§ Mr. David Winnick (Walsall, North)
I beg to move,That this House deplores present Government policies and their effect on the people of the West Midlands ; notes with deep concern the very substantial increase in unemployment in the region since the Conservative Party took office in May 1979 and the large number of factories and plants which have closed down during the last two years; and calls on the Government to reverse those policies which have led to the return of mass unemployment and also to end the cuts in housing and other services which are causing much hardship in the West Midlands.I have chosen this topic because hon. Members representing West Midlands constituencies have a responsibility to tell the House what has been occurring in the region in the past two years. If it is the view of Conservative Members that this is only an Opposition ploy, I make two points. First, it is the responsibility of an Opposition to raise the sort of issues that I and my hon. Friends will be raising today. I have no doubt that if Conservative Members were sitting on these Benches they would be raising the same matters in the same critical spirit. Secondly, I would have raised these matters even if my party had been in office. Indeed, when my party was in office Labour Members were critical when they were dissatisfied with aspects of Government policy. Therefore, this is not an Opposition ploy and we are not simply Government-baiting.
488 The prime Minister and her colleagues argue that unemployment started to increase steadily in the 1970s and that therefore there is nothing particularly different in what has happened in the past two and a half years. That is far from the true position, and certainly far from the position in the West Midlands. Tragedy and devastation have struck the West Midlands in the past two years. There are simply no other words to describe the effect of Government policy on the people in the region.
Let us consider the unemployment figures over the past two years. In May 1979, when the Government took office, the percentage of people registered as unemployed in the West Midlands was just over 5 per cent.—lower than the national average. The latest percentage is 14.8, and for some time it has been higher. Since the Government took office unemployment in the West Midlands has increased by over 170 per cent. That is the accusation that we make today against the Government and the policies that they have pursued. Unemployment has jumped from 119,000 in May 1979 to over 342,000 today. In fact, it has increased substantially more in the West Midlands that in any other region, be it Scotland, Northern Ireland, Wales, the North or the North-West. In parts of the West Midlands the percentage of people out of work is even higher. In my Walsall travel-to-work area—I have raised this matter on numerous occiasions—the figure of registered unemployed people is 16.6 per cent. and for some time it was over 17 per cent. In certain inner city areas unemployment is 25 or 30 per cent.
Let us consider the number of notified redundancies in the region. I quote from official figures because they dispel the notion that what has been happening is little different from what happened previously. In 1978, the last full year of the Labour Government, the number of notified redundancies was 10,006. In 1979 it jumped to 19,320. But in 1980 the number was 69,436, and to October 1981 the figure is 47,523. It must also be borne in mind that, if the number declared redundant is fewer than 10, there is no obligation on the employer to notify the Department of Employment.
The number of factories which have closed is known to all hon. Members. In the Black Country area, for example, Eaton Axles and Rubery Owen in Darlaston—both major employers for many years and both well known in engineering development manufacture—have closed. Armstrong, Stevens and Vaughan in Willenhall, Harris and Sheldon in Willenhall, Samuel Platt in Wednesbury, Tamebridge Foundry in Walsall, Thomas Perry in Bilston, Birtec in Aldridge, GKN Automatic fasteners in Nechells, Midland Motor Cylinders in Smithwick, Dartmouth Auto Castings in Smethwick, British Industrial Plastics in Birmingham have all closed in the past two to two and a half years. In addition, there are impending closures. I shall be attending a meeting in my constituency tonight to meet the employees of John Harper, a factory which is under threat of closure in Willenhall.
More recently there has been the announcement that British Leyland wants to close Guy Motors, the vehicle builders in Wolverhampton. Right hon. and hon. Members will have received a letter from the joint shop stewards' committee. It wants to make urgent representations and to ensure that the factory is not closed by next August. I need 489 hardly remind the House that unemployment in Wolverhampton is very high. There is no justification for closing Guy Motors.
While I am on the subject of British Leyland, I must stress that Labour Members have made clear their determination that in no circumstances would they permit British Leyland to close. Recently we had a brief debate on the wage negotiations, when we made our views clear. The closure of British Leyland would turn the West Midlands into an outright industrial desert. There is no question of allowing British Leyland to go to the wall.
I hope, of course, that what has been happening at British Leyland in the past week or so will be resolved. But the lesson for the BL management is clear. It has had one or two victories in the past when it has gone over the heads of the unions. No doubt it considered that that was very clever. But we have seen proof in the past week that the BL management must never forget that the trade unions exist and that they are there, as elsewhere, to protect the interests of employees. British Leyland may win one or two battles against the trade unions. It may ignore them, as has happened in the recent past under Sir Michael Edwardes. But, at the end of the day, as we have seen this week, management must negotiate properly with the unions, recognising that we live in a country where trade unions are perfectly legal, even under this Government, and that they have long memories. I want to see a more sensitive attitude adopted by the BL management towards industrial relations. The semi-dictatorial attitude of Sir Michael Edwardes is unacceptable to Labour Members.
Even in the 1930s people moved to the West Midlands from the worst hit areas of the country. They moved into Birmingham and Coventry. There has always been the slander that the unemployed, or some of them, do not want to find work. But they did when they moved to the West Midlands with their families in the 1930s. As a child, Moss Evans, the secretary of the Transport and General Workers Union, moved with his parents to the West Midlands because his father was desperately keen to find a job, and he was successful. But today who could move from Scotland, Wales or the North-West to the West Midlands and find a job? Where are the jobs? We have none for our own people. I do not want to exaggerate, but that is one of the differences between the 1930s, however —great the devastation to the country then, and the position in the West Midlands today, and it cannot be denied that much of the tragedy which has hit the West Midlands has been due directly to Government policies. We have very high interest rates. We have an uncompetitive exchange rate which has made exporting very difficult. How many times in the past 18 months or two years have we been told by companies how difficult it is to survive because they find it so hard to export their products? In addition, we have tight money control. All these policies have played their part in creating mass unemployment.
We have had deflation and, looking ahead, deflation remains the order of the day. The other day the right hon. Member for Sidcup (Mr. Heath) said that monetarism had no intellectual justification. He was right. But it is monetarism which has hit the West Midlands. The right hon. Gentleman knows what he is talking about. He had to change course during his period as Prime Minister. How long will it be before there is sufficient pressure from 490 Government supporters on the Prime Minister and her Chancellor of the Exchequer for a change in those policies which have caused so much damage and devastation?
Again looking ahead, the CBI says in its latest economic regional survey that there is no sign of industrial recovery in the West Midlands. It makes the point that home orders are depressed, that most companies face intense competition in export markets, and that business confidence is low. How often we have been told, when Labour Governments have been in office, that that is the reason for the lack of confidence in the industrial and economic sectors. We have had a Conservative Government in office for two and a half years, yet the CBI says that business confidence is low. It will surprise no one to know that, according to the CBI, there is much uncertainty and that the level of employment is expected to decline steadily. But it is not a very promising future for the people whom we represent here.
Labour Members representing West Midlands constituencies have had meetings with CBI representatives, in the course of which it has been stressed that even when the economy starts to pick up again it is not likely that the same number will be taken back into the work force. Due to changes in technology, the prospects of a return to anywhere near full employment in the West Midlands are pretty low. That is also very worrying and a matter which must cause us deep anxiety.
What about those who have been made unemployed? I ask the House to consider how they have been hit as well. They have been hit because they have lost their jobs, due mainly to Government policy. Unemployment benefit has not kept pace with the rise in the inflation rate and will not. The way in which the Government are victimising the unemployed and ensuring that their living standards fall even more is disgraceful. The announcement by the Chancellor of the Exchequer will cause deep dismay to those whom we represent.
The unemployment-related benefit is to be abolished. I have said before that perhaps it did not amount to a great deal, but it gave some extra money to those made redundant. That is why it was introduced. How can the Government justify the abolition of that benefit? Every penny counts for the unemployed man, his wife and his family. But the Government are determined to get rid of that benefit, and it is to be abolished next year.
Only two weeks ago there were exchanges in the House about the £2,000 ruling. The Opposition are concerned about it because a great many people, especially those in their fifties, have worked all their adult lives and managed to save a nest egg for when they retire. I have had letters from constituents saying that they did not even take holidays because they wanted to save a bit of money for when they retired. Successive Governments have praised thrift and said how marvellous it is.
In most cases, the £2,000 includes redundancy money. A redundant person receives unemployment benefit, of course, but after 12 months, when unemployment benefit is exhausted he would in normal circumstances be able to draw supplementary benefit, assuming that he has not been able to find a job—hon. Members can imagine how difficult it is for anyone in his mid-fifties to find a job in the West Midlands—he is denied supplementary benefit because of the £2,000 rule. If a man, or his wife, has £2,000, that is it. If he has over that amount, the money has to be spent before he can receive a penny in supplementary benefit. I should like to know those among 491 Conservative Members who are willing to defend the type of rule that has come into operation under this Government.
Apart from the £2,000 rule, I wish to quote part of a letter that reveals the hardship that has been caused. The letter is open to inspection. The person, who has signed his name, lives in Willenhall and is 47 years old. He writes:Can you comprehend the feelings of hopelessness, frustration, despair and bitterness at being in the position that I and others find ourselves in. I do not consider myself to be living, merely existing. Money is not everything, indeed I do not crave great wealth and fortune, but when a person is denied basic things in life, then something must be terribly wrong.If there were some unemployed people taking part in the debate they might say "Thank you for raising these issues" but unless one is unemployed oneself and understands the blow that is suffered it is difficult to comprehend what it means. It is not only an economic blow but a psychological blow to people's self-esteem. Unemployed men in their middle age or late middle age wonder whether they will ever be able to return to the labour market and earn their living again. Many possess skills that have proved to be of great value to this country in engineering and other industries. They fear that they could find themselves in poverty or near poverty for the rest of their lives. They have a feeling of failure when it is nothing of the kind. Their feeling of depression often leads to illness as a result of their being forced to take their place in the dole queue.
There is also the tragedy of young people and those who left school with no hope of getting a job. It is difficult even at the best of times for those who leave school with no academic qualifications to get jobs in some places. When there is intense competition for jobs and when there are 80 or 90 youngsters applying for a vacancy as a shop assistant, it is understandable that those who leave school with minimum qualifications face great difficulty. I spoke last in a debate on the West Midlands on 30 March. I remarked at the time that there had been no riots on our streets. Hon. Members know what has happened since. It would be a tragedy if the only means by which young people could make their voice heard was by rioting. Rioting is, of course, to be deplored; but so is mass unemployment.
Among the unemployed in the region are many construction workers. According to a reply I received, there were 33,000 construction workers registered as unemployed up to August. I believe that that was an underestimate. There are formidable queues for housing in the West Midlands. Nearly every major local authority has long waiting lists. The figure in Walsall is 10,000 and in Birmingham 15,000. The question therefore arises of the number of local authority dwellings under construction. In the whole of Birmingham there are only 202 local authority starts, in Wolverhampton 41, in Dudley four, in Walsall 44 and in Coventry none.
Even this pathetic number of dwellings under construction for local authorities consists in the main not of ordinary council dwellings but of special units of various kinds which, of course, I support. There are, however, thousands of people, many in desperate need of accommodation, for whom homes should be provided. The hon. Member for Lichfield and Tamworth (Mr. Heddle) often talks about the private rented sector. Opposition Members are concerned about the public 492 rented sector and the homes that people need. I am not talking of shorthold tenancies providing a year at most of security. The need is for council dwellings.
Tenants in the West Midlands, as in the rest of the country, have been penalised by exorbitant rent increases imposed by the Government. Leaving aside the latest increase of £2.50 for next year, council rents nationally have gone up by 78 per cent. and in the West Midlands by 84 per cent. since the Government took office. When the £2.50 is added, council rents will have increased during the Government's term of office by 123 per cent. in the West Midlands. Council tenants have been virtually punished for being council tenants and for refusing to buy their homes.
Like my right hon. and hon. Friends, I support the spirited efforts of the West Midlands county council to provide jobs. Conservative Members should not sneer. The enterprise board has been started with the aim of sustaining employment and helping those in need in the West Midlands. Is that a crime? Is it something to be sneered at? The scheme may not get far off the ground, but these are early days. I commend the Labour group that has taken the initiative. It is an initiative on the right lines.
When an hon. Member raises the problems of a particular region, as a representative of the region, it may be argued that he is being a little parochial and that instead he should be considering the national position. In my view, the economy nationally will not improve until the situation in the West Midlands improves. The West Midlands is the heartland of engineering and manufacturing; for as long as the West Midlands is in a state of decline, the rest of the British economy will be in a state of decline. We shall see an improvement nationally when the position in the West Midlands begins to improve. To raise the problems of the West Midlands is not simply to concentrate on a regional problem. It is a problem for the country as a whole.
§ Mr. Richard Shepherd (Aldridge-Brownhills)
Instead of being a professional wailer at a funeral, perhaps the hon. Gentleman will give some indication of how the economy of the West Midlands can be revitalised and have a prosperous and hopeful future.
§ Mr. Winnick
I should have thought that the hon. Gentleman would realise that when I talk about a change in Government policies and providing an opportunity for the West Midlands his accusation would be seen to be unfair. It is unfortunate that the hon. Gentleman should make that type of remark. It is unfortunate, but perhaps characteristic of the hon. Gentleman.
§ Mr. Winnick
The cry that comes from the West Midlands is clear. It is for a change of policies. What is also necessary for the West Midlands and for British manufacturing is the introduction of selective import controls. Such measures are necessary to sustain our economy and to meet the competition, unfair in many cases, from a number of countries and from the EEC. The position of the Labour Party on the EEC has been made clear.
Above all, however, the cry from my right hon. and hon. Friends and myself is for a basic change of policy and 493 a return to the situation that existed before May 1979. Of course, all was not rosy at that time. All sorts of problems were facing the West Midlands but they were nothing like the tragedy that has hit the region in the past two and a half years. We have had enough of the dismal, abysmal and devastating policies of the Government that have hit so much the people whom we represent in the House of Commons. We say to the Minister that we want a change of policy. If we cannot get a change, the sooner the Government leave office the better it will be for the people of the West Midlands.
§ 10.1 am
§ Mr. Iain Mills (Meriden)
I apologise for the fact that, due to a long-standing engagement later today, I shall not be able to hear all the contributions that will be made by right hon. and hon. Members. However, I shall do my best as we all have in common the interests of the West Midlands.
I am sure that some of the words said by the hon. Member for Walsall, North (Mr. Winnick) struck deep into the hearts of my Conservative colleagues. Defining the problem is one thing, but finding a solution is perhaps where the difference between us lies today. Conservative Members are as acutely aware as anyone of the many personal tragedies and the many ghastly feelings in the hearts of people who are made redundant. We are aware of the feelings of inadequacy of those who are seeking work, but cannot find it.
It is not a simple matter however. I speak as one who has lived and worked in the West Midlands for many years, in the heart of manufacturing industry, and as one who now has the honour to represent Meriden, in the heart of England and the West Midlands. It is easy to say that the Government's policies have caused the problems in the West Midlands, but Opposition Members must recognise that we are in the teeth of an international recession and that, as a result of the increased price of oil, as a Western nation we cannot compete. Partly as a result of Labour legislation in the past, we have become decreasingly competitive.
We must recognise today that neither the West Midlands nor the country at large is free from the need to compete with other nations and that there is no magic way of sealing off this island, or the centre of it, in the West Midlands. Our people, our management systems, our trade unions and the whole mechanism of production must result in products that will be bought by the customer.
Do not Opposition Members find it strange that in the heart of the West Midlands, where those tragedies are occurring, their next-door neighbours are buying Japanese cars and Korean tape recorders? Is there not a dual attitude, almost self-destructive behaviour, in some of our purchasing habits? However, when I say those words as someone who would like to see everyone buying British, I am often reminded by constituents, in letters, of unpleasant experiences that they have had with British products. British buyers, whether trade union officials, managers or anyone else, are all eager to have the freedom of choice to buy the products that best suit their needs, of the quality that is needed and at the right price. Therefore, we are not insulated. We are not able, by Government policies alone, to ensure that our products, which are the heart of the wealth-creating nature of manufacturing 494 industry in the West Midlands, can succeed. They can succeed only if we are fully competitive in those various ways.
I always consider myself both fortunate and unfortunate to have been part of manufacturing industry for two decades, when Britain—which used to lead because of its industrial revolution—as a result of changes to manufacturing industry and our inability to produce the goods, has been in constant decline. My motive for seeking election to the House was to play a small part on behalf of my constituents in trying to deal with that problem.
For decades the West Midlands as well as the rest of the country has had a strange blindness about wages and productivity. I have been part of it and like anyone else, I am keen to have increased wages and to participate in growing standards of living and to broaden the horizons of my life. However, if neither the country nor the West Midlands has been paying for those increased expectations and better standards of living with better productivity so that our products can increase their market share and, therefore, our manufacturing base, at the end of the day someone must pay the price. When that price must be paid in the teeth of an international recession it is difficult and there are no easy solutions. Not many solutions are put forward by the Opposition, but those that are need a much deeper examination if we are to ensure that the West Midlands will not only survive but will be a leading component in the regeneration of Britain's industrial ability.
We must recognise that we are not isolated either in our attitudes or in our industrial abilities. We discuss endlessly the different ethical systems and cultural attitudes of our main industrial competitors. We ask ourselves whether we can ever compete with the Japanese, who see things in a different light. Should we do so? Have we advanced in our cultural and social behaviour to the point where we do not want to compete?
In the heart of the West Midland lad on the shop floor, the manager and everyone else, there is no lack of work ethic. We in the West Midlands are used to grafting for our living, working and making things. Therefore, I do not accept that the people of the West Midlands are somehow less able, given the opportunity and the right system, to make their contribution towards a better, broader and bigger manufacturing base. If my argument is accepted, one must say that if the people are not at fault it must be the system—
§ Mr. Mills
The hon. Gentleman should be better able to define the whole of Britain's and the West Midlands' problems. I expected more from the hon. Gentleman.
To achieve the right system, we must examine the various components. I can say, in my humble experience only, that the blindness of the trade union movement in the West Midlands, particularly towards restrictive practices, is equalled only by the blindness of industrial management that has been unable to succeed with innovation and to create in the West Midlands a successful working industrial atmosphere.
Those two attitudes are often seen as sides, although I never understand why managers should be different from employees, because that is what they are. One must examine whether British management has been bad and 495 whether trade union practices have been bad. Changes in management and trade union practices would help towards the solution to the decline of the West Midlands. Advances in the de-restriction of labour practices and the increase in working flexibility at all levels are as essential as the need for professional management skills and the ability to manage companies in the 1980s the employees of which are intelligent, interested and expectant people. There are two factors that the heart of this country should have—the ability to manage well and the ability of the trade union movement to play its part in creating greater wealth.
I find it incongruous—as I am sure other hon. Members do—that often in negotiations the trade union movement wishes to act restrictively, when the common objective of all, whether inside or outside the House, is to be expansive. The trade union wish artificially to restrict because of ideological attitudes. Other forms of blindness can only reduce our industrial base. The customer does not care much about that. He cares about being able to buy the right product of the right quality and at the right price. He cares about its availability.
Unless management and the trade union movement are dedicated to pleasing the customer, we must expect imports from our European partners and from other countries to continue to take the share of the market that should by rights and by skills belong to the West Midlands.
It is superficial to suggest that changes in Government policies will bring about a magical change. Will changes in Government policy magically give management instant access to better professional skills? No, they will not. To bring about such change is a long and hard business. For many years Britain has seen its priorities well away from engineering. We have only to consider the status of the engineer in France, Germany, Japan and America to realise that perhaps our priorities have gone wrong. If it were as simple as the Government saying tomorrow "We shall do away with all trade union restrictive practices and repeal all restrictive legislation", life would be easy but, unfortunately, that cannot be done.
We have built up a complex industrial society in which change does not happen by revolution. Nowadays, change rarely happens by legislation. It takes place organically. That happens when we see the need to change and to play our part in removing restrictions and creating a better, freer, more efficient and more productive manufacturing industry in the heart of our remarkable country.
