HC Deb 02 February 1982 vol 17 cc279-86

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

3.17 am
Mr. Bruce George (Walsall, South)

Darlaston may not be a place name familiar to many people here this evening, and I am sure that even fewer people have been there. It is a small town of some 25,000 people within the Walsall, South constituency that I am proud to represent. It comprises villages such as Fallings Heath, Moxley, Rough Hay, Bentley, parts of Bilston and parts of Wednesbury.

It is a town with a history stretching back to the medieval period. Earlier this evening we heard about new towns. Darlaston was a new town around the time of the early medieval period and the Domesday Book. It is a town built on history. It is rather ironic that we heard hon. Members today pleading party loyalty in accepting £1 billion for new towns. I wish that the old town that I represent could have only a small portion of the money being allocated to new towns. I would receive it with far more gratitude than Conservative Members appear to be accepting the donation to their constituencies.

Darlaston may not have won any national awards for the most beautiful township in England and Wales. For generations, its people have worked and died in conditions often of unimaginable hardship. Yet they helped to create the Industrial Revolution and helped to create for Britain and the world industrial fasteners, the nuts and bolts industry and engineering products. It is a town with foundries and can be encapsulated in the term "metal bashing". It has in more recent years adapted to the production of cranes, washing machines and machine tools. It is a town that has the capacity to adapt.

I bring the plight of Darlaston to the attention of the House for a number of reasons. I last raised the subject specifically on the last day of the previous Parliament. This is a good moment to compare what I assumed in the previous debate to be a rather hopeful future facing the town with the present situation. Industry has declined, and the decline has been accelerated by the Government's policies. Darlaston does not mirror the national and regional decline. If it is a mirror, it is a distorting and exaggerating one. The unemployment figures are now significantly higher than both the regional and national averages.

We all know how difficult it is to calculate unemployment figures. It is especially difficult to do so in Darlaston. Although the township is in the metropolitan district of Walsall, it falls within the Wednesbury employment district. There is almost 18 per cent. unemployment: in Walsall and undoubtedly Darlaston, if it were possible to calculate the unemployment, would have an equally high percentage. As I have said previously, unemployment figures tend to underestimate the real level.

A number of major companies in the small town of Darlaston have been decimated. Some have become extinct and some have been taken over but with substantially reduced work forces. Some companies have shed very many jobs. Is this the leaner and fitter industry that is being created? How shall we ever recreate the jobs that have been lost? They have been lost for ever.

In the past couple of years there has been an enormous loss of jobs. In June 1979 Rubery Owen shed 400 employees. In the same year GKN shed 860, while Atlas Bolts reduced its work force by 500. In 1980 GKN cut its work force by 84. Servis washing machines cut 170 jobs and Eaton Axles announced a cut of 450 jobs. Albion Bottles shed 310 employees from its work force. GKN Forgings announced 200 lost jobs. In March 1981 Rubery Owen declared a reduction of 340 jobs. In December 1981 Charles Richards Fasteners shed 150 employees and Bradley and Foster followed with cuts of 120. The largest cuts came at Rubery Owen, which axed 950 jobs.

Almost 5,000 jobs have been lost. Those figures, which were taken from an analysis of major employers in the area, tend to under-emphasise the loss of jobs. I estimate that the redundancies that have been notified and the unemployment in Darlaston has been much in excess of 5,000 over the past couple of years. The work force within the town has been halved over the past decade. l have never argued the crisis at Walsall and Darlaston began when the Government came into office, but undoubtedly the situation has deteriorated seriously since then.

All unemployment is bad. The school leavers are in a desperate plight. There are 7,000 unemployed in Walsall. We must welcome the job creation scheme, but obviously it is a palliative and no substitute for real employment. However, we must welcome the opportunity that it provides for at least some youngsters to have a form of employment.

Many of the middle-aged people in the area have given up the prospect of ever working again. I have spoken to a good friend who is not yet 40 years of age. He told me that when he applies for jobs he is told that he is too old.

