HC Deb 30 March 1981 vol 2 cc32-110

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

4.5 pm

Mr. John Sever (Birmingham, Ladywood)

We welcome this opportunity to discuss unemployment in the Midlands. If they are fortunate enough to catch your eye, Mr. Speaker, my right hon. and hon. Friends will, I am sure, wish to pursue the question of the difficulties that they are experiencing in their constituencies and to outline the difficulties experienced by working people in the Midlands. Throughout the towns and cities in our region we see the plague of unemployment raging through the lives of countless thousands of families, bringing distress and unhappiness on a scale undreamt of in our wildest nightmares in May 1979. The wildest nightmare in that month, of course, was the arrival of the present Administration.

Arguably, this Administration is the most doctrinaire and reactionary in modern British politics. Certainly, for many of us who have grown into politics in recent times it is the most doctrinaire Government that we have ever seen. The Department of Employment's figures released on 24 March show that the national unemployment level is now a shade below 2.5 million. If the number unemployed but not yet registered as such could be quantified, I believe that that figure would be well over 3 million. It would be difficult for the Minister to argue against that.

The figure for the East and West Midlands together is now 428,700. In May 1979 it was 188,600. The current figure is most alarming. Will the Minister tell us today what he and his Department are able to do to reduce it? I hope that the debate will centre around the Government's proposals for relieving the misery facing thousands of Midlands families.

We on the Labour Benches believed in May 1979 that the figure of just under 200,000 was unacceptable. Today, twice that number are out of work. The current level of unemployment is truly staggering, and I fear that it will increase. The Government are entitled to ask why that should be so. Many of us believe that the reasons for that fear are obvious, but I point to ample evidence from our Midlands experience to support the contention.

First, hundreds of factories are working short-time. Every employee who is working within such an enterprise feels the threat that his firm may not weather the economic blizzard that has settled over those enterprises, and that the short-time working will in time develop to no-time working. Secondly, grossly unfair foreign competition, the import of cheap and often Government-subsidised goods, the high cost of borrowing, and the competition restrictions imposed by the high value of sterling will mean further reductions in the already thin order books of those firms.

All the business sectors in the Midlands, such as enginering—those firms known colloquially in the Midlands as the metal bashing businesses—motor cars, components and accessories, carpets, textiles, footwear and leather are experiencing extreme difficulties. I wonder how many of the good electors of Grantham, in the East Midlands, are now happy with their decision to support the election to high office of one of their daughters, who is now responsible for the loss of so many of their jobs and livelihoods.

The list of substantial Midland businesses with redundancies totalling more than 100 recorded from reports received by the Birmingham chamber of commerce reads like a national "Who's Who" of British industry—or a list of who is going next in British industry.

In January 1980, the British Steel Corporation subsidiary, Prothero of Wednesbury, sent 600 workers to the dole queue. GKN, Sankey at Wolverhampton sent 139 to the dole queue. In February, BSR at Cradley Heath made 1,200 workers redundant. Patent Shaft steelworks, at West Bromwich, made 1,500 workers redundant. I know from my hon. Friend the Member for West Bromwich, West (Miss Boothroyd) that those jobs are lost and gone for ever.

In March 1980 there was more bad news from GKN, Sankey at Bilston, where 136 workers were made redundant. In the same month there was further bad news of proposed redundancies of about 12,000 during 1980 from British Leyland. In April, Triplex of Birmingham announced 200 redundancies. In May 1980 there was yet more bad news from GKN, Sankey at Telford, where 600 were declared redundant, with another 300 at Bilston.

Midland Motor Cylinders at Smethwick announced 330 redundancies. In June the year was half over, but the situation was no better. Lucas Electrical announced 3,000 redundancies at various sites in the Midlands. Birmetals at Quinton announced 900 redundancies. BSR at Old Hill announced 600 redundancies, and there was a further startling announcement from GKN that 2,000 more jobs were to go.

In July, Tube Investments at Wednesfield announced 350 redundancies. In August, Triumph (BL) at Canley announced 1,600 redundancies. In September, Cadbury-Schweppes at Bournville announced that 3,000 jobs were to go in the next four years. T.I. Raleigh at Handsworth, Birmingham made 220 redundancies. In October 1980, guess who—GKN, Sankey at Wolverhampton made 930 workers redundant.

In November, Talbot Cars at the Stoke plant in Coventry, made 900 redundancies. In December, 500 Christmas-present redundancy notices were issued at GKN Forgings, Bromsgrove and 200 at Darlaston. Dunlop at Erdington, in Birmingham, made 1,000 workers redundant.

In January 1981, it was a happy new year for 450 workers at GKN, Automotive Fasteners in Birmingham. In February, GKN said that there would be no further redundancies after 1,200 further redundancies at various sites. Talbot Cars at Ryton, in Coventry announced 525 redundancies. Recently, Ansells Brewery, in Birmingham—a household name in the City and the Midlands—announced 600 redundancies.

Mr. Dudley Smith (Warwick and Leamington)

I am listening to the hon. Gentleman with interest. He must know that bad industrial relations led to the Ansells redundancies.

Mr. Sever

I am aware that the future of that company is in jeopardy because of the management's total inability to give working people a fair deal to which they can respond. As a result of that inability, 600 people are on their way to the dole queue.

The question that immediately springs to my mind is: when will GKN decide that enough redundancies have been forced upon it by the Tory Government through their policies and that it will put no further funds into the Tory Party's coffers? Already the writing is writ large on the wall of the Conservative Party Central Office that no more money will come as the jobs go out the back door of the factories.

The list of redundancies and closures in the Midlands is endless. I do not propose to take up the time of the House further in listing the long catalogue.

Mr. Andrew Faulds (Warley, East)

I am grateful to my hon. Friend for allowing me to intervene. I wish that he would go on with his litany of disasters. He has missed out from my constituency Chance Brothers, Mansill Booth's, Avery's, Dartmouth Autocasting, and other firms that have declared hundreds of redundancies as a result of the Government's policies. I hope that my colleague will be kind enough to continue with that litany of disasters.

Mr. Sever

My hon. Friend tempts me. My list was typed and it contained some of the companies to which my hon. Friend refers. However, to try to ease the agony of Ministers I decided to take out some of the names. The redundancies and closures to which my hon. Friend refers reflect the distress in his constituency and in others. He presses me to continue with the list, but it is better that I should try to prise from Minsters their ideas for trying to resolve some of the disastrous problems that face working people in the Midlands.

The number engaged in short-time working is also a fearful problem. In addition to all the redundancies that I could have listed this afternoon, short-time working is affecting the livelihoods and standards of living of many more thousands of people. In the week ending 17 January this year, 594,000 operatives in manufacturing industries in Great Britain were on short-time. Many of the operatives work in the Midlands.

Mr. Greville Janner (Leicester, West)

Is my hon. Friend aware that the Ministry's figures are appallingly defective? They include only short-time working figures that are reported to the Department, generally because people are after temporary employment supplement. Is my hon. Friend aware that in areas such as Leicester, where unemployment is already over 10 per cent., about 15 per cent. of the work force is working short-time? That figure is not available from the Government because it can only be estimated.

Mr. Sever

I am happy to confirm that. Many people are on short time but do not register. I accept that Ministers might have difficulty in dealing with that problem, because it is difficult to quantify the numbers involved. However, hundreds of thousands of families in the Midlands are affected. Their incomes have been reduced savagely and their standard of living is far below that which the Prime Minister said it would be after two years of her Government. The short-time working figure compares with a total of 502,000 on short-time working in the week ending 13 December 1980.

I now turn to the situation in Coventry. I should like to place on record the feelings of hon. Members on both sides of the House who will share my sadness at not seeing my hon. Friend the Member for Coventry, North-East (Mr. Park) here today as he is unwell. Many of us have listened with enthusiasm and high regard to what my hon. Friend has said in similar debates. Hon. Members will miss his contribution.

Coventry has long been regarded as healthy. It has been regarded as one of Western Europe's most prosperous cities. Today the story is different. Coventry is also subject to Government gloom. Coventry has suffered, as has the rest of the Midlands, from the prophets of monetarism and from the dogmas pursued by the present Government.

Factories that once boasted high production levels of goods readily saleable around the world are now empty. They echo only to the footsteps of property developers and auctioneers who are either trying to sell the space for warehousing or storage or to sell machinery for export or scrap. That is desperate and dangerous. It is destroying the whole fabric of the economy of that great city.

When will the Government realise that they are presiding over the assassination of industry in the Midlands and the destruction of the hopes and dreams of countless thousands of families, because of their inability to provide work. I hope that the Minister can tell us today when the long-promised upturn and consequent improvement in the lot of Midlands workers will take place.

Within a few hundred yards of the famous Matthew Boulton Soho foundry—the heart of the West Midlands industrial revolution—is the Soho Road area, in my constituency. The general neighbourhood is largely where ethnic minorities live. They feel justifiably disadvantaged for a range of reasons, including poor housing, lack of social provision, and inadequate services of all kinds. As a result, they are at a social disadvantage so pronounced that now every square inch of that district and the whole of my constituency is within the core area of Birmingham's inner city partnership area. Now, in addition to that social disadvantage, racial minorities are finding it extremely difficult to find work. They blame, the Government, as we do, for a lack of effective policies on employment and job opportunities.

The Secretary of State would be well advised to reconsider the statement made as long ago as 1977 in the report to the OECD by a group of independent experts, under the chairmanship of Paul MacCracken. The report was entitled Towards Full Employment and Price Stability". It said: The fact that present high levels of unemployment have not caused more social and political unrest is a tribute to the effectiveness of today's systems of income maintenance and social security. But there can be no complacency about the consequences of prolonged unemployment on social, racial, religious and regional tensions and, in time, on attitudes to work and to society in general.

Mr. Faulds

Does my hon. Friend agree that the utterances of the so-called right hon. Member for Down, South (Mr. Powell), who appears certifiable in what he now says outside the House, do not help the dangerous situation that is developing for these ethnic minorities?

Mr. Sever

Much public disquiet was expressed at the weekend by the leaders of ethnic communities, whom I was happy to meet on Sunday, about the words of the right hon. Member for Down, South (Mr. Powell). What the right hon. Gentleman says does nothing whatever to improve race relations and racial tolerance and harmony, particularly in our large cities.

The MacCracken report went on: Indeed the continuation of excessively high rates of unemployment could call into question the market-oriented economic system. It is clear, therefore, that a policy designed to minimise unemployment over the medium run cannot ignore the social and political costs being incurred in the short run. What worries me now is that we have long since passed the short run in 1977 and are well into the medium term. I hope that the Minister will say how the Government intend to allay the fears expressed in that report and felt by the unemployed in the Midlands.

The situation becomes worse daily. I quote from a recent newspaper article, in which Mr. Brian Willis, of the chamber of commerce in Coventry, said: The Prime Minister could so easily adjust the tappets, change the plugs of our engine instead of stuffing potatoes up the exhaust and putting sugar in the petrol tank". It is my view that Mr. Willis has got it nearly right, but not quite right. I believe that the right hon. Lady has pinched the engine.

In the same article, Mr. Scott Glover, chairman of the large company section of the chamber of commerce and director of the Coventry factories for Massey-Ferguson, is quoted as having said: The danger is that the current economic policies of the Government are going to lead to such a collapse of the industrial base that we will reach a position from which we can never climb back". That comes from a city that was once regarded by many in the House as probably the most prosperous in Europe.

A growing fury is felt by many of the smaller Midlands industrialists and entrepreneurs—allegedly those whom the Government wish to encourage—who feel that they have been sold out by the right hon. Lady and her colleagues. They desperately want help from the Government with the high energy costs that they have been asked to absorb. They regard high energy costs as simply a further taxation on hard-pressed small businesses. I hope that the Minister will tell us what discussions he is having with the Department of Energy to try to relieve this worry, which I know has been expressed to his right hon. Friend in a number of representations from the Midlands and elsewhere.

The crippling level of interest rates has damaged production capabilities, and companies are forced to scale down their enterprises and put many long-serving and well-trained skilled workers on the dole. During the 1979 general election campaign I spoke to groups of workers in a substantial engineering and electrical manufacturing company a hundred yards from my front door. Strangely enough, some of those workers did not want to listen to me when I told them that a vote for a Thatcher-led Administration would lead them eventually to the dole queue. I wonder how many of the workers who doubted what I said at that time feel about being out of work, particularly when they see the "For Sale" notice that is now stuck on the side wall of that factory.

It is the same story in companies, both large and small, throughout the country, but it is particularly true of businesses in the Midlands. The jobs that have now gone are likely to have gone forever throughout the region. Mr. Reg Parkes, vice-chairman of the regional CBI and chairman of the Brockhouse Group—one of the most substantial enterprises in the Midlands—is quoted as saying, a few days ago, that: The Government had distorted competition and weakened basic industries so much that many would not survive". There we find a leader of organised management in the West Midlands complaining that the policies of the Government, which doubtless many of his friends in industry helped into office, have left industry in such a state that it is doubtful whether many of them will survive.

Mr. Parkes is quoted as saying: The Midlands has lost great chunks of industry most of which are lost for ever, we have over two hundred and seventy thousand unemployed. Another two hundred and thirty five thousand are on short-time working". He went on: Successive Governments have directed industry out of the Midlands to designated depressed areas, assisted areas, and like so that although we have bounced back after each recession it has always been at a lower level". Moreover, it takes a longer time.

With the constant body blows that the Government have inflicted upon industry, job opportunities for many thousands of young people seeking to enter industry will not be there. The Government's duty is clear. They must give greater support to financing apprenticeship training and must encourage such help through the engineering industry training board and other industrial training boards. Midlands TUC leaders, in their recent report on the crisis, called for a campaign for a new policy to support the Midlands, which is still not rated for financial assistance.

Many of us on the Opposition Benches believe that the problems of the Midlands cannot be solved by throwing money at the area. We also believe that there is an immediate need for much extra financial help to be given to the Midlands, because that is where the growth and the long-sought-after upturn in the economy, to which the Prime Minister refers in her speeches, will come from. Unless it happens in the Midlands—unless encouragement is given to that region—the position will worsen.

Those dire warnings come not only from trade unions and Labour Members but from established, recognised and well-regarded figures in the business community in the Midlands. The Government would do well to study the TUC report carefully and to regard the comments made in it as an indication of the way in which they can best help in the Midlands. They should read it and act upon it immediately. The Midlands area, once the centre of full employment—the boisterous, booming heart of the nation—is now in danger of a terminal seizure. The Government must provide a pacemaker at once.

I believe that in this debate my right hon. and hon. Friends will conclusively prove that the welfare of the Midlands has for far too long been ignored by the Government. The priority must be to reflate the economy, support retraining schemes for workers, offer increased skill training opportunities to the young, and provide the climate for the development of an industrial renaissance. If the Government cannot or will not do those things within a programme designed to reduce unemployment they should do the honourable thing and place their record before the electorate and seek a new mandate.

4.31 pm
The Under-Secretary of State for Industry (Mr. Michael Marshall)

The whole House will have listened with particular interest to the speech of the hon. Member for Birmingham, Ladywood (Mr. Sever). I believe that I am right in saying that it was his first from the Dispatch Box. I congratulate him on a well constructed, thoughtful speech, delivered with confidence and in a way that challenged the Government side of the House and enlisted the support of his hon. Friends over a wide spectrum. I am sure that we shall hear the hon. Gentleman speaking from the Opposition Front Bench on many occasions. He will be a great improvement on some of the others who appear there from time to time.

This is an important debate. Those of us who have had the opportunity to take part in similar debates in the past regard them as occasions for serious and detailed contributions. I am sure that we shall have them today. There is a wide range of expertise present on both sides of the House.

My hon. Friend the Under-Secretary of State for Employment will listen with particular interest and will later pick up some of the themes of the debate. I should like to speak briefly, because I do not wish to answer immediately some of the points that the hon. Gentleman put. I am sure that they will be taken up and orchestrated from both sides of the House.

Perhaps I may immediately be somewhat more critical of the hon. Member's contribution. He naturally fell into the trap of giving us a gloomy picture. He did not try to strike a balance. We heard nothing about the good news.

Let us look at the problem clearly. We are all aware that the Midlands is, in effect, two distinct regions—the West and the East Midlands, different in nature and with different industrial problems. In the West Midlands, the heartland of our manufacturing industry, it was inevitable that the national and world-wide recession would bite particularly deeply. I regret that the hon. Gentleman did not put his remarks in that context. In the East Midlands, traditionally a prosperous area with a wide industrial base, the problems have centred on the long-term decline of the relatively small number of important industries, particularly clothing and footwear.

But to say that the regions have distinct sets of problems is not to say that they are in a traditional sense regional problems. I appreciated that part of the hon. Gentleman's speech in which he tried to look at the question of regional aid in a wider context. I shall come to that a little later. We have for a long time been faced by parts of the country suffering from locational disadvantages or long-term structural decline—the problems of Merseyside, the North-East and the far South-West are well known to the House. By and large, their problems are not the problems of the Midlands. They are very much a reflection of national problems, of, in some areas, historical failure to remain competitive, particularly certain industries, and to adjust to a changing world.

That is a reality well understood in the Midlands, particularly in the West Midlands. Even with the conurbation suffering such historically high levels of unemployment, there has been remarkably little clamour for regional aid. A number of representations have been considered, but so far as I am aware only Telford is currently putting in an application for assisted area status. A deputation led by my hon. Friend the Member for The Wrekin (Mr. Hawksley) will be seeing my hon. Friend the Minister of State next month to discuss its case.

I find myself leaning very much towards the argument that, by and large, regional policy cannot offer solutions to problems of the sort faced overall in the Midlands. I shall come to some specific instances in which that policy must perhaps be looked at in practical terms in isolated cases, but in general I am inclined to agree with the hon. Gentleman's argument.

In the East Midlands the problems are rather different. We now recognise the validity of a regional policy to meet some of them. In particular, the House will recall the prompt action that the Government took to help Corby when the steelworks closed, giving it the investment incentives of a development area. Equally, a number of hon. Members have in their constituencies assisted areas, which are, as part of our efforts to concentrate regional aid, to lose assisted area status in 1982. Hon. Members may make a case against that today. I shall listen carefully to such arguments, though they will have to be very strong to persuade us that we should be deflected in any way from our efforts to concentrate and to increase the effectiveness of regional aid.

If the problems are, in general, not traditional regional-type problems, what are they? In the West Midlands they are the result of many factors: the legacy of inefficiency in some parts of industry; problems of industrial relations, which in the motor industry, for example, are well known; problems of industrial relations, in striking the right balance, such as my hon. Friend the Member for Warwick and Leamington (Mr. Smith) mentioned; the cost-plus, piecework mentality of the war years, nurtured by a virtual absence of competition, as many of us who worked in industry at the time will recall, during the first 10 post-war years, and sustained in many cases right up to the 1970s; low wage differentials between the skilled and the unskilled; the hoarding of skilled labour in times of prosperity; the advantage taken in the past of the influx of immigrants prepared to do less attractive, low-paid, unskilled work, thus removing the incentive to modernise old capital equipment; the carrying for so long by so many firms of the dead weight of overmanning.

In the East Midlands and much of the rest of the country all the same problems apply. The diversity of the industrial base enabled the region to sustain a relatively high level of prosperity for a long period, but its hopes of escaping the recession have foundered on the heavy dependence of some areas on clothing and footwear, with their now so well-known history of competition from abroad.

Against that historical background we have also to set a number of current problems. First, we must consider inflation. Time and time again industry in the Midlands, as elsewhere, has made clear its view that the control of inflation must be our first priority. The hon. Gentleman talked about some of the views of leaders of West Midlands industry. He may wish to recall that on his recent visit to Birmingham my right hon. Friend the Secretary of State was told by the chambers of industry and commerce that they had identified the reduction of inflation as a key factor likely to improve business prospects in the region. I should like to feel that the hon. Gentleman welcomed the continuing fall in the rate of inflation in each of the past nine months.

Mr. J. W. Rooker (Birmingham, Perry Barr)

Will the Minister also take on board the fact that four of my hon. Friends and I were told last Friday by leaders of West Midlands industry, in the guise of the CBI, that, whatever inflation came down to, we and our constituents would have to live with a permanent pool of 2 million unemployed? The Opposition are not prepared to accept that.

Mr. Marshall

I note what the hon. Gentleman says. I do not think that anyone would relish the prospect of a high level of unemployment, but the hon. Gentleman knows, and the whole House knows, that this problem is not capable of immediate and instant solution. We are facing a long-term problem, not only in this country but over the whole of Western Europe.

The other factor to which the CBI referred as being of key importance was interest rates, and the hon. Member for Ladywood also referred to it. The Government are seeking to bring down interest rates as fast as possible without disrupting the prime objective of controlling inflation. The House and industry welcomed the 2 per cent. reduction in MLR announced in the Budget and the contribution that this will make to business prospects.

Mr. Sever

I am sure that the hon. Gentleman is right in saying that everyone welcomes every kind of reduction in MLR and interest rates. Although the 2 per cent. reduction was welcomed, many industrialists have told me that it was largely discounted in advance.

Mr. Marshall

That is the natural approach of business men in this situation, and I appreciate the hon. Gentleman's point, but it is a significant and a progressive move. I hope that it will be part of a continuing process by which the reduction of interest rates goes steadily down, along with the reduction in inflation.

Mr. Nick Budgen (Wolverhampton, South-West)

Surely the important thing is the effect that a reduction in MLR will have in increasing demand. The fact that it may have been discounted by the money markets and the Stock Exchange is completely irrelevant, is it not?

Mr. Marshall

Not for the first time, my hon. Friend has put the question into a broad statesmanlike perspective, and I entirely agree with what he said.

I deal next with a set of particular problems that are specific to the region, and are important and worrying. First, there is the problem of the steel closures at Bilston, and, in particular, at Corby. I have mentioned some aspects of that area. There are also the inner city problems, particularly in the West Midlands conurbation. I have mentioned already the problems of the clothing and footwear industries.

It is easy enough to list the problems, as the hon. Member for Ladywood did, but it is much harder to see the solutions. We should be looking at what can be done now to help the region weather the recession and the unemployment that it is currently facing, and in the short-term future at the ways in which it must adapt to ensure that it emerges from the recession with a sound industrial base and a level of prosperity comparable to that which it has traditionally enjoyed.

First, this means continuing our efforts to create a climate for the growth of industry. This remains the thrust of our industrial policy. The defeat of inflation through the control of the money supply is the course that we must follow. I shall not take up time by repeating the economic argument ad nauseam, because it is well known to the House, but I believe that it is right.

Secondly, it means supporting—as long as there continues to be a prospect of viability—the single most important industry in the West Midlands, namely, the vehicle industry. I agree with the hon. Gentleman about not throwing money at problems. He went on to argue that there may be specific cases. The specific case that is of most value to the West Midlands is the vehicle industry. The House will not need reminding of the magnitude of our support—almost £1 billion committed over the next two years—but this support has taken into account not only BL but the large number of component manufacturers throughout the Midlands who are affected by the future of that great company.

We took the dificult decision to support BL in the clear knowledge of its vital importance to the whole of the local economy. It has been a very difficult matter, because not only are we taking a view here about the motor industry in respect of that particular company; we are having to make a judgment on whether that company is becoming successful with its new models.

Incidentally, it would have been nice to hear the hon. Gentleman talking today about the Metro. I hope that he will join all those who feel that the success of that new model is of great significance to his part of the world.

In other industries we are prepared to continue to make aid available under section 8 of the Industry Act to help attract investment which is either internationally mobile—and might otherwise go abroad—or will lead to substantial improvements in performance or to the introduction of new products. The West Midlands has received over £17 million in the period from May 1979 to December 1980, and the East Midlands has received just over £9 million in the same period. Furthermore, as part of the effort to stimulate new enterprise in the region, we have introduced two enterprise zones, at Dudley and Corby, in the first experimental group of 11 zones. It is too early to evaluate the effect that these zones will have on the Midlands, but it is an important initiative and one that we shall watch with great interest.

