HC Deb 04 December 1981 vol 14 cc554-62

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Stradling Thomas.]

2.30 pm
Mr. Bob Cryer (Keighley)

I am grateful for the opportunity to raise the question of intermediate area status for Keighley, which follows yet another debate about the terrible, agonising consequences of the Government's policies on people who are confronted with ever-increasing dole queues.

I have a specific task this afternoon, because section 13(2) of the Industry Act 1972 provides that, in defining an intermediate area, The Secretary of State shall have regard to all the circumstances actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies. It is with that definition in mind—which comes from the legislation that the Minister must heed—that I shall conduct my representations.

As the Minister knows, the previous Secretary of State for Industry conducted a review and removed intermediate area status from many areas, including Keighley, to be carried out by August 1982. It is therefore being phased out. I am grateful to have the opportunity of making representations well before August 1982 so that the Minister can review the position, think again and, I hope, retain intermediate area status for my constituency, which largely covers the Keighley travel-to-work area.

Keighley now has its highest number of unemployed people since the 1930s, which fact alone warrants the retention of intermediate area status. It is ironic that, in 1979, a Conservative Party spokesman claimed that 2,457 people were unemployed and that there was a high rate of unemployment of 7.9 per cent. Official figures at that time gave a total of 1,353 people unemployed, at an average for the Keighley travel-to-work area of 4.5 per cent., which was below the national average of 5.5 per cent.

At that time in Keighley many small firms enjoyed support from the small firms employment subsidy introduced by the Labour Government. Over 750 jobs were supported in the Keighley travel-to-work area by that means, which was directly aimed at small firms. It was much appreciated by them and helped to create and retain jobs.

That support was cancelled by the Government when they took office. The temporary short time working scheme, which replaced the temporary employment subsidy scheme that supported many jobs in Keighley was cut back by the Government when they took office. The early retirement scheme, much appreciated by people in middle age, was cut back by the Government when they took office and only recently has the qualifying age of 62 been restored to what it was in May 1979.

High interest rates and cuts in public expenditure with consequent cutbacks in contracts to the private sector—because most of the money spent by local authorities is on contracts with private companies—cutbacks in industry support in the way that retrenchment on intermediate area status suggests, and the ending of exchange control, which allows unlimited investment abroad, have meant a massive increase in dole queues and in public expenditure to maintain them. That is the irony of the Government's position. To cut public expenditure they have created enormous dole queues which require about £12 billion a year in direct payments and lost tax revenue to sustain them. As a result of the Government's policies, between May 1979 and November 1981 the number of people registered as unemployed in the Keighley employment office area increased by 182.5 per cent., according to an answer that I received on 26 November.

The sad statistics of the dole queues in Keighley are that on 12 November the numbers of registered unemployed were: adult males, 2,519; juniors registered at the careers office, 179; adult females, 962; and junior females registered at the careers office, 131; making a total of 3,791, or 12.4 per cent. That is almost in line with the regional unemployment level of 12.9 per cent. The national average for Great Britain is 12.1 per cent. and for the United Kingdom 12.2 per cent. Keighley's unemployment level is now above the national average, even at a time when the national average is the highest since the 1930s.

Of the people who are registered as unemployed in the Keighley area, 684 have been unemployed for over 12 months and 276 for over two years. That is a total of nearly 1,000 people who have been unemployed for 12 months or more. Surely that is the saddest and bleakest testimony to the Government's policies.

On an age basis, on 8 October 440 young people aged 18 or under were on the dole. Almost 1,000–959—people younger than 24 were on the dole. For young people that represents a bleak prospect for the future. Many of them must feel that there is little hope for them.

The Minister must also take into account future trends in the granting of intermediate status. In addition to almost 4,000 people being on the dole, a further 250 job losses have been announced. They are in the pipeline and have not yet taken place.

For the 3,791 job hunters on 6 November there were 84 vacancies. The future is bleak for the 4,000 people who are seeking to occupy 84 vacancies. The Minister might say that the numbers vary from month to month. He would be right. They vary between 70 and about 80.

Two industries—mechanical engineering and textiles—are extremely important in the Keighley travel-to-work area. Mechanical engineering in 1977, the base year for calculating unemployment statistics, provided almost 3,000 jobs. Many other types of engineering such as foundries are not included in that figure. I use that figure to demonstrate what an important component of employment the engineering industry is in the Keighley area.

The finest skills and products are available in the Keighley area, including the best centre lathes and the finest grinding machines in the United Kingdom. Because of the Government's diminution of support for manufacturing industry and the regressive attitude of the Chancellor of the Exchequer, including the deflationary policies announced on Wednesday, the prospects for an increase in engineering demand are bleak. That is another reason why intermediate area status is important.