In Darlaston many have little chance of finding jobs, especially in the immediate vicinity. Darlaston is still the home of the industrial fasteners industry. At one time over 90 per cent. of nuts and bolts were manufactured in the town, but the industry has been halved over the past few years. However, it is not falling on its face prostrate and accepting its fate. It is fighting back, but it requires more assistance from the Government. It needs a steel subsidy to enable it to compete with its many competitors. The EEC makes its task even more difficult. It is suffering from counterfeiting. It is being hammered by what it regards as unfair competition from abroad. I know that the Minister may have heard that tale before from other industries, but I seriously ask and shall shortly write to him to ask whether he would be prepared to receive a small delegation representing the British Industrialists Fasteners Federation to discuss some of the problems it is facing and ways in which the Government can assist it to meet the competition. I emphasise that it is not an industry that has done nothing to meet the competition.

One of the largest employers in my constituency, Rubery Owen, once one of the largest private companies in the land—at Darlaston in the 1960s it was said to employ some 14,000 people—is now but an utter shadow of itself. When I took a delegation to the Department of Employment, the only help that appeared to be forthcoming was an offer under the derelict land clearance scheme to grass the factory over if it was vacated. The redundancies announced by that major company were sad.

I hope that the Minister would relate the problem of one employee to his colleague in the Department of Employment, as he is typical of almost all the April 1981 men made redundant. Mr. Shenton was made redundant by Rubery Owen when the company became insolvent on 3 April 1981. He received no notice payment from the company but later received a payment from the Department of Employment. He signed on as unemployed from 6 April 1981 and received benefit from 9 April 1981. When the Department of Employment paid his money in lieu of notice, it deducted 12 weeks unemployment benefit from the amount due to him. There is no argument on that score, because if that amount had not been deducted Mr. Shenton would, in effect, have been paid twice for that 12-week period.

We argue that after that deduction Mr. Shenton should have been able to claim 312 days unemployment benefit, which anyone else would have been entitled to. He was told that his entitlement to benefit ceased 312 days from 9 April 1981 and not 312 days from 2 July 1981–12 weeks later. That is inequitable when one compares the situation of two people both made redundant on the same day and each having 20 years' service with their respective companies, the only difference being that one of those companies has gone into liquidation. I agree with Mr. Shenton that he has lost £363—the amount deducted from his pay in lieu of notice—compared with a person made redundant without the company going into liquidation.

In the next few days, I shall hand the Minister a small file on this subject because a number of other people may be similarly affected and, while one recognises the existence of the redundancy fund, there nevertheless appear to be some anomalies that I should like to see remedied.

Another major company and large employer that used to operate in my constituency was GKN. It has gone with the wind. Darlaston Operations a couple of years ago employed 2,500 people but the employees have fallen victim to the investment policies of the GKN group. Our loss may be the gain of South Korea, Germany or America, although my constituents will hardly feel any sense of joy at the investment policies of that company. Its chairman, Sir Trevor Holdsworth, was recently knighted—I hasten to add, not for services to the industry of Darlaston.

The jobs destroyed outside Darlaston are equally dramatic so that one cannot say that people can escape from a small town and seek employment on the periphery. In neighbouring Bilston the British Steel Corporation is shedding 2,300 and Patent Shaft in Wednesbury is shedding 1,500. Therefore, one cannot simply jump on a bike unless one is prepared perhaps to join the Tour de France and cycle to Southern France.

In addition to the catastrophe in industry, Government policies have been disastrous in housing and social services. Over a period, and certainly over the past couple of years, the area has been transformed into a wasteland. We remember the Simon and Garfunkel song "The sound of silence." The sound of silence in Darlaston is quite deafening. It proves that monetarism is working, and the dole queues prove that this experiment in economics is having disastrous consequences and must surely be reversed.