The signs are not all bad, although the West Midlands has been harder hit than other regions. Labour Members blame the Government, but I suggest that the reason lies in the West Midlands being especially dependent on certain industries. Changes in industries such as the steel industry, the car industry and the engineering industry and increasing competition from competitors abroad are the real reasons behind the extra rate of decline that the West Midlands has suffered. That is tragic because my background lies in the industries to which I have referred. I weep more than Labour Members and I shed genuine tears. I was a part of that industrial structure. I recognise that some Labour Members may have been, too.
There are signs that the regenerative process is taking place throughout the nation, including the West Midlands. Labour Members may smirk, but that is true. My hon. Friend the Under-Secretary of State has confirmed to me in written replies the results of my own investigations. The number of companies going out of business is greatly 496 dominated by new business starts. About 2,500 new businesses are generated each week and a proportion are being generated in the West Midlands. In my constituency I have had great joy in opening new factories. In one instance, within a year of opening a factory I was asked back to mark the fact that its size had been doubled.
The slow process of regeneration and moving towards companies that, by their very nature, are high productivity concerns, has been a most encouraging sign. Although the number of new businesses greatly outnumbers the businesses that are going into liquidation, those that are starting are usually high technology and high productivity concerns and, therefore, offer fewer jobs. They are usually small businesses. They are eager to retain high productivity because they wish successfully to compete.
Many of the companies that have gone out of business, including those referred to by the hon. Member for Walsall, North, have been lower-productivity organisations. They were able to offer many more jobs because of their larger size. The tragic but necessary change to our industrial base—a change that has taken place in most countries—is now taking place at a speed that is confronting us suddenly with tragedies and new opportunities. On the whole, I find the figures most encouraging.
I imagine that my solicitor's practice is more accustomed to dealing with conveyancing and meeting the simple needs of the people of the West Midlands. However, that practice is now involved in the detail of management buy-outs. Throughout Birmingham solicitors are smiling when they tell me that they are handling about six to seven buy-outs. Some divisions of large companies are no longer able successfully to manage their businesses, yet their employees see an opportunity for them to take over.
Labour Members are keen on worker participation. That and other innovations have been encouraged and assisted by the Government and especially by my hon. Friend, the Under-Secretary of State, who appeared recently at the Belfry hotel in my constituency to encourage business men to play their part in innovations. He led them by the hand down the path of industrial change. He told them how they could change the base of their industries by being total participants. Surely the shared democracy of management buy-outs must appeal to all but the most hardened cynics on the Opposition Benches. I am told that throughout the nation there are about 100 management buy-outs, including the extremely exciting buy-out of the National Freight Corporation. This form of future co-operation should not be ignored by Labour Members.
My hon. Friend has produced an excellent brochure, which is available in the Library, and which is given to small business men. It identifies the extent to which the Government and their policies have helped new business starts. There have been over 1,000 take-ups of the loan guarantee scheme. That has proved that the banks were not right when they said that they alone could provide the finance. It has proved that Labour Members were wrong when they said that the scheme would fail. The business start—up scheme is recognised by many small business men in my area as a major help. The Government have introduced many other such measures, including the now often forgotten raising of the VAT registration limit from £10,000 to £15,000.
497 We must not scoff because the nature of change is not cataclysmic. Changes are not made at a stroke. They are brought about by the sometimes small processes of help to companies that are designed to create success for the West Midlands.
§ Mr. Peter Snape (West Bromwich, East)
I hesitate to interrupt the hon. Gentleman's mellifluous flow. However, I ask him to answer a fairly simple question. Does he feel that the economic prospects of the West Midlands are being helped or damaged by the economic policies of the Chancellor of the Exchequer over the past two and a half years?.
§ Mr. Mills
When we consider the amount of help that the Government have given, apart from two matters to which I shall turn, there is no doubt that my right hon. and learned Friend's policies have helped. I find it difficult to accept that there is an alternative philosophy.
The extra rate precept of the West Midlands county council was put over most movingly by the hon. Member for Walsall, North. Opposition Members seem to forget that someone will have to pay for it. Do they realise who will pay for it? It will be paid by businesses whose marginality of operations may well be affected by the extra precept of 14p.
§ Mrs. Renée Short (Wolverhampton, North-East)
It costs £6,000 a year to keep a man on the dole. That is unproductive expenditure.
§ Mr. Mills
I merely suggest that there is no magic about the rates. Someone has to pay for them. If a business is operating so marginally that the extra precept will cause it to go into liquidation, who is to blame? I ask Opposition Members to think about that.
As I have said, there are two areas of Government policy that I criticise. Those of us who have watched the IDC system operate in the Midlands know that the certificates have prevented growth. I ask my hon. Friend the Under-Secretary of State to refer to the IDC system.
Many business men feel that the Government's regional policy is continuing to be applied in a way which will undoubtedly shift businesses from the West Midlands, which is not an assisted area, to other parts of the United Kingdom. They feel that this has been the result of the regional policy of successive Governments.
§ Mr. Geoffrey Robinson (Coventry, North-West)
I am sure that the hon. Gentleman is aware that we are following his arguments with great interest. He has been called early in the debate because he has an engagement elsewhere. We understand that. However, many hon. Members wish to participate in the debate. It is unfair to Members on both sides of the House for the hon. Gentleman to take so much time after having been called so early.
§ Mr. Mills
I note the hon. Gentleman's comments. I have sat for many long hours in the Chamber but this is the first time that I have ever asked for special consideration. I shall now be brief. The nodding of the heads and the tapping of the watches will no doubt be noted by those concerned in such matters.
There are some good signs in my constituency. Agriculture, with help from EEC funds, and mining are two of the bright spots. There is no doubt that the West 498 Midlands is going through a great and difficult industrial change. There are no easy alternatives, no simple Government solutions but the change is starting to take place. The many policies of the Government, particularly those of the Department of Trade, will help this change, and the re-creation in the West Midlands of a healthy, productive and competitive industry.
§ Miss Betty Boothroyd (West Bromwich, West)
There have been several debates in the last couple of years on the economy of the West Midlands. They were all initiated by Labour Members, either as a group or as individual Members. We are grateful to my hon. Friend the Member for Walsall, North (Mr. Winnick) for tabling his motion today.
We all recognise that the West Midlands has been more seriously affected by Government measures than any other region. The fortunes of the West Midlands can be measured by a simple exercise which shows the traumatic fall in industrial activity and the great rate of job losses in recent times. Since the Labour Government left office in May 1973—no, May 1979.
§ Miss Boothroyd
As my hon. Friend says, it seems a long time.
Since the Labour Government left office unemployment throughout the United Kingdom has increased by 127 per cent. That is condemnation enough of the Government's policies, but in the West Midlands unemployment has increased by 190 per cent. since May 1979. In the last year alone unemployment in the United Kingdom has increased by 37 per cent. while in the West Midlands it has increased by 47 per cent. The rate of job loss in the West Midlands is increasing much faster compared with the country as a whole. In the West Midlands we have 50 people chasing one job.
The Department of Trade recently published figures which show that company bankruptcies and liquidations have increased by about 30 per cent. in each category in the past 12 months. In the lifetime of this Government about 25,000 firms, large and small, have gone out of existence. The West Midlands has an extremely high roll call of industrial casualties. My hon. Friend the Member for Walsall, North mentioned many of them.
Although it is a long way from the House, I should like to tell hon. Members of an experience I had 18 months ago when I saw the lighthouse which stands in the strait of Malacca in South-East Asia. The lenses of that enormous construction were made by the skilled men and women of my constituency. After nearly half a century the light still gleams brightly over the South China seas guiding the sailors to safety and the refugees to freedom, but the firm of Chance Brothers that built the lighthouse and other similar equipment throughout the world no longer exists. It was joined in closure by Paten Shaft and Rubery Owen—
§ Mr. Andrew Faulds (Warley, East)
I should like to put in a slight historic claim at this point. My hon. Friend and I share constituents who worked at Chance Brothers, which used to be in my constituency of Smethwick. All the constituencies in the area have suffered the loss of work occasioned by the appalling closure of that historic glassworks. As my hon. Friend said, it contributed lighthouse glass to nearly every lighthouse in the world.
§ Miss Boothroyd
I am sure that my hon. Friend would also recognise that many of his constituents worked at Patent Shaft and Rubery Owen. These are all Black Country firms with household names, known throughout the world. Together with about 4,000 firms throughout the West Midlands which have closed, they represent evidence of the crushing failure of Government policies.
In my own area of Sandwell, for which I have to leave shortly—I hope that the Minister will excuse me—apart from adult unemployment, there are now about 5,000 teenagers out of work. There has been an increase of about 70 per cent. in teenage unemployment in the last year. Of the 5,000 youngsters, only about half are in any type of youth training programme. The principal careers officer—a splendid woman who does a remarkable job in very difficult circumstances—estimates that only about 30 per cent. of them stand a chance of finding work at the end of their schemes, compared with a much higher proportion 18 months ago.
We are constantly told by the Government that this grim picture is due to the recession—I accept that part of it is—but we are also told that the sacrifices have to be made as part of an exercise to produce a fit, lean, industrial base. We are told that by cutting away the fat we have a better chance of recovery. That is rubbish. Even the Government's own business friends do not accept the fit, lean, health farm approach any longer.
In October last, the business report in The Times produced a stinging attack by the chairman of the West Midlands CBI, who declared that, as a result of high interest rates, companies were reporting a loss of permanent capacity which was so serious that many feared they would not be able to meet the demands of recovery. That is in very sharp contrast to some of the Government's pronouncements of the last few months. Even the Government's friends are now saying that amputation has taken place instead of the slimming exercise that we were told about some time ago.
Rising interest rates have created gloom among West Midlands industrialists. They recently conducted an emergency survey of the reactions throughout the region. The survey forecast further sharp increases in unemployment and permanent damage to the manufacturing base. The chairman of the West Midlands group of chambers of industry and commerce said:There is no shortage of discussion with the Government. They were not easy to talk to. They listen but they do not react…We frankly cannot understand the Government's economic policy or thinking".The chairman of the West Midlands industrialists, representing the largest regional body reflecting industrial and commercial life in Britain, is Mr. James Ackers, a prominent member of the Conservative Party and a former national chairman of the Bow group. If he finds it difficult to talk to the Government and does not understand their attitude, it is hard luck for the rest of us.
We were asked earlier in an intervention by the hon. Member for Aldridge-Brownhills (Mr. Shepherd), to identify what we wanted to be done. There are two projects on which I should like the Minister to act immediately.
Late in 1978, a large and old-established firm in my constituency submitted to the Department of Trade specifications and designs for four pieces of precision machinery. They need verification by the metrology, quality assurance, safety and standards division of the Department of Trade before they can be exported to the 500 120 countries with which the firm deals. I learnt only recently that that equipment has still not received certification. It has been awaiting verification for three years. The firm told me that the delay is because of the backlog in the Department. Therefore, there must be other equipment waiting for Department of Trade approval.
I am sorry to see that there is not a Minister from the Department of Trade on the Front Bench today. It is extremely important in such a debate that there should be. Despite intense competition in the export market, such a position means that overseas markets are lost, machinery throughout the Black Country lies idle and job losses occur because of the long delays caused by cutbacks in Civil Service manpower brought about by the Government in order to make it lean and fit. I cannot believe that such crazy behaviour exists in either the Japanese or German Governments. To pose such serious threats to productivity and job prospects is wicked. The Secretary of State for Trade has the matter on his desk, and I ask for a reply next week.
The other example concerns imports. I must declare an interest as a non-executive director of Thorn Lighting. During recent years the importation of replacement vehicle light bulbs has grown tremendously. During the past 12 months Britain has imported 63 million replacement vehicle light bulbs from Eastern Europe and the Far East.
After much pressure, draft regulations have been drawn up under the Consumer Safety Act 1978 which will demand higher safety standards and better performance before such light bulbs can be imported into Britain. However, the Department of Transport cannot bring the regulations into effect before the end of next year. So another 12 months will go by without any reason being given as to why the regulations cannot be put into effect. How many more manufacturers will close and how many more folk will be thrown on the dole in the next 12 months? Surely the Government can commit themselves to some speedy action on the examples that I have given.
We make it unnecessarily difficult for our firms to export, while at the same time we seem to welcome with open arms anything produced by competitors. We are a welcoming country. We welcome anything to our shores that is produced by overseas competitors. The time is long overdue when Customs officials should be asked to take a leaf out of the book of their opposite numbers overseas and insist on individual, rigorous examination of each item imported to ensure that it passes the appropriate safety, health and performance standards. The French and Japanese customs departments are among the toughest in the world and it is time that we adopted some of their tactics.
In many debates dealing with the region, as well as with unemployment and industry generally, proposals have been made by Opposition Members which we believe would go some way towards assisting recovery by gradual reflation. There should be long-term low interest rates for industrial investment so that the technical machinery produced in the West Midlands, for example, may be produced for the National Health Service, which needs it badly. It would enable equipment to be produced for the water supply and distribution industry and for capital projects to rebuild the creaking sewerage and water systems surrounding Black Country towns.
The other day I saw in an important regional newspaper that an estimated 100,000 people are on council house waiting lists in the West Midlands. Their hopes of a home 501 are receding, but an injection of capital into the construction industry would provide homes for them as well as generate much-needed activity in that area.
The alternative lies in using the nation's wealth for large investment programmes, chiefly in the public sector, to rescue industries in the areas that all hon. Members in the Chamber know well. Instead, the Government consistently fail to distinguish between capital spending and current spending. Britain needs spending for investment, yet the Government seem to fail to make the crucial distinction between money for investment and money for consumption.
I hope that the Minister today will give some message of hope to those people whom we represent, to a shell-shocked Sandwell as well as to other areas of the West Midlands. If he is not confident in that message, I invite him to come with me or join me later today to meet with the careers people, the trades councils and the industrialist organisations. They all speak with one voice in telling the Government that there is an alternative to the destruction of industry and to the demoralisation of people in the West Midlands.
§ Mr. John Heddle (Lichfield and Tamworth)
I hope that the hon. Member for West Bromwich, West (Miss Boothroyd) will forgive me if I do not pursue precisely the path that she has trodden, but tell the hon. Member for Walsall, North (Mr. Winnick)—who was successful in the ballot—how grateful those of us who have the privilege to represent the heartland of Britain are to him for having brought to the attention of the House today the problems of our region.
There my congratulations must cease. Whether it is simply because it happens to be the first Friday in December, I do not know, but the hon. Gentleman's speech was naked and bankrupt of ideas and, in its proposition, he suffered from selective amnesia. Of course, he forgot to advise the House why the West Midlands economy is in such a sad and parlous state. He wept crocodile tears about the length of council house waiting lists in Walsall, but failed to advise the House that, although there may be many people on the waiting list in his constituency—which in one small part abuts mine—there are 1,000 empty council houses awaiting tenants. He also failed to advise the House that, despite the fact that the Government have been forced to increase council rents to a more economic level, only 7 per cent. of the average industrial income of the average council tenant goes towards paying rent.
The hon. Gentleman further failed to advise the House that, compared with that average of 7 per cent. in the publicly owned housing sector, people who are buying their houses donate 20 per cent. of their income to their mortgage repayments. He also failed to advise the House that at least 45 per cent. of council tenants—nearly five out of every 10—because of the uprating of rent and rate rebates introduced by the Government since May 1979, have to meet not the entire increase, but only part of it.
§ Mr. Winnick
I am sure that the hon. Gentleman's constituents who are council tenants will wish to know at the appropriate time how he justifies up to the hilt the increases imposed upon them by the Government. As to 502 empty dwellings in my area, the hon. Gentleman should bear in mind, as I said in an Adjournment debate, that the number of empty dwellings is less than average compared with other areas. What is more important is that a number of dwellings remain empty because the council does not have the funds to carry out improvement work, which stems from the cutback in the housing investment finance programme. That is the position that he should bear in mind.
§ Mr. Heddle
I am grateful to the hon. Gentleman for giving me the opportunity to remind him that his local authority could find the money to carry out the labour-intensive improvement programme, which I acknowledge is necessary, if it released money locked up in bricks and mortar by pursuing a vigorous policy of selling council houses to tenants who wish to buy.
I deplore the rather belligerent language used by the hon. Member for Walsall, North when introducing the motion. The hon. Gentleman referred to battles to be won between management and labour. We do not want battles in the West Midlands. We want partnership and cooperation. I am sad to say that there was little that was constructive in the hon. Gentleman's contribution, which was like that of so many of his hon. Friends who choose to debate unemployment on Supply days and in censure motions. They are full of invective but very short on constructive alternatives.
The hon. Gentleman forgot to mention the legacy of inefficiency that has accompanied industry in the West Midlands for too long. He forgot to mention the problems of industrial relations, particularly in the motor industry. I recall when, in 1976, the then Chancellor of the Exchequer was hauled back from the tarmac at Heathrow as he was going, begging bowl in hand, to the IMF.
I remember the interview on "News at Ten" later that date when the ITV economics correspondent asked a German merchant banker to what he attributed Britain's industrial decline. In impeccable English the German banker said "Of course, the trouble with Great Britain is its tea break." How right he was in 1976. How apposite it is today, after three weeks of industrial strife over a tea break at British Leyland.
The hon. Gentleman forgot to mention the low wage differentials between the skilled and the unskilled, the hoarding of skilled labour in times of prosperity and the advantage taken in the past of the influx of immigrants prepared to do the less attractive and lower paid unskilled work, thus removing the incentive to modernise old capital equipment. The hon. Gentleman forgot to mention the carrying for so long by so many firms of a large amount of dead wood through overmanning. He also forgot to mention restrictive trade union practices.
I agree with my hon. Friend the Member for Meriden (Mr. Mills) who said how encouraging it was to see the Under-Secretary of State for Industry on the Front Bench to reply to the debate. I remember the vigorous and energetic campaign that he and my right hon. Friend the Home Secretary pursued during the Summer Recess advertising and extolling the virtues of the Government's small business loan guarantee scheme. I remember with gratitude the one-day conference at the Belfry hotel just outside my constituency which he attended. Two of my constituents share my gratitude. One of them, Mr. Mark Gallon of Lichfield, would not now be master of his own 503 house and boss of his own business, after being laid off by GKN, after 25 years' service, if he had not attended that conference two months ago.
Another constituent, Mr. William Wainman, now of W. J. Wainman (Engineering) of Tamworth felt that after hearing the presentation and contribution by my hon. Friend the Under-Secretary that there was no alternative but for him to start his own business—[Interruption.] Opposition Members may laugh, but the fact is that Mr. Wainman, having been in business on his own account for two months, has employed three other erstwhile unemployed constituents.
§ Mr. Heddle
I shall come to the Chancellor's economic package later. Given the alternative—the sadness of the dole queue—Mr. Wainman is impressed by the measures that the Government have taken to give him and people like him the opportunity to do their own thing.
I represent a constituency that is divided. Half is a cathedral city with an unemployment level of 17 per cent. and half is an overspill town with an unemployment level considerably in excess of 20 per cent. The disparity between those two percentages is in no small measure due to the lack of foresight of town planners in the 1960s who, anxious to accommodate Birmingham's overspill, did not have the wisdom to provide jobs in the town at the same time as they provided homes.
There are hon. Members on both sides of the House who perhaps represent constituencies with higher unemployment levels but the levels of unemployment in my constituency give me no comfort whatsoever. The first duty of this Government is to create conditions to bring about a substantial and continuing fall in the number of people out of work. The people as a whole understand that. They understand that Britain is not alone in facing the problems created by a world recession.
Many people believe that the Government are right to stress that industry should be competitive and free from unnecessary restrictive practices and labour disputes. However, the people also look to their elected Government to put the reduction of the giant social evil of unemployment at the top of the list of political priorities. The Government must ensure that their response adequately measures up to the size of Britain's jobless figures. They must view with disquiet the fact that tens of thousands of young people are coming off work experience schemes and going straight back on to the unemployment register. The Government must be as concerned as I am about the reports that we are all receiving from careers offices. I received a letter from a careers officer in my constituency three weeks ago which referred tothe apathy of youngsters who feel that the youth opportunities programme allowance is inadequate and that training and experience on the schemes leaves much to be desired. The 18-plus group in particular hesitate about accepting a YOP placement when they know that supplementary benefit will rise to £21.50 in November.The Government's duty is to ensure that real and not paper jobs are created; that real skills are given to our school leavers. That can best be done by reducing the power and influence and costly bureaucracy of the industrial training boards. I welcome the announcement by my right hon. Friend the Secretary of State for Employment in the House 10 days ago. We must give back 504 to employers the responsibility, incentive and encouragement to create skills, and to train young people to ensure that when they play their part in industrial life as managers and foremen they can do so in a real and practical sense. The industrial training boards do not do that job adequately.
