§ Mr. David Winnick (Walsall, North)This will be a bleak Christmas for many families in Walsall and the Black Country area of the West Midlands. Hardly a day goes by without further news of redundancies and planned closures. Today, there is the tragedy of the closure of Round Oak and all those who will now find themselves in the dole queue. The closure comes on top of the massive redundancies and closures that the Minister knows have occurred in the past two or three years in the Black Country. In a reply that I received from the Prime Minister earlier this month, I was informed that since May 1979 unemployment in the Black Country has increased by 75,498. In the West Midlands as a whole, unemployment has jumped by 241,000. This represents a rise of 216 per cent. in unemployment on the basis of the new calculations.
The Minister should already know—the reply came from his Department—that when the Government took office there were 222 travel-to-work areas in the United Kingdom where the percentage rate of unemployment was higher than that of Walsall. In October this year, the figure was 70. My concern is shared by my hon. Friend the Member for Walsall, South (Mr. George), who also hopes to contribute to the debate. The question arises of what conditions will be like in six months' or 12 months' time. It certainly gives my hon. Friend and I no pride that we should be so near the top of the unemployment league.
According to Department of Employment figures, the highest percentage rate of unemployment known in the Walsall travel-to-work area prior to 1979 was 7.3 per cent. When the Government took office, it was 5.1 per cent. That same percentage of 5.1 per cent. operated in the West Midlands as a whole. Now, on the basis of the new calculations, the Walsall unemployment rate is 17.9 per cent. In October, it was 18.9 per cent. Even on the old calculations, the figure for the Walsall travel-to-work area, which does not include Darlaston, is likely to have been under-estimated. A truer unemployment figure for Walsall is 22 per cent. to 25 per cent. Over 30,000 people are officially unemployed in the Walsall travel-to-work area. In the West Midlands as a whole, the number of jobless amounts to 353,000.
I spoke a moment ago about the highest total of unemployment known in the Walsall travel-to-work area before the Government took office. The highest unemployment percentage known in the West Midlands before the Government took office was 6.7 per cent. It is now 16 per cent. and probably more. Those are the figures, let the House be under no illusion, behind which are the individuals and families whose lives have been shattered by the devastation and tragedy that have swept through the West Midlands, the Black Country and the Walsall travel-to-work area during the past two or three years. I have raised the matter with the Minister before, and he knows that there are school leavers in the Black Country who have no opportunity of finding work and that there are far fewer apprentices than there were before May 1979.
The Minister should bear in mind also the people in their forties and fifties, who have sometimes been made redundant after working for the same firm for 25 or 30 years. It is not just that they have become unemployed, 1115 which is bad enough, but they have to ask the inevitable question whether they will ever be able to work again, whether they will have an opportunity to earn a living or do they just look forward to receiving the old-age pension in due course.
Those were not the kind of promises made by the Government when they were campaigning for office in May 1979. It is not the sort of Britain that we want and for which so many of the people to whom I have just referred fought in the last war.
If the Minister gives an optimistic gloss to the future, I have a number of points from the West Midlands CBI which offer little hope for the West Midlands in 1983. The CBI says that further redundancies are expected before the end of the year, although it says that the extent of the redundancies is likely to be lower than in the recent past. What causes us anxiety is not just the present level of unemployment but the fact that there seems to be little hope that the number of jobless will be reduced in 1983. The evidence seems to point to the contrary.
My right hon. and hon. Friends are worried by the way in which those people who have been made jobless are penalised. There was a cut of 5 per cent. in unemployment benefit in lieu of taxation. Those benefits are now taxed, but the 5 per cent. has not been restored. There are a number of other measures that irritate and aggravate the position of those who are denied the opportunity to earn a living.
I do not think that there is any doubt that the fault lies in the lack of demand in the economy and the deflation that has operated during the past two or three years. Some of the other factors are well known, for example, the high interest rates that have operated during much of the Government's time in office, a much overvalued pound, which has undoubtedly made it more difficult for exporters to sell their goods abroad, and the continued import penetration, which has done so much harm to the West Midlands and the Black Country. We can, of course, have theoretical debates about whether import controls should be applied. The Minister should be in no doubt that the import penetration, which is continuing in the West Midlands, puts many firms at risk that might otherwise be able to survive. Those are disturbing matters.
