Unemployment (Forest of Dean) (Hansard, 7 December 1982)

§ The Minister of State, Department of Industry (Mr. Norman Lamont)

I am grateful to my hon. Friend the Member for Gloucestershire, West (Mr. Marland) for the opportunity to debate the problems of his constituency and in particular the Forest of Dean. I know that his constituents will appreciate the assiduousness with which he pursues their interests. While I cannot agree with all the points he makes or arguments that he advances, I pay tribute to his determination to bring those problems to the attention of the House. He has been most assiduous in pressing their claims and bringing delegations to see me. We all respect the hard work that he does for his constituency.

I assure my hon. Friend that we are well aware of the position in the area to which the debate refers. He has made representations, although we have received representations from other parts of Great Britain all of which have reasons for believing that they should receive special treatment.

I want to explain our policy on regional assistance and why, unfortunately, I cannot go all the way with my hon. Friend and why, although I shall try to be helpful, I do not believe that the Forest of Dean can be given assisted area status.

When we came to office we looked for ways to make regional policy more effective. We have done so by making it essentially more selective. Now that the final phase of our programme has been announced, assisted areas are being restricted to those with the greatest need. 826 We have reduced the proportion of the working population covered by regional policy from about 44 per cent. in 1979 to 27 per cent. today. It will obviously go a long way to remove the competition for new investment that non-assisted areas such as the Forest of Dean faced previously. Although I recognise that my hon. Friend's area might be at a disadvantage, the fact that we have reduced regional assistance lessens the disadvantage that his area faces.

We are required by the Industry Act 1972 to have regard to certain criteria in designated areas. We must consider first the overall rate of unemployment. It is important that the absolute level of long-term unemployment for any one travel-to-work area is considered relative to all other travel-to-work areas. My hon. Friend has said that the Forest of Dean comprises the Cinderford travel-to-work area and a small part of the Gloucester travel-to-work area. In October 1982 their unemployment rates were 12.6 per cent. and 10.7 per cent., respectively compared with 13.6 per cent. for Great Britain as a whole. That is well below the national average and also the average for assisted areas. Many other parts of the country, for example, the West Midlands, have higher unemployment rates without assisted area status.

My hon. Friend referred to mounting redundancies and his fears for the future. Of course we shall continue to watch closely the situation in my hon. Friend's constituency as well as the trend of unemployment. As with other areas of the country, the unemployment rate in that constituency has risen sharply, largely due to redundancies in firms that faced difficulties. That is the main reason for the rise in unemployment in my hon. Friend's constituency. It is not so much a question of firms being tempted away by the inducements offered in other areas. The redundancies announced by Rank Xerox at Mitcheldean, together with the impending closure of the London Rubber Company's works at Lydney and its transfer to London will regrettably add to unemployment, but it is difficult for the Government to intervene in commercial decisions made by companies.

My hon. Friend argues that Lydney is an unemployment blackspot, and that its problems have not been recognised. In the past, he has argued that the unemployment rates are hidden in the figures for the Cinderford travel-to-work area. Perhaps I should explain why a travel-to-work area is the smallest area for which the Department of Employment quotes unemployment rates. A travel-to-work area is intended to represent a self-contained labour market, where a significant majority of those who live in the area also work and vice versa. As unemployment rates reflect an area's need for jobs, it follows that such rates can be quoted only in respect of relatively self-contained labour markets that broadly include work places, the geographical source of labour supply, and demand for labour. Obviously, if people can travel within an area to find employment, it would be misleading to quote unemployment statistics on any other basis. Thus, it would be misleading to quote an unemployment rate for an area smaller than a travel-to-work area. However, as my hon. Friend has said, many travel-to-work areas have black spots within them.

I know that my hon. Friend is concerned about the high cost of public transport for those of his constituents who travel to work. That problem is faced by many rural communities. Local authorities are responsible for deciding transport policy in their areas, but the 827 Government have played their part, including in Gloucester, where they accepted in full the local authority bid of £625,000 for bus revenue support in 1982–83.

Quite understandably, my hon. Friend referred to what he described as the unfair competition offered by the nearby assisted areas of Gwent. I am sure that he would be the first to accept that the enhanced assisted area status of Newport is justified on the grounds of the major effect of the unemployment at Llanwern steel works on the local economy and on employment prospects. The Monmouth travel-to-work area has had consistently high unemployment—20.4 per cent. in October—due to the "shadow effect" of industrial decline that occurred in other parts of Gwent. Thus, the status of those two areas—development and intermediate areas respectively—is fully in line with the Government's aim of concentrating aid on those areas with the greatest problems.

My hon. Friend referred to the fact that the district is a border area. However, as he will know from our previous discussions, it is inevitable that, whatever decisions are made about where aid should go, and however narrow that aid is—we have considerably cut the amount of aid—there will always be borderline cases. That must follow if aid is to be given where the regional disadvantages and the unemployment levels are severest. However, although we shall continue to monitor the situation carefully—particularly in the light of what my hon. Friend has said tonight—the present boundaries were drawn only after the greatest and most careful consideration of all the factors.