The local authority in the town is not being idle in responding to the situation. In conjuction with the local chamber of commerce in Walsall it is organising a trade fair on 15 and 16 April. It is designed to promote the products and services provided by the town. It has also created a small firms advisory unit to stimulate local industry and to attract new enterprises to the town. It has sought to develop an integrated approach to training and retraining. It is involved in discussions with the Manpower Services Commission, educationists and business men. It is trying to reclaim derelict land and use it for industrial development. It is investigating the potential of further diversification of the economic base of the area and is preparing further submission to the Government to include Walsall and Darlaston for designation under the Inner Urban Areas Act.

I am sorry to keep reminding the Minister of this fact and it is not his fault that we do not receive a response. The town of Darlaston, with its enormous unemployment and dereliction, has problems that are infinitely greater than those in many areas that are designated under the Inner Urban Areas Act. We seem to be caught between two contradictory elements. On the one hand, a new town receives generous assistance. On the other hand, if an area is regarded as an inner urban area, if receives generous assistance.

Darlaston is a township of 25,000. There is much dereliction and poor housing stock with a long waiting list.

Some 3,600 houses in the town of Walsall are overcrowded. Some 6,000 lack basic amenities. The industrial problems, housing problems and the problems of social services and of having many members of the New Commonwealth in the town are exacerbated by cuts in Government assistance. When the Labour Government left office the housing investment programme was £21 million. At today's prices it would be £24 million. Under this Government the programme is under £10 million. That shows that the seriousness of the plight is not being remedied.

I should like the Government to proceed with some sensible economic policies at macro and micro level. They should pursue policies more likely to produce co-operation than conflict. The area that I represent is suffering and stagnating. Its life-blood is being sucked out of it.

We need co-operation of industry, local government, unions and the Government, who should not be a passive observer. I urge upon the Government real action, not platitudes, commitment and not merely sympathy. We are desperately anxious to see the town of Darlaston, once one of the engine rooms of our national prosperity, assuming its rightful place.

The Minister may say that the West Midlands CBI sees some light at the end of the tunnel, but that is not to be squared with the evidence as seen by the national CBI, which said only yesterday that it envisaged No evidence of any significant improvement in demand and output in the next four months. The Minister has listened sympathetically to my case. I hope that he will apply pressure on his colleagues to provide assistance at regional and local levels. I hope that he will consider asking his civil servants to inform him of the plight of the nuts and bolts industry, which is still vital to our national economy. I hope that he will find some way consistent with the Government's philosophy of providing the assistance that that important industry and the town of Darlaston need to survive.

3.34 am
The Under-Secretary of State for Industry (Mr. John MacGregor)

As always, the hon. Member for Walsall, South (Mr. George) has drawn attention to the problems of his constituency in a compassionate and, at times in his earlier remarks, poetic way. It was back in April last year that we debated the problems of Walsall as a whole. Today the hon. Gentleman has rightly focused our attention on a part of his constituency most badly hit by the current recession—Darlaston. Although I cannot agree with a number of his analyses, and certainly not with some of the arguments that he advanced about the Government's general economic policy, I know that his constituents will appreciate the assiduousness with which he pursues their interest in these debates.

As the hon. Gentleman has said before, and as he fairly repeated today, the crisis that has hit parts of the West Midlands, and Darlaston in particular, had been coming for 20 years. I shall not go over the general background, which has been dealt with in previous debates. The hon. Gentleman referred briefly to economic policies at the macro and micro levels. He will understand why I cannot go into those matters in this short debate. Suffice it to say that in many ways Darlaston is a microcosm of those parts of the West Midlands that have suffered most from the current recession.

As the hon. Gentleman said, it is an area heavily dependent upon the traditional Midlands industries—nuts and bolts, vehicle components and the group of trades collectively known as "metal bashing". He referred in particular to the Industrial Fasteners group, and I note that he will be writing to me about that. The area therefore depended to some extent upon a relatively narrow industrial base concentrated on precisely those industries which, through a combination of the effects of the declining competitiveness of the car industry for many years and of the world recession, are most vulnerable. In short, it is the fate which inevitably befalls the overmanned and uncompetitive.