As the House will recall, firms within the zones are freed from rates and benefit from a simplified planning regime and from various tax concessions. They are given the freedom to develop. These developments—this is part of the good news that we did not hear this afternoon—have been warmly welcomed by the two communities, and they will do much to regenerate the local economies.

Thirdly, if we are to pursue effective policies in the short or in the medium term, it will mean continuing to support a range of employment schemes designed either to keep people in employment or to provide opportunities for training or work experience for the unemployed in the Midlands as a whole. I remind the House that 181,000 people are benefiting from the temporary short-time working compensation scheme, 98,000 from the job release scheme, and 600 from the community industry scheme. Since April 1980, 53,600 people have joined the youth opportunity grant schemes, and 14,000 have joined the special temporary employment programme schemes.

Fourthly, it means help with the particularly acute problems faced in the region. I have already mentioned the help given to Corby to which we gave development area status. It has, as a result attracted additional support from the EEC. It means continued determination to see a viable textile and clothing industry in the Midlands and the United Kingdom as a whole.

We shall implement the existing multi-fibre arrangement and press for a continuation of effective restraints when the current MFA expires at the end of 1981. Voluntary restraint agreements have already been signed with Mediterranean suppliers, and this matter will receive continuing attention. The hon. Gentleman spoke of unfair competition. If any hon. Members have evidence of that, my colleagues at the Department of Trade will be anxious to look at it as a matter of great importance.

Mr. Sever

One of the difficulties is that when such cases have been brought to the attention of various Ministers it has been found that legislation is required in other countries to control the abuse of our system. The difficulty is that we cannot get the agreement of the countries concerned to help us in the way that we seek. Does the Minister agree that that is the difficulty?

Mr. Marshall

The hon. Gentleman has made a fair point. I am not unaware of the difficulties in trying to deal with the subject in the way that he suggests, but he may agree that we have to continue to seek transparency and reciprocity in these matters. For an exporting country such as ours the stakes are very much higher than for many of the countries with which we are holding such conversations.

Part of the assistance that we must consider is a continuation of our help for the footwear industry, through restrictions on imports from a number of countries. Quota or voluntary restraint agreements now apply to imports from Bulgaria, Czechoslovakia, Hungary, Poland, Romania and China, and industry-to-industry restraint agreements on all footwear exist with the South Koreans and the Taiwanese.

With regard to help for inner city areas, through the traditional urban programme and inner city policy £23 million of resources have been earmarked in 1980–81 under these headings alone.

There is also the question of assistance for small firms. The hon. Gentleman was critical of the Government's approach to these matters, yet the West Midlands in particular is a classical example of an area where even tiny firms, which make a massive contribution to the prosperity of the area, may well find considerable support from what is provided in the Budget.

Mr. Gwilym Roberts (Cannock)

Does the hon. Gentleman agree that although we have heard about the big firms—the headline snatchers—the real tragedy of the West Midlands has been the tens of thousands of jobs lost, six here and 10 there, with the decline of small firms?

Mr. Marshall

A problem faces the whole of industry, including both large and small companies. I should like the hon. Gentleman, with his usual sense of fairness, to consider some of the good news coming up on the small business front. As he will know, the Budget contained no fewer than 10 measures of assistance to small firms, of which perhaps the most important was the loan guarantee scheme. It is designed to overcome the difficulties currently faced in raising finance by the new small business that has no track record to display. We shall certainly continue with our efforts in that direction.

Most importantly, it means helping the industries of the Midlands to adapt and change to meet today's competitive environment. Those hon. Members who take an interest in industry will know that there are many different types of business in the Midlands. There are some efficient modern businesses and some that are still, in a way, part of our long tradition of the Industrial Revolution. The climb out of the recession will be led by the new high technology growth industries.

The House recognises the problems of rapid change. The Government have made available extensive schemes of assistance for firms with new processes or products, particularly where these involve microelectronics. We are maintaining the microprocessor application projects, the microelectronic industry support programme and the product and process development scheme. Industry in the Midlands has already benefited to the extent of over £15 million of assistance in this way.

We all recognise the severity of the problems faced by the Midlands. Historically, unemployment is high. To put things in a broader perspective, it must be said that the problem has been evident and growing since 1975. In addition, the problem must be seen in the perspective of the country as a whole. Regrettably, the North, the North-West, Wales and Scotland still have much greater unemployment and industrial problems.

It is right that the House should express concern about the problems of the Midlands. Our efforts should be directed towards ensuring that the Midlands weathers the recession without irreparable damage being done to its industrial base. That is why I stressed, for example, our support for the vehicle industry and the efforts that we have made on behalf of the clothing and footwear industries.

Perhaps it is a function of the way in which not only our proceedings but industry affairs are reported that as the good news comes in the bad news tends to be stressed. However, we see encouraging signs. The Staffordshire Development Association reported this month that in the last two years it has pulled in 100 new arrivals, creating 2,500 jobs. In Coventry, Alfred Herbert has found increased demand for its CNC machine tools and intends to move towards double its present rate of production by 1982. Hon. Members will remember Alfred Herbert's background of problems. One could make a list of such companies, but the fact remains that the problems are being offset over a lengthy time scale.

We often have to wait five or seven years before the real benefits of new investment come through. It is essential to bear in mind that the Midlands, like so much of British industry, will come through the recession by means of diversification into the growth industries of the future, by means of a sound growing base of small firms and by means of the employment potential that we all recognise. The solution to the employment problems of the West Midlands lies primarily in the encouragement of those sectors. That is precisely the aim of the Government's policy, but we can only encourage such growth. Ultimately, it is up to those in the Midlands to act and to turn the spirit of enterprise—of which they are justifiably proud—towards new directions in which they will be able to secure their future.

Several Hon. Members


Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. This is a very important debate. Twenty-three right hon. and hon. Gentlemen have indicated their wish to take part in it. Those who speak at inordinate length will prevent their colleagues from speaking.

Miss Betty Boothroyd (West Bromwich, West)

On a point of order, Mr. Deputy Speaker. What about hon. Ladies? They also represent the areas involved and would like to be called.

Mr. Deputy Speaker

I recollect that the hon. Lady mentioned that the other day. As far as the Chair is concerned, ladies are included in "hon. Gentlemen" and "hon. Members".

4.54 pm
Mr. Peter Archer (Warley, West)

This House was, in its origin, a place where elected representatives came from the various localities to express the grievances of those who sent them, so that the Executive would know the problems and aspirations of local communities and could build up a picture of the country's needs. That was and is the purpose of the House. Our debates should echo the grievances of the localities and should provide a clear indication of what we are asking the Government to do.

But that purpose is achieved only if the Government show by their actions that they have listened to the debate and respond accordingly. I do not say that they should carry out slavishly everything that is asked of them. There may even be conflicting requests. However, our debate, to be effective, should get through to the Government's consciousness and should influence the Government's thinking. If that does not happen, the people back home could be forgiven for asking what is the purpose of parliamentary debate or parliamentary democracy.

I have a feeling of déjà vu. On 20 June 1980 the House debated this same subject of unemployment in the West Midlands. Indeed, at this point I should like to add my congratulations to those given to my hon. Friend the Member for Birmingham, Ladywood (Mr. Sever). It is a great pleasure to see him sitting on the Opposition Front Bench. I congratulate him on the force with which he put our case. Even he will agree that what he said—and, indeed, what we all say—has mirrored and will mirror almost exactly what we said nine months ago.

Mr. Gwilym Roberts

It is not quite a feeling of déjà vu, because since then unemployment has increased sharply throughout the region.

Mr. Archer

That is precisely the point that I had intended to make. The arguments and the complaints are the same, but as my hon. Friend pointed out, the figures are worse. Indeed, the debate might never have taken place. As a whole, the Midlands has a depressing story to tell. In 1971 the unemployment rates in the East and the West Midlands—excluding school leavers—was each 2.9 per cent.— only the South-East had a better figure—but by December 1980 the figure for the East Midlands was 8 per cent. and for the West Midlands 9.9 per cent. Even the South-West had a figure of 8.1 per cent. The figure for the East Midlands was only marginally better and that for the West Midlands was substantially worse. The debate was held nine months ago. Hon. Members from all parties explained the plight of our industry and of those who worked in it.

My hon. Friend the Member for Coventry, North-East (Mr. Park), whose absence today we regret, pointed out that in 1966 the West Midlands contained 5 per cent. of the nation's unemployed. By June 1980 it contained 10 per cent. In addition, by June 1980, 22 per cent. of the unemployed among the ethnic minorities were situated in the West Midlands. We explained that the reason for such high unemployment did not lie in a lack of skills. If that vast reservoir of industrial skills is fast draining away, it is not the cause of unemployment but the result. As people are made redundant they leave to find work in different industries, away from those in which they developed their skills. Companies are reducing the number of apprenticeships on offer. Youngsters who leave school to acquire skills are told that no one will want them even if they take the trouble to acquire those skills.

We explained that the reason for such unemployment did not lie in bad industrial relations, although Conservative Members have tried today to make that point. We all related examples of how managements and unions had co-operated to the full in introducing schemes to save their companies. We explained that the reason for such unemployment did not lie in the fact that the people were not prepared to work. They are not just sitting down and taking it but are fighting hard for their existence.

In Cradley Heath, in my constituency, several small and medium-sized engineering companies have grouped together in a joint training scheme known as the provident joint training scheme. Not only has it revolutionised training methods, and persuaded managements to rethink their procedures; it has twice arranged a tour of Holland to demonstrate to our Dutch friends what British industry can do. On each occasion, it has returned with over £10 million of orders. But those companies are swimming against a current set running by the Government. The very existence of such schemes will be jeopardised if the Government place a question mark over the future of the Engineering Industry Training Board.

It does not help to talk about a world recession. British industry is losing its share of world markets. The world is making too many tubes and too many industrial fasteners. So we are in danger of losing not only our export markets but our home markets, because they are being invaded by goods from countries where Governments accept responsibility for the welfare of industry. Companies in such countries receive concealed subsidies, cheap capital, tax concessions and sometimes patent subsidies. Our industry is racing against competitors who have the benefit of a half-length start. That is why some of us reluctantly argue for selective import controls.

Let us not confuse the argument by speaking of technological revolutions. It may be that within 20 or 30 years the world's needs will be met by a small work force working short hours. That will require a readjustment in our thinking, and it is important that we should debate it. But that is not the issue that we are debating today. We are discussing unemployment while human needs are not being met. We are discussing unemployment side by side with material deprivation. We are discussing unemployment in the construction industry, while in Sandwell 4,800 families on the live housing list, apart from what is known as the supplementary list, are asking for any kind of accommodation. We are discussing the laying off of thousands of people in vehicle building while in some countries people are starving for lack of agricultural machinery. It is nothing to do with the technological revolution.

We are concerned with the circulation of money. People are unemployed because those who desperately need the goods cannot afford them. As more companies experience cash flow problems, the settlement of bills is increasingly delayed and the circulatory economic system slows to a halt.

On 20 June last year we explained that the reasons lay chiefly in high interest rates. They distorted exchange rates so that we were less competitive abroad. It was impossible to carry large stocks, because they cost too much. Above all, high interest rates made it impossible to borrow for investment, so worn-out plant was not replaced and new technology was not installed.

We explained that the problem remained with the money supply and that the Government must do something about it. We might as well have saved our breath. The Government were totally unresponsive to our appeals. They were impervious to our arguments. They were firm in their course, and the lady was not for turning. Monetarism still stalked through the land unchecked.

Between January and June 1980 unemployment among people in the West Midlands, including school leavers, rose from 5.7 per cent. to 6.8 per cent. Then we held our debate and made our appeals to the Government. By December 1980 unemployment had risen to 10.4 per cent. In the past month, unemployment in the East Midlands has risen by 5,300 and in the West Midlands by 9,800. Those statistics tell the story of real communities and of interrelated complexes of industrial processes where each contract provides a spin-off for other sections of industry.

Mr. Greville Janner

Does my right hon. and learned Friend accept that those figures tell only a fraction of the story, because they deal only with unemployment'? Did he note that, despite the assurance given to me by the Leader of the House during business questions last week, to the effect that the Mininster would note the request for details about short-time working, the Minister did not see fit to refer to it, still less to give any details? Would not the entire picture of the misery in my constituency and in my right hon. and learned Friend's constituency be reflected better by showing not merely the unemployment figures for short-time working, which often means unemployment for four days out of five?

Mr. Archer

I agree with my hon. and learned Friend. The statistics tell a bleak but bare part of the story. We can talk about second incomes, short-time working and many concealed losses of income. I was about to put a little flesh on the bones.

In the last debate on this subject I mentioned the names of some companies in my constituency, some of which have been mentioned by my hon. friend the Member for Ladywood, which for generations have been synonymous with British industy. Such names formed part of the vocabulary wherever in the world people spoke of engineering, industrial fasteners, tubes, chains and cables, boilers, lifting gear, and so on. They were family companies not only because they were owned by local families but because the labour forces consisted largely of people whose grandfathers had worked in the same companies. Since that debate, some of those names have disappeared, such as Chance Brothers, referred to by my hon. Friend the Member for Warley East (Mr. Faulds), Babcock and Wilcox, in boilers, and BSR, mentioned by my hon. Friend the Member for Ladywood, which has recently ended over 1,000 jobs. My hon.Friend the Member for West Bromwich, West (Miss Boothroyd) can tell similar stories about her area. In many of these places the topic of conversation is whether next week people will be working two days or three days.

Miss Boothroyd

Or none.

Mr. Archer

Or none. At first, in honesty, the evidence was not obvious to the eye. If pay packets were thinner, the deprivation was concealed. If the diet changed, it happened at meals at which only the family were present. If the holiday was nearer home, only the suntan was absent. But now it is showing through. People are still paying their round but the clubs and pubs are empty except at weekends, and then only later in the evening. Suits have been discreetly patched. Children are more frequently denied the chance of going on school trips, because their parents cannot spare the money. Self-respect has not gone, because people are papering over the cracks, but the paper is wearing thin.

When councils are compelled to increase rates and rents there is something akin to desperation in those communities. That is why I pointed to the purpose of holding debates in the House. Elected representatives should express to the Government what is happening before it is too late. If the Government refuse to listen they cast doubt on the effectiveness of the parliamentary process.

Last week some of us were confronted by desperate people saying that they could not afford to pay rent and rate increases because they were not earning enough money. There were those present who sought to persuade them to respond by witholding the payment of rent. I believe in parliamentary democracy and the rule of law. If those principles are endangered, the people that we represent will not benefit. I have said that continually; I said it then, and I say it now. But what does one say to people who remark "So you had a debate in Parliament about unemployment in the Midlands. What resulted from it? How differently will the Government behave?".

My purpose in intervening was not to suggest remedies, because we have done that already. We know the arguments used by the Government to justify their policies. The Government claim that their policies will bring down inflation. Even if they were the most effective method of fighting inflation, the spectre which haunts us is of Britain with no inflation and no industry. Treating sickness by letting blood may prove effective for certain conditions, but if it is persisted in over a long period those conditions will become academic, because the patient will be dead.

We have asked for assistance in Sandwell. If the Minister is unaware of it, we can give details. My hon. Friend the Member for West Bromwich, West may give details in her contribution.

We are grateful for any measures to alleviate the position even marginally, but no one has persuaded us that our salvation lies in cosmetic treatment. A Budget which boasts of tax relief on start-up capital for small businesses but sends transport costs through the roof does not indicate that the Government have grasped the problem.

The Minister spoke of the enterprise zone about to be established in Dudley just outside my constituency. I say this with respect to my good friend the hon. Member for Dudley, West (Mr. Blackburn): it may attract some business to the area but it has not brought smiles to the faces of those operating businesses just outside the area. They suspect that it will attract not a different kind of industry but competitors in the same kind of business taking advantage of rate concessions. So, for every job produced within the zone a job will be lost on the other side of the wall.

My intervention is in the nature of an appeal. If the Government continue to ignore the sense of our debates and if Conservative Members who share our concern—I believe that some do—continue to uphold the Government in their course, they risk losing markets that we can never regain, dismantling entire industries that we can never reassemble, losing skills that we can never replace and producing a loss of confidence in a whole way of life. I beg them to take heed of what is said in the debate before another nine months pass, because next time it may be too late.

5.10 pm
Mr. Dudley Smith (Warwick and Leamington)

The right hon. and learned Member for Warley, West (Mr. Archer) is always listened to with great respect. He is renowned for his sincerity. I was interested to hear his comments and his castigation of the Government. He took up some of the longer-term problems, and I was sorry that he did not go further along that path. So often that sort of analysis is absent from the arguments advanced by Labour Members when we debate, as inexorably as we do, unemployment and the problems that arise from it.

When the Leader of the Opposition took office he said that he was determined to debate unemployment up hill and down dale, week after week. That is his privilege. We have had many debates on the levels of unemployment, nationally and regionally. It worries me that the arguments so far advanced from the Opposition Benches—I welcome the hon. Member for Birmingham, Ladywood (Mr. Sever) to the Opposition Front Bench—are still sterile. We hear a recital of the problems about which we all know. No one would minimise them. They are extremely serious. Unemployment in the West Midlands has doubled over the past year or so. It seems that the Opposition's panacea is reflation. In effect they are saying "Give us more money. Let us print more money. Let us get things moving again to try to alter the present situation".

Concern about unemployment does not lie purely with Opposition Members. My right hon. and hon. Friends are equally concerned. Like Labour Members, we too have constituencies. Surely it is time that the House moved forward to consider what should be done when the recession begins to come to an end and the country begins to take off again. There will be a long-term problem in the next three or four years to be dealt with by a Conservative or a Labour Government. The problem will not be solved by the generalisations that we hear so often from both sides of the House.

The hon. Member for Ladywood made an interesting comment when he talked about Coventry. He said that it was once one of the most prosperous cities in Europe.

Indeed, the West Midlands was one of the most prosperous areas in Europe. It is still prosperous, but not as prosperous as it was. Why is that? Coventry was overmanned. It did not produce as much as it should have done. It fed on the seedcorn. It was overmanned and overpaid. It was receiving far too much money for the productivity that it was achieving, and we are now picking up the bills. Many of those who were amongst the most prosperous citizens within Europe are now unemployed or on short time.

Mr. Geoffrey Robinson (Coventry, North-West)


Mr. Smith

I shall give way once. I promised to be brief. I am aware that others wish to participate in the debate.

Mr. Robinson

The hon. Gentleman has laid the catalogue of evils solely at the door of working people in the Midlands. Can he not find it in himself to attribute at least equal blame to a lack of management, especially in engineering development, in his catalogue, put the responsibility side by side and balance the argument? Surely it was the right of management to give a lead and to produce the necessary engineering. If that had been done there would have been a different result in the West Midlands.

Mr. Smith

I agree with that. The hon. Gentleman was one of the managers. The company with which he was connected has gone through some rough times. Time and again management gave way to organised labour. It did not have its industrial relations on the right lines. It seemed that management and organised labour were unable jointly to work out the right approach for the future. I accept that management bears much responsibility. Many of those who are now calling out for help—some of them have been quoted by the hon. Member for Ladywood—were once saying "The world is prosperous. There is nothing to worry about in future. We can go on in the same sweet way." We have suffered a great fall. Both management and employees share responsibility for the past and the present situation.

I am especially concerned about the West Midlands, as I represent a constituency within it, but the Midlands generally has been known as the workshop of Britain. It is right that it should still be so regarded in future. Constituents have lobbied us strongly and said that it is wrong for this Administration,with their tough and realistic policy, to give large sums to nationalised industries. It is an aspect that worries me considerably. However, I agree with the Government in forwarding funds to BL. It was a hard judgment to make. I have in mind the many jobs not only in BL but in the car component industry, to which my hon. Friend the Under-Secretary of State referred. Many jobs are at stake, and it would be folly not to support the efforts of Sir Michael Edwardes in the new and realistic approach that BL has adopted.

The company still has some way to go. I am not entirely convinced that it will succeed, despite the Metro. However, I hope with all my heart that it will succeed. It is not merely a West Midlands problem. The future of British industry is involved. I support the Government wholeheartedly in what they are trying to do to get BL on the right lines, but in the West Midlands and in the Midlands generally we should begin to question whether the area should be known as the heartland of the car industry in Britain.

We have gone through Many phases over the years. In some respects the car industry has had its day, when it is remembered what it was 15 or 20 years ago. There will always be a place for it, but it is dangerous to put all our eggs in one basket and to make the industry the major industrial factor in the West Midlands.

It is a controversial statement for me to make. but I do not support those who are lobbying strongly for the new Nissan project to come to the Midlands. There is a case for making that claim. There is a desperate need for jobs, but there are other areas where unemployment is greater. The claims of Wales and other parts of the peripheral areas of the British Isles are strong. I shall not seek to identify those areas. I merely say that they may have a stronger case to submit that the Nissan project should go to them.

If the project were to come to the West Midlands, we might still be pushing forward with the idea that forever and a day the Midlands will be the centre of the car industry and that the industry will be the motivation for the industrial future of the British Isles. I cannot subscribe to that idea.

Only today the TUC's figures have been published, which state: One in five of the 107,000 redundancies reported between last October and February were in the vehicle industry. The decline is continuing. The Midlands must now turn its attention to new and innovative industries that will provide long-term jobs. Such industries will provide an opportunity for future generations to get away from the concentration of heavy industry that we have had in the past. These industries will enable the Midlands to be not only a workshop but an innovative area.

In the area that I represent, there are new companies with new ideas. Each of these companies is contributing in a small way to improving employment opportunities, and there is the prospect that that will give a lead to other areas. A few years ago, IBM came to Warwick. The company now has one of the main computer centres in Britain. It is enormously successful, with a good rate of employment, and good employers and employees. There is no redundancy. It is making progress and is a most successful company.

Recently, in Leamington Spa, in my area, ASDA has opened a new superstore, which has provided much-needed employment for many. It is appreciated by the local community and gives the sign for future developments of that kind throughout the Midlands. Further, a large new hotel complex is about to open. It is to be called the Ladbroke Hotel. It is on the outskirts of Warwick and will make a significant contribution to tourism and provide much-needed jobs.

I have mentioned before the need to regard tourism as a major industry. We are extremely naive in our approach to the matter. We all talk about it and subscribe to it, but we do not realise its potential for providing employment. We must change our attitudes and do more as a country, with our enormous wealth of tourist potential, to encourage more and more people to enter that industry, because jobs can be created in tourism. There will be many opportunities in the future if we plan in the correct way.

The other point that I wish to make was also raised by the right hon. and learned Member for Warley, West in his interesting remarks. Nationally, whatever the policies of the Government of the day, we must face the fact that over the next 20 or 30 years we shall have a much larger pool of unemployed than we have known in the past. The right hon. and learned Member for Warley, West and I have been Members of the House for between 15 and 20 years. In that time, although there have been quarrels about the numbers, by and large the number of unemployed has been reasonably acceptable, give or take a few thousand.

Those who will follow us in the next 20 or 30 years will be faced with well over 1 million permanently unemployed. It will be extremely difficult for the Government to know exactly how to harness their talents and employ their abilities if they are not to rot or fester and become totally disillusioned. The right hon. and learned Member knows as well as I do that one can go round large modern factories today and see them being run by 25 or 50 people, whereas 15 or 20 years ago the employees were numbered in hundreds. It is a modern-day problem. I do not think that it is insuperable, but it is one that we have constantly to bear in mind.

It is essential that in looking towards the future, and in planning to ensure that in areas such as the West Midlands we retain the prosperity that we have known for many years, and still to a large extent retain today, with all the difficulties of a high rate of unemployment, we do what we can to preserve present employment. We constantly hear talk from the Opposition and those outside about the fact that so many are out of work, and that one in 10 is out of work. I prefer to put that more positively and say that nine out of 10 people are in employment.