§ Mr. Ivan Lawrence (Burton)
My hon. Friend has worked hard to expand business opportunity in his constituency. Does he think that the IDC policy is helpful to the expansion of industry in Lichfield and Tamworth or not?.
§ Mr. Heddle
I am grateful to my hon. and learned Friend because I am about to make three suggestions to my hon. Friend the Under-Secretary of State concerning ways of encouraging the private sector of industry in the West Midlands to create jobs. We now come to initial territory—the initials IDC and IBA.
My hon. Friend the Member for Meriden and my hon. and learned Friend the Member for Burton (Mr. Lawrence) have referred to them. I declare a non-pecuniary interest as consultant to a firm of chartered surveyors with offices in London, Birmingham and Manchester. I hear cynical groans from the Opposition Benches. I believe that I can contribute something of practical benefit to the House, unlike Opposition Members who have spoken in today's debate.
One of the first measures that the Government introduced in 1979 reduced the necessity for industry and commerce to rely on Government permission to build new factories by increasing the exemption from industrial development certificates from 15,000 sq ft to 50,000 sq ft.
It is still bureaucratic nonsense, because the application for an IDC has to be made before a planning application is even submitted. It is a costly, time-wasting and bureaucratic hurdle. I urge my hon. Friend to discuss further with industrialists throughout the nation, with planning officers, and with those who, as it were, are at the chalk face of this bureaucracy, to see whether the industrial development certificate policy can be abolished. We could thereby encourage firms to expand into a region, possibly from overseas.
I come to my second proposition. I ask my hon. Friend further to persuade my right hon. and learned Friend the Chancellor of the Exchequer to extend the operation of industrial buildings allowances.
§ Mr. John Golding (Newcastle-under-Lyme)
I wonder whether it would be possible for the Minister to listen to what hon. Gentlemen are saying, instead of fixing his dinner time.
§ Mr. Heddle
It ill behoves the hon. member for Newcastle-under-Lyme (Mr. Golding) to make such remarks about the Government Front Bench, when his hon. Friends have been giggling and laughing, including the hon. Member for Nuneaton (Mr. Huckfield), who I am told will shortly place his political and parliamentary future somewhere north of Staffordshire.
I return to the subject of industrial buildings allowances. I pay tribute to my hon. Friend the Under-Secretary, who took the time and trouble to attend an Adjournment debate on 17 November which I was fortunate enough to secure, on the subject of industrial buildings allowances. The House will not need to be reminded that my right hon. and learned Friend the 505 Chancellor of the Exchequer introduced in the 1980 Budget 100 per cent. tax-free exemption for companies providing industrial space to let to small manufacturing industries under the Capital Allowances Act 1968, introduced by a previous Administration.
Viewed first from 1968, and more recently from 1980, it is reasonable to suggest that at that time the manufacturing industries were labour intensive. However, with the onward march of automation, it is not necessarily so today. It is perhaps the service industries that are becoming more labour intensive, and because of automation, the manufacturing industries are becoming less labour intensive.
I put it to my hon. Friend, as I did to my hon. Friend the Financial Secretary to the Treasury a fortnight ago, that a real and compelling case can be made for widening the operation of industrial buildings allowances to include not only those tenants in the manufacturing sector of industry but also tenants in the service sector of industry, in particular use classes 4, 5 and 10. There will be no loss of fiscal revenue to the Government, and the plus factor is that there will be an added incentive to industry to take the opportunity of these capital allowances to create jobs.
My final proposition concerns rates. Industry and commerce in the West Midlands are being crucified by the levying of supplementary rates, not only by the West Midlands county council but by other Labour-controlled local authorities in the region. They see the levying of supplementary rates as a means of biting the hand that feeds them and, quite literally, of clobbering capitalism. Industrial and commercial ratepayers are the people who have no voice, no vote, no say and no sanction over the way that profligate councils spend their hard-earned money. I ask my hon. Friend to urge upon my right hon. Friend the Secretary of State for the Environment, as the review of the rating system is being undertaken, the great urgency, particularly viewed from the standpoint of the West-Midlands ratepayers, of introducing short-term temporary legislation to protect the industrial and commercial ratepayer.
The Government would be wise to consider seriously the recommendations of the CBI that those companies that are in the depths of recession should be able to mothball the parts of their premises that are at present unproductive, and for which they are receiving no services from the council, and on which they should pay no rates.
Moreover, the Government would be wise to consider extending the opportunity to all industrialists and commercial ratepayers to pay their rates by instalments. The Minister increased the right to pay industrial and commercial rates by instalments for premises with a rateable value of £5,000 in London and £2,000 in the regions last year. I suggest that all industrial and commercial ratepayers should have the same opportunity as domestic ratepayers to pay rates by instalments, because the cash flow of commerce is at least as important as that of councils.
Further, my right hon. Friend the Secretary of State for the Environment should deny local authorities the opportunities to levy void rates. A business receives no benefit if its premises are empty. I see no justification whatever in a business having to pay rates on empty premises for services that it does not receive.
506 After my right hon. and learned Friend's statement on Wednesday, industry and commerce in the West Midlands will not be entirely convinced that the winds of fortune are yet on their side. However, they will be entirely convinced that the reflationary policies advocated by the Labour Party, and by other minority parties that are not represented here today, are certainly the way to the commercial grave. They feel that this Government at least have the right principles and are on the right road. They hope that very soon the corner will be turned and that the destination of prosperity and profitability will be in sight.
I hope that my hon. Friend will seriously consider the three propositions that I have put to him: a total abolition of industrial development certificates, greater flexibility for the operation of industrial buildings allowances, and urgent moves to protect the industrial and commercial ratepayers in the West Midlands from the extravagances of Labour-controlled authorities.
§ Mr. Terry Davis (Birmingham, Stechford)
We have heard two speeches this morning from the Government Benches and a common thread has run through both. The hon. Member for Meriden (Mr. Mills) and the hon. Member for Lichfield and Tamworth (Mr. Heddle) both blamed the crisis in the West Midlands on what they described as the legacy of inefficiency in industry and the restrictive practices of trade unions. They attributed a large part, if not all, of the blame for the crisis in the West Midlands to the people of the West Midlands—that is to management and trade unions in industry in the West Midlands. For my part, I do not say that no blame is to be attached to industry. But to say that the people of the West Midlands are themselves responsible for the crisis is ridiculous.
The hon. Member for Lichfield and Tamworth complained about the smiles on the faces of Labour Members. We smile because we find Conservative Members' analysis of the situation to be partisan in the extreme. They have blamed the trade unions and mentioned restrictive practices, but they did not give a single example of these restrictive practices. In the West Midlands, the mood of those in industry is not such as to encourage restrictive practises. There is a feeling of gloom. Trade unions are as depressed as management. In this situation, trade unions are doing nothing other than protecting the few employment opportunities they have—that is protecting existing jobs. And if it is possible to produce examples of restrictive practices, it must be said that an economic crisis such as the present one causes restrictive practices by making people defensive.
The speeches made by the hon. Member for Meriden and by the hon. Member for Lichfield and Tamworth were interesting because they did not blame the Government at all for what is happening in the West Midlands. Conservative Members blame a West Midlands trend that has existed for years and the international recession. They did not blame those factors before the general election. When they made speeches before 1979, they said that everything was the responsibility of the Labour Government which had been elected in 1974. There is a marked contrast between what they say today and what they said three years ago, and that will be noticed by people in the West Midlands.
§ Mr. lain Mills
The hon. Gentleman should check his facts. If he looks at my speeches, he will find that since entering political life the constant theme of my speeches has been restrictive practices and poor management.
§ Mr. Davis
I accept that that has been the theme of the speeches that the hon. Gentleman has made in the House. However, before the general election in 1979 the hon. Gentleman blamed the Labour Government's economic policies for what was happening in the West Midlands, although unemployment was far lower then than it is today. Since the general election, unemployment in the West Midlands has nearly trebled. Those who pretend that there cannot be anything wrong with the Government's policies and that the Government bear no responsibility are adopting an extreme position, and many Conservative business men would not accept it.
§ Mr. Faulds
Is there not also some significance in the fact that, whenever such matters have been debated in the House, the initiative has been taken by Labour Members—[HoN. MEMBERS: "No."] On the four or five occasions on which we have debated the West Midlands, Labour Members have taken the initiative. It is extraordinary that on each occasion time is wasted by extremely long speeches from Conservative Members, who say nothing substantial and who do not attack the real cause—the Government. They merely adopt a defensive posture during many minutes of our debating time, when other hon. Members—who are probably more concerned about the problems of the West Midlands—are waiting to speak.
§ Mr. Davis
I note what my hon. Friend the Member for Warley, East (Mr. Faulds) has said. Conservative Members blame restrictive practices for the difficulties facing industry in the West Midlands. If that were true, I would expect industrialists to say that that was the problem. However, industrialists do not blame their problems on restrictive practices, industrial relations or trade unions.
A quarterly survey is carried out by the West Midlands regional group of chambers of commerce in which their respondents are asked to identify the factors most likely to improve their prospects. For several years the question of better industrial relations has been at the bottom of the industrialists' league table. In September, more than 400 respondents were asked to identify the most important factors, and they identified low interest rates and a reduction in the rate of inflation. A reduction in local authority rating has risen in the league table. The hon. Member for Lichfield and Tamworth made great play of that so I shall return to that point later.
Industrialists also identify higher productivity as one of the most important factors. Therefore, the four factors at the top of the list are low interest rates, a reduction in the rate of inflation, a reduction in local authority rating and higher productivity. However, better industrial relations and pay control are at the bottom of the league table.
The hon. Member for Lichfield and Tamworth referred to increases in local authority rates. It is ridiculous to suggest that Labour councillors have levied supplementary rates to clobber capitalism. Councils in the West Midlands have had to levy supplementary rates to recover the money that the Government have taken away. That is true of the 508 city of Birmingham. It is to some extent true of the West Midlands county council, which was faced with a legacy from the previous Conservative administration, which had not included in its budget the amounts necessary for some wage increases. In addition, the West Midlands county council has had to increase rates in order to pay for its transport policies, which were put to the electorate last May and for which the electorate voted.
I paint the whole picture, but Conservative Members concentrate only on part of the picture. That is also true when they discuss the economy. They refer only to international trends and never place any blame or responsibility on their Conservative Government.
I turn to what should be done. The Labour Party—both inside and outside the House—has put forward a range of proposals for changing the Government's economic policies. We have argued for lower interest rates—a policy that seems particularly attractive to industrialists in the West Midlands—for the restoration of exchange controls, for import controls and, above all, for an expansion in the economy by increasing public expenditure.
The hon. Member for Lichfield and Tamworth described the call for reflation as the way to a commercial grave. He does not understand that it is no good being in business if there is no market. Industrialists can sell their products only if there are people to buy them. In a depressed economy, business men in the West Midlands do not have any markets. We want to expand the economy through increased public expenditure so that there will be a growth in the economy for the first time in years and so that business men in the West Midlands will be able to sell their products. Reflation will provide the market for industry in the West Midlands. That is why we need a change in the Government's economic policies.
Reflation is the way not to a commercial grave, but to commercial salvation.
§ 11.7 am
§ Mr. Julius Silverman (Birmingham, Erdington)
I shall comment in due course on one or two aspects that have already been dealt with. Firstly, I would say that the West Midlands used to be one of the most prosperous areas in the country. For many years hon. Members on both sides of the House and their advisers have assumed that that would continue indefinitely. It used to be said that Birmingham was a resilient area and that with its 1,100 different industries it had a diversity of industry, which guaranteed prosperity. In previous recessions Birmingham has recovered much more rapidly than other areas. Governments and their advisers tended to assume that that will continue for ever. Clearly that is not so.
The problems of the West Midlands depend, to some extent, on the world recession, largely on the Government's economic policies and on structural and economic alterations in the West Midlands—some of which are irreversible. I refer, for example, to the decline—in some cases the disappearance—of traditional industries in the West Midlands. That has not been fully appreciated. The West Midlands has deteriorated to such an extent that its unemployment rate is not substantially different from the rate in assisted areas. However, it is not treated in any way as a special or assisted area. Preference is still given to assisted areas and that still results—although not today on a large scale—in the removal of industries, or in the commencement of industries in areas other than the West Midlands. I do not 509 attach much importance to IDCs. I have been a Member of the House for a long time and have therefore had a long acquaintance with them. Hon. Members made representations to Labour and Conservative Ministers about them. When we did that, we were told, "Look, you tell us about any company or deserving case which has applied for an IDC and has not got it". Hon. Members have simply not been able to produce such evidence. I am going back about 20 years, and more. When hon. Members are approached by West Midlands industrialists and they tell them that, the industrialists say that this is some sort of psychological factor. The psychological factors produced by the policies of the present Tory Administration are about 20 times more important than these psychological factors.
However, whilst that is not important, there are other matters which the Government must consider in the special position of the West Midlands in regional policy. One particular matter concerns the EEC. For example, Britain now gets substantial sums of money from the EEC under the regional fund. Nothing from the regional fund—except for items which are so small and unimportant that I do not need to mention them—goes to the West Midlands. More important than the regional fund as a whole are the supplementary measures which occurred under the May 1980 agreement. Again, substantial sums accrue to the British Government, under the terms of the treaty that they negotiated, and they would go only to the assisted areas. These amount to several hundred million pounds a year. Not a penny of that money, as far as I know, goes to the West Midlands which is still considered to be prosperous on that basis. The Government must realise that the West Midlands area is not what it was. Apart from the general position of the country, it has its own problems to which I want the Government to attend, and to give it the same status that is given to other areas in the same economic position.
There are one or two other facts I shall mention about points made in the debate. Some Conservative Members do not realise that industrial relations are a two-sided matter. Bad industrial relations and disputes do not arise merely from one side's actions. I mention that specifically because of what was said about the tea break dispute. I state to industrial concerns—not only British Leyland—that it does not pay in the long run to try to go over the heads of union representatives in the official organisations to try to appeal to the workers to get or dictate a political solution. I am sure that the tea break dispute could have been avoided and several million pounds of the company's money saved. I hope that not only British Leyland but other concerns will take a lesson from that. If they are prepared to negotiate, they should do that through the official channels and representatives of the unions. In the long run, that pays in industrial relations.
A great deal has been said about the burden imposed on industry by increases in rates. It is a matter of great concern in the West Midlands—certainly in Birmingham. That is due not to an increase in Birmingham expenditure, but, as has already been stated by my hon. Friend the Member for Birmingham, Stechford (Mr. Davis), mainly to the withdrawal of support from the ratepayer by the Government. This was accentuated by the Chancellor's statement a few days ago, which means that matters will get worse. The lack of aid support simply means that the 510 council will either have to increase the rates or denude the community of essential services which are now being cut to the bone by many local authorities.
I do not argue against the special rate support given to industrial concerns. It might be a good idea to give that support, but it must come not from the local authorities who, in most cases cannot afford it, but from the Government. I ask the Government to bear that point in mind.
As in other areas, the major item in the West Midlands that is creating industrial havoc—I estimate that about 15,000 jobs have been lost in industries in Erdington in the past two and a half years—is the Government's deflationary policy. That is creating the industrial havoc. Complaints about that come now, not only from the Opposition but from the industrialists who are at the receiving end of it, and their employees. Judging by the Chancellor's last statement, that madness is being continued without any regard to the consequences. It will undoubtedly result in turning the West Midlands, like many other areas, into an industrial desert. I ask the Government to try to change course before it is too late.
§ 11 18 am
§ Mr. John Stokes (Halesowen and Stourbridge)
We have heard from many Opposition Members, who tend on the whole to blame the Government for much of the West Midlands' troubles. A fashion has grown up in Britain since the war for blaming successive Governments for all the nation's ills. However, the nation is constituted of individuals, and it is their behaviour and attitudes which we must, above all, consider.
After the Second World War, all went well for Britain's industries. There was such a demand for goods and services that production and profits increased. When it appeared that the boom might peter out, the Korean war broke out and there was a further burst of demand. Industry then gradually but inexorably lost its cutting edge. We saw our European trade rivals, the United States and, latterly, Japan, overtaking Britain's industries by leaps and bounds. In the past 10 years, we know that we have paid ourselves increases of over 300 per cent. while production has increased by only 16 per cent. While British industry still manages to sell abroad, it has lost huge markets at home to foreign competition.
In parenthesis, I ask the weaker brethren and faint hearts on the Government side, none of whom seems to be here today, what the use would be of inflating the economy, as the hon. Member for Birmingham, Stechford (Mr. Davis) said, if that led only to more imports being sucked in and fewer home-produced British goods appearing on the shelves? The lack of competitiveness in British industry became obvious in the years after the Second World War. For example, textiles, clothing and shoes often came from Third world countries where wage costs were far below Britain's. Then the West Midlands began to feel the blow of fearful competition in such manufactures as motor cars, commercial vehicles, household appliances and engineering products generally, not only from Europe but from Japan.
This is a new and horrible experience for the once prosperous West Midlands. No Member there can feel anything but sadness at the number of firms which have closed, the number of firms just clinging on, and the number of people out of work. But, curiously, I find that resentment at all this is very much less on the shop floor 511 than almost anywhere else. Ordinary working people sometimes seem more clearly to understand the fundamental problems facing industry than do some managers, directors and owners of companies, who, in other parts of England—but not, I am glad to say, in the West Midlands—seem to be attracted by the party of protest and of escape, the Social Democratic Party—which, as usual, with the Liberal Party, is not represented here today.
In my constituency I marvel that so few complain. I pay tribute now to the steadiness and patriotism of the working man, which puts some of the middle class to shame. As I often do, I went around a number of pubs and clubs in my constituency on Friday evening. I was heartened by what I heard and saw, in spite of all the troubles in the country.
The factories in my constituency produce a very wide range of engineering products, such as chains, nails, nuts and bolts, screws, car components, ship's tackle, castings and forgings, and a hundred and one other things. Some of the component firms have wisely diversified from too much reliance on the motor industry. Others, unfortunately, have not. Productivity everywhere has improved. Labour relations in the smaller firms, which were always good, are now even better. Strikes are very rare indeed. There is a willingness to abandon restrictive practices and to do any job that calls to be done to keep the business in being and the job safe. Wage settlements have been extremely sensible. All these immense benefits stem from the lead given by the Government.
We have heard today about BL. It recently survived a serious strike, which was nearly catastrophic; but Longbridge has again suffered from another dispute. I do not know the real causes, but some of the remarks I hear from employees in my constituency still leave me worried about the attitude of the management in that great plant. Men still complain that they never see a boss. Sometimes they hardly know who their real boss is. Why cannot the top men take a leaf out of the book of the leaders in the last war, such as General Montgomery, who were frequently showing themselves in front of the men they had to lead?
In the main, the men are good men. Let the leaders there show themselves capable of good leadership.
I am certain of one thing, too: the taxpayer will not again agree to pay the huge sums which have been paid to BL. So, for BL, 1982 must be make-or-break year.
I said earlier that productivity had improved in many of our firms. But productivity alone cannot be the answer. There must be a demand for the products of our factories. That is where good marketing comes in. So many of our firms in the West Midlands have made good sound products for generations, but markets are always changing and it is not enough to make what one has always made. There is need constantly to try to develop new products for which there is a demand. It is no use the unemployed marching about up and down the country. British industry needs customers for its products and reflation alone would not produce them. It might produce only demand for goods made abroad. That is the competition that Britain has to face.
I do not blame the Government for the near disasters that have hit part of the West Midlands, although I blame previous Governments for forcing many Midlands firms 512 to take their factories elsewhere, sometimes to areas in Great Britain where perhaps people work less hard than they do in the West Midlands.
I blame the world slump. The depth and intensity of that slump has taken many people by surprise. I also blame certain firms for allowing their competitive edge to become blunted. When demand returns at home, as it will, in greater volume than now, they must be poised and ready to meet it.