There are always honourable exceptions to be found in any area and I am merely generalising at this stage, but I do not think that the hon. Gentleman can reasonably contest that general analysis of decline. He will know as well as I the comparative figures for United Kingdom car production -1.7 million in 1965 and only 924,000 in 1980. He will also know that in France, Germany and Italy the trend is in the other direction, sometimes strikingly so. There, in a nutshell, is a large part of the problem. Others have met customers' requirements better than the once great world-beating industries of the West Midlands. They have done so continuously and progressively for many years, and now the effect is being felt.

The hon. Gentleman referred particularly to the problems of Rubery Owen, where closures have had a considerable effect upon Darlaston over the past 12 months. Here. too, the particular example provides a good illustration of the general problem. The decision to close the Darlaston plant was part of the company's retrenchment plan. It was taken in the light of a drastic fall in demand for truck components because of the industry's competitive difficulties and of the decision by its main customer, BL, to order wheels from only one other source.

As the hon. Gentleman knows, BL was triggered in that direction in the first instance by the discovery that a substantial saving could have been made if it had sought the wheels abroad. In the end it settled for a United Kingdom supplier, but, alas, Rubery Owen was not competitive. One therefore sees clearly a further example in which the problems facing BL, which it Is now attempting to sort out, have had an effect upon component suppliers.

Pointing to the problems, tragedies and sometimes mistakes of the past does not in itself help us to solve the problems of the present. We must use our understanding of what went wrong in places such as Darlaston to build upon the strengths that remain. I shall mention a number of the steps that are being and have been taken.

First, we have now accepted the long-standing argument, which extended far more widely in the West Midlands, that industrial development certificate controls—a negative growth, the restrictive side of regional policy—are no longer either necessary or justified. As the hon. Gentleman knows, on 4 December I announced to the House that the Government intended to take steps to suspend IDCs forthwith, and on 23 December the appropriate order was laid. It came into effect on 9 January.

There is, therefore, now no need for any company contemplating any size of investment in a non-assisted area to seek any kind of permission from the Government. In fact, as the House knows, we have not refused any IDC's since we came to office, but I accept that the very existence of such a system can discourage investment. I know how strongly this was felt in the West Midlands and it was always raised with me when I was there. I know that it was regarded as a psychological and administrative barrier. That will now no longer be a problem.

The second major recent change in Government policy relates to the way in which local authorities' capital expenditure allocation for derelict land is to be distributed.. The current year's allocation was distributed as part of block 5, on the basis of the recommendations of the local authority associations. However, for the coming year my right hon. Friend the Secretary of State for the Environment proposes to distribute the allocation for derelict land clearance himself in the light of the needs of each local authority. The hon. Member will agree, I think, that that is a significantly better arrangement. No doubt Walsall intends to submit a competitive and worthwhile scheme in the near future.

The hon. Gentleman referred to Government assistance. I remind him of the extent of industrial support available to firms in the Darlaston area. This takes the form of aid under section 8 of the Industry Act 1972 to assist with new investment in the national interest that would not otherwise take place. In the period since May 1979, 184 projects in the Dudley and Sandwell travel-to¬≠work area have received Government assistance to the tune of £6.8 million on projects whose total costs amounted to £34.8 million.

The hon. Gentleman will also agree, I am sure, with the importance that I attach to the development of the small firms sector in Darlaston. He referred to the action of the local authority in that respect. Small firms have traditionally been the lifeline of the West Midlands and the essential support for the engineering industries for which the region has been famous. In restructuring the local economy they will have a major part to play, although I recognise that it will take time for the effects to work through.

The hon. Gentleman will, I hope, accept that since coming to office the Government have done much to regenerate this sector, through a whole series of measures. In particular, I draw attention to the success of the loan guarantee scheme. There are now 187 loans worth £6.3 million guaranteed in the West Midlands alone. This is lending that would not otherwise have taken place. A considerable source of new finance has been unlocked. The level of interest in starting up and expanding companies is buoyant. There were 2,074 inquiries to our Birmingham small firms centre in January this year, twice the number received in the previous year. I shall be near Darlaston later this week for a business opportunities programme, which I hope will be attended by some firms from the Darlaston area. I shall be dealing with the 76 measures that the Government have taken to help small businesses.