I am worried about some of the activities of those who, instead of competing against industry, which is still working reasonably succesfully, are trying to hamper it. I draw the attention of hon. Members to an article in today's edition of The Daily Telegraph.It said: Manufacturing companies believe State industries are abusing their monopoly power by demanding swifter payment of bills while delaying their own payments. That matter has been called to the public's attention by the Engineering Employers Federation. Private industry has enough problems with cash flows and competition from world sources without being hamstrung by the pressures generated by the electricity boards, the gas boards, British Telecom and others.

My hon. Friend the Under-Secretary is in the right Department to pay attention to the pressures being generated against private industry. Private businesses can cope with many pressures, but if the burden becomes too great others will go to the wall who do not deserve to do so. I hope that my hon. Friend will bear my remarks in mind.

Unemployment has been growing inexorably over the past 15 or 20 years. There are easy answers and easy options—they are put forward every time by the Opposition—such as reflation, which is the cosmetic approach to get more jobs quickly. We need a second Industrial Revolution and the sort of approach that will create permanent employment and provide a firm base. As my hon. Friend the Minister said, that will not come about overnight. It will be five, six or seven years before we have the permanent employment that will stand us in good stead in our relations with the rest of the world.

I think that the upturn is not so far away. At the weekend I was talking to a prominent accountant in my constituency who has his ear close to the ground. He said "It is turning already. I know two or three firms where improvement is taking place." I queried that and said, "I am sure you are wrong. I have not detected it myself." He said "Yes, it is. I have other evidence as well. It is coming through rather more quickly than is believed." I hope that he is right. I am sure that we all hope that he is right, but, in the meantime, until that reflation can be started by productive means and not by printing money, the Government are on the right lines. They must intensify their efforts. They must be steadfast and courageous, in view of the strong criticisms coming from all quarters. I hope that they will reject the advice that 364 so-called distinguished economists gave.

Mr. Budgen

One for every day of the year.

Mr. Smith

As my hon. Friend says, one for every day of the year. But with economists one pays one's penny and takes one's choice. Economists have not had a very good track record in their advice to various Governments. Part of the trouble that we have today stems from the advice tendered to the Labour Government. I hope that my right hon. Friend the Prime Minister and my hon. Friend will stick to their task. If they do, the country will come through.

5.28 pm
Mr. Robert Edwards (Wolverhampton, South-East)

I am greatly tempted to follow the remarks of the hon. Member for Warwick and Leamington (Mr. Smith). The Opposition would prefer the advice of 300 British economists to the advice of one £50,000-a-year American economist who is the person advising the present Government.

Nearly half a century ago I marched with 380 unemployed workers to Lancashire from London. We were protesting against the deflationist policies of the National Government, led by Ramsay MacDonald. The only area in the country where jobs were available during the 1930s was in the Midlands. Unemployed workers from Lancashire, Scotland and South Wales migrated to the West Midlands and were able to find jobs which lasted for many years. The whole situation has changed fundamentally because now the Midlands has ½ million unemployed and about 60,000 workers on short time.

Some of the industries in the Midlands cannot possibly compete in world markets. Even if some of those industries paid no wages at all they would not be competitive. The traditional, highly efficient industries cannot meet the high interest charges on money that they have to borrow to pay the wage bill. Among the industries that were expanding and were a credit to the country was the paper-making industry, including Bowater's and Reed's who had factories as modern as any in the world and full order books. Yet they have closed. The reasons are the high value of sterling, high interest rates and the cost of fuel, which is double that paid by their overseas competitors. How can they compete under those conditions, which are entirely due to Government policies, urged on by an American so-called economist?

The chemical industry has never before known a slump, but now factory after factory is closing and massive redundancies are being declared, even by ICI. The chemical industry, which has always expanded, is in dire trouble. The troubles have to be related to the Government's policy of deflation. That policy failed in the 1930s and only massive rearmament and the Second World War saved our economy. I hope that we are not heading for that sort of solution again. I hope that we have learnt that massive rearmament and war will not solve the problems of the system.

In the old days we used to liken the financial system to a railway train that had broken down. It had three compartments; in the first-class compartment were bankers, financiers and the very rich, in the second-class compartment were small business men, top civil servants and the like, and in the third-class compartment were working people, the unemployed, the sick and the poor.

The train had broken down and the order went out "First-class passengers, retain your seats. Second-class passengers, get out and walk. Third-class passengers, get out and push." Working people are still expected to do all the pushing, but there is something different today. The third-class compartment has millions of new passengers, including hundreds of thousands of low-paid civil servants and scores of small business men and workers who would not have been considered third-class passengers in the 1930s.

My hon. Friend the Member for Birmingham, Ladywood (Mr. Sever), who made an excellent maiden speech from the Opposition Front Bench, mentioned small businesses. In 1950 about 75 per cent. of net manufacturing industry consisted of small businesses employing 200 workers or fewer. Today, such small businesses perform only 25 per cent. of net manufacturing. The 100 largest companies in the country have moved from 25 per cent. of net manufacturing in 1950 to 75 per cent. last year.

Those large companies are responsible for more than half our total export trade. Whatever we do to help small companies, they will be taken over by large firms that were once British, but are now multinational. The assets of small companies are squeezed and often the companies are closed, as though they had never existed. There is no future for small companies in present circumstances.

The Under-Secretary of State for Employment (Mr. Peter Morrison)

The facts do not bear out what the hon. Gentleman is saying. Last year, the two Midlands small firms centres received more than 5,000 inquiries, an increase of 65 per cent. on the previous year.

Mr. Edwards

They were only inquiries. The only real progress among small companies has come from the development of industrial co-operatives that have grown in number from 20 to 300 in the past five years. But what are the Government doing to help that massive development? They have stopped the subsidy that the previous Government willingly gave to industrial common ownership finance and they are threatening to stop money going to the Co-operative Development Agency, a worthy institution that is more responsible than any other for the development of small companies through industrial common ownership.

I know that other hon. Members wish to speak and I shall conclude shortly, though I am tempted to go on. The West Midlands did not face a massive slump during the 1930s, but the situation is becoming almost hopeless today. A total of ½ million working people feel that they are treated as criminals and outcasts. It seems that nowhere in this big world is there a place where they can fit in and do a useful job. We must end that tragedy, and to do so we need not a new Industrial Revolution, as was suggested by the hon. Member for Warwick and Leamington, but a new and courageous social revolution.

5.38 pm
Mr. Esmond Bulmer (Kidderminster)

I was recently in Australia, where I saw that school leavers in Sydney were finding it, if anything, more difficult to get a job than are school leavers in my constituency. We should remind ourselves that unemployment is a problem throughout the free world and that in many countries it is accelerating.

If we ask ourselves the reason for that we must conclude that the major cause is the huge increase in the price of oil. There is a lesson to be learnt by contrasting the way in which we behaved in 1974 with the way in which the Japanese and Germans behaved. We allowed wage inflation to develop, and our goods consequently became increasingly uncompetitive.

Our competitive position was maintained only by the pound falling greatly. That drop in the value of the pound ripped off our farmers and our savers. Between 1974 and 1979 industry's profits were remorselessly squeezed. Who can doubt that many of the industries in difficulty today would be better able to weather the storm if their profits had been going up over that period and they had some fat on which to draw, or if the previous Government had run a tight ship so that when we became a petro-currency our exporters were not faced with the huge reversal in the relative positions of the pound and the dollar?

The previous Government reinforced our Achilles heel—the rigidity of our labour market. Much of their legislation, including the Employment Protection Act, made it much more difficult for employers to take on people and much more difficult for them to react to market conditions if they had to trim. Equally, they progressively and, I would argue, finally destroyed the private rented sector. It has become extremely difficult for people to travel from one part of the country to another to find a job.

Many of the seeds of the present unemployment were sown during the years from 1974 to 1979. I recall how the Chancellor of the Exchequer at that time put £1 billion on the payroll tax without even consulting the then Secretary of State for Employment. Some of the panic measures that followed the introduction by the IMF of sensible housekeeping bore hardly on the private sector. If my memory serves me correctly, the then Chancellor of the Exchequer took £5 billion out of the capital programme. It was an easy way of cutting public expenditure, but it also bore hardly on private industry.

It remains true in the West Midlands that if our motor industry were as good as it is bad there would be no problems. That is probably true for Great Britain as a whole. The problems of the motor industry go back a long way. I subscribe to the view that one does not have bad regiments. One has bad officers. One does not have bad companies. One has bad management. However, bad management can be made much worse if Government decisions are equally bad. Some of the decisions of the right hon. Member for Bristol, South-East (Mr. Beni) were positively disastrous for the motor car industry. I wonder whether his right hon. Friend the Member for Chesterfield (Mr. Varley) now believes that he was right to bail out Chrysler.

We are beginning, thank God, to see some improvement in industrial relations. I hope that the great blessing to come out of the recession will be a greater awareness among those who work together in a company that they are all in the same boat. I should like to see not only management developing involvement at every level where appropriate, and through profit sharing, but a response from the trade unions. If unions can get together to form a single bargaining point to tempt Nissan to invest, I hope that they can get together to find a single bargaining point in some of the companies where wage bargaining is still a traumatic experience.

Japan and Germany benefited from having their economies destroyed during the war. We have not replaced our capital base, as should have happened. We have concentrated too much on preserving jobs in old industries rather than on creating conditions in which new industries can come forward. The most important question for the Government to ask themselves is how industrial confidence can be rebuilt. The Government have made a good start, measured by the criteria of what one constituent put to me three years ago. He asked "How can I run my company when I cannot pay my people what they deserve and when I cannot get my best managers back from abroad because of the fiscal system? I cannot raise money on the Stock Exchange because I cannot pay the dividend that justifies my getting the money at the right price. I cannot locate my plant where the market is."

The Government have swept away all those constraints—

Mrs. Renée Short (Wolverhampton, North-East)

Industries still cannot survive, can they?

Mr. Bulmer

—and that is important. I also believe that my right hon. and learned Friend the Chancellor of the Exchequer was right in his Budget to concentrate on one point. Minimum lending rate had to come down as it did, and those in industry must have confidence that it has further to fall. This is crucial in my constituency. As the interest rate falls, the mortgage rate falls. This is good for a return of confidence to the carpet industry, which is the major industry in Kidderminster.

Mr. Michael Latham (Melton)

It is also important for house building.

Mr. Bulmer

As my hon. Friend says, it is also extremely important for house building. If interest rates go down to the point at which large companies can raise long-term money at between 10 and 12 per cent., they will do so. If interest rates can be reduced to single figures, many smaller companies will have the confidence to raise money. At no time during the period of office of the previous Government was it possible for companies to borrow money at a fixed term at what could remotely be described as a commercially sensible rate. I look forward to the Government creating a situation in which that can happen.

My constituents tell me continually that there is now an enormous contrast between the rate of price increases in the private sector and those in the public sector. Behind all the public sector bills that land on our desks, there is a monopoly union and a monopoly supplier. I hope that people involved in those industries will reflect on their relatively privileged positions compared with the private sector. It is impossible in equity to defend the level of redundancy pay that can be expected by my constituents in the carpet industry against that enjoyed in the public sector. I hope that the TUC will think hard about this matter.

I believe, however, that the Government have been insensitive in adjusting their energy pricing, against the background of all the other increases that have been coming forward from the public sector. My right hon. and learned Friend the Chancellor, in his Budget Statement, gave some indication that action would be taken. I hope that it will not be a case of too little, too late.

I have touched already on the damage done by the Chancellor of the Exchequer in the Labour Government in the way that he cut public spending during his period of office. He allowed far too much of the burden to fall on the private sector. I look to the Government to ensure that public sector spending, in so far as it grows at all, grows on capital account and not on revenue account. I look for a continual move towards a broader balance between the private sector and the public sector. That can only benefit my constituents.

We have now a record number of school leavers. I welcome the action taken by my right hon. Friend the Secretary of State for Employment to see that more money is available to provide useful training, and, I should like to hope, skilled training, for those leaving school. I believe that some skill shortages could develop even by next year. I hope that those in the Department of Employment will read carefully the recent research carried out by Warwick university, which identified six major growth sectors. I hope that the Government will ensure that training, so far as possible, is directed to those areas where jobs will be available in the future. I hope, too, that the trade unions will show a greater flexibility in their attitude to apprenticeships. The late Ernest Bevin remarked that after the age of 18 he could become Foreign Secretary but could not become a craftsman in his own union. That situation needs urgent attention.

I welcome the help that the Budget is giving to small businesses. This is the only way to create jobs. I believe that when the recession ends, many large companies will not take on more people. They will look outside for services. They recognise how difficult it is to shed labour once they have become overmanned. It has to be recognised, however, that many small businesses have to be started to produce even two or three potentially big businesses in the years ahead.

Anything that the Government can do to encourage small businesses has the support of all Conservative Members, and certainly of my constituents. At a time when, in my constituency, the carpet industry has lost 6,000 jobs, small businesses have been putting back jobs in hundreds, albeit that they have been lost in thousands. As the recession ends, I look to those small businesses to begin to fill the gap. For that to happen the Government need to stay on course and continue to reduce the rate of inflation.

Many matters lie within our own hands. Two do not, and they are vital to the restoration of full employment. The first is the recycling of the Arab oil surplus, and the second is to see that the less developed countries receive super Marshall aid-type schemes that allow them to buy our manufactures. I hope that the Government will see that everthing is done to encourage those two developments.

5.50 pm
Miss Betty Boothroyd (West Bromwich, West)

I was most interested in the comments of the hon. Member for Kidderminster (Mr. Bulmer). I have heard him discuss these matters before. He will not expect me to agree with a good deal of what he said, but I was especially interested in his remarks about the increase in the number of school leavers that there will be in the coming years, and if he will bear with me I shall touch on that point later in my speech.

First, however, I want to emphasise that I have taken part in quite a number of debates on industry and unemployment. But, most importantly, I have listened carefully over many years to what Treasury Benches have had to say about these matters. They seem to me to chorus each time the same well-worn song. The Prime Minister and the Chancellor of the Exchequer, whether in this House or outside, always have a duet about encouraging the economy and stimulating the creation of wealth. A couple of weeks ago, on 16 March, the Secretary of State for Employment added his support in a solo about the West Midlands and the signs that the recession there was beginning to bottom out.

The same point was made today by the hon. Member for Warwick and Leamington (Mr. Dudley Smith), who said that there would be an upturn very soon. I hope that he is right. However, it is in complete contrast to what the CBI says in its forecast today. It gives the opposite view. It says that manufacturing output will carry on sliding, that it will be 20 per cent. below the 1979 level, and that unemployment is expected to follow that slide and to continue rising. So the reality is contrary to what we hear from the Government. Unemployment is biting very deeply into the West Midlands and all the indications are that it will continue to do so over the coming years. Job losses there have increased more traumatically since this Government came to office than they have in any other region.

I shall not go on to enumerate the picture in the West Midlands, because my hon. Friend the Member for Birmingham, Ladywood (Mr. Sever) did that expertly, but I want to talk a little about my own locality because, in a debate such as this, we tend to relate our speeches to the areas that we represent and to the people who sent us here to represent them.

I speak for a moment about the Sandwell and Dudley travel-to-work area, where there are now 65 people chasing every job. Job losses are occurring there at an appalling rate. Today, 37,000 people are registered as unemployed in that one area.

There is one aspect of unemployment in all this which to me stands out like a sore thumb. It is the present and future prospects for young people. As I see it, of all the damage that has been inflicted during the short lifetime of this Government, the bruising of a generation of young people is very worst feature.

Hot off the press only last week from the Manpower Services Commission came the publication "Labour Market Trends in the Midland Region". It is an assessment of labour trends between now and 1983. It makes very interesting though very depressing reading. It warns that further job losses are to come in the manufacturing sector and that further considerable increases in unemployment are inevitable with a further worsening in the area's position. So today the CBI has simply joined the Manpower Services Commission in making nonsense of the statement by the Secretary of State for Employment on 16 March that the recession was just about bottoming out.

Even on the training of apprentices the report recently published tells us that private industry has reduced the number of apprenticeships in all industries to below the 1979 level and that engineering apprenticeships alone are now down by one-third. The report goes on to say that if the current reduced rate of intake persists the number of trained craftsmen available by the end of the planning period—1983—will be insufficient to meet any upturn in the economy.

In my area the young are particularly vulnerable, because the labour demand for them is falling at a faster rate than in the region as a whole. At the same time, projections indicate that the total number of young people reaching school leaving age will be on the increase over the coming years. That was the point made by the hon. Member for Kidderminster. In my area it will rise over the coming years to a total of 11,500 new people coming on to the labour register each year. What is very frightening about this is the indication in the assessment that they will be joining a labour force in an area where unskilled and semi-skilled jobs have contracted enormously. In circumstances such as these there are obvious implications—social and economic—for their job opportunities and their future.

Last year, when I talked to the careers staff in Sandwell, we concluded that we had a very bad deal. We found that we had only 40 vacancies on record and 950 people to squeeze into them. That is not the case today. In 12 months the number of vacancies has fallen to 14, and we now have 2,700 youngsters looking for work. What is more, as my right hon. and learned Friend the Member for Warley, West (Mr. Archer) said, they will be joined in only a few weeks by the Easter school leavers. In our joint area they represent an additional 500 to that human factor.

Training and work experience in engineering and manufacturing in the Black Country towns are all-important. Some training is going on, but not enough. The overwhelming number of young people in my area have had their training interrupted, and that has happened for two general reasons. The first is that training officers tend to be among the first to be made redundant. When redundancies occur they tend to be some of the first to go. Secondly, the amount of work experience on employers' premises has diminished. More than 500 places have been suspended recently by companies which find themselves with insufficient adult workers left to carry out the supervision. My hon. Friend the Member for Lady wood mentioned Patent Shaft, a very important firm which was in my constituency until it got the chop one Friday. In that one firm alone 100 craft apprentices were made redundant. Some of them were being trained in specialist furnace fabrication. That type of training can be carried out by only one other firm in the country.

It is difficult to follow the career courses of those 100 young people and to discover exactly what happened to their careers. I have done as much research as I can with the careers officer, and I discover that many of them have moved down market. They have grabbed any jobs that have been going. In other words, they have become underemployed. That continuing process has increased the problems for young people who are less qualified. It has been a matter of squeezing out the less qualified and, in doing so, increasing social tensions and other problems.

I want to discuss some of those social problems, and I do so first by relating my remarks to the condemnatory statement made today by academics from British universities. It is no good the Government joking or making jibes about that. What the academics say is serious, and attention should be paid to them.

In addition to condemning the Government's economic therories they now threaten our social and political stability. Those raised voices, which have been joined by those in the CBI, the TUC and many other organisations, should be listened to. Never has there been a period in history when the Government have been more roundly and authoritatively condemned.

I relate my argument to my own area, because this is an important issue to people who live in Sandwell. Ten days ago, I was approached by the chairman of the local citizens' advice bureau. The object was to seek more money for the bureau. Even with voluntary help, the increased case work with which it must deal, resulting chiefly from unemployment, has caused greater pressure than ever before. Its work load is increasing as a result of the social problems created by unemployment.

Last Friday I looked at the local newspaper, which is a responsible regional newspaper. An article on the front page said that suicide calls to the Samaritans in the Black Country towns had nearly doubled. I hope that that does not put the usual smile on the faces of Conservative Members. According to the director of the Samaritans, the stark conclusion to be drawn from this enormous increase in calls for help is that many peope feel worthless and view the future without hope. He added: Young people see their fathers on the dole and they can see no future for themselves. It is all extremely worrying". The annual report of the Samaritans for the Black Country area, which many Labour Members represent, states: Those who come to us appear to feel that they have nothing of value to offer to the community and, more so that the community is breaking faith with them. There are no signs that things are getting any better and as the recession continues problems will mount". Voluntary organisations know that the problems are mounting. We see that every day through letters and various deputations, yet the Government tell us that there is no alternative strategy. The Prime Minister tells us that only her policies will succeed in the long run. Those are cruel and arrogant claims for anyone to make. Moreover, they are patently false.

A month ago, in a London Weekend Television broadcast, the Prime Minister tried to argue that unemployment was costing the country £2.4 billion. However, she did not take loss of taxation into account. In fact, her figures were wrong.

An unemployed man with two children costs the country more than £6,000 a year. If we take lost tax revenue into account we find that unemployment benefits are costing us about £8 billion a year and producing nothing. That does not take into account the cost of lost productivity. Therefore, the cost of all unemployment benefits outstrip the revenue from North Sea oil. There must be borrowings to make up the shortfall. The Prime Minister is also wrong when she tries to argue that those resources are insufficient to create the necessary jobs.

The hon. Member for Warwick and Leamington asked about the Opposition's alternative policies. I remind Conservative Members that a Conservative Government are in charge of Britain's economy. They should have an alternative policy, but I shall try to make some suggestions. The Government consistently fail to distinguish between capital spending and current spending. Spending for investment is just what the country needs, yet the Government fail to make the crucial distinction between money for investment and money for consumption.

If it is right that economic recovery will occur if private sector companies borrow to invest, I must be convinced that disaster will follow if British Telecom or British Rail also borrow to invest.

An alternative lies in using the nation's wealth for huge investment programmes to rescue industry. Most of it should be put into the public sector and used for electrifying the railways, spending on gas pipelines, renewing outworn sewerage and, above all, investment in construction. As my right hon. and learned Friend the Member for Warley, West said, it should be used to get people off the housing waiting lists.

Mr. Kenneth Carlisle (Lincoln)


Miss Boothroyd

I am sorry, but I shall not give way.

In the process, much of that cash will flow into private industry, such as the engineering sectors of the Black Country and the small companies there which supply the accessories. It would flow into the small firms, which we all want to help. That goes some way towards an alternative which the Government will not face. They deal in faith rather than fact. There is work to do and there are men and women available to do it. They must be brought together.

Mr. Carlisle


Miss Boothroyd

I am sorry, but many other hon. Members wish to speak. If the hon. Gentleman is patient I am sure that he will be able to make his point in his own time and not in my time.

As I was saying, those men and women and that work must be brought together. While we wait for an economic upturn, the unused labour of working people who could produce the country's wealth is not piling up to our credit to be used at a later date. It is running to waste.

As today's censure on the Government by the CBI and those in British universities indicates, other alternatives must be examined. The policies now being pursued threaten the very social and political stability of this country. It is time that the Government addressed themselves to that problem.

6.8 pm

Mr. Warren Hawksley (The Wrekin)

Thank you, Mr. Deputy Speaker, for calling me in this important debate. I hope that the hon. Member for West Bromwich, West (Miss Boothroyd) will excuse me if I do not follow her argument. However, I disagree with her suggestion that we should take notice of the academics, for that is possibly the attitude that has harmed the nation for a number of years. We should perhaps take note of more practical ideas than those being advanced by those academics.

My constituency has the highest level of unemployment in the West Midlands, and in the whole of the Midlands with the exception of Corby. In fact, in numbers, a few thousand fewer are unemployed in Corby than in The Wrekin constituency.

As hon. Members will know, I also represent a marginal seat. If Labour Members think that will convince me that I should become an ally they are in for a surprise. The pledges that we gave in 1979 and the strategy that we have followed since then were those we were elected to carry out.

Mr. Bill Homewood (Kettering)

The hon. Gentleman referred to my constituency, which I understand has the highest level of travel-to-work unemployment in the whole of the United Kingdom, with one exception. The hon. Gentleman seems to question that. I should like him to put me right, because it is what I intend to say in my speech.

Mr. Hawksley

My point is that there are more people out of work in The Wrekin than in Corby, although there is a higher percentage in Corby, because fewer people live in the area. We in our part of the country could possibly agree with the hon. Gentleman on certain points.

