HC Deb 18 June 1981 vol 6 cc1264-70

Motion made, and Question proposed, That this House do now adjourn. [Mr. Thompson]

10 pm

Mr. Bruce George (Walsall, South)

I make no apology for this, my fourth speech on the subject of industrial decline and unemployment in the West Midlands and Walsall. After two centuries of virtually unhindered and sustained industrial and commercial development we are in deep crisis and deep recession. It is futile for people to blame the world recession or the trade unions for all our problems.

The Birmingham Post, a respected newspaper not to be politically compared with the Morning Star, said on 11 June: Despair and anger as a region rots An article by its industrial correspondent said: The economic recession continues to deepen, either despite or because of the Government's policies. West Midlands industry has suffered more than most and is joining both Conservative and Labour MPs in calling for a new approach. Most of the blame rests with the doctrinaire, monetarist strategy for controlling inflation, the laisse-faire approach of the supply side of the economy. There has not been the attempt made to moderate the impact of those policies. For decades unemployment in Walsall was way beneath the regional and national average. For a long time it was half the national average. Now it is significantly higher.

Let us consider some stark and terrifying statistics. Of persons registered as wholly unemployed in Walsall, there are nearly 12,000 males and 4,320 females, an appalling total of over 16,300 people. The change over the years is 8,953. In the Walsall travel-to-work area, the unemployment figure is 14.6 per cent. In the West Midlands it is 12.7 per cent, way above the national average of 10.6 per cent. We are grateful that the youth opportunities programme provides a cushion for almost 3,000 youngsters in Walsall and the temporary short-time working compensation scheme another 12,641.

The CBI's economic situation report for the end of May gives this gloomy message: Redundancies are expected to continue to increase for some time although at a slowing rate. Concern has been expressed that a significant proportion of those currently working short-time will eventually become unemployed. Are we to have, on top of our 16,300, a considerable proportion of the 12,500 who are on the temporary short-time working compensation scheme? That is how desperate unemployment has become.

How much comfort is there for school leavers, of whom nearly 1,000 are unemployed in the Walsall area? A report by the council to its further education sub-committee on 10 June says: The prospect for this year's school leavers is grim. Of approximately 340 pupils who left school this Easter only 18 are known to have jobs. Of those leaving soon—to add to the mountain.….less than 5 per cent have so far found permanent jobs. It is a great responsibility on employers, both public and private, to absorb where they can the youngsters about to hit the job market. Unfortunately, with the disastrous loss of apprenticeships, the position will hardly improve.

There is a great obligation on the Manpower Services Commission to give worthwhile experience to the kids that we have let down. Tomorrow I am visiting Wolverhampton skillcentre to see where some of the unemployed adults will be retrained, I hope for jobs and not another spell on the dole.

It has been said that there is a light at the end of the tunnel but, as we have heard, that light is a train rapidly coming to knock us over. The loss of jobs since 1979, when the Conservative Party came into office—I have said many times before that one cannot put all the blame on the Government, merely most of it—is without precedent since the Second World War, and we have to go back to the early 1930s and the worst years of the Depression to find a fall in production of comparable dimensions.

It took the whole of the 1930s and the Second World War to rebuild the economy of the West Midlands, and I do not propose to wait 10 years to see the damage done by this Government being remedied. We are told that things are bottoming out, but there seems to be little sign of it. The Cambridge Journal of Economics has recently written: Indeed, it is highly implausible that the pursuit of Thatcher policies will leave the industrial base of the economy in any position to generate recovery, or even that they will achieve a permanently lower inflation rate". I have recently been written to by the local chamber of commerce in Walsall—a body that I regard very highly. In quoting from its letter, in no way will my analysis be attributable to the chamber. I do not wish to embarrass it. It recently conducted a survey of 96 local firms that employ approximately 14,000 people. The chamber wrote: Although there has been a slight improvement in the scene compared to three months ago, the overall picture is still pretty bleak. Only 13 per cent. of local firms are working at full capacity, and 59 per cent. of firms expect stock levels to remain at the present low level over the next three months. Prospects for alleviating the high levels of unemployment in the borough are not good, with only 8 per cent. of firms indicating that they intend to increase their workforce over the next quarter, while 14 per cent. report that their workforce will decrease over the same period. Although the chamber's remedies are not the same as mine—they blame many factors, including rates and taxation, and the level of inflation—it points to a very serious situation.