A further component of jobs in Keighley is textiles. In Stine 1977, 6,268 people were employed in textiles of all kinds. Since then, with the massive deflation and increase in unemployment under the present Government, the figure has been cut back, probably by 2,000 or 3,000. However, it is still an important component in Keighley employment. A Keighley worsted spinning firm said in a telegram to me: Give them hell tomorrow. After 125 years in textiles Conservatives ruining my business. Also MFA obviously a sellout. I understand that the firm has made representations to other Governments, but that is what it says about this Government, and that is what it feels about the position in textiles.

At least intermediate area status and its continuity would give some confidence to an industry that is wracked by uncertainty. On Tuesday 1 December, after a meeting in Bradford, the British Textile Confederation issued a press notice relating to the multi-fibre arrangement negotiations. I know that the Minister does not have direct responsibility for those negotiations, which are a matter for the Department of Trade, but industry is involved. There is concern about the MFA and its outcome because of employment prospects. The Minister should bear that in mind in reviewing the question of intermediate area status after August 1982 for an area which is heavily dependent, even today, on textiles. The press statement says: The decisions of the Council of Ministers on December 7th and 8th will play a major role in shaping the environment within which the British textile industry will operate between now and 1986. Any failure by the Government to press the need for a toughening of the EEC approach in these critical areas, and to persuade other Community governments to accept a mandate which meets the real needs of the textile industry, will have very serious consequences for the industry, for the British economy and for regions of the UK already suffering high levels of unemployment". On 1 December, Mr. Norman Sussman, the chairman of the British Clothing Industry Association, issued a press release, which said: the main failing of MFA II had been the generous growth in quotas which had been fixed prior to the current recession. As a result, the 1982 quotas were excessive compared with the stagnant UK market, and yet these quotas were being put forward as the base above which 1983 quotas would be fixed". The association calculated that if the MFA were based on the quotas which the Minister for Trade put forward as the base, 30,000 jobs could be lost as a result of the increase in imports. So the multi-fibre arrangement prospects are not bright, and are clearly a cause for concern by the industry. The fact that the previous MFA was administered by the EEC, separate from the Government, with little direct control, is also a cause for concern, because it means that even an agreement which is satisfactory to industry may not be administered with the sufficient verve and determination that are required to ensure that the industry has a confident future. Cheap imports from the United States are also a cause for concern. The MFA is not the sole reason for the lack of confidence in the textile industry.

I come to the general position. Over 500 jobs in the Keighley area are protected through the temporary short-time working compensation scheme. I understand from a parliamentary answer, that, since 1 April 1981, 1,500 young people have entered the youth opportunities programme in the Bradford local authority area. I stress that the youth opportunities programme is no substitute for basic, decent jobs in manufacturing industry with secure futures. In the previous debate, hon. Members were clearly concerned about aspects of the youth opportunities programme and the fact that youngsters are given brief jobs without futures and simply returned to the dole queue.

The provision of worthwhile projects is part of the criteria for regional selective assistance. The booklet provided by the Department of Industry states: The present criteria for Regional Selective Assistance are designed to bring forward worthwhile projects which would not otherwise go ahead and which provide more productive and more secure jobs. Assistance is given when it is necessary to secure the project but is not provided for projects which would proceed in any event or in cases where it would simply divert investment from one location to another with no net benefit to the economy. I am asking the Minister to instil confidence in an area that suffers from a lack of certainty. I refer particularly to the textile industry. I ask the Minister to instil that confidence by backing worthwhile projects through the retention of intermediate area status.

The retention of intermediate area status will help to give confidence to manufacturing industry and will throw a chink of light on the Government's wrecking policies. It will give some hope to the blighted prospects of many thousands of people. Intermediate area status is not the sole source of hope. Other action is needed. However, it is a helpful factor.

I remind the Minister that, according to the Department of Employment's statistics on 12 November, the Yorkshire and Humberside region had an unemployment rate of 12.9 per cent. compared with 13.4 per cent. in Northern Ireland. Therefore, the Yorkshire and Humberside region seems rapidly to be catching up with that difficult area. However, as the Minister knows, Northern Ireland has special measures. For example, the Government have given an £80 million grant to the De Lorean company, with a cost per job of about £26,000, compared with a maximum cost per job of £2,000 in an intermediate area. I am asking not for £26,000, but for the £2,000 regional grant.