Unemployment in my area is running at 17 per cent. To that will be added 1,000 GKN workers in the not-too-distant future. The BKL factory is to close under an announcement made only last week. In those circumstances the level of unemployment is unacceptable, but who does one blame? It is clear that Labour Members blame the Government. I do not. We in the Midlands cannot be sheltered from the winds of the world recession. We must recognise the seriousness of the international scene. In Belgium unemployment is 50 per cent. higher than in Britain. France and Germany are repatriating some of their immigrant workers to keep their unemployment levels down. In America there is a growing realism that that country must move over to a policy of sound money. It is against that background that we should view the world recession as causing our high unemployment.

In 1979—when many Conservative seats were won in the West Midlands—we were elected not to go for the easy option of borrowing and printing money. That had been tried by successive Governments and it had failed. In 1979 the electorate knew that a Conservative Government would go for medicine that in the short term would hurt but in the long term would cure. The medicine is still hurting. Partly because of the intensity of the world recession, it is hurting more than many people thought it would. But we cannot get out of our troubles by printing money. The nation is currently borrowing the equivalent of £240 for every man, woman and child in it. If people wish to see effect given to the views of the TUC and the CBI, the onus is upon them to say where the money will come from. The money does not exist. It will come only from efficient and profitable industry moving, as we hope it will very shortly, out of the world recession.

I turn to a more local issue—in particular, the suggestions made in 1979 that a Conservative Government would make public expenditure cuts that would kill many of our areas. I want to paint a different picture of what is actually happening in the West Midlands generally and in my constituency in particular. At the 1979 election, my opponent contended that in supporting me and a Conservative Government the electorate would be supporting the death of the new town corporation in Telford. We have seen not a bit of that. The board has been strengthened and its life has been extended. We were told that there would be no motorway connecting Te [ford and the West Midlands. That has proved not to be true. My right hon. Friend the Secretary of State for Transport has not only put out the contract for the tender, but has arranged for the work to begin in June. That is different from what happened under the Labour Government, when the motorway project was beset by one delay after another.

During the Labour Government's period of office a hospital was closed in the constituency. We have how been given the go-ahead for the purchase of a site and for the training of staff to work in a new hospital. That w ill create many jobs in the area when the hospital is ready to open. How different that is from events under the previous Government, who closed the local hospital at Cosford in the face of spirited opposition from many people in the area.

An Inland Revenue computer has now been located in our area and will start operations shortly. In spite of the tale of woe told by the hon. Member for Birmingham, Ladywood (Mr. Sever) about GKN Sankey, the Government have given the company a defence contract for an Army personnel carrier. We should be thankful for that example of Government help for the West Midlands. Still on the defence side, there is also to be an expansion of COD Donnington, which is creating jobs and improving the local position considerably.

It is childish for anyone to criticise the Government for not doing enough. I hope that I have managed to convince hon. Members that the Government have done a great deal. Let me deal, however, with the point mentioned by my hon. Friend the Under-Secretary of State about Telford's application to be considered for development area status. That would be an important event for the area. Our 17 per cent. level of unemployment will rise to nearly 20 per cent. when the GKN Sankey redundancies work through into the system. At the Madeley exchange the level of male unemployment is currently 32.9 per cent. That demonstrates the seriousness of the position. Of the 29 special development areas, only four will have higher unemployment than that.

I do not like the idea of development areas because they distort economic factors, and many people in the West Midlands realize—

Mr. Budgen

Does my hon. Friend agree that if Telford were given development area status, it would be particularly disadvantageous to Wolverhampton?

Mr. Hawksley

I agree entirely with my hon. Friend. Let me in due course give other examples of how regional policies affect my area and other parts of the West Midlands in that way. My right hon. Friend the Secretary of State for Employment recently visited my area. He saw at first hand how bad the position was and he gave public support to our campaign for development area status. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) referred to the effects of such measures on other areas. My constituency is already suffering from the effects of the Wrexham special development area. Jobs that the Telford development corporation had expected to obtain have been lost because those creating them discovered that they would get grants if they went to Wrexham.

I agree with those who want to abolish the development areas but while they exist it is important to ensure that the help they provide goes to those in greatest need. It is on that ground that I claim that status for my area. EEC aid can at the moment be given only to areas which enjoy some development area status. May we have confirmation from the Government tonight that they can do nothing to arrange for European aid to be considered for a wider area? Certain Members of the European Parliament suggest that it is possible for us to decide where EEC aid should be directed. I hope that we may be told tonight whether the West Midlands can be considered as a recipient of European aid.

Another of our problems concerns regional policy. I bear no malice to my hon. Friend the Member for Dudley, West (Mr. Blackburn), who has succeeded in getting an enterprise zone located in Dudley. We in Telford would have liked it. We thought that we had won the argument, but unfortunately one of the conditions was that we should carry the support of the local authority. The Socialist-controlled Wrekin district council was flatly opposed to the idea. It seems that the Socialists in Telford are different from those in other parts of the West Midlands. In some other parts the Socialists were on bended knees begging for the enterprise zone to be given to their areas. Instead, it was given to Dudley. That action will increase Telford's problems.

It is therefore important that when the delegation of councillors, industrialists and trade unionists visits my hon. Friend the Minister of State, Department of Industry in the first week of April our case should be considered seriously. If we could develop a prosperous area on the edge of the conurbation, that would help the surrounding areas and would be of great benefit to many people who are outside the area we are discussing.

In asking for development area status we do not ask for permanent charity. The Government should consider giving the area such status for five years to prevent its being worse off than special development areas. That status would help us until the benefits of the motorway could be seen. Once the motorway has been built and industrialists realise that it is not just an idea they will have confidence to come to Telford.

Mr. John G. Blackburn (Dudley, West)

I have been following the debate intently. My hon. Friend said that his constituency was worse off. Does he agree that one of the reasons for that and the horrific unemployment figures was Government policy between 1975 and 1978, when 118,000 jobs were taken from the West Midlands by Government intervention? Does he agree that many of those jobs were not real jobs? They went to my hon. Friend's constituency and now he has to tackle the problem.

Mr. Hawksley

I do not accept that jobs that came to Telford denuded other areas. I have mentioned what the Labour Government failed to do for the West Midlands. We needed help then. I sometimes agree with hon. Members who attack the principle of new towns. There is agreement that the third-generation new towns are the last. However, they are with us. A commitment was given by the incoming Government in 1979 that the new towns would be completed. They must be allowed to run their course.

I finish as I began, on a note of confidence in the Government's policies. I believe that the Government's overall economic strategy is right. However, if they are to retain their regional policy they must ensure that aid is given to areas with the greatest need. I hope that I have convinced hon. Members that with its high unemployment my constituency is an area of greatest need.

6.22 pm
Mr. Clement Freud (Isle of Ely)

I shall not pursue the claims by the hon. Member for The Wrekin (Mr. Hawksley), but I make no excuse for contributing briefly to the debate. The Liberal Party does not have a Member in the Midlands at present, but my constituency is a historically low unemployment area. The Minister said that the Midlands area was not as bad as some areas. That is no relief to the 2,053 unemployed people in Wisbech, chasing 56 vacancies, or to the 883 people who were unemployed in March, when that figure was only 377 when the Government came to power. It is no relief to the 808 unemployed people in Ely, 139 of whom have had no job for over a year.

Most of those people are unemployed not as a result of five years of Labour misrule, as the hon. Member for Kidderminster (Mr. Bulmer) said, but because of the Conservative Government. They are in their fourth six-month period in office, and they predicted that the rightness of their policies would begin to become evident by now.

The Minister talked of the Government's encouragement of industry. What encouragement is being given, and what could be given? The Government could do more. They have given some complicated help to small industries, and that is welcome. They have also created enterprise zones. I agree with the right hon. and learned Member for Warley, West (Mr. Archer) that for every job created in an enterprise zone one is jeopardised in a non-enterprise zone.

The Government would do well to examine short-term enterprise zones on the basis that Lord Rothschild used to sack his chef every three years. He believed that if his chef had not made a fortune after three years he never would make any money. If an enterprise zone existed for three years it would provide an incentive to start up in business without making life difficult for others.

We should remember what other countries are doing to encourage industry. The Minister would be wise to examine what happens in France. People there are given a six-month advance of unemployment benefit so that they can buy jobs for themselves by creating some type of industry. In Italy, no employer's contribution is charged for job creation. They are sensible ways to help.

Pension funds must be encouraged to invest in small businesses. Many small businesses do not have the expertise of the pension funds. Industry should not be encouraged simply because of the need for employment in a specific area. The Government might consider encouraging industry to grow round seats of learning, such as the universities and polytechnics, so that the applied knowledge could fan out and create something new.

A company in my constituency made its entire work force redundant last week, and 96 jobs were lost. The company is losing about £200,000 a year. It is part of the Howden group, the profits of which last year went up from £6.5 million to £7.5 million. I am sure that it would not have closed the Wisbech offshoot, which makes hydraulic valves, without the most careful searching of its accounts. It could not have been difficult for the Government, who are faced with an unemployment bill about three times as high as the losses of that company, to give the encouragement that the Minister said he was giving to industry.

Tax concessions are not available. We hoped that the Budget would bring relief from the employer's contribution surcharge. That would have helped the Howden group to keep Andrew Fraser of Wisbech going. Instead, 96 jobs have gone and £5,500 per man and woman will have to be found in unemployment benefit. Not much encouragement would have been needed to make the company think again. If we are to believe the Government when they talk of deep regret at the unemployment figures, for heaven's sake they must consider constructive job creation. The Government's energy pricing policy is no help.

In Japan, people look ahead to the next boom. To what is the Minister looking? The public sector borrowing requirement is not a divine instrument. Indeed, nothing that can be estimated within only 50 per cent. of reality has much divinity.

Does the Minister intend to invest money in British Rail, in the Channel tunnel, or in communications? Hon. Members are aware of the plight of our communications industry. One has only to try a House of Commons telephone and get two wrong numbers for every right one, or to hear a boring voice saying "Lines from London are engaged" to understand the industry's plight. The updating of the communications industry has to be done sooner or later. While we have the current crisis, why not have it sooner rather than later?

Young people are growing up with no work experience, and that will have grave consequences for future industrial relations and society in general. In my constituency, about 30 per cent. of the under-18s have never had a job. A period of unemployment used to be characterised by frantic job searching. Now it cannot be long before, in many places, what has traditionally been a hiatus has to be faced as a lasting condition for many younger and abler people.

6.30 pm
Mr. Michael Latham (Melton)

I thought that I was to be the first hon. Member not from the West Midlands to speak, coming as I do from the East Midlands, but it turns out that I am second, because the last speaker—the hon. Member for Isle of Ely (Mr. Freud)—does not represent the Midlands at all. Nevertheless, he made an interesting speech, and I am glad to have the opportunity to follow it. I am also very pleased to see the hon. Member for Leicester, South (Mr. Marshall), who I understand is to reply to the debate from the Opposition Front Bench. I wish him every success, in a bipartisan spirit. No doubt he will continue to make many speeches from the Opposition Benches.

I want to give the present unemployment position in my constituency. As from 12 March, the Melton Mowbray jobcentre had 1,399 registered unemployed, representing 9.9 per cent. Since December, the figure has risen by 202, of which 120 came from lay-offs at the British Steel Corporation factory at Holwell. A further 80 redundancies have since been announced by Holwell, and these will be reflected in the April figures. There are only 44 registered vacancies. The Melton figure is 1 per cent. above the Leicestershire average and 0.6 per cent. above the East Midlands average, though it is slightly below the national average.

Many of my constituents live in an area covered by the Loughborough agency. There, I am glad to say, the position is better. The unemployed percentage is 6.3, and last month vacancies rose from 120 to 128. Nevertheless, the figures are bad, though my constituency as a whole is one where unemployment has not been a problem in the past.

All hon. Members are particularly concerned about youth unemployment. I met the principal of Melton Mowbray college of further education—Mr. Pobjoy—last Friday, and I am also in touch with the area careers officer, Mr. Goddard. Although some local employers have responded extremely well to the challenge of the youth opportunities programme—indeed, Pedigree Pet foods Limited had a scheme of its own, involving 25 youngsters—much still needs to be done.

I hope that the Minister will be able to tell me whether the Easter guarantee will be honoured in Melton Mowbray. I sincerely hope so. I hope that my hon. Friend can reassure me in that regard, either this evening or by letter.

We need more YOP sponsors. I hope that my hon. Friend will consider the arrangements whereby young people have to pay the first £4 of any travel expenses. The careers service tells me that this allowance, which is very low for rural areas, and lower still as a result of the increased petrol prices following the Budget, is making it almost more worthwhile for a young person to stay at home on supplementary benefit than to participate in a YOP scheme in Melton Mowbray. Clearly, if that is happening it is most unsatisfactory. I hope that my hon. Friend will give the matter careful consideration.

I realise that the recession is the main problem, and that my hon. Friend cannot wave a magic wand to make it go away. I am sorry that the Budget did not give more help to industry, particularly to help people to stay in work, whether through the short-time working compensation scheme or through a wider job release scheme, rather than find projects for unemployed people, useful as those projects are. I hope that my hon. Friend will be able to bring forward further proposals in this regard in the next few months.

Unemployment is already intolerably high. Some of the figures being bandied about, of 3 million, 3.7 million or 4 million unemployed, are not to be contemplated. The public expenditure White Paper made the gloomy prediction of 2.7 million unemployed, excluding school leavers, in 1982–83 and 1983–84. Those figures, which assume a higher level of unemployment in two and a half years' time than we have now—supposedly in the depth of the recession—are simply not acceptable. Ministers should make it plain that if those are the underlying assumptions—let alone nightmarish figures like 3 million or more—the assumptions will have to be looked at again.

The economy of Leicestershire is well spread. That is why the county has avoided the worst of the storms in past years. At present, there are some brighter signs. Clearly, private house building is recovering sharply throughout the county and country. That is confirmed by the latest survey of the House Builders Federation. By holding clown its precept increase to a very modest 4 per cent. this year, Leicestershire county council has eased the crushing burdens on private industry. In that regard, I must point out that there is great resentment in private business about price increases in the public sector, some of which, such as those relating to telephones, are blamed directly on the Government. If the net result of the system of external financing limits is to force up charges of nationalised industries, already in surplus, at the expense of jobs in the private sector, it is high time that we changed the financing system, whether by wholesale privatisation or by taking capital sector borrowing out of the PSBR.

I congratulate Leicestershire county council on playing its part in holding down rates. I welcome, too, the facilities of the small firms centre in Leicester, and I am delighted to see that there is to be a Leicestershire week in Saarbrucken, in Germany, next week, where much of the county's attractions will be displayed to our German friends. I hope that it goes very well and produces more work for our people, both in exports and in revenue from tourism.

The county, which is at the heart of England and which has the M1 running through it, has excellent communications. I hope that the electrification of the Midland railway line to Leicester will go ahead. The project could provide considerable benefits, as well as providing more work.

I should like to say a brief word about two traditional industries of the East Midlands, both of which are in serious straits. I refer, of course, to footwear manufacturing and hosiery and knitwear. The fact that they are traditional industries does not mean that they are not modern or inventive. Quite the contrary; their performance is excellent. The footwear industry is badly affected by the strength of the pound. The level of import penetration is high, and Britain is the easiest place in the world into which to import shoes. An importer can go to the British Shoe Corporation in Leicester and then to Northampton and Manchester and see most of the shoe trade in a day and a half. If our domestic industry is to be maintained we shall have to take an increasingly hard line on imports.

I can imagine what the French would do in such circumstances. They would create an elaborate inspection and testing agency—as they have done for imported doors—or some other bureaucratic or slow-moving obstacle to imports, or they would simply breach the EEC rules, as they did with sheep.

At the same time, I hope that retailers, especially those with enormous buying powers, such as the British Shoe Corporation, will ensure that their purchasing policy is directed towards maintaining a viable domestic manufacturing capacity, not only in the corporation's own factories—where it makes 20 per cent. of its shoes—but among its suppliers. After all, the BSC owns Saxone, Dolcis, Manfield, Freeman Hardy and Willis, Trueform and Curtess. It also used to own Benefit, Phillips, and Lilley and Skinner, which it has since merged with the others. Its orders can literally make or break a supplier or manufacturer.

Any such giant needs to have an exceptional sense of retraint and responsibility in its purchasing and pricing policy. Of course, it must also remain keenly price competitive, in the interests of its employees as well as of its customers or shareholders. But the House will look to the BSC always to act in the widest interests of the consumer that it serves and British industry and employment, with which it is involved. I am sure that the company will not disappoint us, and that the Office of Fair Trading will bear this issue closely in mind. While the pound stays high, importing is fairly easy and exporting is hard, and all sectors of the footwear industry need to stick together for its survival in the years to come.

Finally, I want to say a word about the Leicestershire hosiery and knitwear industry, which has had to shed many employees over the past 18 months. Only today, along with other Leicestershire hon. Members, I received a letter from the county council chief executive expressing the concern of the county council about the state of the industry. The council says that 6,000 people have lost their jobs and 8,000 out of a labour force of 40,000, are on the short-time working compensation scheme in the industry in Leicestershire.

In a recent letter to me, my right hon. Friend the Prime Minister rightly said that she was impressed by the improvement in textiles generally—including hosiery and knitwear—in both their efficiency and productivity, and by the industry's good labour relations record and export achievements. There are 400 quotas and other restraints on textiles. I am particularly pleased that my right hon. Friend felt able to confirm the Government's intention to press for a tough successor arrangement when the present multi-fibre arrangement comes up for renegotiation later this year. I hope that the EEC will do all that it can to plug loopholes in the MFA—we all know that there are loopholes—and that it will set its own house in order. Some EEC countries, such as Italy, which use child labour or cheap female outwork labour, are also trading unfairly. Ministers should pursue this matter strongly at EEC level.

More needs to be done. The temporary short-time working compensation scheme is essential to the textile industry, which had received £31 million up to December 1980, let alone what it has received since. I hope that my hon. Friend will be able to keep the scheme going at a reasonable level.

I am well aware that Leicestershire has not suffered as badly as some other areas in the present recession. It is well placed to take advantage of the upturn, when it comes, but far too many resources are having to go into unemployment benefit at present. That is necessary but unproductive expenditure. Let us see more people in jobs. I hope that the Government will increasingly direct their attention to that end.

6.41 pm
Mrs. Renee Short (Wolverhampton, North-East)

Every Opposition speaker and most speakers from the Government Benches, including the hon. Member for Melton (Mr. Latham), who is not from the West Midlands, have spoken of their serious dissatisfaction with the present position, about which the Government seem to be so complacent. The Minister's speech was smug, complacent and unconstructive on ways of dealing with the problems that face us.

The major problem, surely, is the Government's refusal effectively and speedily to mobilise' our resources of human skill, energy and talent, together with the country's financial resources, to remedy the present situation not only in the West Midlands but in many other parts of the country. I find that refusal incomprehensible. I cannot understand how the Government can sit back and make the same statements as they made at the time of the election about how they would deal with the country's problems. They see those problems become progressively worse as each month goes by, yet they refuse to change course. What hold does the Prime Minister have over other members of the Cabinet and juniors Ministers that results in their refusing to join together to say "So far and no further. We must change course"?

My hon. Friend the Member for Birmingham, Ladywood (Mr. Sever), who opened the debate very effectively, said that the West Midlands region was fast becoming a wasteland, as firm after firm—many of them established for generations—disappeared. Many others of my hon. Friends also spoke of this problem. To survive, we must move fast and find a solution.

We have seen no significant move by the Government to encourage the development of viable new industries. If they have developed, they have not come to the West Midlands. We see no encouragement of viable small firms, no energy or drive put into the development of new technology in the region. There is no vision, and little hope is offered for the future. All that we see is a continuation of the present position. Hon. Members have pointed out the possible social, political and economic consequences.

Do the Government ever study what anyone abroad does, apart from looking at the EEC? Have they been made aware of what the Danes have done to stimulate industry? Denmark is a small country, with a small population and no material resources. By the Prime Minister's standards it should be poor and backward, but it is one of the most industrially advanced in Europe. Most Danish firms employ fewer than 500 people, so none of them is very large. The Danish Government have played a leading role in sponsoring a small-firms technology institute, similar to the Schumacher centre. Much development and innovation is going on, and that is what we want to happen here.

In Japan there are 7 million small firms with only five or six employees. All those firms have developed since the war. The Japanese Government stimulated the growth of small firms by giving tax relief on modernisation schemes and on consultancy services, so that there was available proper consultancy advice for the new firms that were starting up.

The major Japanese companies use the small firms to supply components. There is a strong link between small firms and large firms. For example, Toyota has 140 direct suppliers, which draw upon 40,000 small firms contributing 60 per cent. of Toyota's parts. That gives a guarantee of employment and survival to many small firms.

What do the Government intend to do for the thousands of skilled workers now on the dole, and for the thousands of school leavers with no training who face a grim future? The Secretary of State's announcement last November of special measures to enable them to obtain vocational training may have raised their hopes. The director of special programmes in the Manpower Services Commission, Geoffrey Holland, has said: Fourty-four per cent. of British young people enter work—or remain unemployed—with little or no training, compared with only nine per cent. who do so in West Germany, and we have the smallest proportion—24 per cent.—compared with other industrial nations in full-time vocational training. What will the Minister do about that? Half our unemployed young people are under 25 years of age. By the time they reach the age of 18 or 19 some are married and have children. Therefore, a large proportion of the young unemployed families face a dire future.

Since 1974 there has been a ninefold increase in the numbers who remain unemployed for more than 12 months. The position demands not talk and smug remarks by Ministers but action, determination and—inevitably—resources. None of those is forthcoming from the Government.

There are considerable problems of education if the new small firms and the community enterprises are to get off the ground. I do not believe that young people want to lead idle, aimless lives. They all want to have jobs, to earn money and to take their place in society, but they often fear the alienation that comes from working in huge, impersonal units, where they feel overwhelmed and disregarded as human beings by management and often by those with whom they work. They feel themselves to be tiny, unimportant cogs in an enormous organisation.

Our young people should be encouraged to learn what they can do to relieve the problems that face the world today—major problems of food shortage, energy conservation and the delivery of good health. Teaching must take all those problems on board and must encourage skills in those subjects as well. It must deal with the problems of the everyday lives of our people and of other peoples, especially in the developing world.

We must encourage the doers and adventurous among our young people. We do not do that anywhere near enough. We tend to offer rather orthodox and often very boring opportunities to young people in their work experience schemes and training. We need to be much more adventurous and rather more unorthodox than we have been so far. We must have a change of policy away from the sterile and destructive attitude of the Government. If the Prime Minister will not turn, the Cabinet must insist on a turn being made.

The latest count of unemployed school leavers in the Wolverhampton employment area shows that between 1977 and 1981 there has been an increase of three and a half times in the number of young persons under 18 unemployed. In the West Midlands as a whole, there has been an increase from 2,562 in 1977 to 8,285 this year.

The rot appears not only in industry; it appears in the National Health Service. A large number of posts are vacant at every level in the National Health Service throughout the West Midlands simply because the regional health authorities do not have the resources and the money to pay the salaries. This applies to consultants, doctors and nurses, as well as to other staff. If those jobs remain unfilled, patients suffer. In addition to suffering from unemployment and short-time working, people are suffering from long hospital waiting lists. I refer especially to the increasing number of patients who are suffering from mental illness induced by the disastrous economic position that faces all of us. Those patients are having to wait even longer for help.

The construction industry could do a great deal to generate jobs. An enormous amount of new industrial building is needed in the West Midlands. Many hundreds of jobs could be created if a go-ahead could be given for new industrial building. If local authorities were able to start their house building and house modernisation programmes again that could also help the building industry.

The CBI—some of us on the Labour Benches had the pleasure of meeting its representatives in Birmingham last Friday—is forecasting 2 million unemployed for the foreseeable future. That is a very dreary prospect. But if the measures that I have suggested could be adopted we could change that rather doom-laden attitude and regenerate industry and employment in the West Midlands.