One of the underlying problems of Darlaston is the narrowness and vulnerability of its industrial base. I hope that small firms will play a part in rectifying that situation. Of particular importance are the aid schemes designed to assist with the application and development of the products, processes and industries of tomorrow. These include my Department's product and process develop­ment scheme and the microprocessor application project schemes.

I suspect that the hon. Gentleman, like me, will have been disappointed by the take-up of these schemes so far in his area. The exact figures for expenditure in his constituency are, unfortunately, not available. I can, however, give those for the microprocessor scheme for the West Midlands as a whole. Committed expenditure now amounts to £739,000. I am sure that the hon. Gentleman welcomes our continued emphasis on this sort of assistance, geared to the needs of the future. We discussed the matter when he brought a delegation to see me. Anything that the hon. Gentleman can do to promote the awareness of the schemes will be helpful.

While such investment is of the greatest long-term importance, I appreciate that the hon. Gentleman's immediate concern must be for those of his constituents who are out of work. He mentioned one case that I shall pass on to my hon. Friend. I am aware of the number of redundancies that have ocurrred in the Darlaston area over the last year or so and the consequent high rate of unemployment. In recognition of that, the area continues to benefit from the application of the various employment schemes under which support or training of one kind or another—this is important—are available.

In the Dudley and Sandwell travel-to-work area—these matters have to be broken down into such areas -3,387 people are benefiting from the temporary short-time working compensation scheme and 464 from the job release scheme. Between 1 April 1981 and 30 November 1981, 3,420 benefited from the youth opportunities programme. A further 550 joined schemes under the community enterprise programme.

While such schemes are of course not a solution to the problems of unemployment, about which we must all be so concerned, 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, for obvious social and humanitarian reasons and to ensure that the work force is equipped both in skill and motivation to take full advantage of the opportunities as the upturn comes.

I have so far catalogued what we in the Government are doing to help the people of Darlaston. There is much that local government can do. I know of the efforts that are being made to assist small businesses, for example. The hon. Gentleman referred to them. Almost top of the list of the concerns of businesses, including small businesses, and very much so in the West Midlands, are the massive increases in non-domestic rates, which a dispassionate observer might imagine were precisely designed to discourage the development of the area, undermine the local economy and drive out businesses.

In the current year the West Midlands county council raised its rate by 37.8 per cent. and Walsall district council raised its rate by 37 per cent. There are reports of similar rises next year. It is a serious matter. I hope that the hon. Gentleman is aware that rate increases of that size are destroying both large and small businesses and discouraging others from expanding and creating the jobs that are so desperately needed. I trust that he is therefore aware of the dangerous path that the local authorities are following and is counselling caution before it is too late.

I cannot deal now with all the points that the hon. Gentleman raised. He referred in particular to designated district status, which he has raised before.This is a matter for my right hon. Friend the Secretary of State for the Environment, who reviewed the list of designated districts in February 1981, when he decided, on the basis of various criteria of deprivation, that changes were not then justified. He recognised that Walsall was, largely because of the problems faced by Darlaston, a borderline case, but the line must be drawn somewhere, and under the terms of the Act he must designate by complete district and cannot focus on an area such as Darlaston. That remains the position. However, I shall draw my right hon. Friend's attention to the fact that the hon. Gentleman has raised the question once again in the context of the further developments in his area since it was last discussed.

There are many other things that I would have wished to say about assisted area status and other similar points, but time prevents me from doing so.

The hon. Gentleman referred briefly to the West Midlands CBI survey. Among the most interesting things in it were its descriptions of what companies in the West Midlands have been doing in the face of the probelms. One in two companies has developed new products. In a surprisingly large number of cases an entire product range has been replaced. Three out of four companies have modified existing products and introduced new technology. Nearly 70 per cent. of the companies have broken into new markets. These are encouraging signs from the survey, because they demonstrate that many of the problems of the past are now being tackled by the companies in a way that will undoubtedly help in the future.

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

Adjourned at thirteen minutes to Four o'clock am.