However, I believe that the Government can and should do certain things to ease the pressure on our manufacturing industries. They could, for instance, be much stricter in controlling the nationalised industries, which, because in most cases they face no competition, can charge too much and employ too many people.
The Government could also be more sensible about energy charges. In many cases these are higher than they are in Europe and higher than they need be. After all these months and after all the explanations that we have heard from Ministers, I still simply do not understand our energy policy. Here we are, with so much energy—oil and coal—yet still we seem to be charged more than necessary for it.
Interest charges are obviously a more difficult factor because they must depend to a great exent on the state of affairs in the world. I welcome the small reduction last week. I was sorry that it was postponed—for unknown reasons—for a fortnight, and I hope that we shall see a continuing fall in interest rates now that they are falling in Europe and in the United States.
The increase in the charges of so many of the nationalised industries is a grievous burden, and though I know that England has become a most difficult country to govern, I beseech Ministers to look again at these industries. The last increases were those in telephone charges and telex charges, which were quite scandalous.
We have heard a great deal today about rates in the West Midlands. The sooner that the Labour-controlled West Midlands county council has its wings clipped in this matter, the better. I hope—as I believe most people in the country hope—that somehow a fairer system of taxation can be employed to avoid the present unfairness of the rating system.
We still have the national insurance surcharge on industry. That was originally imposed by the previous Government. I hope that that will be reduced in the next Budget.
Above all, in the next Budget there must be relief for manufacturing industry, which feels bitter. It has had to bear so much from a Government who are supposed to be—I believe that they are—devoted to private enterprise, while bankers, for instance, who may not always have lent as wisely or as well as they should, and other professional people and public servants have flourished as never before. Inflation-proof pensions in the public service cause immense resentment among all ranks in private industry.
It is sad that the last thing that a young man seems to want to do today is to go into manufacturing industry. Instead, he is attracted into, for instance, teaching or the Civil Service. Unless industry makes higher profits and pays better salaries, that is bound to be so. I am infuriated that young merchant bankers in the City of London earn £30,000 a year or more while older men in the Midlands who run factories, earn only half as much.
Above all, I hope that the Government will reduce both company and individual taxation. Taxes are far too high 513 today, which is an awful thing to say under a Conservative Government. We have two or possibly three Budgets in which to accomplish that and our ability to form the next Government in 1984 may depend upon our success here.
In sum, it is not the policies of the Government that disturb me, but the way in which some of them have been presented. I hope that Ministers will show more awareness of the problems of industry and of the West Midlands and more understanding of the difficulties facing so many businesses there, both small and large. I remind some Ministers that it is far easier to be a Minister of the Crown than to run a successful business. The Government do not have very much more time. Of course, they are right to continue the fight against inflation. I am wholly opposed to any reflation. Nevertheless, they must listen carefully to what industry is saying and not take its loyalty too much for granted.
Industry does not want handouts or financial help from the Government. It wants a reduction of the burdens that it has to bear—burdens that are largely imposed by the swollen public sector. There are today in England two classes—those employed in the public sector, with all the security and benefits that that brings, and those employed in the private sector, with all the risks and dangers involved. That is the balance that the Government must swiftly redress. In spite of their problems, they still enjoy a measure of good will for what they are trying to do in reducing inflation, in balancing the nation's books and in helping us to pay our way and stand on our own feet in the world. They must pay more attention to industry and to all those who work in it, because, in the end, those people produce the wealth on which the Government and everyone in the country depend.
§ Mr. Hal Miller (Bromsgrove and Redditch)
The common bond that we all share is our concern about the state of manufacturing industry, the construction industry and employment in our constituencies. We are all proud to serve the people of the Midlands, even though I am ashamed to see that the hon. and temporary Member for Nuneaton (Mr. Huckfield) is departing for another region, apparently not confident about the policies and alternative strategies that he constantly advocates as the solution to the problems, not only of the West Midlands, but of the country as a whole.
§ Mr. Les Huckfield
I am going in order to get away from speeches such as that of the hon. Gentleman.
§ Mr. Miller
The hon. Gentleman and I have crossed swords many times and I look forward to continued engagements, even at a remoter distance.
Hon. Members have differed in their diagnosis of what has gone wrong and in their prescriptions for the recovery of the region's confidence and pulse, which we all seek. We have heard much from the Opposition about how the present position must be the fault of the Government. Anticipating the main burden of their attack, I have been refreshing my memory with the report of the West Midlands economic planning council, and a speech delivered by its then chairman, Dr. Pope, in April 1978.
Dr. Pope drew attention to the dependence of the region on five key manufacturing sectors, quite out of proportion with the dependence of the rest of the country on 514 manufacturing industry. Those five sectors—vehicles, metal goods, metal manufacture, mechanical engineering and electrical engineering—accounted for over 63 per cent. of manufacturing output at that time compared with 45 per cent. nationally. The same disparity could be seen in the employment figures in those industries in the region compared with those in the country as a whole.
In the report Dr. Pope referred to investment levels in the West Midlands as being the lowest in the country. He also referred to the relative decline in the levels of wages and personal disposable income in the West Midlands, to the disproportionately low output per head and to the report on Coventry—which would interest the hon. Member for Coventry, North-East (Mr. Park), my fellow chairman of the motor industry group—by the steering group of the Manpower Services Commission dated December 1977 which stated that the majority of school leavers entered the labour market with no, or virtually no, qualifications and that there was a decline in both apprenticeships and skill training. Dr. Pope concluded that unless those underlying difficulties were redressed the medium and long-term future of the region had deeply disturbing implications.
We are dealing with a trend in the West Midlands that has been continuing for 20 to 30 years. It is partly the result of new developments and partly the result of our own faults. Because of the rise in oil prices and the advent of the Conservative Government, we have been forced to put right in a short time the ills that have been accumulated in the region over a very long time. The severity and speed of that adjustment has caused much distress, to which all hon. Members have referred. The nature and depth of the change that is taking place requires a more flexible application of policy from the Government than we have so far seen, and a more imaginative lead than has on occasion been given.
I entirely exempt from that statement my hon. Friend the Minister, to whose sterling efforts in the promotion of small businesses and the business opportunities programme I pay tribute. I also pay tribute to his unceasing personal efforts in many parts of the country—but in our region in particular—to get across to people what is available. I remember the look of dismay on the face of the Secretary of State when he attended a meeting of manufacturers in Redditch. They had been carefully selected as being among the most progressive and best informed on the new technologies. He found that not one of over 12 manufacturers was aware of the assistance that the Government were giving in the application of microtechnology and other areas of higher technology. My hon. Friend is performing a remarkable and much needed service.
I confess that I part company with my constituent and old adversary, the hon. Member for Birmingham, Stechford (Mr. Davis), when he advocates an increase in demand without saying where the finance for that demand is to be provided. I believe that our recovery depends on the ability of our businesses to compete. It is only by obtaining additional sales that we can acquire the cash that is needed for investment, new products and new jobs.
I call on my hon. Friend the Under-Secretary to develop and to present to the West Midlands, the political and industrial heartland of the country, a coherent competition policy which can form the basis and the framework in which our industries will be able to compete in the future. Our people are more than ready to answer the challenge. 515 In the region we have the experience, the capacity, the skills, the ingenuity, the drive and the determination to go out and sell more. But it is up to the Government to remove the barriers and burdens which have been placed in the way of our more effective competition. That is why I call on the Government to develop this competition policy.
Several hon. Members have said that the prime element in such a policy embraces regional policy and industrial development certificates. Unemployment in the region has reached such a level that, in normal circumstances, we should qualify for assisted area status. We are also locked into a declining industrial structure, the remedy for which, in other regions, would be Government assistance. However, we in the West Midlands do not expect to be included among those areas. We do not believe that the automatic availability of Government money for whatever industrial purpose can be the solution to our problems. We believe that there may be a place for regional policy in such environmental projects as infrastructure, motorways and possibly buildings.
However, regional policy in industrial terms does not make sense, and we welcome the Government's determination, in accordance with the announced programme, to reduce progressively the extent of assistance made available automatically to other areas. Thus our industries will be able to compete on a fair and equal footing with other parts of the country; there will not be distortions to investment decisions taking new plants and new technologies away from our region; the expansion of existing industries will not be guided away to other regions, and in this connection I believe that the industrial certificate policy has had an effect.
As the hon. Member for Birmingham, Erdington (Mr. Silverman) said, it is not easy always to provide concrete examples of frustrated development, but I have some in my constituency. It is the psychological barrier which is so important. Why maintain the bureaucracy and apparatus of a policy which, if it is not effective, is not required? Let us do away with these unfair barriers to competition for our industries in the West Midlands.
As my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes) said, other aspects of competition policy must take account of the Government's energy policy. Consideration of this matter has been going on now for more than 18 months. The NEDO report last month made it plain that there had been some improvement in the competitive position of our industries in terms of gas prices, but there is still a very wide disparity in electricity prices and in heavy fuel oil prices as a result of the duty imposed upon them. These are especially injurious to the metal manufacturing and forming firms which predominate in our region.
I must ask my hon. Friend to transmit to the Department of Energy the message that our industries cannot be expected to compete successfully where fuel prices form such a large proportion of their outturn costs and are not on a par with those of their continental competitors. I have already cited the example of one such firm whose outturn costs went up this year by £16 per ton, of which £14 resulted from the increase in fuel prices and £2 from rate increases. The labour increase in the outturn costs was zero.
It is no good the Government lecturing us about wage increases in private manufacturing industry. As my hon. Friend the Member for Halesowen and Stourbridge said, there is real concern about wage increases in the public 516 sector and in the non-productive areas. But, according to the latest report from the regional CBI, in our manufacturing industry workers are receiving wage increases of 4 per cent. or less when water workers are turning down 8 per cent. ; and goodness knows where the Government will settle with the miners. It cannot be fair or sensible, and it places an intolerable burden on private manufacturing industry.
The competition policy which I should like to see my hon. Friend the Under-Secretary present to the House must have regard to our trade policy, as the Hon. Member for West Bromwich, West (Miss Boothroyd) said. I do not wish to add to her remarks other than to say that it is incomprehensible to our forgings and vehicle industries that, for example, Spanish imports come in at a very low or zero tariff, never mind the element of export subsidy present, whereas our exports to Spain are subject to a prohibitive tariff. There is no doubt, for example, that the Metro car could command a substantial market in Spain in competition with the Fiesta model if that competition were permitted. I must ask the Government to look again at our trade policy to ensure that it is on a fair and reciprocal basis.
Any competition policy must also include attention to the communications from our regions. It strikes me as amazing that when I was called to speak at Liverpool from the Blackpool conference I had the choice of three motorways to reach my destination. A similar situation obtains in West Yorkshire, yet our region still lags behind. We still do not have the links for our exports to the East Coast and South Coast ports. We need to be able to compete on an equal basis of communications with establishments in other regions.
The final element of competition policy to which I wish to refer concerns research and development and the adaptation of higher technologies. Because the region has been locked into a traditional and now declining structure in so many products, it is all the more important for us to try to secure a base in the products of the future. At the moment, private industry cannot make enough profit on the reduced turnover to sustain the research and development effort that is required first to invent and then to successfully innovate a product.
We must put together a package harnessing the research efforts of our universities, particularly our technological universities such as Aston and Warwick, with the systems technologies that the Department of Industry is doing so much to promote, and to apply these to the forming of metal and the new products which our region is so uniquely well equipped to produce.
There is a role for the Government in providing tax incentives for the innovators. I think especially of people coming out of universities and going into some form of science park—the name is American—to develop a new product based on the research. Those entrepreneurs need the incentive of a tax allowance or relief in respect of successful products in view of the high failure rate. It is, however, the development period that is so long and difficult for a firm to sustain.
The Government should consider taking an equity stake in new products, perhaps to be repaid later if they are successful so that the downside risk is limited. At the moment many public companies are unable, in fairness to their employees and their shareholders, to shoulder the risk of developing a new product over the three or four years needed for a successful launch. Unless some way can be 517 found of limiting or sharing the risk, those products will not see the light of day. The Minister is obviously not in a position to reply immediately, but this is an important aspect of the effort that needs to be made in the West Midlands in particular to assure for us a successful future using all the elements already available there.
Many of my hon. Friends were deeply concerned about the nature of the reductions proposed in the technical departments of Aston university by the University Grants Committee. That aspect must be looked at again. I hope that this will happen when the University Grants Committee visits Aston university on 15 January next year.
In conclusion—[Interruption.] At least I have tried to be constructive and to put forward some suggestions that may lead us out of our present difficulties and respond to the needs of our people. I believe that what I have put forward is a practical response to the needs of the region. I believe it is consistent with the objectives of the Government. It is consonant with our national interest and regional strengths. I ask my hon. Friend to give it serious consideration. The object must be to restore confidence among those working in the industry. Only the development of a competitive, productive and successful industry capable of adapting to changes in technology and world trade can give people the confidence which will command the active consent of all who work in the West Midlands.
§ Mrs. Renée Short (Wolverhampton, North-East)
The speech of the hon. Member for Bromsgrove and Redditch (Mr. Miller) contained one or two points with which Opposition Members would not disagree. I must, however, take the hon. Gentleman and his hon. Friend the Member for Meriden (Mr. Mills) to task over their eulogy of the development of small businesses. I understand that 17 out of 20 small businesses are going bankrupt. That creates redundancies. Small businesses are subject just as much as large firms to the cold winds that blow from the Government.
As many hon. Members have remarked, the West Midlands is in a state of crisis. We face a serious situation. The blows seem to rain on our region almost daily. Our manufacturing base, the source of our past prosperity and of our pride in our skills and sense of achievement, has virtually disappeared as the Government starve our great firms and stand cynically aside watching their death throes without making any attempt to help.
Yesterday, the Prime Minister said to my right hon. Friend the Leader of the Opposition in reply to continuing protests about unemployment, inflation and growing poverty:The right hon. Gentleman tries to have it both ways."—[Official Report, 3 December 1981; Vol. 14, c.386.] People have got it only one way at present—despair, poverty and deprivation. Their personality is being damaged. I explained to the Prime Minister yesterday that the male unemployment rate in my constituency is 19.1 per cent. That figure, which I was given in October, is slightly out of date.
The female unemployment rate is 12.3 per cent. The figures are enormous. What is the Prime Minister's message to the 32,000 young people under 18 in the 518 Wolverhampton area who have never had a job since leaving school? Before the 1979 election, the figure was 2,621. It is now, as I say, 32,000.
The British Leyland saga has cast gloom throughout the whole of the West Midlands. The announcement recently that Guy Motors in my constituency is to close has had an appalling effect in Wolverhampton. The factory is located in the same road as another factory that closed not long ago. Its products, like those of British Leyland, are known nationally and world-wide. I refer to the Ever Ready battery factory. Hundreds of women lost their jobs. Now the highly successful Landtrain and trucks and buses made in Park Lane, Wolverhampton, are to be transferred to the Bathgate works in Scotland. I should like to know from the Minister what he intends to do to help Guy Motors.
Why have the Government allowed that situation to develop? The management and the men at Guy Motors are not on short time. They are working not two or three days a week, but five days a week from 7.45 am to 4.45 pm each day. They make trucks and buses, most of which are exported. The firm has a full order book. Many of its exports go to Third world countries, where the Landtrain is highly successful in difficult terrain.
There is no rhyme, reason, logic or common sense about this decision of the rogue elephant who is running British Leyland. It would be a scandal if the Government allowed that factory to close. My constituents at Guy Motors want only to go on working, making their good products, earning good money, being independent and looking after their families.
In a note to all the employees, sent out on 20 November, the plant director made a pertinent point. He said:You will want to know why Guy Motors must be closed when we are so busy.There is absolutely no excuse for closing that firm. I should like an answer from the Minister so that I can go back to my constituency today and tell my friends at Guy Motors what the Government intend to do to rescue the firm.
Another vital area is public expenditure. The Government have a craze for regarding public expenditure as a necessary evil, which will have serious effects. High inflation, rising prices and the increased demand for improved services will create serious problems for the West Midlands regional health authority and all the area health authorities that rely on public expenditure.
A number of major capital schemes are coming to fruition when the outlook for the region has changed dramatically. The West Midlands is the eighth most deprived region in England and Wales. That is also true of the National Health Service in the region. We have long waiting lists and a large number of unfilled posts, including consultant posts. We have one of the highest perinatal mortality rates. Thousands of families are existing on social security. All that is sapping the morale of administrators in the National Health Service, the medical and nursing staff and the public whom they serve.
A 2 per cent. growth in revenue allocation has been proposed by the Department of Health and Social Security for 1982–83. Nothing is known beyond that year. Even if inflation remains as it is, which is highly unlikely, the regional health authority will face an effective cut of 10 per cent. by 1982–83. That must mean a catastrophic crisis for every hospital in the region. We have a large number of old, somewhat decrepit, hospitals in the West 519 Midlands. There is bound to be a further adverse effect on the construction industry, the steel industry and the components supply industry in the West Midlands if those important capital projects are put back.
In my constituency the area health authority has been asked to choose its priorities in capital development for the next five years. It has been told that if the area health authority cannot or will not do it in time, the regional health authority will choose the priorities for it. The area health authority may not like the regional health authority's choices and decisions. If the Wolverhampton area health authority were to repair and replace existing capital stock up to new standards, it would need not £6.6 million, which is now being offered, but £11.5 million, which is almost twice that amount. We can see the likelihood of that happening. Eight important schemes will be in jeopardy. The hon. Member for Wolverhampton, South-West (Mr. Budgen) will know about the urgent problem at the Royal hospital in his constituency. There is a constant wave after wave of further debilitating effects on industries and, therefore, on jobs. More people are likely to become unemployed in the West Midlands.
The hon. Member for Bromsgrove and Redditch mentioned our universities. I mention also the polytechnics. We urgently need new posts in new technology, particularly biotechnology. The recent report by the Royal Society says that the University Grants Committee should create 20 new posts and that by the next decade we shall need 1,000 extra graduates and 4,000 more technicians in biotechnology. Where is the national policy in the Department of Education and Science for carrying out those recommendations? There is no sign of it. If there is no such policy, there will be another brain drain to Europe and to the United States with more disastrous results for this country.
The Government are not only cutting back on university education, but are risking closing down whole departments or depriving important centres of new technological research—centres of medical excellence where leading research has been carried out for many decades. The academic staff have an international reputation. Those people also carry a large patient load. They treat patients as well as teach. All that is at risk because of the cuts in the resources to our universities.
The situation in all those areas is developing disastrously. What is the solution? The other day the Chancellor of the Exchequer produced another mini-Budget aimed at saving the Treasury £2,000 million. Higher council house rents, higher prescription charges, higher television licence fees and a reduction in unemployment benefit will hurt those who are most in need. Who will be pleased by that package?
The Minister should be aware that it costs £6,000 a year for every unemployed man with a family. That is what we are now spending on unemployment pay or social security benefit. Let the Minister work out the sum. That will give him an idea where he will obtain the money to invest in the new industries that all of us want in the West Midlands and to save the industries that are now doing well but are in peril. I hope that the Minister has replies ready for Opposition and Conservative Members who have criticised the Government's disastrous policy.
§ 12.8 pm
§ The Under-Secretary of State for Industry (Mr. John MacGregor)
This is by no means a winding-up 520 speech, as I recognise that many other of my hon. Friends and hon. Members wish to speak, but it may be useful for me to intervene now as a large number of points have been raised. In view of that, I cannot comment on them all. I shall certainly take note of points that are made subsequently. I shall also take up specific case studies put to me, such as the two raised by the hon. Member for West Bromwich, West (Miss Boothroyd) later, and not in the debate.
It is right that we should be debating this issue. I am glad that the hon. Member for Walsall, North (Mr. Winnick) chose the subject when he won his place in the ballot. I do not wish to minimise the difficulties that face the region. I recognise that in relative terms it has suffered most from the recession. As the centre of so many sectors of manufacturing industry, its fortunes are of considerable national importance. I accept what the hon. Gentleman said about the effects of unemployment in human and social terms.
I often visit the West Midlands. I have done so since becoming a Minister. I am aware of all the issues that have been raised. We do no one, least of all those in the West Midlands, a service by making parrot-cry speeches, beating breasts and making negative contributions. There has been rather too much of that from the Opposition.