I am not in any way suggesting a general ban on imports, but I believe that some form of selective import controls is necessary. They were applied to the textile industry, although rather late in the day. If they had been applied earlier we would have a much healthier textile industry. How much of our engineering, metal-based and manufacturing industries must be undermined by import penetration and other factors before the Government recognise that there is a need for some control on imports?
The abolition of exchange controls—which may seem to be a rather technical matter—was almost a direct incentive for the exporting of capital that should have been invested at home. We want desperately to see investment in our constituencies, but instead the capital is going abroad. I am pleased that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), who speaks for the Opposition on Treasury matters, said recently that one of the first steps that a Labour Government would take would be the restoration of exchange controls. Such controls should never have been abolished in the first place.
Many people in the Walsall area are unemployed because there has been such a low amount of activity in the construction industry. In my borough, thousands of 1116 people are desperately in need of accommodation. Since shortly after the present Government took office, there have been no new contracts for public sector house building. Any council house building in the West Midlands is now a unique sight. There is no such construction going on in Walsall. If it were restarted, it would supply the accommodation that is needed so urgently and at the same time it would take construction workers from the dole queue and thereby save money that at present is going in unemployment and supplementary benefits. Moreover, housing construction in both the public and private sectors would help many small firms to survive and generate a need for all the ancillaries, including furniture and fittings, that go with housing construction. Activity of that sort is essential for the revival of the economy.
In the Black Country, a great many skills have been developed and passed from generation to generation. It can be said without exaggeration that the work force of the Black Country played a very distinguished part in making Britain renowned for its engineering manufacturing and the rest. Over the past 100 years, great pride has been taken in the skills that have been developed. The position today—hence my reason for speaking with such force—is that those skills are going to waste. Instead of applying them in the revival of industry, and instead of ensuring that those skills are used constructively, those with them are denied the opportunity to earn a living. They exist on the most limited incomes.
I do not believe that this is the way that the country should be run. I do not accept that there is no alternative to mass unemployment, with all the poverty, squalor and deprivation for families arising from it. I do not have much hope that my speech will change the Government's views, but I believe, however, that Members of the House of Commons owe to their constituents the duty to draw attention to their plight, and I shall continue to do so.
I hope that the time will come in 1983 when we shall have a new Government with new policies who are determined to reverse the tide of mass unemployment and give our constituents the opportunity to earn their living.
§ Mr. Bruce George (Walsall, South)I am grateful to my hon. Friend the Member for Walsall, North (Mr. Winnick) for allowing me a few minutes in which to endorse his forceful speech.
While Ministers are enjoying their Christmas lunches, smoking their Havana cigars, and knocking hack their port—probably in warmer climates than those of the West Midlands or the United Kingdom—perhaps they should think about the responsibility that they share for helping to create a disaster area in the Midlands and areas that have enjoyed high employment, and even greater disasters in areas where industry has been less successful in the past.
Recent figures produced by the Library show that in an area such as mine the word "unemployment" was rarely in its vocabulary until recently. As my hon. Friend said, Walsall, South is now 64th in the list of shame, one ahead of Walsall, North, although it is an area that historically has had high employment. Although no one can put all the blame on the Government, a large percentage of the blame must be attributed to the Government and their appalling policy.
If one reads the OECD reports, clearly the lessons that should be learnt are not being learnt. The unemployment 1117 figures, which are already too high, are likely to get even worse. As my hon. Friend said, the unemployment figures are artificially low. If we extrapolate from the OECD recommendations what is likely to happen, perhaps one in four of the work force in our constituencies will join the legion of the hopeless. The last few years have been an unqualified disaster for my constituency and that of my hon. Friend, and there is little hope that the situation will change under this Government.
I hope that my party will get its act together in the next few months so that it can present the image of a party that is prepared to take on the responsibility of office and present itself as a real Opposition party. That is the task that we face in the months ahead. I hope that when the cataclysm eventually comes and we realise that unemployment will not be brought down under this Government, this Government will reap the whirlwind, and deservedly so.