We cannot change the status of one travel-to-work area in isolation. We must put the question of assisted area status in a regional and national context. When unemployment is historically high and when parts of the West Midlands are suffering unemployment rates far higher than those of Cinderford—higher than many areas that have assisted area status—the problems of the Forest of Dean are, alas, not unique. Unemployment in Telford new town is 20.5 per cent., in Walsall it is 18.9 per cent. and in Birmingham it is 18 per cent. Yet we have resisted granting assisted areas status to all those areas. To grant assisted area status to Cinderford and Gloucester would give rise to claims for equal treatment by those areas as well as other areas from which assisted areas status has recently been withdrawn.

If the areas that do not have intermediate area status were given such status, areas that are at present intermediate areas must be given development area status and development areas must then be given special development area status. The knock-on effects would be considerable and we would get away from our objective of reducing the area of Britain to be covered by regional assistance. Our objective of reducing the area from about 44 per cent. to 27 per cent. of the population would no longer be attainable. I am sure that we are right to concentrate the limited resources available on the areas of greatest need.

I remind my hon. Friend that alternative industrial support is available to firms in the Forest of Dean, although we cannot give the automatic grants available in development areas. That takes the form of aid under section 8 of the Industry Act 1972 to assist new investment in the national interest that would otherwise not take place. Since May 1979, 30 projects in the Cinderford and Gloucester travel-to-work areas have been given 828 £600,000, on total project costs of £2.7 million. I assure my hon. Friend, especially in the light of his strong representations, that if any projects are put forward from his constituency that might conceivably be candidates for aid under section 8, I and my colleagues will consider them most sympathetically. We are anxious to help.

My hon. Friend will also agree with the importance of the small firms sector in the Forest of Dean. He will accept that we have done much to regenerate the sector and to assist in the creation of new businesses through a series of measures. I draw attention to the success of the loan guarantee scheme. Also of importance are aid schemes designed to assist the application and development of products, processes and the industries of tomorrow. The support for innovation scheme and the microprocessor application scheme are designed precisely to that end. Figures for expenditure in my hon. Friend's constituency are, unfortunately, not available, but I am sure that he welcomes our continued emphasis on such assistance, geared as it is to the needs of the future.

While such investment in the future is of the greatest long-term importance, my hon. Friend is worried about his constituents who are out of work. In the Cinderford and Gloucester travel-to-work areas, 41 people are benefiting from the temporary short-time working compensation scheme, 332 from the job release scheme, 540 from the youth opportunities programme in 1981–82 and 17 joined schemes under the community enterprise programme this year.

Such schemes are not a solution to the great problems of unemployment, but they make a positive contribution to the preparation of the unemployed for their return to work. They are clearly a necessary short-term measure in a recession, both for social and humanitarian reasons and to ensure that the work force is equipped in skill and motivation to take full advantage of the upturn and the opportunities when they come. My hon. Friend referred to what the Forest of Dean district council had done in preparing industrial estates. I agree with him that the council has done a great deal to help itself in preparing its own infrastructure.

The Government are also aware of the importance of good communications for local economies in all parts of the country. My hon. Friend referred to the new bridge that is planned for the River Wye at Chepstow as part of the town's inner relief road scheme. The project will benefit the local infrastructure. Orders are to be published next year by the Welsh Office, which is managing the scheme in conjunction with the Department of Transport. Work is expected to begin in 1984, subject to the availability of finance and the completion of the usual statutory procedures, and the new bridge should be open by 1987. My hon. Friend has said that he is disappointed that this cannot take place sooner, but he will appreciate that an important scheme of this nature inevitably takes several years to come to fruition.

My hon. Friend has been concerned about the status of the A48 trunk road. Although from a national point of view the A48 through West Gloucestershire is not of great significance, the Government have recognised its importance locally and have retained it as part of the trunk road system. I can assure my hon. Friend that there are no plans to change that status.

In conclusion, despite my inability to give the Forest of Dean intermediate area status, I repeat what I have said about considering possible projects for assistance under 829 section 8. I assure my hon. Friend that we appreciate the problems in his area. I do understand that there has been a considerable rise in unemployment in his constituency. There are no easy solutions. Our view is that prospects for all parts of the country ultimately depend on the health of the national economy. That is why it is encouraging that inflation and interest rates, so important for industrial confidence, are at their lowest level for years. The defeat 830 of inflation is essential to provide a sound economic base for areas such as the Forest of Dean and, indeed, the country as a whole. I assure my hon. Friend that we shall keep his constituency and its problems firmly in our minds and under review. We shall examine projects that he cares to put to us for possible assistance under section 8.