I hope, therefore, that the Minister will be able to give us some new ideas and will not repeat the same old jejune economic arguments which hon. Members on both sides of the House and the country at large are sick and tired of hearing. Those ideas do not get us any further. We want new ideas. We want some of the ideas that have been put forward from the Labour Benches—and, indeed, from the Conservative Benches—to be adopted by the Government. We want Ministers to tell us what is to be done to regenerate all the regions that are suffering so much from the Government's policies—and particularly the West Midlands region, which all of us care about very much.

6.54 pm
Mr. John Stokes (Halesowen and Stourbridge)

I welcome the serious tone of the debate. Members on both sides of the House are deeply concerned about unemployment in the Midlands. The Midlands has never really suffered in this way before. We may differ about the remedies but we are united in deploring the human tragedies involved.

I remember the unemployment of the early 1930s, when I was a boy, and the Jarrow marchers. Fortunately, the poverty and hardship are not as great now as they were then. Some of the unemployed are now able to augment their incomes—in some cases significantly—by doing all kinds of jobs, which are now called "moonlighting".

Nevertheless, I know only too well the anxieties and the sense of helplessness that afflict many of the unemployed—the young leaving school, worried about getting a job at all; the middle-aged man with a wife and children to keep; and the older man who wonders whether he will be able to get another job before he reaches pension age at 65.

We must remember that the total work force now is much larger than it was in the 1930s. Not only has there been an increase in population; nearly 1 million extra women are now employed, compared with a decade ago. Many of these women are married, and their husbands are also earning. Even so, I hardly think that one can expect them to give up their jobs for the sake of unemployed men.

Obviously, in these times of heavy unemployment firms will consider early retirement where suitable, and the engagement of young persons in the place of those retiring, but these are only palliatives. The great question that we are debating today is whether the Government can do any more and whether industry is doing all it can to make itself as competitive as possible in world markets.

We all know why the present position has come about. The world is still in the deepest recession that it has experienced since 1929. The recession is deeper and has lasted longer than the Government and most people expected. Fortunately, there are now signs that the worst may be over and that we can look forward to a steady if slow recovery, from the summer onwards. Stock Exchange prices in the last week or two are pointing in that direction, and Stock Exchange investors are usually right in the longer term.

The recession has hit the engineering industry very hard, and engineering is the heart of the Midlands. One does not wish to criticise hard-pressed employers when they are trying so energetically to climb out of the trough, but the twin evils of British industry—overmanning and low productivity—are, with the slump, the main causes of the loss of orders and, therefore, of high unemployment.

Another failure, which has not so far been mentioned in the debate and which is becoming generally more recognised in the engineering industry, is poor marketing and not sufficiently aggressive selling. The Midlands has always been able to manufacture products, but they have to be sold, and it is necessary to adopt a strongly market-oriented stance—to find out what the customer wants and then make it, rather than to hope to sell what has been produced for a long time.

I recognise that in some trades, such as steel, there has been such an appalling drop in demand—not only here but in Europe, and, indeed, world-wide—that no amount of selling techniques will be able to overcome the problems. There are, nevertheless, encouraging signs. There is now much more realism on the shop floor. Sometimes there is more realism and less moaning than I find among managers, directors and owners. People on the shop floor are now realistic about accepting sensible and moderate wage increases. They understand the importance of productivity, and of moving, if necessary, from one job to another in a firm. Managements are at last, albeit slowly, making greater efforts to keep their employees more fully informed of what is going on.

My hon. Friend the Member for Kidderminster (Mr. Bulmer) made an extremely sound speech and pointed out something that everyone knows, namely, that during the past 10 years we have paid ourselves an increase of over 300 per cent. while productivity has increased by only 10 per cent. That is one of the root problems. The Midlands has a magnificent labour force, which is as good as any in the world. I spent Friday evening in Cradley, that splendid small chain-making town that has some of the best Englishmen in the country. Both they and the rest of the work force in the West Midlands need good leadership from everyone responsible, including charge hands, foremen, managers and directors. That is the most important factor.

That effort must be supported by good research and development, product planning, efficient marketing and the most cost-conscious means of production, followed by first-rate technical services. There is no substitute for such things if we are to compete with the French, Germans, Americans and Japanese. After all, this country has enormous brain power, but it must be harnessed to commercial success.

The Midlands is still too dependent on the motor industry, and wise firms will diversify as much as they can. We all remember that in the early years after the war motor manufacturers, anxious to take on labour, offered too high wages for too little work, coupled with poor supervision and bad discipline. For many years management in the motor industry lacked an "officer class".

However, I hope and believe that this is one of the matters that Sir Michael Edwardes is turning his attention to. British Leyland has slimmed down greatly, but even now it must increase production of the Mini Metro in order to enable a profit to be made on each car produced. At least two other volume cars are required. They must be models that the public at home and abroad and employees of British Leyland will want to buy. The recent white-collar strike of employees working on the Metro could well hold back progress. Surely the shop stewards and union leaders, who have done such immense damage to the motor industry, have learnt their lesson.

In the West Midlands there are big companies, such as British Leyland, GKN, Tube Investments and ICI. I doubt whether such companies will ever recruit such large numbers of employees. The trend towards the microchip and automation will see to that. Small employers and the self-employed are, therefore, vital as the future recruiters of labour. That is one reason why the Government gave them so much help in the Budget.

Few hon. Members know what new industries will come forward. Such new industries may be developed in one of the small properties that new business men can now acquire. They may even be developed in a backyard or in a garage, with only one or two people to start with. That is how the plastics industry started in this country after the First World War. We need to encourage inventors and entrepreneurs as much as we can. It is they, and not the Government or the House, who will eventually produce the wealth that the country needs.

I know full well that industry has its complaints. I sometimes think that there are more complaints from management than from the shop floor. The high rate of exchange has fallen slightly, but industry must to some extent learn to live with a high pound. Interest rates have fallen and may fall a little further. Energy costs and the national insurance surcharge must be borne in mind. I hope that the Government will reconsider energy costs, particularly in terms of coking coal for foundries. English foundries are at a disadvantage compared with those in Europe.

Otherwise, I wholeheartedly support the Budget and the Government's determination to reduce inflation and to return to sound money. That must benefit industry and help employment more than anything else. It will inspire confidence and enable further investment to be made.

We must ensure that we make the best of present investment by shift work and proper utilisation of plant and machinery before we clamour for additional investment. I utterly condemn wildcat schemes of large public investment that have to be supported either by printing money or by further borrowing. It will lead only to further inflation and will nullify the sacrifices made.

The slump will come to an end and things will get better. The remedy lies not, as Opposition Members seem to think, in more Government action but in more determined action by industry. Many severe and long-lasting faults in British industry are at last being corrected. That alone will help towards big profits when the slump is over. It is profits that British industry requires, and with them there will be many more jobs for a great many people in British industry.

7.6 pm

Mr. David Winnick (Walsall, North)

Having listened to the speech of the hon. Member for Halesowen and Stourbridge (Mr. Stokes), it is not difficult for me to imagine him being just as complacent during the slump before the war. He might have told the House that things would get better and that hon. Members should not worry. He said that he was a supporter of the Budget. He is very much in a minority in the country at large. Indeed, if there were a free vote he would probably find himself in a minority in the House.

Mr Stokes

I was alive before the war and perhaps I was a little older than the hon. Gentleman. Things got better in the 1930s, as a result not only of rearmament but of a big boom in the South, when towns such as Watford and Slough became the great towns that they are today. There was an enormous leap in house building and it was possible to buy a good three-bedroomed house for £880.

Mr Winnick

I have been proved more correct than I had anticipated. The hon. Gentleman has confirmed the attitude that he would have adopted before the war. At that time millions of people rotted on the dole queues. His views are hardly likely to conflict with recorded history. The Conservative Party suffered a large and humiliating defeat in 1945 mainly because those who had never voted Labour before said that they did not want to return to the pre-war days.

It has been said that we shall have to accept the fact of a great many permanately unemployed people. My hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) mentioned last Friday's meeting of the CBI in the West Midlands, which I attended. The Opposition find unacceptable the idea that 1½ million or 2 million people might be permanently unemployed. If we were to accept such an idea we should be falling into the Government's trap of saying that there is no alternative and of accepting—as before the war—a large number of unemployed. People do not want to rot their lives away on the dole queue. We must continue to work for policies that will eliminate large-scale unemployment and see a return to the situation that prevailed in most parts of the country during the first 20 to 25 years after the Second World War.

The debate reflects the crisis in both the West and East Midlands. Nowhere else in Britain is unemployment rising so high as in the West Midlands. For example, in the past year adult unemployment in the United Kingdom has risen by 69 per cent. In the West Midlands the increase has been 102 per cent. and in the East Midlands 80 per cent.

My hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) was right when he said that before the war there were jobs in the West Midlands, and that people travelled from the most depressed areas to Birmingham and Coventry. But who would wish to go to the Midlands today to find work? With unemployment rising, there is no prospect of people coming into the region and finding relief from unemployment.

Hon. Members on both sides of the House referred to school leavers. Last week in my constituency I met a girl who has now found a job. She told me about her difficulties in finding work. She applied for countless jobs. One job for which she applied—not a very distinguished job—was an assistant. in a jewellery shop. When she was interviewed she was told that there had already been 81 applicants for the job and that no doubt there would be others.

Those who leave school with few formal qualifications, who in better circumstances might have difficulty in finding work, are now having the utmost difficulty in getting any employment. When employers have the pick of the market, it is understandable that those who have reasonable qualifications but do not go on to higher education will be taken on for jobs that would otherwise go to school leavers such as I described. This tears at our social fabric. It undermines stability when school leavers with few formal qualifications have very little chance, of finding work however hard they may try. How many months—indeed, years—will they have to remain on the dole queue? We must deal with this problem. It is one of the reasons for this debate today.

One in 10 of all jobs in manufacturing industry has been wiped out during the past year. I bore that point in mind when listening to the hon. Member for Halesowen and Stourbridge. The crisis in the West Midlands is the result of the Government's policies for manufacturing industry. There have been constant redundancies and closures, and extensive short-time working. Many firms in the Black Country have closed down completely. Some factories are unlikely to be reopened. The equipment is being dismantled and shipped abroad.

An official of one large trade union provided me with a list of many pages of redundancies that have occurred in his area during the past 12 months. There is sheet after sheet of firms that have declared redundancies and of firms that have closed down.

Of course we are worried about school leavers being unable to find work, but let us not forget men who, in many instances, have worked for a company for 25 years, have based their working lives on the reasonable assumption that they would continue with that firm, and have saved money and made arrangements for their retirement—men whose lives have been shattered in the past 12 to 18 months through redundancy. Some are unlikely to work again. When their unemployment benefit is exhausted, if they try to claim supplementary benefit, what will be the result? If they have more than £2,000, which is perhaps redundancy pay, or if their wives have money, they will not receive a penny. Their savings during their working lives are taken into consideration. That is shameful. It is humiliating for the Government to inflict such hardship on the victims of their own policies. My hon. Friend the Member for West Bromwich, West (Miss Boothroyd) referred to the report in the Express and Star about the large numbers who have taken or attempted to take their lives as a result of the depression in the region.

It is interesting to look at "Labour Market Trends in the Midland Region", a document prepared by the Manpower Services Commission. No doubt in replying to the debate the Minister will wish to refer to the MSC's report on the East and West Midlands. It says that there are no signs that the rise in unemployment in the West Midlands is abating. This informative report, which should be studied with care, concludes that the West Midlands will be more affected by the recession than the country as a whole. Some Conservative Members are optimistic. There are pages and paragraphs in this report—and there might have been one or two that I have overlooked—but it shows that there is little to be complacent about in the East or the West Midlands in the next few years.

The region has a narrow industrial base. Two weeks ago I took a deputation to see the Under-Secretary of State. I pointed out that in my borough in Walsall 48 per cent. of the working population were engaged in metal-based manufacture. In one part of the borough, Darlaston, represented by my hon. Friend the Member for Walsall, South (Mr. George), 80 per cent. of all employment is in metal-based manufacture. This is a worrying matter.

Of course BL had to be rescued. Unemployment would have increased enormously if the previous Government and the present Government had not acted to ensure the company's survival. We must not, however, continue to place so much reliance on metal-based manufacture, vehicles, and so on. We must be willing and able to take new growth industries into the region. That point was made by the deputation from the borough council a fortnight ago. We must recognise the need for new growth industries, and the Government should be willing to promote such industries coming into the region. If we continue to rely on metal-based manufacture, and if present policies continue, there is a strong possibility—I hope that I am proved wrong—of the West Midlands becoming a depressed area.

Last weekend the right hon. Member for Down, South (Mr. Powell) made a disgraceful, inflammatory speech. It could only incite race hatred. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) was right to describe it as being full of Munich beerhall remarks. He was referring to pre-war Munich. Acute economic insecurity, caused by the Government's extreme policies—obviously supported by the right hon. Member for Down, South—is the greatest danger to stability and our social fabric. The danger is presented not by ethnic minorities but by policies that produce mass unemployment. That is where the tensions come from, and such tensions can only be aggravated by speeches such as that made over the weekend by the right hon. Member for Down, South. The right hon. Gentleman represents a part of the United Kingdom that has seen so much violence in the past few years—to a certain extent that violence has been due to the policies pursued in Ulster over the past 50 or 60 years—and we do not need any lectures on social harmony from him.

Mr Dudley Smith

What has that to do with unemployment?

Mr. Winnick

A great deal, for reasons that I have stated.

It is a coincidence that 364 leading and distinguished economists have today condemned the Government's economic policies. There are those who will say that they differ from those economists, but Conservative Members cannot merely dismiss their arguments and claim that they do not know their subject. The economists say that the policies being pursued by the Government will deepen the recession, erode the industrial base of our economy and threaten its social and political stability. Moreover, they make the claim that the Prime Minister wants always to refute—namely, that there are alternative economic policies.

There is a tremendous need for investment on a much larger scale. When the Chancellor of the Exchequer produced his first Budget we were told that his policies would galvanise industry and promote the type of investment that has been lacking in the past. There has been little sign of that. We need more public services. Many Conservative Members condemn public expenditure, but it is necessary in many areas. If employees in the public sector were to be made redundant, which I should oppose, they would in most instances join the dole queue. That would lead to an increase in public sector borrowing powers.

It cannot be emphasised too much that by depriving people of jobs we are taking away demand. If there are firms in the West Midlands and elsewhere creating goods for the home market and the British people do not have enough purchasing power to buy those goods, the recession is deepened and there is more deflation. Conservative Members are arguing that it is essential to reduce public services and to make those who work in them redundant. Such a policy will merely aggravate the present unemployment.

There have been no riots in the streets. It is true that mass unemployment, as we have now, has produced a milder attitude on the part of trade unions. The type of incomes policy now being pursued is the sort of policy that we had before the war. Those whose jobs are under threat take a different attitude towards wage increases and take less than the current rate of inflation.

I welcome evidence of a fight-back. There is to be a people's march in May. It is being organised by the North-West TUC. It will be from Liverpool to London. Boroughs in the West Midlands have said that they will give every hospitality to the marchers, provide overnight accommodation, and do what they can to boost the morale of those taking part. A trade union official, referring to this debate, asked me "What good will it do?" I replied "There is no guarantee that a debate in the House of Commons will necessarily do any more good than a march, demonstration or public meeting."

But it is the duty of the British people to ensure that there is not permanent unemployment. It is their duty to organise a fight back that challenges the Government's policies. If the Government refuse to change their policy, they must be forced out of office. The Government have inflicted tremendous hardship on ordinary people. Their record is, indeed, a rotten one.

7.25 pm
Mr. Hal Miller (Bromsgrove and Redditch)

A common theme running through the debate has been the problem of school leavers and the training to be provided for them between leaving school and obtaining their first job. I shall expand upon that in the latter part of my remarks. First, I must deal with the cynical, hypocritical rubbish spouted by the hon. Member for Walsall, North (Mr. Winnick). The hon. Gentleman aped some earlier remarks. He and others who take a similar view do no service to the real problem of unemployment or to those who are suffering from it. Their cynical purpose is to try to make use of the unemployed for political ends. They are flattering them to deceive. They have produced no policy to ameliorate the lot of the unemployed. Their arguments are hypocritical because—this was admitted by the hon. Gentleman—a great deal of the decline in employment in the West Midlands has been due to the narrow industrial base and a worldwide recession in the motor-car industry.

Britain is uniquely dependent on its trade throughout the world. A very much higher proportion of its gross domestic product is derived from trade than that of any other country, and the West Midlands is uniquely dependent on manufacturing. Over 42 per cent. of its employment is in manufacturing. A unique feature of the West Midlands is its dependence, within the manufacturing sector, on the motor vehicle industry, and employment in that industry has declined over the past 10 years by over 100,000. That more than accounts for the decline in total employment in the West Midlands over the same period. My hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes) advanced the valid argument that there are many more people in work than one might suppose. It was only last year that we saw an absolute decline in the total number employed, and that was due to the decline in the motor vehicle industry.

That may be illustrated in another way by the relative decline in earnings in the industry over the same 10 years. At the beginning of that period the motor industry worker was the highest-paid worker in the land. His earnings are now below the national average. That is a sure sign of decline in the industry. One reason for our difficulties is that we have been locked into the industry by successive Governments. New developments have been diverted by regional policy and new industries have been prohibited from establishing themselves in the West Midlands.

I pay tribute to my right hon. Friend the Secretary of State for Industry for getting rid of the industrial development certificate requirement—a decision which has allowed some development to take place in the West Midlands. I hope that he will further reduce the special development areas. As my hon. Friend the Member for The Wrekin (Mr. Hawksley) said, in our area we are faced with the most rapidly rising unemployment in Britain. We have some of the highest levels of unemployment. There can be no justification for producing special incentives to divert businesses of all types to other areas.

I spoke on the motor industry when we debated unemployment in the West Midlands on a previous occasion and I shall not pursue that line tonight. The Government have taken many constructive measures to try to ease the problem of unemployment. My fear is that they are largely short-term measures, and they are expensive. I refer to the youth opportunities programme and the temporary short-time working compensation scheme. The West Midlands has the highest proportion of people helped by that scheme. There is a real threat to our employment. We have also received considerable help through the investment funds for British Leyland.

I am trying to turn minds to a longer-term approach. We have to face the inevitability of more and longer-term unemployment than we have been willing to contemplate so far. I am not trying to make a political point. Unemployment was rising rapidly under the Labour Government. It rose under the previous Conservative Government and the Labour Government before that. We face a new situation with the new technologies and we must come to terms with it. We shall have to re-jig our whole approach so that we not only investigate all the various opportunities available for employment but look at the situation more from the point of view of unemployment.

Among the problems to which I want to see the Government giving more long-term attention is the need to bring forward easier terms for earlier retirement. I do not believe that the job release scheme—although I welcome the recently-announced improvement—is yet adequate for the task.

We shall have shorter working weeks, which must be accompanied by more intensive use of machinery. I was connected with the textile industry 10 years ago, when it had a much shorter working week, coupled with continuous 24-hour working seven days a week, but at that time the workers were working only four days or nights a week. That is the sort of pattern which we can expect with more capital-intensive equipment needing more intensive working.

Therefore, we shall have to provide a higher level of skills. We need to break down the frontiers between education and training. I have been urging my hon. Friends in the Department of Employment for some time to dispense with the artificial barriers that exist between them and the Department of Education and Science.

Reference has been made to the shortage of apprentice places, as many firms are no longer able to provide that sort of training. We need to aim to produce a replacement and we need an amalgam of work experience and further training and the necessary financial support to enable that to continue to lead us away from the present stupid 21-hour rule imposed by the DHSS before benefits can be paid to people studying. There has been a welcome relaxation, in that study for a qualification now carries entitlement to benefit, but only after an individual time-consuming interview. We need to achieve a basis of approving courses for that purpose.

Another example of the barriers that exist is the siting of the Redditch skillcentre. I urged that it should be built on the site for phase 3 of the Reddich college, and should be amalgamated with it. But the Department insisted on going ahead on its own site on the ground that it would provide regional training in skills. Nobody believes that, with travel costs at their present level, people will travel from all over the region to Redditch. Even that argument was inadequate because the regional skillcentre is nowhere near the railway station or the bus station, whereas the Redditch college is within easy walking distance of both. It is blinkered thinking.

We are still experiencing the same difficulty where people are trying to co-ordinate their approach, some on a voluntary basis. A remarkable committee operates which combines both sides of industry, careers officers, Church leaders and the college authorities. It is trying to provide a training workshop. Can they make use of that unused skillcentre? No, it is impossible—that would be crossing the bureaucratic line. There is no way that that use can be facilitated. Yet such a training workshop is the only way to provide such training for school leavers.

There needs to be more follow-up of the progress through training workshops and college courses, trying to provide a replacement for apprentice courses with the necessary financial backing through the benefit system. As a recent report made plain, we must get away from the plurality of offices through which benefit is currently paid—unemployment, supplementary, injury, all sorts of benefit. I hope that my hon. Friend the Under-Secretary of State will be able to reassure me that we still definitely intend to move towards the introduction of a tax-credit system. Only in that way can we bring sense to the benefit system.

As many more hon. Members want to speak, in passing I should say that it is rather cynical of the Opposition to introduce the motion on unemployment in the West Midlands when they cannot find even as many speakers as the Conservative Party. We have heard all the sham protests from the Leader of the Opposition during Prime Minister's Question Time, and all the demands for debates. When those debates are held the Opposition enrol the services of one of their Whips to speak on the subject to make up the numbers—

Mr. Geoffrey Robinson


Mr. Miller

—and keep the pot boiling.

Mr Robinson

Will the hon. Gentleman give way?

Mr. Miller

In conclusion, I should say—

Mr. Robinson

Will the hon. Gentleman give way?

Mr. Deputy Speaker Mr. Bryant Godman Irvine

Order. The hon. Gentleman is not giving way.

Mr Robinson

On a point of order, Mr. Speaker.

Mr Deputy Speaker

I am unaware that a point of order is likely to emerge.

Mr Miller

In conclusion—if I may be permitted to conclude—I make the point that attitudes are changing. There is no doubt that businesses have become more competitive, leaner and hungrier. But a price has been paid for reversing the years of decline. We need to look seriously at providing for new ways of working, new methods of manufacture, and new skills, training and education, so that there can be a pew approach to what is considered as the normal working life. I am looking to the Government for a lead to meet the challenge. I am confident that my hon. Friend the Under-Secretary will not fail, as the Government are not failing in other challenges.

7.28 pm
Mr. Geoffrey Robinson (Coventry, North-West)

I am grateful to you, Mr. Deputy Speaker. I would have risen earlier and you would have ruled me out of order, but the imputation made by the hon. Member for Bromsgrove and Redditch (Mr. Miller) was as silly as it was totally unjustified. For an hon. Member to descend to that sort of futile remark in a debate which he had characterised as being of the utmost importance is not worthy of the House.

We are discussing the regional issue of unemployment in the West Midlands, which is taking place against the gravest recession and the worst unemployment that the country has had the misfortune to suffer since the great slump of 1929 to 1931. In the past 12 months we have seen national unemployment rise by 1 million to a record postwar level of 10 per cent. Whether one attributes that to the design and intention of the Government, which I do not, or to their total incompetence and ignorance, which I do, does not matter. The simple fact stands out. A total of 1 million more people who wish to be in jobs earning a decent living are, through no fault of their own, in the dole queues and without employment, with all the shame and degradation that is attached to that.

If one turns to the regional situation, one sees that the figures become much starker and more real, and bite far deeper. The figures for the West Midlands have already been quoted and many of my hon. Friends have emphasised particular aspects of them. There is no need for me to pursue them further, but I must speak of Coventry and its travel-to-work area, which I have the privilege to represent.