The situation must be analysed carefully, and my hon. Friends have done so. It was done in an interesting way by the hon. Member for Birmingham, Erdington (Mr. Silverman). We must arrive at policy solutions and not a short-term panacea such as higher public spending. That has been demanded by the Opposition, but it would make things worse in the longer term. We must arrive at policies that will tackle fundamental deficiencies.
I shall take up three of the issues that the hon. Member for Walsall, North included in his remarks. He quoted the Midlands region of the CBI and the fact that industries in the region are facing intense competition in export markets. That is the reality of the world situation. The hon. Member for Erdington put the point well when he said that it used to be assumed that the West Midlands would always be one of the most prosperous regions and would always be the first to emerge from a recession. When industries become uncompetitive in world terms at the time of a world recession they will suffer, especially when there is such intense international competition. That is one of the fundamental issues to which we must address ourselves.
The hon. Member for Walsall, North quoted industrialists. I have heard many of them say that when the economy starts to pick up again it is unlikely that large companies will take on the same number of employees as they employed previously. The hon. Gentleman referred to the impact of technology. It is one of the problems of economic restructuring that we must face. He did not refer to overmanning, which is a major issue and from which we have suffered for so long in certain industries. It is imperative that we do not return to overmanning when the economy starts to pick up again.
Thirdly, the hon. Gentleman talked about supplementary benefit and the £2,000 capital disregard. This is not a new policy. The rule was altered in November 1980, but a capital disregard policy has existed for many years. There was a sliding scale operating from £1,200 upwards.
§ Mr. MacGregor
Indeed. It operated from £1,200 upwards. There has been a considerable improvement in the cut—off point. The Department of Health and Social Security is reviewing the operation of the rule. I am aware of the problems to which the hon. Gentleman drew attention, but there is a related point. I appreciate that those who want to start their own businesses after having been unemployed for some time, or having been made redundant, face difficulties in meeting living expenses, quite apart from the capital disregard. That is why we have introduced a pilot experiment of enterprise allowances. We have done so to ascertain whether we can find a way with dealing with the problem.
My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) hit the bullseye when he intervened during the speech of the hon. Member for Walsall North. It was clear that the hon. Gentleman did not have a constructive answer.
I note from the press—I have no idea whether the press reports are accurate—that the hon. Member for Walsall, North attacked the Leader of the Opposition last night for the right hon. Gentleman's rejection of Labour's newly selected candidate for Bermondsey. If that is the hon. Gentleman's position and if his policies are the same as those advocated by the extreme Left of the Labour Party, including by such people as the new candidate for Bermondsey, he is entirely empty of solutions to deal with the problems that face the West Midlands.
The hon. Member for Walsall, North argued that there is a need for higher public expenditure and hugely increased subsidies, as did the hon. Member for Wolverhampton, North-East (Mrs. Short). It is so easy to advance that argument. It is so easy to draw attention to the many things that have to be done. However, everything has to be paid for. That is a lesson that many people are facing for the first time. It is no answer to our problems to continue to demand more and more from the public purse, which would lead to much higher taxes and much higher Government borrowing, both of which would cripple industry.
§ Mr. Gwilym Roberts
Surely the central problem is that the Government are not distinguishing between capital expenditure and revenue expenditure. They are providing money for unemployment benefit and the same money could produce many more jobs.
§ Mr. MacGregor
I have great respect for the hon. Gentleman's views but that is a gross oversimplification. First, it ignores the fact that capital expenditure on nationalised industries is 15 per cent. higher in real terms—and that will be continued next year—than it was last year. That is a good deal higher than it has been for many years. Secondly, it ignores the fact that, as people are switching from over-manning, or from the jobs of the past into the jobs of the future, there has to be a transitional stage. That means there will be unemployment during the transitional stage and it is right to concentrate benefits, which are current spending, to ease that stage. I am sure that we could debate this at great length but I am anxious not to go on for too long.
§ Mr. Geoffrey Robinson
My hon. Friend's remarks were directed more to the fact that including the capital projects in the PSBR imposes unrealistic limitations on the economy which would not apply to any company running its affairs profitably. The revenue and the capital account 522 should be separated. That would enable the Government, using sensible accounting procedures constructively, to spend far more and yet show an acceptable PSBR limit.
§ Mr. MacGregor
The hon. Gentleman will know that that has been the situation for many years and that there are grave dangers in moving substantially away in the direction that he is suggesting. Not least of these is that Government guarantees are attached to all capital expenditure in nationalised industries.
The hon. Member for Walsall, North put forward two further solutions. The first was for import controls, which would do nothing to deal with our fundamental uncompetitiveness except to make it worse. The second was to withdraw from the EEC, which would have a devastating effect on many industries in the West Midlands. While I appreciate the hon. Gentleman's concern, I rather fear that he was wearing his heart on his sleeve—although I am sure he has great concern—with no sign that he had begun to analyse why the West Midlands is facing its current problems or what actions or policies could be used to put matters right.
Some of those who have listened to today's debate might be forgiven for getting the impression that the problems of the West Midlands have entirely appeared during this Government's term of office and as a result of their policies. That is an utter misreading of the position. It might help if I were to remind the House of the nature and time scale of the problems faced by the region.
To be fair, several Labour Members have recognised the long-standing problems of the West Midlands. Earlier this year the hon. Member for Walsall, South (Mr. George) said that the crisis was not unexpected but had been coming for some 20 years.
My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) made an excellent speech. In opening, he put the point well when he quoted those in the West Midlands who were drawing attention to the dangers that before 1978 had been developing over many years. So the problem is of very long standing.
No one would dispute that the West Midlands is facing the most difficult period since the war. Up to the end of the 1960s, the region enjoyed a long period of full employment and relatively high wages. Its prosperity was concentrated on a select group of manufacturing industries—vehicles, engineering, metal working and pottery.
The early 1970s were, however, a period of stagnation for the West Midlands. Productivity in many centres began to fall, markets disappeared, and some of the firms in the staple industries of the region fell into the decline that befalls the uncompetitive.
There are many reasons why the West Midlands has been hit harder than any other region. Undoubtedly, the most important is the over-dependence on the three industries—cars, engineering and metal working—the industries in which, as a nation, we have done worst in recent years. The decline in the car industry has been particularly severe in its effects. There is a major structural cause of decline. What needs to be done is to make these traditional staple industries more competitive so that, as my hon. Friend the Member for Meriden (Mr. Mills) reminded us, customers, including industrial customers, such as the components industries will want to buy their 523 products again in large numbers. Then new technologies can be introduced and over manning can be eradicated and never return.
At the same time, the West Midlands has failed to attract the new high technology industries. Hence, there is a need to attract new investment and to develop such things as science parks. I recently visited the university of Warwick to discuss the science park possibilities there. I shall shortly be seeing Professor Crawford of the university of Aston in order to discuss the same subject.
From 1975 onwards, the failure of the region's prime industries began to be reflected in the unemployment rate, which rose sharply and persisted at a historically high level to the end of the decade. Now we see the region suffering the effects of this cumulative decline, particularly exacerbated by the world-wide recession, and with unemployment rising rapidly.
The task now facing the West Midlands—the uphill climb to its former level of relative prosperity—is considerable. The industrial base of the region must broaden away from such extensive reliance on a few troubled sectors. Management and workers at all levels, in new and old industries alike, must strive to bring them to the level of competitiveness necessary for survival.
The Government, too, have a role. For most of the postwar period, and especially from the late 1960s onwards, successive Governments have agreed upon the need for a policy of regional investment incentives designed to help those areas suffering profound structural decline of their basic industries—a decline stretching back to the 1930s.
Several hon. Members have referred to regional policy and to industrial development certificate control, so I want to spend some time in addressing my remarks to those subjects. One element of the regional policy has been the industrial development certificate control of new industrial development in non-assisted areas. I believe that IDCs played a positive role in regional and industrial policy in the 1960s and early 1970s, when—we all rather tend to forget this—conditions were very different. But since then they have become increasingly less important. Since 1975, for example, only 28 out of about 7,000 applications have been refused—a refusal rate of less than 0.4 per cent.—and there is little evidence that the procedure has caused firms to relocate in the assisted areas.
I have been making a particular study of the question and I was interested to see that a study by my own Department in 1975, on the effect of IDC refusals between 1958 and 1971, showed that the usual response was for firms to modify their projects in order to avoid the need for an IDC, or to circumvent the control in some other way by purchasing or leasing a building already designated for industrial use, or simply to abandon the projects altogether. Out of the 1,369 projects covered by the study, only 18 per cent. went ahead in an assisted area.
No further work has been done of the effectiveness of IDC's because of the low number of post-1971 refusals, but there is little more up-to-date evidence that control, as operated since the mid-1970s, has caused many firms—or, indeed, any—to relocate projects in the assisted areas. In the West Midlands, since 1975, there have been 1,054 applications, and no IDCs have been refused since the beginning of 1976, which shows that the Government have been following the policy of successive Administrations, and certainly the policy of the previous Labour Government.
524 On the other hand, in my view, the existence of the control may have discouraged new investment in the West Midlands and elsewhere, and it is clear that the region fully supports this view. Many hon. Members, particularly Conservative Members, the regional CBIs, many chambers of commerce, other opinion formers and industry generally, have made it clear that, while they welcome the changes that we announced in July 1979, when the policy was relaxed substantially, IDC requirements are still a psychological barrier to investment, unnecessarily delay the planning process and are detrimental to industrial efficiency. Moreover, they are expensive to run and impose a heavy administrative burden on companies.
That argument has been put forcefully on many occasions by my hon. Friends. It has long been a continuing theme in debates such as this, and has been again today. On the several occasions when I have been to the West Midlands, it is usually the first point that is put to me. It is also the first point that is put to me in any interview on television and radio, and it is the point most pressed upon us in discussions with people from industry. The hon. Member for Erdington referred to it as being a psychological barrier, in addition to its administrative disadvantages. That may be correct, but a psychological barrier can be extremely important.
In a recent deputation from some of my hon. Friends to the Minister of State, Department of Industry—a deputation which included my hon. Friend the Member for Birmingham, Northfield (Mr. Cadbury) who feels strongly on this matter but is unable to express his views today—the point was again made.
In the light of all those factors, the Government have over some months been undertaking a review of the operation of IDC policy in which we have taken full account of those and other representations made to us. I can now tell the House that we have concluded that the procedure has outlived its usefulness and that we should take steps to bring the policy into line with what effectively has been the practice under successive Governments.
Two alternative courses of action are, therefore, open to us. We could legislate to abolish IDC controls, but the pressures on legislative time are already heavy and that route could not bring quick relief. We therefore propose to introduce an order before the Christmas recess to revoke the regulations that prescribe the sorts of industrial buildings in relation to which IDCs are currently required. That will have the effect of suspending IDC controls until further notice.
I wish to stress that the Government maintain their full commitment to a strong regional industrial policy, but it is clear from the figures that I have already quoted that during the past six years the IDC controls have made an infinitesimal impact. The suspension of the controls will, however, produce immediate staff savings in my Department, worth over £100,000 a year. It means that industry will be free to invest where it considers it most efficient and advantageous to do so. It will, I hope, give a significant boost to investment in the West Midlands and remove the psychological barrier that has been talked about for so many years.
My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) referred to the IDCs and to IBAs, the industrial building allowances for small workshop units. He will know that I have considered carefully that aspect of policy and the points that he has raised because 525 of my special responsibility for small firms. He will know from the Adjournment debate the other evening that my hon. Friend the Financial Secretary to the Treasury is also considering the matter. I can give my hon. Friend no commitment, but I can assure him that we are very much aware of his points and are studying them.
I turn to the wider question of regional aid and the points raised by the hon. Member for Erdington, although I listened carefully to the perceptive remarks made by my hon. Friend the Member for Bromsgrove and Redditch. I have some points to make about regional policy and assisted area status and the implications for the West Midlands. The first is that the cutback introduced by the Government from 44 per cent. to 26 per cent. of the country covered by assisted area status will be of benefit to all non-assisted areas, including the West Midlands, because it means that the aid is much more concentrated on the areas of greatest need.
Secondly, one cannot consider unemployment levels along in defining whether assisted area status should be granted. Unemployment levels are clearly one factor, but the Industry Act 1972 lists many other factors that must be taken into account. Some of the factors are those referred to by my hon. Friend the Member for Bromsgrove and Redditch, such as infrastructure, road programmes, the markets available to a local community and the prospect of switching from jobs that have declined to jobs of the future. The infrastructure and communications are a mark in the West Midlands' favour. Compared with many other parts of Britain, especially those with assisted area status and high unemployment, the West Midlands has good motorway communications. The Department of Transport is making further improvements and such schemes are among its highest priorities.
My hon. Friend the Member for Bromsgrove and Redditch specifically referred to the need to improve communications to the east coast ports. I have a clear interest in that as I represent a part of East Anglia. I wish to see those communications improved and speeded up, not least because it will enable our industries to come to the West Midlands and sell their products in the markets there instead of the other way round. However, that comment alone shows that we cannot take only unemployment levels into account.
Thirdly, the Government have pledged that we shall constantly review, in areas where there is evidence of especially high unemployment, the position of assisted areas status, bearing in mind the region's relative position and the long-term or permanent structural change that may be taking place in its economy.
It is important to say that because in the short time that I have been at the Department of Industry I have discovered that the changes in some travel-to-work areas fluctuate markedly, even for six months. One cannot simply consider the employment level at any one time.
I turn to the question of the impact of Government spending on British Leyland. Many hon. Members who come from the West Midlands find that when they go to other parts of the country they hear criticism about the amount of Government aid to British Leyland which they believe to be greater than the aid given through regional development grants. It is important to remember the 526 impact that such considerable sums have on the West Midlands economy. From 1975 to October this year £1.771 million of Government money was spent on BL.
§ Mr. Hal Miller
I would not like the Under-Secretary of State to run away with the idea that all that money goes to the West Midlands. There are many substantial BL plants in Lancashire and Scotland. He must not ascribe all that money to the West Midlands.
§ Mr. MacGregor
My hon. Friend need not worry. I am about to make the qualification. Since we came to office, £900 million has been provided in support of the company, and £450 million already spent is part of the new £990 million announced by my right hon. Friend the then Secretary of State for Industry on 26 January 1981. A substantial proportion—and I do not wish to overstate it—was used in support of operations in the West Midlands. In providing the money we had in mind the importance of the company and the industry to the region, both as direct employers and as a source of work for thousands of supplier firms.
I have referred to the importance of restructuring the West Midlands economy, not only in terms of improvements to technology and new products in existing firms, but in bringing in new industries. The region already benefits from an array of measures, but I believe that it could benefit more from them if there was a greater awareness of the possibilities. My hon. Friend the Member for Bromsgrove and Redditch mentioned that.
Firms in the West Midlands are eligible for assistance under section 8 of the Industry Act 1972. Since May 1979 we have made 687 offers of such assistance in the region to the value of £23 million and on projects worth £126 million. Such assistance provides a substantial contribution to new investment throughout the West Midlands. Funds are available to meet the needs of industries either producing or needing to employ new and advanced technology, particularly that based on microelectronics.
So far we have committed nearly £1.7 million in grants to the region under the various aspects of the microprocessor application project. My hon. Friend the Member for Bromsgrove and Redditch referred to the lack of knowledge of the schemes, as revealed by industrialists on a recent visit by my right hon. Friend the Secretary of State for Industry to the region. I confirm that impression from my experience. That is why we are making efforts to make many more people aware of that important assistance.
My hon. Friend also referred to the desirability of the Government working out ways in which they can assist firms to start up in high technology. I take his point about the difficulties in that connection. My hon. Friend will know that a scheme, now under the auspices of the British technology group, but previously under the NEB, helps with finance, with public sector support, for a number of firms in the high technology area.
§ Mr. Richard Shepherd
In view of the ignorance that exists about the support available to industry, could not the information be circulated through VAT offices? All companies registered for VAT have to make returns. Surely that would be a way of identifying firms and informing them of their entitlements.
§ Mr. MacGregor
We have given thought to how we can further spread the knowledge of what assistance is 527 available. We are doing that through the business opportunities programme. One of the disadvantages of my hon. Friend's suggestion is that it would involve considerable expenditure and a great deal of effort, not necessarily resulting in much response. Many firms throw out most of the forms that they receive. However, I am continuing to think about the problem.
Other technology-related support, such as the project and process development scheme, and research and development expenditure via requirement boards, for which regional figures are not available, are of particular importance to the West Midlands.
I am convinced that as the recession eases, many of the region's traditional industries will rise rapidly with the new wave of activity, but in the longer term the region must broaden its economic base if it is to return to its former position of relative prosperity and productivity. The key to such stability must lie, on the one hand, in investment in the industries of the future and, on the other, in using technology that is now available to boost the competitiveness of the old. I assure my hon. Friends who have raised this matter that we shall continue to provide extensive support in this connection.
I shall say a brief word about my responsibilities for small firms, which have an important part to play in this restructuring. Small businesses in the region have benefited substantially from the measures that we have taken in this connection. Of particular importance has been the loan guarantee scheme. The figures for the take-up of the scheme show that it is already meeting a substantial demand. I announced yesterday that, to date—we have the latest figures up to the end of November—nationally, 1,512 loan guarantees have been issued during the six months that the scheme has been in operation, making a total loan guarantee sum of £52.6 million. In the West Midlands, 150 small firms, of which many are start-ups, are benefiting already from the scheme, making a total lending—additional lending that would not otherwise have taken place—of £4.7 million.
I referred to the enterprise allowance scheme earlier. I shall not elaborate on it, because I discussed it in depth two weeks ago. Because of the particular problems in the West Midlands, we have singled out Coventry as a pilot area for the scheme. I hope that that experiment will prove beneficial, and we shall watch it with great interest. The details of the scheme are currently being worked out by the Manpower Services Commission, which will run it in conjunction with the small firms service. I hope that the details will be announced shortly, and that the experiment will begin early in the new year.
Meanwhile, the small firms service continues to operate in the region. Inquiries are now up to nearly 2,000 a month, compared with 1,000 a month a year ago. That is a welcome increase in entrepreneurial spirit. Bookings in the region for counselling sessions, which are a form of management consultancy provided by experienced business men, are running now at about 150 a month. During the past two months, I have attended three business opportunities programme sessions in the region, and will attend another in Wolverhampton shortly. The response shows that the entrepreneurial spirit is very much alive.
Of particular note in this connection is the progress of the Dudley enterprise zone. It was designated on 10 July and is now well in operation. The level of inquiries has been high, and I understand that the Dudley metropolitan 528 borough council has dealt with them efficiently and effectively. The zone can already boast one major success story.
More generally, we continue to give extensive support to the road programmes that I mentioned to maintain the high standard of communication that is necessary. We are supporting the efforts of local authorities to deal with their inner-city problems through the urban programme and the funding of activities under the Inner Urban Areas Act in designated districts. The resource allocation for 1981–82 for Birmingham is £16.9 million, for Wolverhampton it is £3.22 million, and for Sandwell £0.6 million.
The hon. Member for Walsall, North referred to employment. The region is receiving its fair share of support for the unemployed through various special employment measures. Currently, 28,000 are being supported under the temporary short-time working compensation scheme, 4,500 under the job release scheme, and 288 under the community industry programme. Since last April, over 40,000 young people have benefited from YOP courses, and another 1,700 from the community enterprise programme. That is a substantial contribution to the needs of the unemployed, and it is an important source of work experience for the workers of tomorrow.
I want to mention in particular one scheme which can be taken up now, but which comes into operation on 4 January. My hon. Friend the Member for Lichfield and Tamworth spoke about the need to create real jobs by means of Government assistance. I am sure that he is aware of the young workers' scheme, the £15 a week grant scheme, which in my view could be of considerable assistance to small businesses in particular. That scheme, too, needs to be publicised, and I hope that all hon. Members will help to do that.
§ Mr. Winnick
Will the Minister tell us when unemployment in the West Midlands will be anywhere near the same as when his party came to office?.