One industry largely concentrated in my constituency is the nuts and bolts industry, or the industrial fastener industry. It originated in the West Midlands and the Darlaston area of my constituency. In 1975 the industry had a work force of 40,000 people; at the moment it is 23,000. The industry has virtually halved in a period of five years. It has undertaken a considerable process of readjustment and slimming, which has left it in a strong position theoretically to meet efficiently the upturn in trading conditions. However, there are still to be many further casualties, and currently factory sites in the township of Darlaston are on the market.

The industry has taken the opportunity, to a large extent, of redefining its markets and aiming for more sophisticated and higher technological products, and has placed an enormous emphasis on quality. There has even been some investment, despite the very serious economic position. But the industry is under siege from imports, which are aimed at the bulk sector of the market. The fastener industry is heavily dependent on raw materials—steel and wire—and the price levels within the United Kingdom are not comparable with those of other European countries, particularly where those countries have hidden subsidies.

The continuance of restrictive measures by the European steel cartel creates serious consequences for the nuts and bolts industry. The industry is finding a growing problem with counterfeit products, particularly in the aerospace and petrochemical markets. Those products are not only harmful to the fastener industry but in themselves constitute unacceptable safety hazards to the consumer at large. It is therefore essential that mandatory controls, such as country of origin markings, are instituted, otherwise the United Kingdom accident rate will escalate.

The Government must take action. The Government, who recognise the steel cartel in Europe, must also recognise that what is good for steel may not be good for ancillary industries, notably the fasterner industry. It may be good to protect European steel. If the price of protecting European steel is the destruction of ancillary industries such as the nuts and bolts industry this will be too high a price to pay. The industry is being unfairly attacked. It looks for some form of protection, but not protectionism, from the Government.

Similarly, the leather goods industry, formerly centred in my constituency, has suffered from imports from South Korea, Taiwan, Argentina and Italy. The industry looks for some form of assistance. It does seek to be protected indefinitely. I hope, however, that some form of assistance may be given.

The Chancellor of the Exchequer is shortly to visit the West Midlands, including my constituency, where he will open a £200,000 extension for a company called Electronics Design Associates. I congratulate the firm on expanding despite an unfavourable climate. I hope that the Chancellor will not seek to give the impression that my constituency has prospered under the Government's benign and intelligent leadership and tutelage. The situation is quite the reverse.

If the right hon. and learned Gentleman has time, following his visit to the factory, I hope that he will accompany me around other parts of my constituency to see the consequences of Government policy. Many people, I believe, would like to express their views in the forthright West Midlands and Black Country manner with which my hon. Friend the Member for West Bromwich East (Mr. Snape) and I are familiar.

I have some anxieties about the workings of the temporary short-time working compensation scheme. I hope that the Minister will examine the recent case of F. H. Lloyd in my constituency. I am also worried about companies that scuttle from an area of high unemployment such as Walsall and move to other areas that attract grants. A number of companies have come to my attention. They have scuttled and gone to other areas. One moved KO Corby. I am delighted for Corby. With unemployment at almost 15 per cent. in my constituency, however, I feel that far more control must be exercised over these companies to ensure that there is not simply a reshuffling of unemployment. If the price of 50 jobs say, in Corby is 100 jobs lost in Walsall, it is a bad bargain.

As a democratic socialist, my strategy will be different from that of the Minister. I wish to see the small industry that was so important to my constituency revived. I hope that I can bring to the attention of the Minister a dissertation written by a friend of mine—Bob Hale—and submitted to Bradford university, setting out guidelines for policy-makers in encouraging the small business sector. It is an excellent piece of research that I hope will commend itself to the Department.

I hope that the Government will finance the expansion of the public sector, including such areas as building and the railways. I hope that the Government will assist areas such as mine which have particular problems. I hope that the Government will continue to sustain the motor vehicle industry upon which what remains of the prosperity of the West Midlands and my constituency so desperately depends. I hope that the Government will improve the machinery of planning. I hope that the Government will allow local authorities to use their growing expertise to help small industry. The best strategy of all in rescuing British industry is for the Government to go.

10.13 pm
Mr. Peter Snape (West Bromwich, East)

The House is grateful to my hon. Friend the Member for Walsall, South (Mr. George) for drawing attention to a vital and urgent human problem that affects hon. Members representing West Midlands constituencies. The fact that my constituency lies immediately adjacent to that of my hon. Friend gives me the right, I hope—thanks to his kindness—to intervene in this debate and to say that what is happening in Walsall is also happening next door, in West Bromwich. Until comparatively recently the West Midlands was always regarded as the most prosperous area of the United Kingdom. Clichés such as "the heartland of England" and "the source of our prosperity" have been used about constituencies such as those we represent.