There has been a 69 per cent. increase in unemployment in the West Midlands as a whole in the past 12 months, but Coventry has had a 101 per cent. increase in the same period. Through a brilliant management of the economy which will astound everyone the Government have managed to increase unemployment in Coventry by more than 100 per cent. In the Coventry travel-to-work area, which includes Bedworth and Nuneaton, the rise in unemployment has been nearer 110 per cent.

The hon. Member for Bromsgrove and Redditch could single out only young people in the Government's policies, which are in total disarray. In the Coventry area there are 35 per cent. more young people without a job today than there were a year ago. In the city of Coventry alone 4,600 young people are without a permanent job.

That is not surprising when one considers what the economic management of the Government has achieved in terms of its impact on the activity of the part of the economy towards which they have directed their deflationary policies. They have been directed towards the manufacturing sector. The Prime Minister said precisely that in a speech in Cardiff at the weekend.

Everything in our economy has to live on the manufacturing sector. After all, manufacturing will go on after the oil wells have run dry. Despite automation, it is a sector which employs people and it is still the wealth-creating and employment-creating base of the country.

I must apologise for misleading the House when I intervened during the Chancellor of the Exchequer's winding-up speech in the Budget debate. I said that in one year he had done nearly as much as was done in the two worst years of the 1929–31 slump. In fact, he has done far worse. The most up-to-date figures show that from January 1980 to January 1981 manufacturing output fell by 14.4 per cent., compared with only 10.8 per cent. in the two worst years of the slump.

I cannot imagine what scheme of things, what magical formula, or what theoretical proposition can underlie a policy that hits at the epicentre of the country's well-being and wealth-creating sector. But that is what has happened. We in Coventry and the West Midlands have been at the sharp end of a policy the vicious effect of which has been sheer, simple, old-fashioned deflation.

Time and again we in Coventry, like many of my hon. Friends, have put forward cases and justifications for different classifications of various parts of the United Kingdom. We have asked for assisted area status, but, despite the worsening situation, we have been denied it. We have already had a 110 per cent. increase in unemployment in the area to a rate of 13 per cent. We face the prospect of that rate rising this year to 15 per cent.

There can be only one reason why the Government, with the blinkers on—as the hon. Member for Bromsgrove and Redditch rightly described them—can refuse Coventry that status and refuse a change of direction in the country as a whole. It is the belief, which has been much canvassed in the Corridors of the House and peddled among certain economists, that things are on the up—they will get better, the slump will bottom out, industrial production will increase, new companies will come into being, the young technocrats will fill the places of the old industries, and we shall see that the masochism of the past two years has been worth while.

There are two views about that. I share the House's sceptical view of economists, so I shall not refer to the views of the 364 economists, though as 364 of them agree there may be cause for concern. My experience has been in industry and I do not look much further forward than to what an industrialist can anticipate. Distinguished, learned, able and theoretically competent though economists may be, I prefer to take the view of the CBI. I dare say that those holding the opposite view could produce as many supporters if they wished, but, unlike me, they believe that they are winning and I suppose that they have not tried to get together.

A report in The Times today on the CBI's forecasts and figures states: The forecasts, which have been revised to take account of the impact of the Budget measures, are exceptionally gloomy. Unemployment is expected to continue on an upward trend to the end of next year, when CBI economists are predicting about 3.25 million people will be out of work. The CBI recognises the contribution that the manufacturing sector, in particular, must make. The report in The Times continues: Manufacturing output which, it had been hoped might recover once stock pipelines were emptied"— that is the specious hope on which the Government are basing their expectations of a recovery— is expected to continue falling until the first half of 1982, to reach nearly 20 per cent. below its 1979 level. That is the realistic view. It is a view of industrialists and not economists. The industrialists are surrounded by industrial facts of life and have to take account of them in a way that academic economists, sitting in the ivory towers with which we associate them, do not.

The quarterly Coventry monitor of the local economy states: In the conclusion to the report"— that is the most recent quarterly report— on the survey for the third quarter of 1980, it was suggested that the 'worst effects of the recession are yet to be felt in the local economy'. In the current survey, production and orders were continuing to fall, investment plans were again being cut back, and many firms intended to trim their workforces. That is the reality as I see it. That is the situation in which the economy, nationally and locally, finds itself—manufacturing industry in particular. Against that has to be set the current view, put by two or three Conservative Members, who spoke in defence of the Government's policy, that we are on the point of an upturn that will prove every one of the 364 economists, the CBI, and the Coventry monitor of the local economy, wrong.

The Prime Minister stated that until she came to power no one had the courage to stick at the remedy for long enough to allow it to work. We come up against the famous argument that time is of the essence, that the upturn is round the corner and that the Government alone have the courage to see it through. It is probably a misquotation but Napoleon is said to have told one of his generals that he could give him everything but time. This Government have time on their side. They have effectively been in power for two years. How much longer do they want? The most disturbing part of the Prime Minister's speech, speaking of the road that has Led to record deflation, record unemployment and also virtually to a period of record inflation and a massive loss of production—worse than that experienced in the 1929–31 period—was her remark: This is the road I am resolved to follow. This is the path I must go. I ask you all to have the spirit—the bold, the steadfast and the young in heart—to stand and join me as we go forward. For there is no other company in which I would travel. It would be a funny sort of fellow traveller who would go down that road today. I do not think that there are anywhere near as many on either side of the House as the Prime Minister might imagine. That road is leading this country to disaster. A sort of Messiah complex seems to have infected the Prime Minister. That is a very dangerous disease. Fortunately, it is evident that the disease is not infectious or contagious among her Cabinet colleagues. Instead of this sort of messianic complex, what is needed from the Government is a little realism, a little pragmatism and a little understanding of the real problems that face industry, which is where the future for this country lies.

I should like to put some questions to the Government. How much more time do they want? When shall we know whether the measures have proved successful? Two years in Government is a long time. Will it take no longer than one more year for output to rise again, against all the predictions that I have read to the House? No Government can be entitled to more than that.

What level of unemployment are the Government prepared to tolerate? That is the second question. It goes hand in hand with the first. One cannot dodge the unemployment question. There is no way round it. The longer that policies are pursued that lead to a rise in unemployment, a drop in demand and a decrease in productive capacity and production, the longer and the faster this country will continue to go downhill.

The truisms of the past are still relevant today. I make no apology for quoting the Prime Minister again. When unemployment rose above 1 million under the previous Labour Government the Prime Minister remarked that a Conservative Government would have been drummed out of office in that situation. It was from the West Midlands southwards that the terrible swing occurred. I am delighted to see the Secretary of State for Employment enter the Chamber at this critical juncture. At the weekend the right hon. Gentleman spoke specifically of the North-South divide and the necessity for the Government to pay more attention to people and conditions in the North of England. I ask the Government again to state what level of unemployment they are prepared to tolerate before the Government and the Secretary of State himself call it a day. That day will certainly come. The existing policies are doomed.

It was in the West Midlands that the vote went wrong the last time. Across the broad spectrum, trade unionists and housewives put this disastrous Government into power. It will be for the trade unionists, the housewives and the voters of the West Midlands, who are suffering most from unemployment, to put right that terrible mistake and see that it is reversed at the next election.

7.55 pm
Mr. Kenneth Carlisle (Lincoln)

I am grateful to be called in this important debate. It is important for the Midlands. I point out to the hon. Member for Coventry, North-West (Mr. Robinson) that the debate covers both the East and the West Midlands. Not least is it important for my constituency, where over one-third of the people work in engineering, and many in heavy engineering, which is the hardest-hit sector. My constituency, therefore, shares the worries and the problems experienced by other constituencies.

All hon. Members know how unemployment eats into the spirit of a community. Concern about unemployment is not simply a party matter. Opposition Members who claim that it is do the House a disservice. The right hon. and learned Member for Warley, West (Mr. Archer) was one of the few who recognised that this is a matter of concern to the whole House. One becomes angry on hearing some Opposition Members assert that they have a better right to be smug over unemployment than have Conservative Members.

We have heard how levels of unemployment have grown whichever party has been in power. I affirm that Conservative Members share the concern that exists about unemployment. We differ over the remedies.

Unemployment is clearly a deep-rooted problem. Those who examine the issue honestly realise that one has to look further than the short-term effects of party politics. There are no easy solutions for unemployment. Often, politicians believe that they can influence events rapidly, especially when in Opposition. Opposition Members believe that they could speedily cure this awful disease. In truth, events take time to work through.

One needs only to examine the Reform Acts of the last century to understand this. Before they were passed, people thought that they would overturn society. In fact, it took many decades for political events to work through. The same applies to employment policies. The existing level of unemployment is the result of 20 years' relative decline in our economy, allied to the fiercest recession since the war. We should do what we can to alleviate the hardship. That is one reason why the Government have doubled the provision for the youth opportunities programme. However, in Lincoln and, I believe, in many constituencies, although the Government schemes are welcome as an alternative, what people really want are true jobs—jobs that they know are needed.

Therefore, although at present it is reasonable to spend more and more money on these unemployment schemes, they do not fool the British people. The people want policies that they know will create substantial jobs in the long term, and it is the Government's prime job to pursue consistently the main themes that can lead to those jobs in the long term.

I should like to look more closely at these main themes, for it is not good enough just to denounce unemployment for the evil that it is. That is easily done, as we have discovered from many Opposition Members. They have denounced unemployment. But what we want to hear from them, and what we must ask, is what should be done about it. We have to be creative in our approach to unemployment.

First, there is no doubt that inflation is the major destroyer of jobs. It has a devastating effect on industry, and I am surprised that the hon. Member for Coventry, North-West, with his experience, did not mention it. Inflation destroys confidence, it destroys investment, it puts up interest rates, it encourages wage demands and, over a number of years, it eats into the very heart of our productive processes. It saps industry's power to compete. Despite this, there are still many successful businesses in Britain.

Now, at least, the Government have got inflation falling, and at such a time it is easy to forget the damage that inflation does. But it would be foolish to forget the long-term damage that it can do. Any Government who wish to be taken seriously in their fight against inflation must have a coherent anti-inflation policy. Yet, when we listen to the Opposition we hear merely about a programme for massive public expenditure which will entail borrowing on a scale vastly in excess of even what we are borrowing now. Surely, if we have learnt anything in the past 20 years it is that large injections of borrowed money into the economy serve merely to refuel inflation, with a consequent increase in the level of unemployment.

Certainly, as we know from the past, a few jobs will be created in the short term, but only at a very heavy long-term cost.

No responsible Government should follow such a course, but in the few days since the formation of the SDP it has become clear that the new party would borrow just as large sums as—or even larger ones than—the official Opposition. Such a policy is a cruel deception of the British people. On the other hand, the Budget, however unpopular it is in the country—and it is very unpopular—has confirmed the Government's intention to secure consistently falling inflation, which is an essential ingredient in the long-term creation of jobs.

Secondly, it is only by being productive and fully competitive that we can secure jobs. The history of shipbuilding since the war is a sobering example. After the war we had nearly half the world's market for ships. Now we have a negligible share. Perhaps the major reason for the decline was the desire to save jobs in the shipbuilding industry. Restrictive practices remained, and whereas the rest of the world created a modern industry, we held on to what we had, which, in the end, meant fewer jobs in shipbuilding today than would have been the case if we had gone flat out for modernisation.

This recession has made many businesses become more efficient, and when we come out of the recession the potential for greater productivity will be large. But the major task facing the Government is to ensure that we keep the benefits, the changes and the better practices that have been created in this recession. In order to do that the Government have to provide a much better framework for communications and co-operation in industry. They cannot be content with the gains that have been won from or perhaps forced on the unions. They must create a better structure.

In their battle to make the work force feel better involved and more willing to co-operate in defeating restrictive practices, I urge one aspect upon them. The Government have made progress with profit sharing. But they should go much further still with it. It is quite right that the people who help to create the profits should benefit from those profits and the money which they help to generate. When the recession ends we shall make good profits again. Now is the time to create a better structure. Just as we should invest in industry during a recession so that the machinery is available for the upturn, so we should do much more by way of profit sharing, so that the work force can become involved when the upturn comes.

Profit sharing is an important element in industrial participation, along with many other factors. In this and other ways the Government should consolidate the progress in productivity secured during the last two years. Thus, we must reduce inflation and increase productivity.

But these measures alone will not solve the unemployment problem. The example of my own constituency is relevant. After the recession, businesses there will be able to produce much more without employing many more people. They will have to do so if they are to remain competitive and to protect the jobs that already exist there. We do not want to see them go the way of shipbuilding. We delude ourselves if we believe that the old industries will take on more people when the recession is over. Therefore, we must look for genuine growth from smaller businesses to provide new jobs.

Some Opposition Members decry what the Government have done to help the birth of small businesses. However, the sum of the three Budgets shows that there has been substantial progress. We have a coherent and consistent policy to help small businesses both to set up and to grow. When we come out of the recession, these measures, which are small individually but impressive as a whole, will help in the creation of many new jobs.

It is strange that although many Opposition Members point out that the old businesses will not take on more people when we come out of the recession they are loth to give their full backing to the creation of small new businesses. Therefore, in their approach to inflation, productivity and support for small businesses, the Government have the right themes. Anyone can find fault with the details—that is always easy—but if in the main the themes are right, in the end the details will fall into place.

As well as urging the Government to stick to their main themes, I ask them to continue to formulate a more imaginative approach to unemployment. Unemployment seems certain to stay with us in a larger measure than we have known since the war. We must work at both ends of the age scale to diminish the number of people looking for jobs. The youth opportunities programme is already developing towards a national community service. I believe that there is scope here to extend it further and more imaginatively, so that not only have young people some training and some form of job to go to but they can believe that it is really creative and that it contributes to society. It needs developing imaginatively.

In the same way, we must look more closely at retirement. The job release scheme is one of the few schemes that genuinely provide real jobs and have the scope for extension.

The youth opportunities programme, the job release scheme and other imaginative ideas need money. As we come out of the recession, Government borrowing will tend to fall and the funds can therefore be released. But the thinking for that more imaginative extension has to be done now.

This debate is about the Midlands. I have concentrated on national issues rather than on the Midlands because the problems of the Midlands embrace both the strengths and the weaknesses of our national industrial performance. The Midlands is a region still rich in talent and innovation—a region whose industries can compete with the industries of any other country. If the Government continue to provide the right framework for the regions the Midlands will thrive again. I believe that the Government are pursuing the main themes that will provide the correct framework for the Midlands and the nation.

8.10 pm
Mr. Bill Homewood (Kettering)

I want to make three points in reply to some of the comments that have been made by Conservative Members. The first relates to 'what was said by the hon. Member for Lincoln (Mr. Carlisle), who made a thoughtful speech, although I believe that it was totally misconceived.

The idea that inflation causes unemployment is anything but proved anywhere in the world. I certainly have not seen any proof. When the hon. Gentleman gets as old as I, he will realise that in the past—in my case, the 1950s—people argued that inflation was caused by over-employment. Many Conservative Members have constantly referred to the world recession as a means of explaining our dilemma, not only in the Midlands but throughout the country. There is no doubt that there is a world recession, but we should highlight the difference between the situation in Britain and that in the rest of the world.

As was pointed out in the press on Sunday, in the past 12 months unemployment has risen by 3 million in the 24 OECD countries. Britain has contributed one-third of that total. Our increase has been 1 million. However, our contribution to the GDP of the OECD countries is exactly 6 per cent. Therefore, for that 6 per cent. we have contributed 33 per cent. of OECD unemployment.

Conservative Members also refer to our lack of competitiveness and low productivity. I am sorry that the Secretary of State for Employment has left the Chamber. I listened carefully to the speech that he made during the Budget debate. He repeated the theme, which we hear so often from the Conservative Benches, that our problems emanate from low productivity and lack of competitiveness. However, he ended that speech by saying that unemployment is rising in every country in the world. What has happened to their competitiveness? What happens if we catch them up? Do we take their level of unemployment on board, or do they take ours on board? The problem goes much deeper throughout the capitalist world, and the remarks that have come from Conservative Members are more appropriate to a general economic debate than to a debate such as this.

I claim the dubious honour of representing the area with the highest level of travel-to-work unemployment in the Midlands. As I have already said in an intervention, with one exception it has the highest level of unemployment in the United Kingdom. The March unemployment figure for Corby stood at 22 per cent., but male unemployment was 24.8 per cent. One in four males in Corby was out of work. The overall unemployment level in Kettering was 11.4 per cent., but male unemployment amounted to 16.2 per cent. Those figures seriously underestimate the problem.

More than 1,000 persons in those two towns are now involved in retraining schemes at technical colleges. Those schemes are financed by the BSC and are rapidly coming to a conclusion. There is no doubt that a further 1,000 people will shortly be added to the dole queues in those two towns, and there is little prospect of that retraining ever being put to use in the area. Indeed, there is very little prospect of them ever finding jobs at all. I estimate that within another three months Corby will have a male unemployment level of more than 30 per cent., and Kettering will have a male unemployment level of more than 20 per cent.

I remember arguing in the House that the closure of the Corby steelworks would not help the PSBR. I was interrupted by the Secretary of State for Industry, who said that I talked as though none of those people would ever get a job. I did not say that, but imagined that in the medium term they would probably not get a job. However, in the current economic situation, which the Government have created, I should like the Secretary of State for Industry to tell me when it will be possible for those people to get jobs.

I would not feel so outraged about the plight of my constituents if more concern was expressed by Conservative Members—[HON. MEMBERS: "Come off it."] Conservative Members may say that, and I know that the hon. Member for Lincoln said that there was concern on both sides of the House. Unfortunately, not many Conservative Members represent the sort of area that I represent. I am not aware of such concern being portrayed by Conservative Members.

If we could have an acceptance of the fact that the worst economic problem is unemployment and that it is a form of mass human deprivation which, in a civilised society, should not exist to anywhere near this degree, we would be well on the way towards making progress. However, Conservative Members treat and talk about unemployment as though it were some sort of academic exercise.

Very little will improve in Corby or Kettering as quickly as is necessary until the Government change economic course. I appreciate their difficulties. I have been married for more than 40 years, and although I have won 50 per cent. of the arguments which take place within the family, I have never yet been able to get my wife to admit that she was wrong. That is the Government's problem.

However, the Government are not dealing with my domestic problems. They do not decide whether I should buy a new house, have the garden redesigned, or have a room decorated. They are dealing with the lives of my constituents in a variety of ways—whether the kids are ill-treated, whether marriages break up, whether the level of non-accidental injuries rises, whether crime increases, whether vandalism damages a fair town, whether alcoholism and glue sniffing become a norm rather than an exception, whether local shops go bankrupt, and whether there is a grave danger of the whole social structure in a limited area breaking down. When we reach the level of unemployment which exists in my constituency, those are the sort of conditions that must be taken on board.

I did not need 364 economists, the CBI or anyone else to tell me that if the Government do not do a V-turn—not a U-turn, because I see from today's Financial Times that we have V-turns, U-turns, W-turns and many others, although the V-turn attracts me more than any of the others—on public expenditure, interest rates, the £ sterling, the Common Market and import controls, the social fabric of this country will be in danger of breaking down.

I am amazed at the defence of free trade advanced by some hon. Members. Ministers are not even able to give me a satisfactory answer when I tell them, as even Conservative Members have told them, that child labour is used in Italy to produce footwear that is subsequently imported into this country. Ministers tell me that it cannot be stopped. I do not believe in free trade. It has so many aberrations in it that it can never work. I do not see how anyone could believe that it could be a viable theory.

When the Secretary of State for Employment talks about a steady strategy with flexible tactics he should realise that his comments will bring no cheers from the Corby dole queues. The people there will have not the slightest idea of what he is talking about, and, frankly, neither have I. I carefully consulted the Oxford English Dictionary this morning, and I discovered that both those terms are applicable solely in the context of military activity. I understand that the Secretary of State for Employment is one of the "wets". Indeed, I understand that he is an almost half-soaked wet. He would do a good turn to his party if he produced the sort of splinter group that has developed from my party. I could suggest a name for such a group, which would not be so far from the SDP. We could call it the HSD party—the half-soaked democratic party.

If the country is to get out of the mess into which the Government have put it, it must have radical policies. Let me explain how such an approach would help Corby if the Government had the will to adopt it. The Government do damage other than by their economic policies. I have argued for many months with the Secretary of State for Transport about the need for him to give a starting date for the M1-A1 link, which everyone apart from a small agricultural coterie in the county council in Northamptonshire, agrees is essential for the revival of Corby. The Secretary of State constantly contends that the road cannot be started until 1983. It was approved almost three and a half years ago. I find it inconceivable that if there is any will to assist the people of Corby and Kettering the starting date for the road cannot be brought forward.

The other area in which the Government could have helped but have instead injured was the decision by the Secretary of State for the Environment to change the rate support grant for the block grant system. That decision cost Corby £600,000 of Government money. Had the Corby council decided to continue its services and employment at an unchanged level rates in the area would have had to rise by 83 per cent. Of course, it responsibly cut back and produced a rate increase of about the average for the country, putting more people on the dole and cutting services in an already horribly depressed town. Those are two instances of where the Government should be more careful in dealing with local problems such as those in Corby.

I do not want to quote the national CBI reaction to the optimism that was expressed about the recession bottoming out. Instead I rely on a quote from the East Midlands CBI, which was reported only a few days ago in my local newspaper under the headline "No End to Gloom". The report stated that the East Midlands region of the CBI has reported that more people would lose their jobs and more people would go bankrupt over the next few months. It is against that background that I have indicated what must be done to help Corby.

I turn, finally, to the question of retraining in the Corby area. The principals of the technical colleges in Kettering and Corby have told me that the BSC schemes are running out and that when they are finished the technical colleges will not have the funds to continue the courses. That is happening in an area where unemployment is more than 22 per cent.

The whole basis of my contention is that there will be no well-being in the nation until the Government make a substantial change of economic course. That is necessary to secure an improvement in conditions in my constituency. They are worse than anywhere else, and the rate at which they improve depends on the Government's national economic policies.

8.26 pm
Mr. David Knox (Leek)

I wish to pursue only one of the points raised by the hon. Member for Kettering (Mr. Homewood). It serves no useful purpose to throw taunts across the Floor of the House accusing people of not caring about unemployment. Right hon. and hon. Members on both sides of the House care about it, but they have different solutions to the problem. Even hon. Members on the same side have different solutions. We all care about unemployment, and the hon. Gentleman achieves no useful purpose by accusing us of a lack of care or concern.

I am grateful to have been called to speak in the debate, and I do not apologise for doing so. Unemployment in my constituency, which was very low for the first 30 years after the war, now represents a real, growing and serious problem.

Many hon. Members may find it difficult to associate Leek with the Midlands, because when they talk about the Midlands, especially the West Midlands, they tend to think of Birmingham and Coventry, and the towns that lie around those two great cities. They tend to think of the car and engineering industries. However, the Midlands area stretches much further than that, and Leek is just as much a part of the Midlands as is Birmingham or Coventry, albeit on the northern tip bordering on the North-West region.

Over the past seven years there has been a serious deterioration in employment in North Staffordshire., and, of course, I am particularly concerned about the situation in my own constituency. In March 1974, when the Tory Government left office, 644 people were out of work in the Leek constituency. By March 1979, just before the Labour Government left office, the figure had risen to 1,661. At the most recent count, in March of this year, the figure was in excess of 4,000. There was a substantial increase in unemployment under the Labour Government and it has continued under the present Government. If people wish to attribute blame they must remember that both Labour and Conservative Governments are at fault.

Despite the increase in unemployment of over 500 per cent. since 1974, my constituency receives no special help from the Government to deal with the problem, except that the town of Leek and the moorlands area that surrounds it have received help from COSIRA, which has provided advance factories. We are grateful for that help Almost all the factories were occupied immediately they were built. They make a real contribution to helping small businesses to start up in the constituency. I pay tribute to the Development Commission and COSIRA for the work that they have done in my constituency and in other parts of the country.