Intermediate area status for Keighley meets all the criteria laid down in the Act and in the guidelines. It meets the objectives of regional policies. The present unemployment level is disastrous and the future is bleak. Bradford has intermediate area status. Yet Keighley is being phased out. Keighley is part of the Bradford local authority. Happily, Bradford is now Labour controlled, but, even under Conservative control, the council objected to the removal of intermediate area status from Keighley.

Bingley is adjacent and is the next town in the valley. It has intermediate area status under the Bradford travel-to-work area. It makes sense to give intermediate area status to the whole valley, which is largely dependent on textiles and engineering. Therefore, I hope that the Minister will review the position favourably before August 1982. The Government talk about slimming down, new methods of work and investment. The textile industry—like many other industries in the Keighley area—is a low-wage industry. The trade unions have co-operated. Much of the industry has relatively new machinery. The industry has slimmed down, and over the past two years thousands of jobs have been lost in West Yorkshire. Therefore, all the criteria have been met. What will this Tory Government do to give some prospect of jobs?.

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

In the time available, I shall endeavour to answer as many as possible of the points raised by the hon. Member for Keighley (Mr. Cryer).

The hon. Gentleman has consistently urged the retention of intermediate area status for Keighley. I shall have to explain why I cannot accede to his case. However, in view of his persistence in the past I have no doubt that he will continue to urge his case and to look at the evidence as it develops.

He mentioned that a factor taken into account in deciding assisted area status is the unemployment level, present and prospective. He also put some weight in his remarks on the importance of the textile industry in that context. That is the predominant industry in Keighley. I shall say a word about that, although it is not necessary for me to dwell too long on the problems of the textile industry, as we had an Adjournment debate on the subject, initiated by my hon. Friend the Member for Huddersfield, West (Mr. Dickens) on 28 October, and I replied to that. The hon. Member for Keighley knows that only last week the Minister for Trade made a statement to the House on the negotiations for the renewal of the multi-fibre arrangement. I assure the hon. Member for Keighley that I fully appreciate his concern over the difficulties facing the wool textile industry, and that the Government are conscious of its problems.

It must be recognised that in employment terms there has been a decline in the textile industry for many years. The 1969 work force of 137,000 had fallen to 77,100 by 1979. By December 1980 that figure was down to 50,362. In parallel with those figures, the production of wool fabrics by volume fell from 239 million square metres in 1969 to 138 million in 1979 and 119 million in 1980. There has been a steady decline.

The figures should be seen in context against the background of structural changes occurring in the industry aimed at strengthening the sector's position in the longterm. That is important in the context, as the hon. Member for Keighley said, of considering employment in the future. Many small firms were lost in the 1960s and 1970s. There was considerable modernisation and rationalisation of capacity in the two wool textile industry schemes which ran from 1973 to December 1979. The Government contributed over £22 million towards projects costing about £104 million.

As the hon. Member for Keighley knows, the decline in output of wool fabrics has many causes. In the worsted sector there has been the decline of multiple clothiers who used to be substantial purchasers of medium-quality long-run fabrics. Fashions have changed towards lightweight casual clothing—mainly cotton and man-made fibres. There has been the swing to imported ready-made suits and the import penetration from low-cost countries is another factor—for example, from South Korea and Argentina, which are now controlled under the MFA, and from other member States of the European Community.

I shall not go into great detail in that field because that has been done on other occasions. On the other hand, I am pleased to pay tribute to the wool textile industry's good export performance over many years. In 1979 exports of £409 million were achieved, and that amounted to about 40 per cent. of output. Despite difficult trading conditions, the industry exported only £1 million short of that figure—about £408 million—in 1980. The principal export markets are West Germany, Japan, the United States and the Middle East. The positive factors that exist must be set against that.

I assure the House that the Government are fully aware of the continuing difficulties facing the textile industry and its place in the economy. It remains the Government's objective to create the right environment, both domestically and internationally, in which the industry can become more competitive and prosperous.

The hon. Member for Keighley referred to the current MFA negotiations and he knows that the EEC is now taking a tougher stance in them than occurred under the previous Administration. He made a particular point about the administration of any future MFA arrangements. I know that he raised that last week during Question Time with my hon. and learned Friend the Minister for Trade. My hon. and learned Friend replied that he would take on board what the hon. Gentleman said.

Moving from the textile industry to the wider position, it does not follow that the acknowledged decline in the wool textile industry in Keighley and elsewhere, bearing in mind that, among other things, we do not know what the situation for the industry will be until the negotiations are completed, is in itself sufficient reason to justify assisted area status. The designation of assisted areas is the means whereby successive Governments have recognised the needs of areas that have persistent high unemployment problems and long-term structural change—it is important to remember that. As the hon. Gentleman said, the criteria that must be considered are laid down in the Industry Act 1972—all the circumstances—actual and expected—including the state of employment and unemployment, population changes, migration and the objectives of regional policies.