However, since May 1979, when the people of this country made their unhappy choice in terms of the next Government, unemployment in both our areas and throughout the region has rocketed. I shall mention three companies in my constituency that have gone out of business since June last year. I do not go back to 1979, because I might be accused by the Minister, who has the unneviable task of replying to the debate, of sowing the seeds of the demise of the Labour Government.

The three firms have gone out of business since 1980. They were old-established firms, and household names in my constituency. Dartmouth Auto Castings went bust recently, with the loss of 460 jobs in West Bromwich. Chance Brothers, the glass firm, closed, with the loss of 550 jobs. Its premises were in the centre of West Bromwich. Smith Corona typewriters, an American-owned company with good trade union relations, went out of business. A new factory was left lying derelict, and there was the loss of 280 jobs. These jobs have been lost since the Government came to power.

We all saw the posters designed cleverly by Saatchi and Saatchi, which proclaimed "Labour is Not Working". Nobody is working in the West Midlands at present. If the Prime Minister chooses to run a similar campaign for the next general election she will not need to use actors from Saatchi and Saatchi. She will be able to have posters that are twice the size of those used during the 1979 campaign. They will be realistic ones because those depicted will be genuinely out of work and not actors provided by an expensive advertising agency.

In the borough of Sandwell in my constituency, unemployment has increased dramatically since May 1979. That is a great tragedy for youth unemployment. At the time of the 1979 general election 692 young people were registered as unemployed or on youth opportunity courses in the borough, and that was too many. There were 161 vacancies for the 692. In May 1981, only two years after the accession to office of this great businessman's Government, there were no fewer than 3,023 young people either out of work or on youth opportunity schemes in Sandwell. There are no more than 14 vacancies for those young people. That is the real tragedy of the Government's policies.

In May 1981 no fewer than 23,798 members of the working population of Sandwell were unemployed. That means that 13.2 per cent. of the available work force was unemployed. Areas in the West Midlands, such as Walsall and West Bromwich, never saw such unemployment figures in the midst of the Depression of the 1930s. The present unemployment figures turn areas such as Walsall and West Bromwich into the Jarrows of the 1980s. The Prime Minister and the Minister will have something to answer for at the next general election. The seeds of a Conservative defeat are being sown in the West Midlands in the misery of unemployment in that area.

10.17 pm
The Under-Secretary of State for Employment (Mr. David Waddington)

The hon. Member for Walsall, South (Mr. George) is obviously right to raise this matter. There is no doubt about the great problems that the current recession has brought to the West Midlands. However, it is a travesty to suggest that the problems are an invention of the Government. Many causes can be found for our present economic difficulties—for example, the failure over many years to contain public expenditure and the decline in the competitiveness of British industry. There can be no doubt that we are not alone in having to deal with the immense problems caused by the world recession following upon the enormous escalation in the price of oil.

Those are facts that no one can shrug off and they are well known to all thinking people. Although the penalties for being unemployed may not be as great as they were before the war, unemployment remains a great tragedy, bringing hardship, frustration and waste. We should pay respect to the opinions of each other and face the fact that no sensible person in the House, whether on the Government Benches or the Opposition Benches, wishes to see unemployment.

The difference between Labour Members and Conservative Members is that we do not believe that the problem could be solved by reflation. We do not believe that the problem could be solved by massive extra public spending which has to come from somewhere. Rather, we believe that if that were to be done, the problem would be compounded. It is not a question of doctrinaire monetary policy. It is a matter of recognising that the containment of inflation must still be our first aim. Judging from what the hon. Member for Walsall, South said, that would appear to be the opinion of the Walsall chamber of commerce.

How tragic it would be if, when the recession ended, we found ourselves priced out of the world markets and unable, as a result of our folly, to benefit from the climb out of recession and the new markets which would then be available to us if we exercise common sense and restraint now. How fine it would be if, as a result of restraint and good housekeeping now, British industry emerged from the present difficult trading conditions slimmer, fitter and in good competitive shape to seize every opportunity that arises.

I shall deal with the specific matters that the hon. Gentleman raised. The motor industry plays an important part in the economy of the West Midlands. Although it is scant comfort to people who are out of work or in fear of redundancy or short-time working, it is a fact that the motor industry is suffering throughout Europe and the United States, where almost one-third of those who work in the industry have been laid off indefinitely. Again, it would be a travesty to talk of these troubles as being a consequence of mad monetarism. They are a consequence of world recession and fierce competition from Japan.