Apart from the serious overall unemployment position in my constituency, I should like to single out the plight of Biddulph, where unemployment is particularly serious. A figure of 20 per cent. out of work is bandied around, but that is an exaggeration, because large numbers of people in Biddulph are commuters to Stoke-on-Trent and Manchester.

In February 1974 only 131 people in Biddulph were out of work. The number today is 836. The number increased steadily under Labour and Conservative Governments. Despite that dramatic increase in unemployment, no special help has been given to the area. The argument advanced by the Department of Industry is that Biddulph is in the Stoke-on-Trent travel-to-work area.

That is nonsense. Unemployment in Stoke-on-Trent is not as high as it is in Biddulph, but some people in Stoke are out of work. When my Biddulph constituents seek employment in Stoke they face an inevitable problem. If two people of equal ability apply for a job in Stoke the employer will take the person who lives nearer the job rather than the person who lives five or 10 miles away. He therefore does not employ the person from Biddulph. I urge the Minister to examine that problem. The position is not satisfactory. The hon. Member for Cannock (Mr. Roberts) nods in agreement. I expect that his constituents have a similar problem.

We are told that the present high level of unemployment is a consequence of excessive wage claims, restrictive practices, overmanning, bad labour relations, managerial incompetence and lack of investment. The industries in my constituency cover a wide range. They include textiles, engineering, electronics, chemicals, mining and farming. The work forces have a wide range of skills. The people are hard-working, but not highly paid. They have never received big wage or salary increases.

Labour relations are good today, and have been for many years. They are as good as anywhere in the United Kingdom. Strikes are infrequent, and always have been. There is excellent co-operation between management and workers. Management is good. Firms have invested in new plant and machinery. My constituency has a good labour force, which is engaged in efficient factories and mills. I do not say that just because I represent them. It is true, as anybody who has visited the constituency will know. It is therefore unfair that my constituents should suffer high unemployment in the same way as, but to a rather greater extent than, many who have conducted themselves less well in recent years.

Management and unions alike in my constituency are puzzled by the fact that, having done all the right things over the years, they are heavily penalised for the sins of others by a dramatic increase in unemployment.

As I have already pointed out, my constituency receives no help except from COSIRA. I ask the Minister to reconsider that. I hope that he will make special help available to my constituency because of the increase in unemployment in recent years.

Much as we would appreciate such help, and considerable as would be the advantage to my constituents, it is important to recognise that the best way to improve employment in Leek and North Staffordshire generally is by a revival of the national economy. North Staffordshire was prosperous and enjoyed full employment when Britain as a whole was prosperous and enjoyed full employment, and when Britain again enjoys those advantages North Staffordshire will follow suit.

How do we achieve that? I find no evidence in this country, or in any other, that prosperity is the automatic consequence of stable prices. The current battle against inflation and the obsession with stable prices, even if successful, will not ensure a return to economic prosperity and full employment. Because the success, to date, of the anti-inflationary policy is due to a tight squeeze on company profits and a severe depression of demand, a return to prosperity and full employment is impossible as long as this policy continues in its present form.

If we are to return to economic prosperity we need to expand the economy and get economic growth. In my view, that will not happen naturally. The Government must act. Demand must be stimulated for British products, and then more people will be needed to produce those goods.

There are two ways in which that should be done. First, the exchange rate must be reduced to a level that bears a greater relationship to comparative manufacturing costs. That can be done in three different ways: first, by a further and substantial reduction in interest rates; secondly, by ensuring that more of the revenue from oil is invested abroad to ensure that investment income from abroad flows into this country when the supply of oil eventually expires; and, thirdly, by talking down sterling. If the exchange rate could be reduced to a more realistic level, our exports would be cheaper in world markets and imports into this country would be dearer. As a result, the demand on home industry would be higher. In my constituency, the textile, engineering and electronic industries would benefit because they are all engaged in exports, and they are all adversely affected by cheap imports.

In addition to the beneficial effects that would accrue from a reduction in the exchange rate, there would be the advantage of increased demand following a further substantial reduction in interest rates.

The second way to return to economic prosperity is to cut taxation, either direct or indirect. If direct taxes were cut there would be an incentive effect. If indirect taxes were cut there would be a price effect. Either way, people would have more money to spend and more to save. It would help to increase the proportion of the national income taken by the private sector. That part of the tax cut that was spent would result in more consumption and increased demand, and in time that would mean more jobs and encourage more investment. The other part of the tax cut that was saved would mean extra funds for investment.

It will be argued by some people, including my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), that that would increase the public sector borrowing requirement. That would not worry me too much, because I have a feeling that the figure of £10½ billion given as the estimate for the deficit in the year ahead is not scientifically based. In any event, if expansionist policies were pursued it would, I believe, bring into employment the unemployed and underemployed, bring into use under-utilised capital equipment, generate more wealth, and eventually be self-financing. The important point is that a more realistic exchange rate and tax cuts would result, first, in the stabilisation of employment and then in a reduction in unemployment. That could only be beneficial.

Unemployment in my constituency and in the country as a whole is a waste of resources and is socially damaging and divisive. It is the most serious domestic problem that the country faces. We suffered from high unemployment in the 1920s and 1930s. Apart from the suffering imposed on the people then, it left a legacy of bitterness and class hatred. In industry it left a legacy of fear of change, of innovation and of new labour-saving plant and machinery.

Most of our overmanning problems are due to the natural tendency of people afraid of losing their jobs to spread their work, in the belief that that protects those jobs. It would be a tragedy if today we continued to repeat the follies of a mere 50 years ago. Therefore, I ask the Government to make the reduction of unemployment their No. 1 priority. In my view, it is the greatest human problem that we face in Britain.

8.41 pm
Mr. Bruce George (Walsall, South)

I am proud to represent one of the three Walsall constituencies, which are in an area that has, regrettably, suffered considerably over the past 18 months or two years. A distinguished politician, David Lloyd George, to whom I am not related—although after watching the television programmes about him I am not as certain as I was—said a long time ago that Walsall was a town of 100 trades. Unfortunately, the present Government are creating what may be in the not-too-distant future a town of just 100 firms.

This once thriving town, in a once thriving area, has been reduced to dire straits. It would be foolish and immoral for anyone to argue that its crisis began on 4 May 1979, but this Government's misguided policies and wrong decisions have contributed considerably to exacerbating the already considerable problems facing the town and the West Midlands as a whole.

Let me look at the stark statistics, as many other hon. Members have done. The national average unemployment is 10.3 per cent. In the West Midlands the average is 11.9 per cent., and in the Walsall travel-to-work area it is 13.9 per cent., representing a total of 23,542 people. Those figures exclude Darlaston, which is not in the Walsall travel-to-work area. On the basis of my research, I add to those figures about 2,000 people in Darlaston, 2,000 in job creation schemes, perhaps 2,000 who are not at this stage registered as unemployed, and the thousands on short-time working. One then finds that the real figure of unemployment is not 23,500 but well over 30,000.

We read in the press today about proposed coups in 1968. Unemployment then was 542,000, or 2.3 per cent. of the population. If we had threats of coups in those almost halcyon days, the ghosts of usurpers of power, past and present—Videla, Pinochet, Amin, Franco, Hitler, Master Sergeant Doe, the Greek colonels and Korea's Park and Chun—should be heading for London with the speed and numbers of people in the London marathon yesterday.

The unemployment figures are startling and unacceptable. About two years ago a then Minister in the Department of Industry—my hon. Friend the Member for Nuneaton (Mr. Huckfield)—visited my constituency. He visited Darlaston and took a great deal of stick from the trade unionists there. Inflation was then just over 9 per cent. and unemployment was 6.5 per cent. Those were the supposedly bad old days when we were in office. How many people now regret supporting this Government on 3 May 1979?

I also remember vividly the cries of so many Conservative Members that the unemployed were unemployed of will. With 23,500 unemployed in my town, how many vacancies are there? There are 192. That shows how misguided is the view that large numbers of people are deliberately seeeking to remain unemployed. The jobs are not there.

The roll-call of defunct companies in the Walsall area is growing by the day. Were these companies really inefficient or were they potentially viable economic entities? I suspect that in most cases the latter is true.

We in Walsall have no giant companies, yet the thousands of small companies, shedding labour with a constant drip, drip, cumulatively represent a position as disastrous as some of the major crises which have befallen areas such as Corby. The lifeblood of the town has been ebbing away, with companies closing. Aluminium Bronze has closed, with 300 unemployed; Eaton Axles, with 450 unemployed; TI Sunhouse, with 500 unemployed. GKN, once very strong in Darlaston, has virtually abandoned the town. Rubery Owen, one of the giants of former years, is now but a shadow of its former self.

In Darlaston, once the heartland of nuts and bolts, the industrial fasteners industry is now struggling to survive.

Leather goods, once a dominant industry in Walsall, is suffering from imports from Italy, South America, South Korea and Taiwan. In many cases firms are struggling on the very margin of extinction.

The decline of industry in the West Midlands has been well documented. It is, indeed, alarmingly bad. Walsall is not just a microcosm of the West Midlands. In a report commissioned by Walsall council it was said that Walsall is an exaggerated version of the West Midlands economy, with a rather higher level of dependence on metal-based manufacture and relatively lower levels of service sector employment.

The crisis has not bottomed out. The crisis has not been unexpected but has been coming for some 20 years. It has been accelerated in the last two years. Many of the reasons for the decline can be laid fairly and squarely on the shoulders of this Administration. When Conservative Members put the blame on the world crisis they are seeking to delude their constituents.

Many parts of my constituency are suffering more than others. What should be done? Obviously, the Government should end their lunatic economic policies. T. can understand why some Conservative Members seek to denigrate the views of the 364 economists who have spoken against the Government's economic policy, but will those Conservative Members find in the newspaper tomorrow, or the day after, 364 economists who have put their names to a sheet of paper in trying to defend the Government's policies?

No wonder Conservative Members feel rather tetchy. Milton Friedman has virtually colonised their collective mind. Indeed, many of the Government's policies emanate directly from that academic. But I am not suggesting that we should denigrate academics. Had we paid more attention to some of the solutions offered by them we would not be in the mess that we are in today.

The Select Committee on the Treasury and Civil Service has shot out of the sky the remnants of respectability of the Government's economic strategy, and I commend it for that—although I suppose that it is difficult to shoot out of the sky a kamikaze pilot. The Government have lost support from those who put them into office—the press, the business community, large and small, and working people. Indeed, the Government have lost a great deal of support from their own Back Benches and in the Cabinet itself.

I liken the Prime Minister to a latter-day General Custer, gloriously leading her troops into certain oblivion. When I went to the battlefield at Little Big Horn, one thing surprised me. I knew that there would be crosses on the spot where the soldiers died, but I thought there would be 250 crosses surrounding Custer. There were not, for it was obvious that when the crunch came most of his forces had already begun to disappear, and one could see the crosses in the distance around the battlefield. Clearly, that is what is happening today to this Government.

The Government must therefore do many things. They must lower the exchange rate, introduce selective import controls, seek to reflate the economy, reduce energy costs, abandon their loony Friedmanism, and present a new Budget with a new Chancellor of the Exchequer.

In my local area I should like to see specific aid for companies to enable them to invest, as happened under the Labour Government with the Industry Act. A great deal more must be done to provide infrastructure assistance to the local authority to help it to provide factory units for prospective companies.

Training must be given a boost. I am sad that so many apprentices are being shed by companies in my area and in other industrial areas. More aid should be given to the microprocessor industry. The aid given so far is nothing short of piddling. We need a positive rather than a negative approach to industry in the West Midlands. We must seek to give assistance to those local authorities that want to use their powers to attract industry. If some of these things are done, the reversal or our economy can be halted and we can look forward to some form of economic revival.

I believe in a healthy, mixed economy and in a healthy private sector that works alongside an expanded, healthy, public sector. I have set out what the Government should do to encourage industry. Far more must be done. There are problems in our constituencies. People are becoming agitated. Unless the Government respond to pressure from academics, Members of Parliament and their constituents, the unemployment queues, which are already far too long, will grow even longer.

8.50 pm
Mr. Jocelyn Cadbury (Birmingham, Northfield)

The hon. Member for Walsall, South (Mr. George) spoke with great sincerity, as did the hon. Member for Birmingham, Ladywood (Mr. Sever), when he read out a catalogue of disasters—

Mr. Sever

Some of them.

Mr Cadbury

The hon. Gentleman cited some of the disasters in terms of redundancies and factory closures that have characterised the Midlands during the past few years. However, I disagree with Labour Members, because they seem to believe that such disasters can simply be put down to two years of rule by one party. The reasons for the recent closures go back many years. In addition, they have a lot to do with the structural nature of industry in the Midlands.

One of the main reasons why unemployment in the Midlands has increased faster than in other regions is that it is over-dependent on about four major industries. Obviously, the motor industry is the most important one. The motor industry, metal manufacturing, and mechanical and electrical engineering account for about 68 per cent. of the region's output, compared with a national average of 45 per cent. As a country we have performed less well in those industries, and particularly in the motor industry.

We have failed to stem the import of foreign vehicles that has arisen as a result of our relative inefficiency and it is therefore inevitable that unemployment in the Midlands should rise disproportionately. In the West Midlands, about 250,000 people are employed in the motor industry. In Birmingham, British Leyland employs 9 per cent. of the working population. This inherent weakness is nothing new. From 1970 to 1978, manufacturing employment in the region declined by 102,000. That decline in the number of those employed in manufacturing industry, and in particular in the motor industry, has been going on for a long time. It is futile to argue that it is simply the product of two years of one Government's rule.

The fundamental problem in the Midlands is that high technology is not of paramount importance in the industries involved. In the production of a family-sized motor car it is not the degree of sophistication that will sell the car but its price and quality. As a country, we have failed to compete, particularly with the new industrial Powers of the Far East, such as Japan. We have completely failed to raise our rate of productivity to anything like that of the French and Germans—let alone the Japanese.

Why have we failed? In the Midlands there are wonderful specimens of industrial archaeology. There are old factories, such as Fort Dunlop and the factory that I worked in at Bournville. Indeed, that factory celebrated its hundredth anniversary a couple of years ago. It has some fine old buildings, but they are difficult to modernise and to put new machinery into. Such factories have systems of industrial organisation that are also nineteenth century in origin. There are companies employing people in five or even 10 different trade unions. That is one of the main reasons why we have experienced difficulty in raising productivity. Productivity in skilled trades is four to 10 times lower than in Japan.

For example, recent figures supplied by the Ford Motor Company about the numbers involved in making one motor car are alarming. For every one man employed on making a motor car in Japan, in West Germany there are three and in the United Kingdom there are six. That is the difference in productivity between this country and other countries. That is why we have failed and why we have such high unemployment.

I do not blame any particular group for this situation. We are all to blame. Managers are to blame, because since the Second World War they have failed to face these issues. There has been a failure to invest sufficiently in new factories. Managers have failed to tackle the multi-union issue. They have not communicated commercial reality to their employees. They have not gone on to the shop floor and explained the commercial situation. They abandoned the role of communication to the shop stewards, and that was wrong.

Since the war the unions—there are shining exceptions—have been intensely conservative. In my experience in factories, I discovered that we spent too much time on niggling disputes instead of getting on with the job and planning for the future. In Ford factories in this country, production managers regularly spend 50 per cent. of their time sorting out small industrial disputes, whereas their Continental colleagues spend only 10 per cent. of their time on such matters.

Governments of both major parties have been to blame for a regional policy that scattered the traditional industries of the Midlands throughout the country. Part of the motor industry that was happily working in the Midlands was sent to Scotland and goodness knows where else. That is another reason why it has become inefficient. At the same time, regional policy prevented new industries coming into this country. That is why Birmingham and other such cities have few companies involved in high technology.

The Government's record has been roundly condemned by Oppposition Members, but I defend the Government's record on aid to industry. If they had not allocated nearly £1 billion to British Leyland, the West Midlands would have become an industrial desert. Opposition Members should take that factor into account.

The Government have provided help for small businesses. The reduction in corporation tax from 50 per cent. to 40 per cent. was of great help to small companies. Incentives to build small factory units, of which there is a dearth in the Midlands, are of great help.

The loan guarantee scheme outlined in the Budget will help those wanting to start up small businesses to solve the difficulty of getting risk capital. That has been of great help.

Much more needs to be done. The Midlands must attract high technology and growth industries, or the region's decline will go on.

I have certain specific suggestions to make, some of which sound mundane. For example, it is difficult to believe that in Birmingham there is not much land available for industrial development. Going into New Street station by train one sees on either side of the railway track large areas of industrial wasteland. I ask my hon. Friend the Under-Secretary of State for Employment—the hon. Member for City of Chester (Mr. Morrison)—to convey to his ministerial colleagues, especially those in the Department of Environment, the fact that further pressure needs to be put on nationalised industries and private companies that are sitting on land—pressure to sell that land so that it may be used for new industries and firms.

Secondly, we must learn to use university technology to a much greater degree. We need to make much more use of the technologicial expertise that exists in our universities. I am a Birmingham man, and I think of Birmingham and Aston universities. I suggest that we follow the American example of setting up industrial estates—which are known in the United States as science parks—next to our universities. High technology industries should be encouraged to move to these sites, where they could take advantage of the expertise that is available to them in university laboratories. Around the campus of Stanford university there is a truly remarkable scene of billion-dollar companies making microchips and engaged in computer technology—companies that have sprung up around a synthesis that has emerged between business men and academics.

In the long run the responsibility for reviving the West Midlands depends on individuals—individual managers, individual trade unionists and individual employees. Managers must give greater leadership to their work forces. They must make greater efforts to explain economic realities to their work forces so that we can avoid tragedies of the sort that have occurred in my constituency. For example, the closure of Birmetals was due to a failure to communicate. That happened at Ansells brewery, which again was the scene of a failure to communicate between workers and managers. Let us get the managers to communicate. I ask trade union leaders to accept and welcome rapid changes in working practices and the introduction of new technology, and to do that more rapidly than in the past. Only by both sides of industry working together shall we rebuild the strength of the Midlands.

9.3 pm

Mr. Gwilym Roberts (Cannock)

I agree with the hon. Member for Birmingham, Northfield (Mr. Cadbury) that unemployment and industrial problems did not start with this Government. It would be a foolish party that suggested that it could cure the problems of technological unemployment overnight. Our criticism of the Government is not that they have failed to cure unemployment but that their policies, whatever the alleviation in certain areas, in terms of finance and economics are the great creators of unemployment. Unemployment in Britain under this Government has accelerated much more rapidly than in any other country.

The Under-Secretary of State for Employment spoke about the efforts made by the Staffordshire Development Association. I am appreciative of its work and I welcome the jobs that it has created over a period. However, the hon. Gentleman did not say how man4, jobs have been lost in Staffordshire during the same period. My constituency has consistently had a level of unemployment far higher than the level throughout the West Midlands. Indeed, it has one of the highest unemployment levels in the country. It is running currently at about 17 per cent.

The reason for this high unemployment lies with the decline of the mining industry. During the 1950s there was a great fall-off in the industry. Mining jobs were replaced—largely through the work of the local authorities—by a great mass of small industries. An unfortunate feature is that when the squeeze is on small industries feel the pinch much more quickly than large industries, and suffer the most. That is part of the problem. Another part of the problem is that in an area such as mine, which is near to a conurbation, there are often subsidiary units to the larger units within the conurbation.

There is always a tendency for industry to squeeze at the outer ends rather than at the centre in times of recession. We have those problems. My fear is that, never mind what has been said about the upturn, we are only at the beginning of the downward road. The fall-off m demand will create further problems later this year.

We have heard that Lucas is talking about laying off between 4,000 and 4,500 workers. In my constituency about 2,000 people are employed by Lucas Industries. Clearly, we have enormous problems in my area.

What are the solutions? There are no absolute solutions, but something can be done to alleviate the problems. Like the hon. Member for Northfield, I welcome a departure from the blanket regional policies of the past. Successive Governments have tended to take away industries from their more effective areas. The introduction of enterprise zones is a move in the right direction, but the basic need is the revival of the whole of the West Midlands industry.

There has been talk about the possibility of attracting the Nissan project to the West Midlands. Although that was not welcomed by some hon. Members earlier, I welcome it because it would provide thousands of jobs in the motor industry and many more for the component firms. The sad fact is that if Nissan comes to Britain, the West Midlands motor industry will suffer from additional competition, but the siting of Nissan in the area would be a compensation at least to the component firms in the area. The West Midlands has the land and the component firms which are necessary.

I want to see closer consideration of the operation of British Leyland and its treatment of component firms. As the Minister will know, BL recently was humming and hawing over the question whether it should buy headlamps and accessories from Lucas. It was threatening to offer the contract to firms in other parts of the world. Clearly, a large firm such as BL—an enormous recipient of public money—has a considerable responsibility to component manufacturers in the region.

The greater need in the longer term, if the area is to expand and flourish, is the introduction of new high technology industry. That is the real problem. I agree with what the hon. Member for Northfield said about the vital role of the universities in that direction.

Of equal importance is the location of Government research establishments. Government research in whatever Department is located in the belt through Cambridgeshire and Oxfordshire and the so-called desirable areas of the South-East, which the scientists are supposed to find attractive. One of the great needs is to introduce Government research centres of that sort into the West Midlands. Together with the universities they would form the nuclei of high technology and would produce jobs in the technological industries.

In my constituency I have the additional problem of the local lack of growth of the mining industry. We have enormous coal reserves in the area, running to 200 or 300 million tonnes. At one time it was hoped that the new Park colliery would be used to develop some of those reserves. We realised that there were difficulties because of the chlorine content of the coal, but it was a disappointment to the constituency when that plan was put back. It is an even greater blow that the Coal Board seems lethargic about the proposals for a drift mine which could be used to explore large parts of the reserves.

Although I ascribe some blame to the NCB, at board level, the greater share of the blame must lie with the Government and their restrictive financial policies towards the NCB. The board is conscious that it must balance its budget by 1983–84, and that requirement is a stranglehold on the development of the coal industry.

The Government's policies are at the heart of the problems of the West Midlands. They are already undermining our whole industrial base. That is our indictment of their policies. In my area there is a threat that they may undermine our energy base, and that unless there is a sharp and rapid U-turn by the Government the whole of the West Midlands, which was basically our industrial heartland, will be converted into an arid wasteland. Areas such as my constituency, which were living communities, will be converted into desolate dormitories without hope or a basic future.

9.12 pm
Mr. Nick Budgen (Wolverhampton, South-West)

I cannot say much about the plight of Wolverhampton in the few moments left me, but as the third hon. Member from the borough to speak in the debate I do not think that I need to emphasise the hardship being felt in the Wolverhampton area.

I wish to say a few words about the splendid campaign being run by the West Midlands county council to attract Nissan to the area and, I hope, especially to Wolverhampton. I accept that, as my right hon. Friend the Secretary of State for Industry said, Nissan's decision on the siting of its factory will be a commercial one, but I wish to suggest what advice my right hon. Friend should give the directors of Nissan before they reach their decision.

I accept that Japanese society is more authoritarian and perhaps more respectful than ours, though I do not say that it is necessarily a society in which I would wish to live, so I suspect that the directors will wish to have the advice of my right hon. Friend the Secretary of State. He may like to point out that in the long term the political direction of industry is not particularly happy for those who get the industry.

The hon. Member for Kettering (Mr. Homewood) made that point much better than I can. The political direction of a large firm to a new area may appear to be satisfactory for that area in the short term, but if the industry has to be closed, in the long term far greater misery is caused to the area than would have been caused if it had been allowed to grow organically and slowly, with a diversity of industries.