§ Mr. MacGregor
If the hon. Gentleman had been listening he would have realised that I have been analysing the reasons for the position in the West Midlands, which are long-standing, but which are now rapidly catching up on the region. At a time of deep world-wide recession it is impossible to make such predictions. The hon. Gentleman referred to the impact of new technologies. He will recognise that the recent technologies that have come into Britain in the past few years are making a considerable difference to many industries and, as a result, those industries are becoming much more capital intensive than labour intensive.
I had hoped to make some remarks about a number of successful firms that I have visited in the region. They are examples of good small firms that are sometimes succeeding in export markets. They have suddenly discovered that they have the skills to export and have been doing that successfully for the first time. There are many examples of new investments taking place. Time prevents me from going into details, but by concentrating exclusively on the negative side—on redundancies, and bankruptcies—Labour Members do their region a great disservice. There is a need to persuade companies to invest in the region and to expand. The atmosphere of despondency that Labour Members sometimes generate is hardly encouraging to such investors. Much good is being done.
529 I turn to one subject that has often been raised by my hon. Friends. I refer to a very worrying development for industries in the region. The West Midlands county council and serveral district councils—all with particularly high-spending ambitions in transport and other spheres—have decided to levy swingeing supplementary rates. I shall put some of the facts before the House. The eight local authorities in the West Midlands county area—leaving aside the shire counties—form a significant proportion of national local authority spending; 6 per cent.—the key figure—of the volume of current expenditure and 6 per cent. of total expenditure. However, because the West Midlands county council and six of the seven metropolitan districts are budgeted to spend above their volume expenditure targets, and because the West Midlands county council and five of the seven are budgeted to spend above their grant-related expenditure assessments, the West Midlands proportion of the excess of local authority expenditure is 11 per cent. of the national current overspend.
That is significant for two reasons. First, the exceptions in the area are all Conservative-controlled. The others are all Labour-controlled or, like the West Midlands county council, have become Labour-controlled. Secondly, the shire counties elsewhere in the West Midlands and areas such as mine have played their part in responding to national needs and in containing public expenditure to a level that we can afford. They are responding. They have a perfect right to ask why they should suffer for the excessive overspending of those other authorities, when there is a much fairer system for allocating central Government grants.
It is nonsense for Labour Members to blame the Government for their local authorities' overspending. The impact on industry is considerable. Hon. Members should consider Coventry, which witnessed a 50 per cent. increase in non-domestic rates this year. No wonder there was such a response to the referendum. Hon. Members should also consider West Midlands county council, which, like the GLC, is pursuing a wrong-headed policy of lower and heavily subsidised fares at the expense of businesses and jobs in their areas. I was interested to see recently a cutting from the Wolverhampton Express and Star. I understand that a business man has quit Wolverhampton and taken his 28-strong work force over the border, to Dudley. He did that for one reason—to escape crippling rate rises—[Interruption.] I do not think that he moved into the enterprise zone.
§ Mr. MacGregor
He does not have to pay the supplements that he had to pay in Wolverhampton—[Interruption.] It is clear that Labour Members do not understand the implications of some of their policies. That gentleman is moving to another borough, because he will save nearly £6,000 per annum in rates by doing so. In addition, he has been able to hire six new staff with the extra cash. Happily, he is still in the West Midlands, but if the hon. Member for West Bromwich, East (Mr. Snape) does not understand the impact of excessive rate increases on the actions of businessmen he clearly would simply not 530 understand why rate increases are so important to business. The relationship is simple: high rates drive firms either out of the area or to bankruptcy.
When my right hon. Friend the Secretary of State for Employment met the West Midlands county council earlier this year, he begged it to reconsider the effects of its proposals. His arguments fell on deaf ears. The supplementary levy is more likely to follow on what could become dead or fled companies, as in the case of the company in Dudley. I deplore the decisions and the inevitable effects they will have on prosperity, employment and jobs in the region.
I had hoped to make comments on what I thought was an interesting and thoughtful speech by my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes), a large part of which I agreed with. However, in order to enable other hon. Members to intervene, and because there have been opportunities to discuss nationalised industry pricing—I am aware of the concern about that—and that there will shortly be an opportunity to discuss energy prices and the impact of rates on businesses—I hope to touch on all those—I shall go no further on my hon. Friend's speech today.
In conclusion, I repeat that I am glad we have had an opportunity to discuss the problems of the West Midlands. I have attempted to convey to the House the seriousness with which the Government view the industrial problems of the region. The hon. Member for Wolverhampton, North-East knows that hon. Members do not want me to deal with every point because they would not have an opportunity to make their contributions. I also remind hon. Members of the extent that the Government support investment in the region.
I know that the difficult question of regional policy has always been a matter of hot dispute in the region. I have been able to announce a significant change, to the benefit of the West Midlands. The suspension of IDC controls will remove the last vestige of the old disincentives to investment and leave companies completely free to invest where they wish. The often-quoted "psychological barrier" will now disappear.
What the Government do to help any one part of the country can never offer a complete solution to that area's problems. The primary answer lies in the region itself, in all the unquantifiable aspects of the economy; motivation of management and workforce and their determination to succeed and keep up to date. They are some points that my hon. Friends have been talking about today.
I cannot help reflecting that it is particularly sad to see those who are trying to help themselves, especially the small firms, being kicked down again by those local authorities through the absurd supplementary rate demands I have referred to. The spirit of those in the region will enable them to achieve the restructuring required. The Government will continue to provide the investment assistance necessary to encourage expansion, the broadening of the industrial base and the vital improvements in technology, products and processes. It must now be up to those in the region to grasp the forthcoming opportunities as the recession clears and to work their way back to the former level of prosperity.
§ Mr. Deputy Speaker (Mr. Ernest Armstrong)
Order. As the House knows, the length of speeches is not in the hands of the Chair. I just inform the House that at 531 least 10 hon. Members are waiting to catch my eye and that we have approximately 100 minutes left for the debate.
§ Mr. George Park (Coventry, North-East)
It is unfortunate that earlier speakers did not take note that, in giving our thanks to my hon. Friend the Member for Walsall, North (Mr. Winnick) for providing the opportunity afforded by today's debate, the Minister was unable in the time he felt was available to cover all the points. The fact that there are more hon. Members wishing to contribute to the debate means that we owe a debt of gratitude to my hon. Friend the Member for Walsall, North.
Many different yardsticks have been used during the debate to measure the decline in the West Midlands. It is perhaps significant that in Coventry, which used to be the hub of the motor industry, the city's major traffic flow has dropped by about 65,000 vehicles each week. That means that Coventry motorists have become stay-at-homes. They have been driven off the road by the depression, the recession, unemployment, and petrol prices.
As I have said, we used to be the hub of the motor industry. We are now only a pale shadow of what was once a prosperous industry. We are fighting to survive while, by all accounts, a complacent Government do little or nothing to create the conditions for fair competition.
There can be no doubt about the success of the Government's small businesses policy. The compliments have come from the hon. Members for Bromsgrove and Redditch (Mr. Miller) and for Lichfield and Tamworth (Mr. Heddle). We have seen this small business policy operating in Coventry. We have seen it operating in BL, Alfred Herbert, Courtaulds and Chrysler. They have all been reduced to small businesses.
The level of unemployment in the city and the region is the highest since records began. But that does not stop the Government from piling on ever-heavier burdens. These burdens, particularly those in the Chancellor of the Exchequer's statement this week, will hit families and everyone dependent on benefits, such as pensioners, disabled persons and one-parent families. We have had indications of savage increases in council house rents, yet in Coventry 21,000 out of the 26,000 council house tenants already need help to meet their existing rents, so I am hanged if I know where the Chancellor expects to get increased revenue. He is increasing public expenditure in Coventry, and no doubt throughout the West Midlands.
Not content with 38,000 unemployed in Coventry and 10 times that number in the region. the Government pursue people into the dole queues, chopping their benefits and sending more and more down the slippery slope to the official poverty level.
The local authorities—we have heard it again this morning—are given much of the blame for the present situation. Coventry district council, one of the councils named by the Government, in trying to achieve economies under threat from the Department of the Environment—"Either do it or we shall chop your support"—has been involved in an industrial dispute which has prevented 40,000 schoolchildren in Coventry from going to school for four weeks. The council has been trying to carry out Government policy. Each time 532 Conservatives try to lay the blame on local authorities, and each time it is because the authorities are trying to carry out Government policies.
The Government are going further. The Chancellor tells us that another 3 per cent. is to come off the rate support grant. I just do not know how local authorities will cope. Inevitably, when the rate rises come, the blame will be placed on local authorities and not where it should be—on the Government.
We have in Coventry the Lanchester polytechnic. By general agreement, it is a further education institution which conducts its affairs far more cheaply than comparable colleges. Yet the Coventry authority—this is where some of its money has gone—has had to put in £1 million this year out of the rates to bail out the polytechnic because the Department of Education and Science will not face the facts.
The hon. Member for Bromsgrove and Redditch drew attention to the report about Coventry. There is no doubt that this constant chipping away at further education will reap us a bitter harvest in the years ahead.
On Wednesday the whole House waited in vain for some indication that the Government realised that they had a contribution to make to the regeneration of industry. The Chancellor spoke about a 1 per cent. increase in productivity. But that is Grand-Old-Duke-of-York stuff. This is the stocks being run down, and now they are to be built up again. That is where the 1 per cent. comes from. There is no real increase in production.
The hon. Member for Halesowen and Stourbridge (Mr. Stokes), in his usual robust independent speech, drew attention to some of the things that the Government should be doing. Probably that is why the Minister did not want to answer him. He drew attention to interest rates, energy costs and so on, and said that something should be done. We have had no indication from the Chancellor that anything will be done.
In the meantime, many of the West Midlands major employers with established national and international reputations have closed or have implemented major redundancy programmes—firms such as Rubery Owen, GKN, BL, Lucas, Cadbury, BSR, Birmid Qualcast, Dunlop and Massey-Ferguson. It is a roll of dishonour. The Birmingham travel-to-work area now has more unemployed people than any other travel-to-work area in Great Britain, excluding London—more than in Glasgow, Liverpool or any of the special development areas. There are 735 unskilled people for every vacancy in the region. There are 100 skilled workers for every vacancy now—an increase of 150 per cent. over the last year.
A problem that has not been mentioned today is that over a quarter of all the nation's unemployed ethnic minorities live in the West Midlands, but still the redundancies continue at a rate of about 4,000 a month.
This week, a deputation of young people came to see us here at the House of Commons. They left me with a huge petition, signed by thousands. Those young people made three points, and I ask the Minister to take them on board. I know that he will say that they do not come within his remit, but we would like answers to them. First, they said that they would like the opportunity to enter post-school education on an adequate grant. Secondly, they would like the opportunity of undergoing a proper course of training on an adequate wage or grant. Thirdly, they would like a permanent full-time job at a living wage. We should like to send answers back to those young people. 533 The present position can no longer be shrugged off as a passing phase in the current recession. We cannot say, as the former Secretary of State said, "Pull yourselves up by your boot straps", because we have no straps left.
Time and again delegations have met successive Ministers—I do not wish to lay all the responsibility on this Government—to urge recognition of the structural weaknesses of the West Midlands economy, and time and again they have been turned down. The Minister spoke about structural weaknesses. If we have one convert, that is good. He may be able to influence some of his right hon. and hon. Friends. The lack of recognition not only inhibits efforts to attract new industries to the West Midlands; it denies us access to European funds, as my hon. Friend the Member for Birmingham, Erdington (Mr. Silverman) said. On the criteria that are used to judge special development area status, the West Midlands is considerably worse off than many other areas that already enjoy that status.
The Minister said that eligibility for special development area status cannot be judged entirely on unemployment criteria. I am not doing that. I understand that 11 factors are taken into account. Having considered those factors, we still believe that the West Midlands should qualify for special development area status. We realise that we have an overdependence on metal manufacturing, but we have also suffered from a consistently low level of investment.
Regional policy has played a major role in causing the economic decline that we have experienced in the West Midlands. Industry has been and still is actively encouraged to seek locations in the assisted areas. I was glad to hear the Minister say that consideration was being given to eliminating the IDCs.
Apart from the loss of jobs, the natural process of economic regeneration and change has been inhibited severely. The advantages of the West Midlands region have been outweighed by the discriminative effects of regional policy, and the scale of new investment needed to make any significant impact on employment cannot be achieved without additional positive incentives.
The West Midlands county is now experiencing a scale of economic problems which is typical of an area undergoing a prolonged period of structural decline. The widespread factory closures, the disappearance of major industries and the absence of new investment will turn the West Midlands into an industrial wasteland unless there is positive, determined action to reverse the trends.
The Minister spoke about a careful analysis. I hope that that will go beyond his own Department, because it impinges on others, as he knows. If he finds that their political and monetary dogmas prevent his Government colleagues undertaking this radical rethink, which is so urgent, they should stand aside and let us get on with it.
§ 1.1 pm
§ Mr. Richard Shepherd (Aldridge-Brownhills)
I welcome the announcement of my hon. Friend the Under-Secretary about doing away with industrial development certificates. It will be a real contribution to the psychology of our region. As my hon. Friend said, their existence has an effect on the applications which come forward because people believe that their applications may not succeed and therefore hesitate to submit them.
534 I am a little sorry that the West Midlands has not been designated an assisted area. I say that because I am not offended by the concept of assisted areas. However, I am anxious about the damaging effect on our national economy of directing sensible investment decisions away from an area or region which perhaps is best able to see their fulfilment. So often the prizes of being directed away have been rather like golden apples. They do not provide sustenance. They turn to mere metal objects which are sold to foreign buyers of machinery, as we have seen just outside Glasgow in the past fortnight.
If there is such a policy, I believe that the West Midlands should be designated and presented as attractively as any other area is. There is no doubt that areas are more attractive as a consequence of the policy.
I am grateful to the hon. Member for Walsall, North (Mr. Winnick) for initiating the debate. A large number of hon. Members come from the West Midlands. It is the centre of our manufacturing industry, and it has contributed to the wealth and prosperity of the nation for more than 150 years.
I want to place a caveat on the observation that much of the decline of the West Midlands reflects the decline of the world economy. When we consider the growth and generation of competition throughout our economy, we must remember that 100 years ago many countries judged us as the then Japanese, and Japan is still experiencing continued growth in real terms and is marching towards greater prosperity.
When we discuss the state of the West Midlands economy we have to address ourselves to the underlying causes. I was grateful to my hon. Friend the Under-Secretary for devoting so much of his speech to that, as I was to other hon. Members who identified the decline of competitiveness in our economy. That is reflected by an open-mindedness on both sides of the House about how we are to overcome the ingredients of our long-term structural decline.
I take this opportunity to advise my hon. Friend about some of the thinking of business men in my area. They accept the argument that there has been a decline in our international competitiveness, but in their view one of the central themes of the Government should be that very competitiveness. In a sense, I agree with them.
If there has been a black hole in our economic strategy it has been to state that the central theme is the defeat of inflation. I have argued since becoming an hon. Member that the central theme should be our international competitiveness. On that hinges the defeat of inflation. One can defeat inflation and have no industry left. That is the very thing that we want to avoid. When business men argue about what the Government have contributed to our international competitiveness, there are things that can be cited on the positive side. There are also a large number of negatives that undermine the case the Government put forward. I should like to mention one or two.
We were elected, by and large, to reduce taxes. The necessity, as seen by the Chancellor when we came to office, was to increase taxes. This has been done more progressively and more rapidly than under any Government in history short of a war-time Government. We have increased rates. It is true that this may be the responsibility, in some measure, of local authorities and their competence. I know this only too well. I represent a constituency that falls within the Walsall metropolitan borough. It has seen appalling rate increases, which have 535 been deeply damaging, because the administration of that authority is in the hands of people who have no appreciation of the consequences of their actions on business.
§ Mr. Shepherd
My point about the imposition of rates is that this destroys businesses and therefore destroys jobs.
I am deeply concerned that the Chancellor's recent package of measures increases rates, although these have been identified as a cause for doing down businesses and hence employment. I am deeply concerned about the belief that financial and economic policy is designed towards balancing books without the option being open to Government of increasing the international competitiveness of our businesses. This has consequent effects on jobs, the overall prosperity of the economy and our ability to fund those things which are considered—I have not heard any dissent—to be the desirable social aims and policies of all Governments for certainly 20 years.
Energy prices in the West Midlands are an important ingredient of our industrial and export costs. If they are increased faster than those of our competitors, which the Government were dedicated to achieving, our international competitiveness is undermined and our ability to compete against foreigners diminished. It is as simple as that. I do not believe that it is in the interests of my area, my constituency or my country to have some highfalutin philosophy about oil-related prices that diminishes our competitiveness and undermines jobs in our economy.
The medium-term financial strategy made certain assumptions about nationalised industry prices. The Chancellor was advised by hon. Members on both sides of the House, by those who served on the Treasury Select Committee and also by national newspapers, business men and individuals that the turn-round seen in the nationalised industries was nonsense. To include such an ingredient in the medium-term financial strategy made implicit increases in nationalised industry prices that were faster than the rate of inflation. There was a consequential effect not only on domestic consumers but, much more importantly, on employment and the prosperity of the country over a long period, and on the competitiveness of businesses.
A Bill now being considered in Committee has the desirable social purpose of the payment of statutory sick pay. Even in this Bill where the Government state that they are reimbursing employers, there is a little hidden tax amounting to £35 million or so, we are advised by the Minister, on the national insurance contribution to be paid by employers with sick employees. That is an additional tax. Even at this time of acknowledging that the burden of charges by the Government on business is growing, has grown and is damaging our competitiveness, we are still pursuing those niggardly little policies that diminish our competitiveness. I shall repeat that again and again.
536 The Chancellor of the Exchequer acceded to the argument in the Select Committee on the Treasury and Civil Service that, were it not for Government-induced price rises, the rate of inflation would now be between 3½1/2 and 4 per cent. instead of the present 11 per cent. I have a great deal of difficulty in justifying to my constituents and businesses the Government's strategy.
When we discuss the West Midlands and the wider implications, we should impress on Ministers that in a strategy there has to be a balance between that which one can spend and that which one can raise. After 10 years of raising a great deal less than we have spent, a point of equilibrium must be reached. Many people agree with the overall intent of that strategy. Having accepted that, many of us have viewed the division or allocation of resources within that overall budget with concern, as damaging to employment and the prospects of our region.
I should like to tell the Minister business men's views about the Treasury team. There is a feeling that the Government are not sympathetic to the needs, wishes and requirements of manufacturing industry, so they are not sympathetic towards employment and the problems in the West Midlands. That lack of sympathy often arises from training or the nature of the Front Bench. The Treasury team is composed almost entirely of lawyers—with respect to the distinguished Whip on the Front Bench my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen)—whose training and experience have been gathered in the law courts in the Strand. That has failed to give the Treasury team an understanding of the business of earning and of solving problems. No one can appreciate or understand the passion of West Midlanders, whose economy has been based on making something, adding value to it and selling it.
The wealth of this country is based not on our domestic market, but on our ability to compete in the world with other markets. We have retreated from that and we talk as if demand can come only from the domestic market. If we are to create the substance and wealth that we seek, demand must come from overseas, and we can generate that demand only by ensuring that we are making goods cheaper or better than our competitors.
Unfortunately, in many instances people are no longer buying the products that are made by their neighbours. I go to meetings in my constituency and walk through a car park that bears testimony to the judgment of free people in a free market that they would rather buy the products of Japan, Germany or France than those of their neighbours to whom they are bound. The prosperity of our companies often depends on supplies to that car company whose goods people in a free market judge to be not appropriate for their purchasing purposes. That is one of the difficulties with which we are confronted.
Recently we had a debate on the car industry in the West Midlands. I was greatly concerned that the nation has invested much money in British Leyland. There is no question but that the will of the Government is to support it and to ensure that it prospers. My concern about our investment judgment and the way in which we use public money is that we set up the Metro plant, which was to have been the most modern plant in the world, using most of the robotics available to British industry, but I understand that we still have a car plant that competes only with the best in Europe. I have not been contradicted. Our 537 prosperity depends on competing with the best in the world. I do not doubt that we can do it and it is to that that we must set our sights.
There are some charges that can be laid with justce against the Government. The central feature is to determine how we can increase the competitiveness of our manufacturing industries and companies. Above every Minister's desk should be a dictum to the effect "In what way is my decision increasing Britain's international competitiveness? If it is not, why am I taking the decision?" On that basis some of the judgments made last week by my right hon. and learned Friend the Chancellor of the Exchequer and in the preceding months and years of the Government would not have been made. Fortunately, there is time for change.