§ The Minister of State, Department of Employment (Mr. Michael Alison)I listened carefully to what was said by the hon. Members for Walsall, North (Mr. Winnick) and Walsall, South (Mr. George), and I welcome the opportunity to reply at least to some of their comments.
Both hon. Gentlemen were understandably concerned about the high unemployment in Walsall and throughout the West Midlands. I assure them that the Government share their concern. Unemployment is not only a waste of vital human resources, but it has a deeply harmful effect on the people who cannot find a job and the community as a whole.
First, I shall take a bird's eye view of the problem of unemployment, and perhaps I shall have time to take the worm's eye view towards the end of my short speech. Briefly, I want to place the figures in a historical and international perspective, the historical perspective being perhaps slightly longer than the three years that the hon. Member for Walsall, South mentioned. Unemployment in this country has risen persistently over the past 20 years. We kid ourselves if we think that there is anything novel or new about that. I was elected to this House in 1964, which was roughly around the time of the first incarnation here of the hon. Member for Walsall, North. My first election was fought on a national United Kingdom unemployment figure of 390,000. Unemployment in Walsall at that time, 1964–65, was about 0.3 per cent. The figure had doubled in Walsall by 1970, at the end of the first Wilson Government. It remained more or less static during the Heath Administration. It then more nearly tripled than doubled during the next Wilson Administration, and has about tripled again, as both hon. Gentlemen fairly said, since 1979. What has been true for Walsall broadly reflects the trend for the United Kingdom as a whole during that period.
The evolution of unemployment in the United Kingdom has been subject to several influences, many of which are not under the Government's control. For a small, open economy like that of the United Kingdom, probably the most important influence is the state of the world economy. The current recession has produced a rapid rise in unemployment in all the industrialised countries. For example, unemployment has doubled in West Germany, 1118 since 1980 and during this year unemployment in Canada, West Germany and the Netherlands has been increasing at a substantially faster rate than in the United Kingdom.
Another important influence is the level of wage settlements. These have been too high in the United Kingdom during recent years, given our relatively low levels of productivity, and employment has suffered as a result. The average increase of over 18 per cent. a year under the last Labour Government, for example, was not remotely matched by increases in output and in consequence we priced ourselves dramatically out of world markets in that period. The hon. Member for Walsall, North wondered whether there was sufficient demand in the economy at present. I believe that there is. Demand in Britain rose by 3 per cent. in the last full year, whereas output rose by only 1 per cent. That means that two-thirds of the increase in demand went to overseas products because they were more competitive.
Employment is also affected by the rate at which changes in technology, markets, and so on, require changes in economic structure. The world economy has seen an acceleration in the rate of such changes in recent years and the United Kingdom also has the particular need to adjust to the build-up in North Sea oil production. The Government are pursuing policies—assistance for high technology, assistance to small firms, privatisation, enterprise zones, and so on—to increase the rate at which the United Kingdom economy adapts. We believe that a vigorous free market remains the most potent means to achieve that end. Inflation, particularly wage inflation, affects employment. It distorts the pattern of earnings and depresses profits, which is likely to reduce investment. Rapid inflation, because it leads to unpredictable variation in relative wages and prices, increases uncertainty and damages confidence.
There is no doubt that the Government's policies have succeeded in bringing about a marked reduction in the rate of inflation. For example, it is down to 6.3 per cent. at present—its lowest level for 12 years—and it is expected to fall to 5 per cent. in 1983. For the first time in a generation the Government will bring inflation over the life of a Parliament below the level experienced under the previous Labour Government. We are on the path to price stability and predictability. That in turn makes lower interest rates possible, which is probably industry's greatest need.
Productivity in Britain rose last year at Japanese rates and our competitiveness has improved by about 20 per cent. since the first quarter of 1981. We are developing new products and new attitudes to work, and we are succeeding in export markets. There is evidence that many more new businesses are being formed than are closing, despite the severity of the recession.
§ Mr. Richard Shepherd (Aldridge-Brownhills)As a representative of the borough of Walsall, this matter causes me great concern. Will my right hon. Friend say something about rates? One of the factors that seems to bear heavily on unemployment in Aldridge-Brownhills, which does not have the same intense levels of unemployment as are experienced in those parts of the borough represented by Labour Members, is the extraordinary increase in the borough's rates since the incorporation of Aldridge-Brownhills into the borough as 1119 a result of reorganisation. We are now rated higher than the city of Birmingham, and are, I think, the highest rated authority in the West Midlands.