I gather that the annual turnover of the industrial fasteners industry is £330 million. It is a substantial industry, but import penetration has grown and grown. Now its extent is 50 per cent. in low technology mass market products. The industry has been contracting, mainly due, I understand, to intense competition from Taiwan, which benefits from Japanese steel being cheaper than our own and also from a fall in demand following a decline in the motor industry. There is a 15 per cent. Community tax, and officials are considering with the industry a case for increasing that duty. At the same time, a solution will have to be found to the problem of Taiwan rerouteing fasteners through third countries. One important and useful step has been taken by the industry. Its federation has set up a quality assurance scheme in conjunction with BSI to combat the effect of cheap imports, which are predominantly of poor quality.

The hon. Member for Walsall, South raised the question of counterfeit products. It is a wide subject. He will not expect me even to embark on it tonight. However, I can assure him that what has been said tonight will be read and will reinforce the conviction of many hon. Members that it is a real problem and one that has to be tackled.

Then there is the matter of F. H. Lloyd's and the temporary short-time working scheme. I should like to have helped the hon. Gentleman. I started off tonight thinking that I could be fairly expansive, but having thought about the matter more carefully, I have to say that much information given by individual firms is given to the Department in confidence. We have already begun to look into the matter. I shall look into it further and write to the hon. Gentleman about it. That is the fairest way to deal with the matter.

It is folly to give the impression that all is doom and gloom, however great the problems may be. The Metro is selling better than expected. It has helped to push up British Leyland's share of the market from 18.65 per cent. between 1 January and 31 May last year to more than 20 per cent. this year.

Manufacturing industry has been bearing the brunt of the world recession, but new job opportunities have been opening up in other sectors in the West Midlands. This year, 400 retail jobs will be created by the second stage of the new Telford Shopping centre, 150 jobs have been created by the construction of the new pay-as-you-earn computer centre, Asda's superstore in Coventry has created 300 new jobs, and 150 new jobs will be created by Sainsbury's new store in Wolverhampton. The new C & A store at Walsall will also create a considerable number of new jobs.

Mr. George

They are service industries.

Mr. Waddington

Of course they are service industries. We cannot escape from the fact that the expansion of service industries will make a great contribution towards containing the unemployment figures and we hope, reduce them. We should not ignore that fact.

Birmingham, Wolverhampton and Sandwell are being helped by the Government's inner area programme. In 1971 Birmingham received £16 million and Wolverhampton £3 million. I understand that with some of the money Birmingham inner-city partnership will build small starter-unit factories, will run programmes to help the specially disadvantaged, such as unemployed black youngsters, and will designate five of the most run-down areas in the city centre as industrial improvement areas. Dudley is to de designated as one of the enterprise zones.

The £990 million of support that the Government are making available to British Leyland is going to the West Midlands during the next two years. It is a large investment in the future of the West Midlands. The business opportunities programme, the loan guarantee scheme and the whole package of measures to help small firms are a token of the Government's conviction that the small firms sector can play a great role in the expansion of job opportunities.

Unemployment problems in the West Midlands have arisen largley as a result of the current recession, and are not, therefore, comparable with the long-term problems of unemployment and structural decline that we find in certain other parts of Britain. For that reason, hon. Members should not imagine that the Government will take the step of extending assisted areas to cover areas in the West Midlands. However, all the other steps that I mentioned are important steps and are a token of the Government's determination to play their part.

The hon. Gentleman mentioned our special employment and training measures. They can only alleviate the problem, but the alleviation is, none the less, real and important. Between 1 April 1980 and 31 March 1981, 36,760 youngsters were found places on the youth opportunities programme schemes in the Midlands. On a national basis, 50 per cent. of YOP participants are in jobs, further education or training five months after leaving the courses. Great steps have been taken to improve the quality of the programmes so that no youngster leaves without the basic skills necessary to compete effectively in the labour market. We want to move to a position where every 16 or 17-year-old not in full-time education or a job is assured of vocational preparation until his or her eighteenth birthday.

Mr. Snape

I appreciate what the Minister is saying. However, can he offer any comfort to the 3,023 unemployed youngsters in Sandwell who are chasing 14 vacancies? What long-term solution does he suggest?

Mr. Waddington

The long-term solution is to ensure that as Britain comes out of the present recession it emerges in a competitive shape so that it can seize the opportunities that will arise. The worst thing that we could do for the youngsters in Sandwell would be to pour money into the economy and start a new burst of inflation that would compound our problems, so that, three or four years from now, we would have worsened unemployment rather than improved it. Our policies are well known to the country. They are the only policies—

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.