The wool textile industry, like the steel and car industries, is having to adjust to changes in its market. However, the Government are aware of the industry's importance to the economy, and it is wrong to talk of any of the present difficulties as being signs of a collapse or other such things.

The hon. Member has made much of the unemployment figures for Keighley. The Government are greatly concerned, of course, about the levels of unemployment everywhere. We are spending well over £1 billion on measures to alleviate the plight of the unemployed and particularly to prepare the young for jobs in the future. 'While there has been this regrettable increase in unemployment in the Keighley area, in the context of regional policy I have to take into account the fact that the same is true of the country generally as a result of the world recession, compounded in this country by many years of decline in competitiveness.

In any case, the percentage increase in unemployment rates alone does not provide a reliable indicator of an area's need for assistance, since much depends on the starting figures. It is the absolute figures, particularly the figures relative to other areas at any one time, which have to be looked at as a guide for regional policy, bearing in mind, above all, the need to concentrate on the areas of greatest need.

Keighley's unemployment rate has fluctuated around the national average from the time of the Government's review of regional industrial policy in 1979. The provisional figure for November this year is 12.4 per cent., as the hon. Member said, against 12.1 per cent. for Great Britain as a whole and 12.9 per cent. for Yorkshire and Humberside. When it is appreciated that the average rate of unemployment for all these areas which the Government have agreed should be intermediate areas from next August is above 14 per cent.—in October it was 14.3 per cent., which is the latest figure that we have—I believe that the House will agree that there is insufficient justification on unemployment grounds for a change in the status already announced.

The hon. Member referred to the earlier debate. I think that it is relevant for me to do so, too, because there are a number of travel-to-work areas in the West Midlands region which have considerably higher unemployment than Keighley and which have no form of assisted status, now or projected. As the hon. Member will know, other travel-to-work areas are in the same situation as Keighley, being currently intermediate areas which are to have that status removed next August, which have considerably higher unemployment levels than Keighley has. So I have to look at all the relative situations.

The hon. Member also referred to Bradford, which is retaining its status, hut, as he will know, the Bradford unemployment level is 14.3 per cent., which is considerably higher than that of Keighley.

Any Government must consider an area's circumstances relative to those in other parts of the country and against the objectives of regional policy. That is what we are asked to do in the Act. It is the Government's declared and consistent policy to concentrate regional industrial policy on the areas of greatest need, such as the North-East and Merseyside, where, again, regrettably, unemployment rates are high and always have been, where many thousands are without jobs, and where the traditional industries on which the economies of those areas have been based are experiencing major structural change.

I again remind the House that when we came into office, no fewer than 44 per cent. of the working population was in assisted areas. The result was that the areas most in need were not receiving anything like the concentrated aid that they required, as other, better-placed areas were also receiving aid at the expense of more needy areas. After 31 July 1982, the assisted areas will cover 26 per cent. of the working population, which will result in these areas being more effectively helped.

I must, very quickly, make one or two other points in relation to Keighley. It will retain intermediate area status until August 1982. It is important that those firms that wish to take advantage of anything that might flow from that should consider that fact and submit their applications in good time.

Secondly, section 8 assistance still applies. Keighley has benefited from such assistance in the past.

Thirdly, development land clearance area status will continue after that period.

The hon. Member made a number of references to employment schemes. I have the current figures—I believe that the hon. Member has them, too—of the way in which Keighley and adjoining areas are being helped by the present schemes, and they are quite substantial.

I have listened to the hon. Member with care, but in all the circumstances I cannot agree that the Government would be justified in changing their decision so that Keighley would retain intermediate area status. I know that the hon. Member will be disappointed by my decision, which I made clear to him in my reply to his question on 15 July.

The House will know that the Government have repeatedly made clear that we are always ready to consider new evidence of significant long-term change in an area's circumstances relative to the rest of the country. That remains the position. On the evidence available to me now, however, I cannot accept the hon. Member's case. However, I hope that he will take some encouragement from the Government's decision, which I announced earlier today, that we intend to introduce an order before the Christmas Recess which will suspend industrial development certificate controls until further notice, thus leaving industry free to invest where it considers it most efficient and advantageous to do so. I am sure that Yorkshiremen will not be slow to react to this freedom.

Question put and agreed to.

Adjourned accordingly at one minute to Three o'clock.