§ Mr. AlisonThe figures that I have seen from surveys carried out by chambers of commerce in different parts of the country undoubtedly show that firms either cut the number of employees or, in many cases, close down or move out of the area entirely if rates go up much more quickly than the level of inflation. That is undoubtedly an important factor.
There are many reasons why the West Midlands has been hit harder than any other region and I am genuinely sympathetic to the tone of depression and indignation of both the hon. Members for Walsall, North and Walsall, South, which reflects the fundamental change that the Black Country seems to be undergoing. Undoubtedly, the most important difficulty is the overdependence of the locality on three industries: cars, engineering and metalworking. As a nation, we have done worst in those industries in recent years. The decline in the car industry has been particularly severe in its effects. Therefore, there is a major structural reason for the decline.
We need to make the traditional staple industries more competitivenes so that customers, including industrial customers such as the component firms, will want to buy their products again in great number. From 1975 onwards, at least, the failure of the region's prime industries began to be reflected in the unemployment rate, which rose sharply, and persisted at a historically high level until the end of the decade. We now see that the region is suffering the effects of that cumulative decline, which is particularly exacerbated by the world-wide recession, with unemployment rising rapidly.
The task facing the West Midlands—the uphill climb to its former level of relative prosperity—is considerable. The industrial base of the region must broaden away from such extensive reliance on a few troubled sectors. However, the restructuring of the West Midlands' economy must be seen not only in terms of improvements to technology and new products in existing firms, but in the introduction of new industries.
The region already benefits from an array of measures, but it could benefit more from them if there were a greater awareness of the possibilities. Firms in the West Midlands are eligible for assistance under section 8 of the Industry Act 1972. Such assistance provides a substantial contribution to new investment throughout the West Midlands. Funds are also available to meet the needs of industries either producing or needing to employ new and advanced technology, particularly that based on microelectronics. The Government also support British Leyland and have loosened constraints on development by the suspension of industrial development certificates.
1120 Much has been done to improve the climate for small businesses. The Government have now introduced nearly 100 measures to encourage enterprise and risk-taking. They cover a wide spectrum—stimulating investment, encouraging the provision of premises, and reducing administrative and legislative burdens. Those measures, and the Government's economic policy generally, have as one of their principal aims the encouragement of new activities to replace industries in long-term decline or suffering from over-production. The small firms sector is showing signs of resilience. VAT statistics show that in 1981 there were 2,300 more births than deaths of businesses in the West Midlands—an encouraging and significant surplus. Under the Department of industry's loan guarantee scheme, 696 guarantees have been issued in the West Midlands region covering loans totalling £22.8 million.
Despite the difficult circumstances, some people in Walsall are finding jobs. In the past 12 months, nearly 7,000 people in the area have been placed in employment by the Manpower Services Commission's employment service and many more will have found jobs by other means.
§ Mr. Winnickrose—
§ Mr. AlisonI shall not give way as there are only two minutes left in which to speak.
Expansions are taking place in the area and new jobs are being created, although not at as fast a rate as we should like. Of course, we still have a long way to go. In the meantime, we are protecting those hardest hit, particularly young people, with our special employment and training measures. Some 1,260 people in Walsall are currently benefiting from the temporary short-time working compensation scheme, the job release scheme and the community programme. More than 3,200 young people have entered the youth opportunities programme since 1 April this year and our new young workers scheme has got off to a good start with over 1,400 applications for the scheme having been approved so far in the Walsall area.
Young people have, of course, been hardest hit by the high levels of unemployment. Walsall has been no exception to that rule, but there are some encouraging signs. The latest comparative unemployment figures available, for October 1982, for young people aged under 18 show that there were 1,036 in that group compared with 1,189 in October 1981. That represents a decrease of 12.9 per cent.
I do not dispute the fact that unemployment in Walsall is high, nor the fact that some people wish earnestly for an upturn in the new year. We all share that hope and expectation, and I believe that the Government's policies will help to bring them about.