§ Mr. Gwilym Roberts (Cannock)
I hope that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) will forgive me if I do not take up all his remarks. The hon. Gentleman made some constructive comments. By arguing that the pursuit of some economic objectives to the very end would destroy industry itself, he pushed the Under-Secretary of State from the Government Front Bench.
I congratulate my hon. Friend the Member for Walsall, North (Mr. Winnick) on giving us the opportunity to debate some of the problems of the West Midlands. In doing so, I reflect sadly that this is the third debate of this sort in which I have participated in the past 18 months. If my memory serves me right, about 2 million were unemployed when we had the first debate. When the second debate took place about 2.5 million were unemployed. There are now 3 million unemployed, even on the Government's figures. In the same period, unemployment in the West Midlands has virtually doubled.
Hon. Members who represent constituencies similar to Cannock will be especially conscious of the problem. My hon. Friend the Member for Coventry, North-East (Mr. Park) produced a roll call of some of the firms in the West Midlands that have gone downhill in the past two years. In almost every instance their demise has meant more unemployment in areas, such as mine, from which people generally travel to the West Midlands conurbations to work. Throughout the past decade unemployment in my constituency has been about 5 per cent. above that of the West Midlands as a whole. Now that unemployment in the West Midlands generally has reached a sad 15 per cent., Cannock's unemployment is 20 per cent. That means that one in five of the potential working population is without a job.
There are a number of reasons for that. I accept some of the arguments that have been advanced by Conservative Members. There are long-term fundamental problems. In my area, the long-term decline of the mining industry has created great difficulties, and I pay tribute to the hard work of the local authorities in providing alternative jobs.
In my constituency many small firms and subsidiaries of big firms are particularly vulnerable during a recession. One problem that undermines anything that can be done in an area such as Cannock is the vast inflow of population. The hon. Member for Aldridge-Brownhills will be aware of that problem, to some extent, in his constituency.
538 Cannock's population has virtually doubled over the past 30 years, and there has not been an accompanying increase in the number of jobs and services. It seems that no Government have faced the problems that confront population growth areas. It is not useful to consider in detail who is to blame for the present difficulties. There are long-term industrial problems, and the problems have accelerated under the present Government for the past two and a half years. The problems have been created largely by the Government's recessionary policies on top of the recession. Sadly, public expenditure cuts have not only undermined industry, because resources have not been used to further industry, but added to the economic and social problems.
My hon. Friend the Member for Walsall, North referred to the housing problem. A local authority such as mine usually builds several hundred houses each year. This year only 32 houses have been started, although there are hundreds of building workers unemployed locally.
Conservative Members have said that few Labour Members have looked for solutions. Some things can be done. Cannock's first need is for additional mining jobs. The Minister may say that is a matter not for him or even for the Government, but for the National Coal Board. However, I pay tribute to the Department of Energy under the previous Labour Administration for vigorously pursuing a policy of providing mining jobs and retaining mining skills in areas such as mine. The new Chase drift mine will provide 1,000 additional mining jobs and thousands of other jobs in associated industries.
The problems of growth areas, such as Cannock, must be considered. The present Government have not done this; nor have previous Governments. I was pleased when the Minister talked of his consideration of science parks. The real need in growth areas is to base sunrise industries on sunrise technology. Government research departments. in conjuction with universities, have an invaluable contribution to make. Such research centres act as the nuclei of growth. That is the only way to face the enormous problems in the West Midlands.
The solution of Cannock's problems is the solution of the problems of the West Midlands and of the country as a whole. The first and overwhelming need is for a massive increase in public expenditure to provide the necessary housing, social and educational base for the country. We must also invest in industry. It is clear that we cannot rely on the private sector for the necessary investment in industry and high technology.
I was sorry to note that the Minister did not distinguish the vital difference between capital expenditure and expenditure on day-to-day running costs. Clearly, capital expenditure can more than justify itself. We have heard of no new solutions. We have had the same arguments as before—that the Government are solving the problems; that there are signs of a revival. These are promises, but nothing is happening.
It is not only the Labour Party which feels this way about the Government. The Government's friends also think the same way. I shall quote some sentences from Mr. Chris Wallaker, chairman of the West Midlands CBI. I do not know what his political views are, but I should hardly think that he was a natural Labour supporter. Mr. Wallaker was reported as saying that it waswrong for the Government to believe that because manning levels had fallen sharply through redundancies, companies were necessarily becoming more productive, since output had also 539 dropped substantially. 'Terms like rationalisation and streamlining are often euphemisms for redundancies, and the question now is whether smaller work forces will be able to cope with increases in demand. That will be the real test of productivity gains', he said.I agree with Mr. Wallaker. Cannock Chase, the West Midlands and the whole country desperately need a massive injection of public expenditure in the relevant areas. We need a growth economy. That is the only way to move towards a solution of our problems.
§ Mr. John G. Blackburn (Dudley, West)
I echo the congratulations offered to the hon. Member for Walsall, North (Mr. Winnick) on being successful in the ballot and on choosing the subject that we are debating today. I must correct one false impression. There have been occasions in this Parliament when, as a result of initiatives taken by Conservative Members—particularly my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller)—we have had the opportunity to debate the industrial position in the West Midlands. Today's debate is a very important one. That is reflected in the participation by hon. Members on both sides of the House.
Recently the House debated youth unemployment. It was a very tense debate on a subject which crucially affects the West Midlands. We also sat here late at night considering the British Leyland crisis. Today we are reviewing the economic position in the West Midlands. The electorate and this House have been insulted by the fact that in none of those debates have any Liberal or SDP Members been present to put forward the policies of those parties.
It is tempting to argue that the present recession has come about since the Government took office in 1979, but I remind hon. Members that the disastrous slump that we all acknowledge in the West Midlands did not come about in 1979 entirely as a result of Government policies. Any such assumption would be false. The causes of the slump can be traced back to the past 20 or 30 years; they have not arisen over the past two or three years. Whatever the Government have done or have not done since 1979 has made little difference. It is important, therefore, to draw attention to the fundamental problems and how they can be resolved.
Hon. Members have rightly referred to their own constituencies. My constituency was ravaged with unemployment, under the previous Labour Government, with the closure of the Bilston steelworks. The centre of my constituency was torn asunder in 1978 by the closure of the Cookley steelworks. The constituency is dominated by two industries—a magnificent steelworks at Round Oak, which produces some of the finest quality engineering steels in the world, and the crystal glass industry, which I visited as recently as this week.
I know that this will be controversial, but I suggest that the one thing that we must not do as a nation is to withdraw from the European Community. In the West Midlands, within a five-mile range of my constituency, 43 per cent. of all our manufactured products find their market in Europe. On present trends our largest customer is West Germany.
I have recently visited West Germany. It is perhaps not well known that since 1979, when unemployment in West Germany was 2.5 per cent., they returned the highest ever unemployment figure in July 1981 of 11.3 per cent. That 540 figure is reflected in Belgium, where this week we heard that an unemployment rate of 4 per cent. in 1978–79 has now increased to about 16 per cent. Therefore Britain is not isolated. We are in world markets, we must fight the world recession and we must be competitive in it. One of the wonderful pearls of wisdom that has been presented to the House today was the excellent comment of my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) that we must compete not only in a national market but in an international market and find products that we can sell worldwide.
When I am in my constituency, which I visit often, I am surprised that the man in the pub or club is ever conscious about the support that has been given to the steel industry by the Community. The West Midlands has suffered from an especially severe manifestation of the general problems of the United Kingdom manufacturing economy. By the same token, the effect of Community membership must be considered in general economic terms rather than specific policy benefits. The beneficial effect that EEC membership has had on British exports must have helped to cushion the effect on West Midlands industries. I associate myself with the comments made by my constituents.
An article in the Birmingham Evening Mail this week reporting Mr. Wallaker, the CBI regional chairman, presented a different case from that which we have heard this morning. The heading wasShadow of redundancy is beginning to lift.One would be foolish to get enthusiastic about that statement, especially in view of the high rate of unemployment in the West Midlands. However, I was pleased that the Minister referred to the assistance that has been given by the Government to the West Midlands by the introduction of an enterprise zone in Dudley. I have stressed that it is not just an enterprise zone in Dudley; it is an enterprise zone planted in the heart of the Black Country.
When we talk about manufacturing industry, it is interesting to note that the Conservative-controlled West Midlands county council fought a battle to attract the Nissan plant to the West Midlands. I do not know how far the negotiations have gone or where the plant will be situated, but the Nissan plant eventually will produce five jobs per acre. The Dudley enterprise zone currently produces 28 jobs per acre.
§ Mr. Blackburn
New industry is being attracted. During the debate reference has been made to companies moving from Wolverhampton to Dudley, although it must be said that they are not entering premises within the perimeter of the enterprise zone.
There have been many references in the debate to the building industry centred in the West Midlands. I am convinced that all hon. Members in the Chamber have been to the National Exhibition Centre and have met leaders of the building industry at the national building exhibition which is being staged in Birmingham. I was there yesterday speaking to the directors of building companies. There was a quiet confidence that the building industry is beginning to see better times, having come out of the awful depression which has been highlighted by hon. Members on both sides of the House today. If there 541 is to be a recovery and a movement from the depression and recession, we must look for indications in the basic industries.
I am delighted to announce to the House that the only steel-producing plant in the West Midlands is now producing record quantities of steel for the engineering and tube industries. The Minister will be pleased to know that the correspondence that I have had with him in the last two months has resulted in four small businesses being established in my constituency. They employ about 10 people each. I place on record my appreciation of the manner in which the Minister and his staff handled the situation. I formally invite the Minister to visit the constituency to see the progress that is being made, because he has paid generous tribute to the progress being made in the Dudley enterprise zone.
Many hon. Members joined me in a visit to Dover recently where we examined proposals for the Channel tunnel. It is a matter for debate but not today. If we had a Channel tunnel and if we could get our goods to the Continent within 48 hours, and to Brussels and southern Italy in 72 hours, business in the West Midlands would improve tremendously. It is important for the House to make a decision on that project as soon as possible.
We do ourselves, our constituents, our region and our country no service by selling ourselves short. Having walked the avenues of the engineering industry in the West Midlands for 20 years, I have enough faith to believe that the people of the West Midlands will respond to the challenge and that we shall again find the prosperity that we richly deserve and for which we are prepared to strive.
§ Mr. Andrew Faulds (Warley, East)
It is the unhappy duty of hon. Members from the West Midlands to take part in the now recurrent debate on the problems of our area. Today was made somewhat more acceptable by the fact that we have had some excellent speeches in analysis and diagnosis of the problems by my hon. Friends. Much more surprisingly, we have heard some quite thoughtful speeches from the other Benches. I thought that the hon. Member for Halesowen and Stourbridge (Mr. Stokes), whom I do not normally think of as moderate, made a very thoughtful and constructive contribution to the debate. I thought that the hon. Member for Bromsgrove and Redditch (Mr. Miller) made a very constructive speech, but that is in his nature. I have heard him do that before.
I thought that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) made a very valuable contribution by examining much more honestly than most of his colleagues are prepared to do the flaws in the Government's position. I have the nerve to predict that I foresee for that particular gentleman a very distinguished political career, perhaps not in the constituency that he presently represents but in some other part of the country.
We have debated the sad story of the decline of the West Midlands under this Government on a number of occasions. In my speech the second last time round, in June 1980, I recounted the appalling effects of the Government's policies on the industrial life of my own constituency, as hon. Members tend to do. I told of companies that were closing down, of large-scale short-time working, and of a great increase in unemployment. that sad saga was a record of only one year's damage under 542 the present Government. Now two years in office have shown the immense and increasing damage of the Government's devotion to an economic theory that is devastating British industry and lowering the standard of life of the British people.
Now, in Smethwick, the toll of the destructive effects of the Government's policies is much heavier than it was, even in June 1980. Of the companies I then discussed that were in difficulties, three have since closed—Smethwick Drop Forgings, Midland Motor Cylinder and Chances have gone for good, and parts of GKN's fastener activities have disappeared, too. The buildings of some of the factories affected have actually been demolished.
Compared with the 2,826 who were then unemployed, we now have the figure in Smethwick of 6,353—in the heartland of Britain's great industrial centre in the West Midlands. Those simple figures represent the immense amount of human unhappiness that joblessness imposes. In those jobless figures, school leavers who cannot get work have risen from 83 in May 1980 to 344 now. Those are youngsters who see little prospect of permanent work in an area such as Sandwell, where industries are not just declining but are literally disappearing.
Recent research work has provided tragic evidence of the deleterious effects of unemployment. It can lead to ill health—we all know this—because of a fall in income, and can often result in more drinking—which has historically been linked with social deprivation—more smoking—most of us now accept the damage that that does—and an enormous increase in general stresses. There is evidence, too, that child abuse and suicide are linked with high levels of unemployment.
A study of these problems in a pamphlet called "Ill Health and Unemployment"—a briefing paper from the Unemployment Alliance—has this to say:when the whole range of the research work focusing on ill health is taken into account it seems to imply that our current incomplete understanding of the social consequences of unemployment is leading to a considerable underestimate of the magnitude of their costs".Information given to me yesterday by my local office of the Social Services Department reinforces the argument of the stresses and strains that the increase in unemployment is imposing on a constituency such as mine. The current level of referrals to the Department has increased by 40 per cent. in the last 12 months but, even more significantly, the percentage of total referrals concerned with financial problems has risen from 6 per cent. to 38 per cent. over that same period.
Very serious problems are being encountered by many constituents—my hon. Friends will have encountered them all in their surgeries—in meeting payments for electricity, for gas and for rent, and, of course, one of the results is that there is less to be spent on food and on maintaining the health and well-being of many families. And all this in an area where the social deprivation level has always been considerably greater than in most other areas of the country.
Many of the companies in my constituency have been courteous and helpful—I want to make this point—in answering my many and repeated queries about the layoffs, redundancies, the short-time working and the closures that they have had to introduce. Most of them have been fairly responsible in their dealings with and their explanations to the trade unions, with—I must say—some bad exceptions.
543 But one firm has been downright unco-operative. There were reports that this particular company was making staff redundant at the rate of nine at a time to save giving notice to the trade unions concerned in the negotiations. The staff suspected that at the same time the company was receiving Government financial assistance. Perhaps the Minister would get the relevant Department to look at this. I wrote courteously to the managing director, asking if he would let me have a statement of the company's position both as regards future plans and as to any lay-offs and redundancies that it was having to introduce. I also queried what Government assistance it was receiving to maintain staff levels.
I received neither acknowledgment nor reply. Then, in my assiduous Scottish fashion, I wrote again—very courteously—asking for a response to my queries, as I was perfectly entitled to do in my constituents' interests. I have never yet had the courtesy of even an acknowledgment. That company is Crockett and Haden Engineering of Booth Street, Smethwick. It seems to know as little about standard civilities as it does about industrial relations.
The local press, incidentally, tried to elicit information from the company, but invariably received the replyThe management are not prepared to comment.Some of us, in our friendly way, thought of subscribing for a Victorian frock coat for the managing director, but I fear such subtleties would have been lost on a man of such immense stupidity and rudeness. I shall put on record—it is important that those of us who have responsible newspapers should make such points—how very concerned and responsibly my local newspaper, the Smethwick News Telephone, has dealt with what it termsa sad story of decline".The editor and his staff—all young people, or at least a bit younger than I am—have consistently shown their concern about the erosion of the industrial life of Smethwick and its appalling effects on the folk who live there. One of the recent pieces in the Smethwick News Telephone was so good and relevant to these problems that I sent it to our champion of the cyclist, the Secretary of State for unemployment. It argued that the situation in Warley—which includes my constituency of Smethwick—was so bad that there could be no real recovery after the recession, with factories demolished, youngsters not getting a chance to train in the metalworking trades that have traditionally been the industrial strength of the West Midlands—nor indeed, the opportunity to train—for most of them—in any skills.
The Secretary of State's minion, the Minister—I am sorry that he has not found himself free to join us—courteously replied and stated somewhat optimistically:an upturn in the economy is on its wayHe continued:How this will effect the fortunes of your constituency will depend on the ability of management and workforces there to increase productivity and to return their industries"—note that—to international competitiveness. If, as I am sure, industry in Warley is both willing and able to meet this challenge, then I can see no reason why the area should not recover from this recession, as it has from previous recessions, to secure a more soundly-based position of industrial strength and prosperity.Dear, dear, dear. The Minister does not seem to have appreciated the very arguments that were made in the newspaper report—not in my letter—that recovery would not, and could not, restore the working activities and livelihoods of people in my part of the West Midlands. The 544 Government seem blithely determined to go ahead with their policies, regardless of the irreparable damage that they do. They seem unprepared even to listen to experienced industrialists—examples have already been cited—who protest about the damaging effects of the situation that the Government have brought about. Yet the Secretary of State for the Environment has the effrontery to come to the Midlands—as he did last week—to lecture local industrialists. The Times said:Think modern Heseltine tells Midlands".The Secretary of State had been urging industrialists to build modern factories in the middle of the worst recession in their lives. Such a comment must prompt me to wonder what contact with reality the Minister has in his ivory tower at that ill-designed Department of the Environment. Indeed, what contact does the Prime Minister have? She also has a little ivory tower, well furnished by various of our museums and art galleries. What contact has the Chancellor of the Exchequer, given the nonsensical and damaging statement that he came to the House to make the other day? What contact do any of the sorry Government Front Bench—with the possible exception of the Under-Secretary of State, who is profoundly concerned about such matters—have with the realities of the suffering that they are wilfully causing the great majority of our people?
The tragedy reaches epic proportions when we contemplate the stark fact that the only alternative party for Government that has the economic and social policies to amend the situation and end the suffering has turned in on itself to pursue an arid, ideological disputation and so has gravely damaged both its credibility and its electoral hopes. The nutty theorists in our ranks have imposed a dreadful price on the British people for the self-indulgent incantation of their phoney political philosophy, with its anti-democratic intentions.
The British people deserve better of both the major political parties. Another two years of the present Government is simply unendurable. The sooner the Labour Party regains its senses and reassumes its proper responsibility, then, and then only, will there be some hope for our sorely tried people.
§ Mr. Peter Snape (West Bromwich, East)
I hope that my hon. Friend the Member for Warley, East (Mr. Faulds) will forgive me if I do not take up many of the points that he has made. Like him, and like hon. Members on both sides of the House, I pay tribute to my hon. Friend the Member for Walsall, North (Mr. Winnick), who initiated the debate. It has been a valuable experience.
In their absence, I hesitate to refer to some hon. Members who spoke earlier, but I should comment on something said by the hon. Members for Meriden (Mr. Mills) and for Lichfield and Tamworth (Mr. Heddle). The hon. Member for Meriden, in his fairly protracted contribution, said that there were no easy solutions. The hon. Member for Lichfield and Tamworth said something similar.
I hope that I shall be forgiven for some degree of bitterness. In the days when I sat on the Government Benches—regrettably, gagged and mute, as a Government Whip, for most of the time—I had to listen to a torrent of abuse from the then Conservative Opposition Members. I had to listen to an application under Standing Order No. 9 on virtually every parliamentary day, when every ill, every factory closure, every strike or dispute, every rain 545 cloud and snow shower, was blamed on the Labour Government. I get a bit suspicious when Conservative Members now talk in a statesmanlike way about the world situation and factors beyond their control, and so on, because normally their statesmanlike attitude comes about when they would otherwise find themselves trying to defend the indefensible—the policies of their own Government.
I listened with interest to the speech—thoughtful as usual—by the hon. Member for Bromsgrove and Redditch (Mr. Miller). He was mildly critical of some aspects of Government policy. He mentioned the need for a more flexible approach on the part of the Government. All of us would endorse that. Most of us would probably go a little further than that. In certain circumstances, the hon. Gentleman would go a little further than that.