I hope that my right hon. Friend the Secretary of State will be able to tell the Japanese that the stick of the IDC system has gone, and that he will point out that although there are still substantial bribes—as I am rude enough to call them—to take industry away from its natural area of the West Midlands, we have advantages that are not enjoyed by other areas. Perhaps my right hon. Friend will remind the directors of Nissan that in the past industry was driven to Linwood, where a remarkable situation recently arose. Linwood was first run by Rootes, then by Chrysler, then by Peugeot. A situation ensued in which this so-called hard-hearted Government were asked "What are you going to do about Linwood?" The Secretary of State for Scotland asked Peugeot, in effect, whether there was any sum of money that would persuade the company to continue its operation at Linwood. The directors of Peugeot said "No". They had discovered that Linwood was too far from the component manufacturers, but too far away, most of all, from the highly skilled work force that the West Midlands possesses.

The industry had been grafted into an alien land—alien, that is, to motor manufacturing. It simply did not work. I hope that we in the West Midlands will be able to say that we have the support of the West Midlands county council, which is important from a planning point of view, that we have the support of all the employers' federations, which is also important, and that we have the support of the trade unions. One has only to recall what happened when Hitachi wanted to go to the North-East recently. For all the distortions that can be put into the system by the bribes to go elsewhere, industry grows best where it grows naturally. The motor industry grows most naturally in the West Midlands. I hope that my right hon. Friend will indicate these points to the directors of Nissan.

9.16 pm
Mr. Jim Marshall (Leicester, South)

It is my experience that the hon. Member for Wolverhampton, South-West (Mr. Budgen) always manages to say as much in four minutes, whether about his own constituency or other subjects, as any other hon. Member says in 10.

The House will agree that we have had an interesting and wide-ranging debate on the problems of the Midlands. There have been times, unfortunately, when I gained the impression that the Midlands was synonymous with the West Midlands. I believe that I am only the fourth speaker from the East Midlands. In one sense I regret that we have to discuss the East Midlands in this context. It is a sign of the times that a formerly prosperous area like the East Midlands should be discussed in the context of this debate.

In the time available I should like to bring to the attention of the House the problems of the East Midlands. I should also like to raise one or two points that previous speakers mentioned. I agree with my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) in her description of the speech of the Under-Secretary of State for Industry as smug and complacent. I accept the hon. Gentleman's point that the problems of the West Midlands are different from those of the East Midlands, but the Minister misleads himself and the House if he is of the opinion that the problems of the East Midlands are centred on a few industries.

I tell the Minister and the House that the problem goes far deeper. In Derby redundancies have occurred in the Parker factory and in the Qualcast factory. In Nottingham there are problems at T.I. Raleigh. In Leicester redundancies have taken place, and will take place, in the machine tool industry. In Northampton British Timpkin has been on short time since the middle of last year and recently announced 300 redundancies. The problem is far deeper than the Minister would have the House believe. It is the depth of the depression that worries those in the East Midlands.

The Minister was a little churlish when he said that the Opposition did not pay due regard to success stories in the Midlands, and he referred specifically to the Metro project. Obviously we are as proud as are any other hon. Members of the success of the Metro. What concerns us is that such successes are so few and far between. Our view is that the Government's policy makes it more difficult rather than easier to succeed.

The hon. Member for Warwick and Leamington (Mr. Smith) spoke very early in the debate, but found it unnecessary to remain until the end. He said that unemployment was a long-term problem and would not be solved by glib generalisations; nor, he said, were there any easy solutions. But then he made a glib generalisation and suggested an easy answer to the problems of Coventry, which he said were caused solely by overpay and overmanning. I am sure that all my hon. Friends will agree that that is arrant nonsense.

The hon. Member for Kidderminster (Mr. Bulmer) said that the Government had got off to a good start. That must have something to do with the hon. Gentleman's 15,500 majority at the last election.

My hon. Friend the Member for West Bromwich, West (Miss Boothroyd) and my right hon. and learned Friend the Member for Warley, West (Mr. Archer) spoke of the difficulty facing young people and the rapid drop in the number of apprenticeships available. I agree with that assessment. I have some evidence of the problem in Leicester. I read, for example, from a letter from the district secretary of the AUEW in Leicester. She says: We have the situation where many companies are offering no apprenticeships during the coming year—1981—and companies have made apprentices redundant during their training period, which means that their whole career is destroyed, as we have been unable to find firms able to offer alternative training. This will create a vacuum in the future for skilled labour. That really is a case of inadequate provision being made for the country's future if and when the upturn in the economy that we are promised actually takes place.

I then refer to the speech of the hon. Member for Melton (Mr. Latham) if only because he made some complimentary remarks about me. He made a courageous speech. It was a typically East Midlands speech in its pragmatism. He said that unemployment was intolerably high, and he also drew attention to the far deeper political problem when he said that economic assumptions would have to be questioned if the forecast figures of unemployment appeared to be coming true. That needs to be said more often. It was said also by the hon. Member for Leek (Mr. Knox). It cannot be stressed too often to Ministers.

I want now to refer in more detail to the problems that beset the East Midlands. Those of us who represent seats in the region will agree that it managed to hold out against the recession much longer than elsewhere in the United Kingdom, despite the Government's mismanagement of the economy.

Looking at the figures for July 1980, we see that economic activity was still at a very high level. In Market Harborough unemployment was only 2.2 per cent. In Loughborough, an area to which the hon. Member for Melton referred, it was 3.5 per cent. In Northamptonshire it was 4.2 per cent. In Derbyshire it was 4.4 per cent. That prosperity has ended. In many ways the recession has hit the region with a vengeance. The watershed came in April and May 1981, when many firms appeared to lose their orders overnight. Without doubt, the East Midlands is in the worst recession that it has experienced since 1945. If anything, the slump has been more dramatic than elsewhere in the country.

Let me illustrate that again by referring to some unemployment figures published on Tuesday of last week, which indicate that unemployment in Market Harborough has quadrupled. In Leicestershire it has almost doubled. In Northamptonshire it has increased two and a half times, from 4.2 per cent. to 10.6 per cent. In Kettering unemployment has increased from 4 per cent. to 11.6 per cent. Unemployment in Corby is 22 per cent., or almost one in four of the adult population, in the region as a whole 150,000 people are now out of work, representing an unemployment rate of 9.3 per cent.

In addition to the unemployment figures, tens of thousands of jobs are being maintained through the temporary short-time working compensation scheme. Unfortunately—I regret saying this—many of those jobs must be considered at risk, particularly in the hosiery, clothing, footwear and engineering industries.

It is no use Ministers, from the Prime Minister clown to the Secretary of State for Employment, pretending that in the East Midlands, of all regions, excessive wage demands and poor industrial relations are the cause of unemployment. I am sure that there would be general acceptance that the East Midlands region in general is a model of moderation in wage negotiations and wage settlements. It is also a model of good relations between management and workers.

Grabbing trade unionists and poor industrial relations are not to blame for the problem faced by the East Midlands. Most of the problems can be placed fairly and squarely at the door of the present Administration. There is widespread dismay throughout the East Midlands region about these influences, which have brought about the region's present industrial problems.

The influences most often quoted by both industrialists and trade unionists are the high value of the pound, interest rates, public sector charges—referred to by the hon. Member for Melton in the form of telephone charges—increasing import penetration, particularly in the textile industry and, more recently, energy costs.

Before the Government start crowing about interest charges—the Under-Secretary of State went down that path in his speech—let me quote Mr. Patrick Radford, the regional chairman of CBI. He said: The council were disappointed generally about the Budget and stressed that some firms would lose all the benefit from the cut in minimum lending rate because of higher fuel prices. He also criticised the unforeseen and artificial problems caused by arbitrary Government intervention. As an example, Mr. Radford pointed out that two Derbyshire pipe suppliers—Stanton and Stavely, and Clay Cross—have seen demand plummet due to cash limits on the water and gas industries as well as a curb on public sector capital spending. He said: These companies need steady demand not violent fluctuations caused by Government intervention. If I understood the speech by the Secretary of State for Employment at the weekend, that will raise some sympathy in his breast, because I understood that the right hon. Gentleman was now in favour of increasing public expenditure on capital projects.

The shadow of Thatcherism hangs over the East Midlands, bringing with it more and more redundancies and higher records of unemployment. The Chancellor's Budget is looked upon at best with disdain and at worst with outright anger. However, whatever the emotional reaction to the Budget, there is a unanimity of view that it offers no solution to the region's problems and needs. In addition, all areas and all industries in the East Midlands have been affected by the recession. Unemployment in the construction industry has increased by 45 per cent. since 1979. The increase in mining and quarrying since then has been 27 per cent. But the manufacturing sector is the worst affected. Unemployment in it has increased by 137 per cent., from 21,485 in 1979 to 51,207 this year. The shrinking of the manufacturing base is the worst aspect of the recession, since if that is happening in the East Midlands it augurs ill for the country as a whole in terms of future prosperity and levels of employment.

I deal next with one or two of the areas to which my hon. Friends and hon. Members have drawn attention. My hon. Friend the Member for Kettering (Mr. Homewood) mentioned Corby, where one in four is now unemployed because of the ending of steel making there. It ended in spite of the valiant effort by my hon. Friend and the community as a whole to try to maintain the operation. I see the Minister of State, Northern Ireland Office sitting on the Government Front Bench. Perhaps I may therefore refer to Hinckley, which is in his constituency of Bosworth. Hinckley has problems that stem largely from the problems in the West Midlands, since many of the people in Hinckley are in the Coventry travel-to-work area. Those people, like the people of Coventry, have been hit by short-time working and closures.

The hon. Member for Lincoln (Mr. Carlisle) referred to the problems there, but I emphasise that it is heavy engineering that is having to cope with a great deal of short-time working. The hon. Member for Melton referred to the difficulties in Melton Mowbray in the hosiery and knitwear, clothing and footwear industries, but he will know that Melton Mowbray is famous for its pies and pet foods. I do not know whether there is any relationship between the two. Neither of those industries is doing particularly well.

In Nottingham 4,000 engineering workers are on short time, and the same applies to over 2,000 engineering workers in Northampton and—I say this with particular regret—to 4,360 engineering workers in Leicester. The problems facing the hosiery and knitwear, clothing and footwear industries have been described many times in the House and I do not wish to go into them at great length this evening, but unless action is taken to curb unfair competition, whether it be from the Far East, from the State trading countries or from the United States, those three industries will disappear.

It may surprise you to know, Mr. Deputy Speaker, that many people in the East Midlands voted Tory in 1979. They did so because they lived in an area that they thought had most to benefit from the Thatcherite experiment. They thought that they would enjoy tax cuts because employment was available in plenty. They worked in small to medium-sized companies which have maintained good labour relations and invested in sufficient amounts to be able to keep up with their competitors. They are the industries that the Prime Minister said that she was pledged to support.

In addition, the five counties comprising the East Midlands have a wide range of industry which is totally different from that of the West Midlands. Its industry covers bicycles, pharmaceuticals and high technology, and it has good communications. Only two years ago the right hon. Member for Sidcup (Mr. Heath) said in Leicester that Leicester was Britain's most successful city. One can permit politicians a little hyperbole, but that assessment was not far from the truth. He might have gone further and said that the East Midlands, of which Leicester, Nottingham and Derby are the linchpins, was the most prosperous region in Britain. The base of that prosperity is being undermined, if not destroyed, and the people of the East Midlands regret placing their trust in the Tories.

If one could look forward to the future with confidence the sacrifice might be worth while. My hon. Friend the Member for Walsall, North (Mr. Winnick) referred to the document published recently by the Midlands branch of the Manpower Services Commission. That offers little optimism either for the Midlands or for the Government. It concludes that in the East Midlands there is little indication of any improvement in the current employment position. Indeed, with so many jobs maintained by the temporary short-time working compensation scheme it sees a further substantial decline in jobs. In addition, and perhaps worse from the Government's view, it foresees no recovery in production levels until 1982, and suggests that even then output will be increased with fewer workers. Young and unskilled people will be most affected. The commission underlines the inadequacy in the numbers of apprenticeships.

I shall refer to comments which the Prime Minister has made in the past as well as comments made as recently as Saturday. The Prime Minister is fond of saying that unemployment doubled under the last Labour Government. In most parts of the East Midlands unemployment has doubled in the last 12 months. The only thing that the Government have managed to do in the last In a speech at Cardiff on Saturday—and it was a small meeting, even though all the Tories in Wales were there—the Prime Minister said: This is the road I am resolved to follow. This is the path I must go". The road that she is following is strewn with bankruptcies, unemployment and the fear of unemployment. The Prime Minister continued: Let's praise the Chancellor for his judgment—in tactics, flexibility; in strategy, resolution. I think that that is supposed to be complimentary. If the same words were applied to the Secretary of State for Employment they would be condemnatory. We are supposed to praise the Chancellor.

It is not up to me to comment on the Chancellor's judgment. That has been called into question on a number of occasions. Perhaps I am the least appropriate person to make that judgment. Surely "tactics" must be shorthand for unemployment. "Flexibility" must be shorthand for more unemployment, "strategy" for more and more unemployment, and "resolution" more and more and yet more unemployment.

The road that the Prime Minister is following is the road to economic bankruptcy. I suggest, with due humility, that she takes a different road, namely, the one that leads from No. 10 to Buckingham Palace, and there submits her resignation and asks for the Dissolution of this Parliament, so that the country as a whole can pass judgment on this incompetent Conservative Government, who have visited the evil of unemployment upon us on a scale not seen in this country since the 1930s. The country would then be able to vote in a Labour Government committed to reducing the present highly unacceptable level of unemployment.

9.42 pm
The Under-Secretary of State for Employment (Mr. Peter Morrison)

Were I to reply fully to the debate I should need to hold all the senior Offices of State. I apologise if I am unable to reply in full to all the matters that have been raised, and I assure all those who have spoken that I shall pass on their remarks to my right hon. Friends the Secretaries of State concerned.

I begin by congratulating the hon. Member for Leicester, South (Mr. Marshall) on his first appearance at the Dispatch Box. He looked relaxed and calm—much more so than I was a few weeks ago when I was in the same position. I hope that he will continue in that role for many more occasions. I appreciate that it must be difficult for him—now that the hon. Member for Leicester, East (Mr. Bradley) has deserted his party—to make sure that all is quiet on the Western Front. It must also be difficult for him because although it is an Opposition Supply day, Labour Members have not put in an appearance to demonstrate their concern about what is a very important matter, namely, the high level of unemployment in the Midlands. There are now eight Labour Members present, and I do not believe that Labour, Conservative or Liberal supporters would consider that a particularly good turnout.

Mr Gwilym Roberts

Will the hon. Gentleman accept that the only time we have had the opportunity to debate unemployment in the West Midlands or the Midlands has been on Supply days, in time offered by the Opposition?

Mr. Morrison

That proves my point. This is exactly the time that one would expect to see more Labour Members present. In fact, there are twice as many Conservative Members present as there are Labour Members.

The right hon. and learned Member for Warley, West (Mr. Archer) rightly said that this was an important debate because it concerned that part of the country which was the powerhouse and engine of Great Britain. I shall return to that matter. However, my hon. Friends the Members for Kidderminster (Mr. Bulmer) and The Wrekin (Mr. Hawksley) pointed out at some length that the situation in the West and East Midlands was determined by what happened in the world. The Midlands as a whole is highly geared to manufacturing, and therefore has to look to what is happening in the world generally.

My hon. Friend the Member for Birmingham, Northfield (Mr. Cadbury) put his finger on the problem. He said—I paraphrase his remarks—that the trouble was that we had stayed in the 1940s and 1950s, had not modernised enough, and were now paying the penalty. I regret to say that he is right.

Not long ago I went to Birmingham for the day, to hear for myself what was happening. I enjoyed my visit. I was told beforehand that all was gloom and doom. However, I inquired whether it would be possible to meet some people from new businesses. During the morning, before meeting the West Midlands county council over lunch and again after lunch, I met representatives of 10 small businesses. When I asked "Flow is business?", somewhat to my surprise and certainly to the surprise of many of those accompanying me, the reply was "Very good indeed.".

My hon. Friend the Member for Warwick and Leamington (Mr. Smith) talked about the small companies in his constituency. He talked about IBM, a new superstore, and a new hotel in Warwick. Those are the companies of the future.

In the first two months of this year the two Midlands small firms centres received over 5,000 inquiries—an increase of 65 per cent. over the same period last year. Nearly half the inquiries related to the starting up of a new business. That is the future.

Mr Geoffrey Robinson


Mrs. Jill Knight (Birmingham, Edgbaston)


Mr. Morrison

I give way to my hon. Friend.

Mrs Knight

While he was in Birmingham, did my hon. Friend discover that, because of the duties laid upon employers, it is extremely expensive to employ people? Even the local council has people on double time on Sundays, because it is so expensive to pay all the necessary dues before it even starts to pay salaries. Did anyone raise this matter with my hon. Friend? It is a substantial point.

Mr Morrison

Nobody raised it, but now that my hon. Friend has done so I shall—without any commitment—look into the matter.

Mr Robinson


Mr Morrison

I shall not give way. I allowed myself 20 minutes because I knew that hon. Members wanted to make their constituency speeches.

Not all is gloom and doom. Every month 250,000 people leave the unemployment register, and a large proportion of them come from the Midlands.

The hon. Member for Birmingham, Ladywood (Mr. Sever), who opened the debate, rightly asked "What will you do?" We have already built a bridge between the past Great Britain and the future Great Britain. That is why we have special measures, some of which are operated by the Department of Employment and others by the Manpower Services Commission.

In the Midlands as a whole there are just over 181,000 people benefiting from the temporary short-time working compensation scheme. In the West Midlands there are 5,252 people benefiting from the job release scheme, and there are 4,520 people benefiting from it in the East Midlands. Between last April and 28 February, 36,310 people in the West Midlands and 17,290 in the East Midlands benefited from the youth opportunities programme. Therefore, to suggest that we do nothing is to give entirely the wrong impression.

My hon. Friend the Member for Melton (Mr. Latham) asked about the youth opportunities programme. I am told that on 12 March there were still 16 young people living in Melton Mowbray who had not had a YOP offer. However, the local employment officer was very hopeful that they would receive an offer by Easter. I hope that that gives my hon. Friend some indication of what is happening in his constituency.

But more important than the special measures—although they in themselves are desperately important—is what is happening in terms of real jobs. I do not know whether Labour Members heard the good news today. It was announced that an agreement had been reached on one of the largest export projects ever won by the United Kingdom—the sale of a very large coal-fired power station to Hong Kong, worth at least £550 million. This deal will provide about 34,000 man-years of work in United Kingdom firms, including over 6,000 man-years in the West Midlands. That is thanks to a partnership between industry, the Government and the City. I know that the City is not very popular with Labour Members—

Mr. Sever

Obviously, any opportunities which are given to those seeking work in the Midlands are to be welcomed, and we welcome them. But will the Minister address himself to the essential underlying problem, which is that, notwithstanding the schemes that the Government are operating, there are still thousands of young people who, having gone through these schemes, discover that they are unable to find what he calls a real job at the end of it?

Mr. Morrison

I should not have given way, because I shall be coming to that part a little later.

With regard to the Government's help to the Midlands—

Mr. Michael English (Nottingham, West)

What about the East Midlands?

Mr. Morrison

The hon. Member for Nottingham, West (Mr. English) has not been in the debate all day. I have been talking about the East Midlands and will mention it again.

We have two enterprise zones, one in Corby and one in Dudley. I am sorry that the Liberal Party is not entirely enthusiastic about enterprise zones. That is a pity. In theory it should be, with its traditions. We have an inner city partnership scheme in Birmingham and a programme authority scheme in Wolverhampton, with the inner city partnership giving £14.8 million of taxpayers' money and the programme authority in Wolverhampton giving £2.8 million. To me, that denotes that we are—[Interruption.] It appears that Labour Members do not like the idea of the Government helping in this way. That is fine by me, but they should know that many of their constituents like the idea.

My hon. Friend the Member for The Wrekin quite understandably raised the issue of Telford. He also requested assisted area status for his constituency. I know—as my hon. Friend the Under-Secretary of State for Industry pointed out—that my hon. Friend is bringing a delegation to discuss this matter. As he will appreciate, I cannot give any commitment from the Dispatch Box, but I am sure that my hon. Friends from the Department of Industry and the Secretary of State for Industry have noted the forceful way in which he put his case and have listened very carefully to it.

Earlier in the day there was a good deal of talk about the manifesto of the 364 economists. I am always rather bamboozled by economists. They remind me of the sort of person who, when one has lost a telephone number, says "I will give you a guesstimate". I looked at the list of people who signed the manifesto and I came across the name of Lord Balogh—

Miss Boothroyd

There are other names.

Mr Morrison

As a certain celebrated lady said. "He would, wouldn't he?"

Then I came across the name of Lord Kaldor. Again, "He would, wouldn't he?"

The funny thing is that they did not agree on what should be done but only on what should not be done. When we consider the policies that have been pursued as a result of their promotion over the last 20 years we know why we are where we are today. Mr. Samuel Brittan, who is by no means an uncritical admirer of the Government, said in today's edition of the Financial Times that the attack on the Government's policies by 364 academic economists was the best possible sign that these policies might be right after all…policy which has alienated so many of the great and the good is unlikely to be entirely wrong. The high pound has been discussed at some length, but Opposition Members did not mention the fact that as a result of the high pound several manufacturing companies in their constituencies can buy raw materials at a very much reduced price. They also failed to mention that during the expansion of the German and Japanese economies a high deutschemark and a high yen were in evidence. I do not know what the low pound did for the Labour Government. It sank to the equivalent of ․1.56. It did not seem to do much for them.

My hon. Friend the Member for Warwick and Leamington spoke at some length about overmanning. I wholeheartedly concurred with him when he said that he could not put the blame entirely in any one place. He said that the situation could be the fault of management, of trade unions, and even of the Government. I agree with that. It is utterly pointless to say who was wrong. We were all wrong. Therefore, let us look to the future.

Mr Dudley Smith

I am sorry to interrupt my hon. Friend's penetrating analysis. I understand that I was castigated by the hon. Member for Leicester, South (Mr. Marshall) for not being present throughout the whole of his diatribe. Does my hon. Friend realise that nearly all the Conservative Members who represent the Midlands have been in the Chamber throughout our proceedings? There has been a thin sprinkling of hon. Members on the Socialist Benches. One Liberal Member has been present, who is not taken too seriously, namely, our old friend the hon. Member for Isle of Ely (Mr. Freud). There has been no one to speak on behalf of the Social Democrats.

Mr Morrison

My hon. Friend may know that I have already made that point. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) said that he had read a CBI report to the effect that there would be a permanent pool of 2 million unemployed people. How would the Labour Party operate? How would it pay for the expansion that it promotes?

Mr. Geoffrey Robinson (Coventry, North-West)


Mr. Morrison

If Labour Members want to print money they should bear in mind that it means inflation and fewer jobs. If they wish to tax more they should realise that there will be less incentive for investment and for business. How will they do it?

Mr. Robinson


Mr. Morrison

The hon. Member for Ladywood asked for a reduction in the minimum lending rate. Since last November four points have been knocked off the minimum lending rate. Those four points mean £1.4 billion back in the economy. The hon. Gentleman may say that that is not enough, but how could the Government fund their borrowing requirement if they were to slash interest rates? The hon. Gentleman may say that he knows the answer, but I believe that the Government's policy is right. It would be a disaster—

Mr. Sever


Mr. Morrison

The hon. Gentleman should know that the right hon. Member for Huyton (Sir H. Wilson) and the deputy leader of the Labour Party said at the Dispatch Box that spending one's way out does not work. The hon. Gentleman and his hon. Friends now suggest that they should spend their way out.

My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) talked about the Nissan car company, which has decided to invest in Great Britain. At least, we hope that it has, and that it will not be frightened away. Surely that is the greatest compliment that could be paid to the Government's policies. I am sorry that the Shadow Secretary of State for Industry does not want the company here. I understand that some Opposition Members would like it to see it in the West Midlands. The fact that a major Japanese motor car manufacturer would like to come to this country proves that perhaps we have more advantages than France, Germany, Italy and other—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put

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