I have with me yesterday's edition of the Express and Star. That is a newspaper which covers virtually all our constituencies in the West Midlands. Under the splash headline on page 3Tories hit out at no hope Budgetthe hon. Member for Bromsgrove and Redditch is quoted, when addressing the Chancellor of the Exchequer, as saying:Do you not realise that what you have so far announced has increased the costs of industries and increased taxes and charges for those working in industry?The hon. Member for Staffordshire, South-West (Mr. Cormack)—I am sure that he has good reason for not being with us today—was even more outspoken about the Chancellor's policies and the damage that they are inflicting on British industry. According to the same newspaper report, he said:It really will not do to trot out the same old tired clichés and to dole out more and more medicine without indicating when we can expect to feel better. I am deeply disappointed that the Chancellor has not used this opportunity to give some real encouragement to industry, especially in the West Midlands, and some genuine hope to the unemployed.It will not do for the Minister to say that various factors are beyond the Government's control. His own Back Benchers, in certain circumstances, are prepared to say that many of the problems which Britain now faces are the direct responsibility of the present Government's policies over the past two and a half years. That is nowhere more amply illustrated than in the borough of Sandwell. Representation of that borough is shared by my hon. Friend the Member for Warley, East, my hon. Friend the Member for West Bromwich, West (Miss Boothroyd), and others. In view of what has happened in the borough of Sandwell over the past two and a half years, it will not do for the Minister to say that these factors are beyond the Government's control.
When the Government took office, in May 1979, the unemployment figure in Sandwell was at a level that was unacceptable to the four Members who represent that borough. My hon. Friends in the West Midlands urged reflationary measures on the Labour Government. In the past five months of that Government unemployment started to decrease month by month. However, following the first Budget of the present Conservative Government, those trends immediately reversed and the situation grew worse as every month went by in the past two and a half years.
546 Being unemployed at any age is bad enough. Within three hours I shall be in the West Bromwich town hall and I dare say that a number of people I shall see will be unemployed. By and large, they will never have been unemployed in their lives. Four weeks ago a man over the age of 50 years, in tears perhaps for the first time in his life, said "Do you think I will ever work again?" What answer am I supposed to give him? What answer would the Government and the Minister give to someone in his position? Unemployment is tragic for someone of that age, but there is a generation of cynical and apathetic people leaving school. That cynicism and apathy is generated largely because they can see no future for themselves.
I have a number of letters that people have written to me, including one from a 16-year-old student at the local technical college in West Bromwich. The unemployed are not unappreciative of ventures such as the youth opportunities programme—they think that they have some merit and benefit—but they are extremely unhappy about some aspects. They do not simply complain about the wages available. The Government have steadfastly refused to increase the pitifully small amount of money available, despite being asked to raise it by Opposition Members and their own Back Benchers.
Three young girls signed a letter which said:We do the dirty work"—on the youth opportunities programme—for the money we do get. It is certainly not enough for what they make us do. It is just slave labour and we might as well sign on the dole.That is the voice of youthful experience and what it thinks about the current economic situation. Something similar was said by two more girls, who wrote:We think that we should be treated as other members of the working team because many of us have been landed with jobs that no one else will do because they are dirty, boring or heavy.There is no doubt that in the West Midlands and in Sandwell, as with other places, some aspects of the YOP are being widely abused by employers, who see it merely as a source of cheap labour and who are prepared to lay off their own staff in order to take on young people for the minimum six-month period. After that time the young people are dispatched back to the dole queues.
The length of the dole queues of young people have increased dramatically during the Government's period in office. A comparison which will do for my purposes this afternoon shows that the total number of young people registered at the careers centre in the borough of Sandwell was 639 in November 1978 but is currently 2,235—nearly four times as many. Does the Minister seek to shuffle off those figures on the economic recession, world conditions or whatever? The total number of young people in the borough of Sandwell seeking permanent employment in November 1978 was 939; it is currently 4,927. It will not do for the Minister to pretend that it is factors beyond his control which are the cause of all that. The Government are largely responsible.
I wish to say something about rates in enterprise zones. I listened with interest to the hon. Member for Dudley, West (Mr. Blackburn) and I accept his sincerity, as will all hon. Members. However, the enterprise zone concept is not the success that he would have the House believe. I could take him to see people in the West Midlands and lifelong Tory voters—I was talking to some only a week ago—who have industrial premises to let in Lichfield. The Minister has told me that it is impossible to get anybody to rent the premises. Why? It is simply because down the 547 road, in Dudley, one can live virtually rent-free and rate-free. It is certainly no coincidence that jobs are moving from immediately outside the enterprise zone and into the enterprise zone.
There has been a dramatic increase in the cost of factory rentals in enterprise zones. If a person is lucky enough to have a factory to rent within an enterprise zone, he can virtually name his own price. Instead of industrialists paying increased rates to the local authority, they are having to pay increased rents to private developers. That might suit the hon. Member for Lichfield and Tamworth in his profession, and one or two other people, but it does not help industry in the West Midlands, and it could be argued that it is causing considerably more problems.
My hon. Friend the Member for Coventry, North-East (Mr. Park) mentioned the fact that the Chancellor is to increase council house rents. He, like many Conservative Members, has long conducted a vendetta against council house tenants. Many Conservatives do not believe that council house tenants pay rates. Recently, in the Sunday Telegraph, that authentic voice of Right-wing Toryism, Mr. Auberon Waugh, said that council house tenants were cushioned from reality because they did not pay rates. I have heard that view expressed in the House by one or two Conservative Members. It is, of course, not true. Yesterday, the Chancellor was quoted as saying that council house rents are too low because they amount to only 7 per cent. of average earnings. That is a distortion of the facts.
In the borough of Sandwell almost 30 per cent. of council house tenants are receiving rebates direct from the local authority. Goodness only knows the proportion of people receiving rate rebates from the DHSS. in these days of high unemployment. Most council house tentants do not earn anything like average wages. It is a much loved myth of the Conservative Party that council house tenants have six incomes and four Jaguar cars outside their doors. In the borough of Sandwell the reality is different.
The Government should not be allowed to avoid taking responsibility for their actions. I do not know what will happen at the next general election. I am told that the political situation in this country is in a state of flux and that there is much indecision. I believe that in the West Midlands people are too hard-headed and sensible to fall for the views of the SDP, which includes people who have largely failed in politics over the years and who see membership of that party as a way of keeping themselves in power. I do not believe that the people of the West Midlands will once again be conned by the Conservatives. Too many of them were conned at the last election. Many Conservative Members who have taken part in the debate, despite the hard work that many have undoubtedly done on behalf of their constituents, will have to suffer for the failings and iniquities of the Government. They will suffer at the ballot box in the next election.
§ 2.4 pm
§ Mr. John Golding (Newcastle-under-Lyme)
North Staffordshire was always a natural enterprise zone until it was blitzed by the Prime Minister and the Chancellor of the Exchequer. This week, I received a letter from Staffordshire county council saying that the head teacher of the Chesterton high school in Newcastle had reported to his governors recently that only 50 out of 130 youngsters from the area had gone into work or further education. Those figures are disgraceful. That letter would 548 not have been written before the 1979 general election. Those who voted Conservative then have much to answer for to those youngsters.
In May 1979, North Staffordshire had an unemployment rate of about 4 per cent. Today the rate is 12.7 per cent.—three times greater than at the time of the 1979 election. It is now a distressed area in all senses.
Before the general election, jobs were advertised on boards outside factories. I was at the Department of Employment. When I returned to my constituency after visiting the constituencies of other hon. Members, I was always pleased to see vacancy notices on boards outside factories in Newcastle-under-Lyme. Today, there are virtually no jobs. The number of vacancies has slumped from 1,360 in May 1979 to 469 today. For youngsters there is only the inadequate youth opportunities programme, and even that is being ruined by the Government's policies.
In the days of the Labour Government, I had to speak out constantly against the evil of overtime working, and it was a major preoccupation. Today, the problem is not overtime working but short-time working, and it is creating as much hardship as redundancy in North Staffordshire. At present, it is estimated that there are 15,000 or more people on short-time working in North Staffordshire.
Government supporters have to realise the hardship that shrunken wage packets bring to families, to say nothing of the hardship that the cut in spending power brings to traders and industrialists locally. We have to contend not only with unemployment, but with the reduction in work brought about by short-time working.
The workers are no different. The managements are the same. The machinery and the techniques are not that much different. What is different is the approach of the Government and their economic policies. I deplore the way in which the Government, having devastated our area since May 1979, are trying to put the blame on people locally. Before May 1979, there was no great problem. Today, there is a massive problem. The difference lies not in the workers, the managements or the techniques used in industry, but in the change of Government. The Prime Minister's policies have smashed our well-earned prosperity.
I choose one or two examples at random. The membership of the Ceramic and Allied Trades Union has been hit hardest of all. The Minister mentioned pottery as being one of the basic industries, but he did not go on to describe what had happened to it. It has seen the loss of 18,000 jobs—a 40 per cent. reduction in its work force. What is more, we are talking in terms of a couple of years. Such a reduction is not the result of some gradual decline.
The dramatic collapse of the pottery industry is the direct result of the Government's policies. It was an industry of which we were proud. It had a good export record. It made good quality products. It had good industrial relations. That industry has been damaged for ever. Skills and experience have been dispersed and can never be brought together again. The reason, I repeat, is not poor management or lazy workers, but the value of the pound, high interest rates and the fact that we overcharge industry for energy.
The other day, a manager said to me "The Prime Minister promised to bring about the unification of the country. She said that she would bring management and 549 workers together. She has succeeded in one respect. We are united against her now because we see the damage that she has done not only to employment but to profitability."
What of other workers? Much has been said about the need for further building, and I endorse that view. If there were increased building activity, not only building workers would benefit, because the plight of the construction industry hits others as well. Mr. Bill Young, district secretary of the Transport and General Workers Union, tells me of the continual harm being done to the brick industry. Short-time working and redundancies have occurred at Downings—an efficient firm with good management and an excellent work force. Its experience is shared by other brick works throughout North Staffordshire.
There is doom and gloom everywhere. It is not simply traditional industries that are affected. The Minister in his speech, written no doubt within his private office, talked about the failure of the West Midlands to attract new technological industries. We have not failed in North Staffordshire. We have ICL. We have modern technological industries. One problem is caused by the declaration of redundancies within industries that are based on high technology. The ICL plant that disappeared from my constituency was based not on traditional production, but on high technology.
There is short-time working at Michelin. In fact, short-time working and redundancies are becoming an everyday occurrence. Another 2,000 redundancies are in prospect before February. Ministers who urge hon. Members to look on the bright side should give that message to the additional 2,000 who face redundancy over and shortly after Christmas.
Unemployment has followed cuts in public expenditure both at national and local level. The Government must provide more first aid. There has not been sufficient mention of the erosion of the skill base of the West Midlands. The Government's first action should be to repair the damage that they have done to the apprentice system. The Government brag that they have increased support for up to 24,000 apprentices. When I was in office, when there was a far lower level of youth unemployment, the figure was 36,000. The Government should be talking in terms of a massive extension of support for the apprentice system.
The Government are destroying our skill base. They are putting skilled workers on the scrap-heap through redundancy. They are are not even trying to replace those workers from among unemployed young people. The Government can solve some of the problems created by the maladministration of the youth opportunities programme by increasing the YOP allowance and tackling the problem of substitution. They should make certain that there are regular jobs for youngsters who have been on the YOP. The figure of 30 per cent. placement at the end of YOP condemns YOP in the eyes of youngsters and their parents.
The Government must treat the West Midlands—particularly north Staffordshire—as the distressed area that it is. I was pleased to hear what the Minister said about scrapping the industrial development certificate. I make no bones about the matter. It has been a nonsense for several years. The system has been retained but not implemented. Firms in my constituency—I have sent an example to the Minister—are being tempted away 550 from an area of 12.7 per cent. unemployment because of the financial inducements being given in other areas where unemployment, certainly male unemployment, is not very different.
The Minister should think in terms of saving the firms in North Staffordshire and throughout the West Midlands. The Government should be thinking about the ways in which public money that is being used in other ways can be used to save efficient and useful firms in the private sector. It is nonsense for the Government to let those firms go to the wall. If the Government continue to smash industry over the next two years as they have smashed it over the last two years, the country will be in a desperate plight when it comes to the next election. The difference between May 1979 and the date of the next election will be absolutely staggering.
§ Mr. Geoffrey Robinson (Coventry, North-West)
I am grateful to be called, even at this late stage in the debate. From the point of view of the Opposition it has been an important debate, well attended and with many good contributions. The underlying theme has been the way in which the Government's economic policies have affected the West Midlands far more badly than any other region in the United Kingdom.
The Government came to office with spurious and specious promises of industrial rejuvenation and of entrepreneurs leading the industrial life of our nation into a new twentieth century industrial revolution. Those promises in the Conservative election prospectus have proved to be as bogus in reality as those of us who fought the election knew they were.
I do not wish to repeat many of the valid points made by my hon. Friends. However, I shall look at a few statistics. Each of us has a duty to recall the statistics as they affect the West Midlands constituencies. My hon. Friend the Member for Walsall, North (Mr. Winnick), who chose this appropriate topic for debate, quoted an increase of unemployment of 170 per cent. since the Government came to office. I do not know how any Government can live with such a conscience in moral terms, or in terms of being an effective Government, and reconcile themselves to an increase in unemployment of 170 per cent. in the manufacturing heartland of the nation. I do not believe that the Under-Secretary can understand that either.
The Under-Secretary came to a purple passage in his speech when he talked about all that the Government were doing for the country and the West Midlands. He referred to the microprocessor application project and the loan guarantee scheme. Paltry and irrelevant sums in national and regional terms are being allocated and taken up when the Government are confronted with the magnitude of a problem to which they are meant to respond.
In my constituency there are 28,000 unemployed. In addition, 3,000 school leavers between 18 and 20 are on the dole. Another 3,000 are on temporary employment schemes such as YOP. Two out of three of this summer's school leavers have no prospect of permanent employment. That is a condemnation of any Government. It is the inevitable consequence of the anti-industrial and monetarist policies that have been pursued by the Government ever since they took office. In the West Midlands industry has always been the prime mover of a region that has been the industrial heartland of the country.
551 The result of the Chancellor's latest efforts will be more misery heaped on misery. They are bound to create misery and to compound the problems that we are trying to solve. During the debate there have been several good speeches, not least those of the hon. Members for Halesowen and Stourbridge (Mr. Stokes) and Bromsgrove and Redditch (Mr. Miller). Unfortunately neither hon. Gentleman is in his place. I understand that they both have constituency engagements. We shall all have to make our way to our constituencies later this evening.
One of the best questions put to the Chancellor of the Exchequer after his a statement came from the hon. Member for Bromsgrove and Redditch, when he asked:Does he not realise that what he has so far announced is increased costs for industry and increased tax and charges on those working in industry? Will he now tell us what it is all for and what it will achieve?Remarkably, the Chancellor replied:I am grateful for my hon. Friend's reminder of the importance of containing increases for industry."—[Official Report, 2 December 1981, Vol. 14, c. 252.]I can tell the hon. Member for Bromsgrove and Redditch what the Chancellor's package will achieve. It will achieve more suffering, more vandalism, more despair, more lack of hope among our young people and, in the established and traditional industries of the West Midlands, more closures, more redundancies and more decline.
The British motor cycle industry once dominated the world with 70 per cent. of the market. In the machine tool sector we once had the proud name of Alfred Herbert occupying a proud place as one of the largest and most succesful machine tool manufacturers in Britain. We once had a successful and flourishing motor industry. In all fairness and in a sense of intellectual integrity, I am prepared to concede that the decline has persisted since the early 1960s, but we shall see it continue. It will increase viciously over and above the vicious and unnecessary increase in decline that the Government have already caused.
In all fairness the Minister must equally concede that the figures show that for a long time the decline was a gentle one and that for the past two and a half years of this Government's administration it has become extremely accentuated and is now posing—I use the term advisedly and with consideration—terminal threats to certain of our basic major industries situated in the West Midlands.
I am aware that hon. Members on both sides of the House are asking "What are we going to do about it?" Labour Members must concede that the previous Labour Government did not find solutions to the problems. However, in the last 18 months of that Administration we were beginning to reverse some of the worst trends, especially in unemployment. In other areas, too, there was beginning to be greater realisation of the critical importance to the nation of the manufacturing sector.
It is unfortunate that the Government's misguided and perversely conceived monetarist policies have manifested themselves and that their effects have accelerated to a point at which they pose a mortal threat.
Many hon. Members can speak more movingly, emotionally and emotively about closures in their constituencies, not least my hon. Friend the Member for Walsall, North. In and around Coventry the whole of the Canley plant has closed down. We have seen Reynolds' chains go down. At Solihull, which is equidistant between 552 Coventry and Birmingham, a magnificent new facility costing £100 million at 1975 prices has been mothballed. Heaven knows what it would cost at today's prices.
Similar happenings are taking place in many other constituencies. There is no sign that that process will be reversed and there is no hope. Bearing in mind what the Under-Secretary of State has said today and what the Chancellor said earlier in the week, there is no hope that the macro-economic trends will be reversed by the useful but small measures that the Government have introduced. I do not want to decry them. Indeed, some of us are hoping to start a small company—perhaps this is a declaration of interest—by taking advantage of them. But neither in size nor in concept can they respond to the problem.
In Coventry, 12,250 people are waiting for houses, there are 1,000 unfit dwellings, and 8,000 dwellings are lacking in basic amenities. Yet nationally there are 370,000 construction workers on the dole, and millions of bricks stockpiled. What sort of economic sense can that make?
There are many things that the Government could do in order to reverse those trends. I shall list them in no particular order of priority. Far from increasing the public sector borrowing requirement and the other problems about which we have heard the Under-Secretary and other Ministers speak ad nauseam and irrelevantly, such measures could reduce the PSBR.
We need a real drive to revitalise the traditional industries in the West Midlands. That could be done by a national robotic centre combining the microprocessors, the chips and all the other things which, unless they are applied to industry, have otherwise no reason for their existence. In turn, it would involve an expansion of university education.
We must reduce the exchange rate, which is back at the dangerous level of nearly $2 to the pound. It must be brought down to $1.75 or thereabouts. It must also be brought down in relation to the European currencies.
We must introduce import controls, difficult though they are.
We must introduce controls on capital flows.
We must reduce the national insurance surcharge by at least 3 per cent. That would enable more people to be employed.
Interest rates are still far too high. Consequent upon and in line with the reduction in the exchange rate of sterling, they should come down to around 10 per cent.
Those are all measures on which the Government should embark.
At local level, the councils must have more imagination—and more readiness to take risks and to embark upon building programmes and investment programmes in industry—than they have shown so far.
§ Mr. Ivan Lawrence (Burton)
This is the second time this week that I have been permitted to make a two-minute speech.
It is time to nail the lie that the Government are to blame for the unemployment in Britain today. The truth is that the Labour Government did so much harm to the industrial structure of the West Midlands that the Conservative Government are now having to try to shore it up and reconstruct it.
The West Midlands area is pre-eminent in manufacturing and is much more vulnerable when the competitive 553 edge of its manufacturing industries is lost. Long before the Conservative Government came to office that edge had disappeared. During the 1970s wage costs rose by 300 per cent. and output by only 15 per cent. The rise in wage costs in other countries was considerably less. In Japan, one of our major competitors, there was no rise at all. Foreign cars had taken over more than 50 per cent. of our market. Without the reduction in overmanning under the present Conservative Government, it is doubtful whether any cars would now be built here.
Long before the Conservative Government came on the scene, massive obstacles had been placed in the way of West Midlands industry. Can Labour Members deny that under the Labour Administration inflation, which went up at one point to 27 per cent., was brought down only because of the intervention of the International Monetary Fund—and at the price of stoking inflation in the first year of the Conservative Government? Can they deny that it seriously harmed industry, as did high taxation, price restriction, excessive unemployment protection measures, over-stringent planning regulations, and nightmarish form-filling? They all represented a terrible disincentive to the West Midlands.
Worst of all was the disastrous way in which Opposition Members conspired to destroy the very core of British industry in the way that they dealt with the trade unions. The trade unions were and still are the paymasters of the Labour Party, the sponsors of Labour Members without whom they would not be reselected, and the puppet masters for whom Opposition Members must jump in order to maintain their seats and positions. The power was shifted inexorably away from management to the unions, which weakened management—.
§ It being half-past Two o'clock, the debate stood adjourned.