HC Deb 28 January 1986 vol 90 cc924-30

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

12.56 am
Mr. Bob Edwards (Wolverhampton, South-East)

I apologise to you, Mr. Deputy Speaker, and to the staff of the House for raising an issue at this late hour, but I have a duty to perform on behalf of the West Midlands county council and the citizens of the borough of Wolverhampton.

Representatives of county and borough councils from many parts of Britain came to the House last week to express distress about the rising plague of unemployment and poverty in their areas. I feel under an obligation to bring before hon. Members the issue that they raised when I presided over a meeting in this building.

In August 1985, supplementary benefit was paid in the county area of the west midlands to 353,949 people, an increase of 69 per cent. over December 1980. Since 1984, that number has increased by a further 7,744. Between July 1981 and July 1985, the proportion of long-term unemployed—those out of work for more than a year—in the west midlands has more than doubled. Two out of every five people in the area are living below the poverty line. Local services are experiencing increased pressure on their resources to the point of crisis.

Those were the major points that the representatives from the area raised with me. In other words, more than 1 million citizens in the west midlands now live on or below the poverty line.

I have been an hon. Member for 30 years. I remember when the economy of the west midlands was growing and when wages there were among the highest not just in Britain but in Europe. Today, the greatest concentration of low-paid workers in the United Kingdom is in the west midlands.

Unemployment and low wages create extensive health problems. particularly among mothers and wives, who bear a greater proportion of the burden than do their menfolk.

In Wolverhampton, 15 per cent. of the work force is currently employed in wages council industries where low wages are commonplace. Some 35,600 pensioners live in Wolverhampton, and 13 per cent. of them receive supplementary benefit. This month 7,375 pensioners living in council houses received housing benefit and 6,700 owner-occupiers received rate rebates. Some 11,983 children in Wolverhampton qualify for free school meals. Only 9,950 pay for school meals and the parents of many of those children are too proud to claim, although the children are qualified.

In Wolverhampton, 26,158 employable workers are unemployed. That is a rate of 19 per cent. compared with 16.7 per cent. in the west midlands county area, and 13.4 per cent. in the United Kingdom. There are 2,000 people on youth training schemes and 1,600 on community training programmes. Those people would accept employment if it was available, so they can also be regarded as unemployed. Some 52 per cent. of Wolverhampton's unemployed have been out of work for over a year, and have poor opportunities for employment.

The inner urban areas suffer from the highest unemployment. Eight Wolverhampton wards are among the worst of the 25 wards in the west midlands with unemployment of more than 20 per cent. of the employable population. In my constituency four wards have a high percentage of unemployed people. In Ettingshall the figure is 27.8 per cent., Blakenhall 27 per cent., Bilston, East, 26 per cent., Bilston, North 22 per cent. and East Park 25 per cent.; and in St. Peter's ward, which is not in my constituency but in Wolverhampton and has the greatest concentration of ethnic minorities, the figure is 34 per cent. In another ward it is 50 per cent. That is again a ward with a high concentration of what are called black people. Those figures speak for themselves and to some extent highlight the special problems of black and young people in the inner city areas.

I know that quite a lot is being done and I welcome the Government's proposal to extend the youth training scheme by two years. I also welcome the fact that the west midlands is now eligible for regional development aid and can receive funds from the European Economic Community. We wonder why it was that last year, the first year in which the west midlands received regional development grants from the EEC, £7 million went to British Telecom. That was illegal because it would not qualify as an agent for such a grant when it was due for privatisation.

Furthermore, one of the conditions for a grant, based on the rules of the Community, is that the project should creat new jobs. The purpose of that grant, agreed by the Government, was not to create jobs but to rationalise communications. Rationalisation of communications is a good thing, but it puts people out of work. I do not know what justification the Government make for that grant to British Telecom.

I suppose that I should be more constructive because so far I have been critical. Pay is low in the west midlands and particularly in my constituency. Invariably, where there is low pay, there are high profits. Last year the 10 top profit-making companies in Britain made more than £0.75 billion. The profits of the five main companies with headquarters in the west midlands were Guest Keen & Nettlefold, £163 million; Cadbury-Schweppes, £172 million; Jaguar, £91 million; Birmid Qualcast, £12.8 million; and Lucas Industries, £70 million.

I repeat that where there are low wages there are high profits. Those great profits were sweated out of the toil and industrial intelligence of the workers in the west midlands but were not ploughed back in investment there. Most of the surplus was exported to Singapore, Hong Kong, Thailand and South Korea to establish industrial projects manufacturing goods to compete with the products which we used to export.

Massive development of the infrastructure is required. In 1979–80 expenditure on housing was 5.88 per cent. of public expenditure, but in 1984–85 it had declined to 1.98 per cent., a dreadful drop. If more were spent on housing, it would create jobs, improve the environment and give the opportunity of a decent, dignified life to people living in high flats and rotten slums that should be razed to the ground.

The Labour party, the Trades Union Congress and even the Confederation of British Industry all agree that improvement of the infrastructure is one way to develop the economy. Housing, the road network, hospitals, communication centres and research centres are all crying aloud for development. It is high time the Government did something to alleviate the dreadful poverty in many parts of the country and particularly in the west midlands.

In closing, I will be a little sentimental and will read a letter presented to me by an unemployed person. It is headed, "The torments and hardships of the victims of unemployment": Unhappy when employer makes you redundant. Nothing to look forward to for the future. Evil—envious people talking and taking advantage of your circumstances. Money not available for food when required. Poverty taking hold of its victims. Life—love life almost in ruins. One chance in life to prove your ability or capabilities. Young children crying with hunger because of delay in receiving benefit. Man—pride and dignity taken from him. Energy running out as costs rise higher. No friends to ease the strain of your problems because rejected by society. Tension rising higher as days and months go by. These are experiences and facts as suffered by its victims, on behalf of victims of recession. by patrick anthony friel.

1.10 am
The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark)

I accept the seriousness of the situation in the west midlands, and I understand the relationship of the speech of the hon. Member fcr Wolverhampton, South-East (Mr. Edwards) to the lobby which came here from his constituency and neighbouring regions. I have listened with interest to the points that he has made. He has ranged widely over the plight of his constituents, and certainly no one can have listened to the text of the letter which he read without a disturbing feeling of anxiety for the plight of the author and those like him.

Before I deal with the particular points that the hon. Member has raised, I should like to answer one point of which he very kindly gave me notice yesterday, regarding the European regional development fund payments. This is primarily a subject for my right hon. Friend the Secretary of State for Trade and Industry. If the hon. Member wishes, I will try to give him a fuller answer to the complaint that he made. It is, however, my understanding that British Telecom projects were at the time eligible for ERDF as a publicly funded infrastructure contributing to the development of the region. I agree with his point that it did not lead directly to jobs but, as I have said, telecommunications are part of the infrastructure. and this leads to the safeguarding of existing jobs and to the generation of a climate in which new jobs can be created.

Before I go on to the other points that he made, I would like to pay tribute to the hon. Gentleman. I am very conscious of the fact that he has represented Wolverhampton and Bilston in the House for over 30 years. He will have seen many Ministers come and go at the Dispatch Box. It is in the spirit of respect for his long service in this place that I respond to what he has said. His knowledge of the area and his sympathy with the frustration and hardship suffered by large numbers of his constituents cannot be doubted.

Although I cannot disagree that many people in the west midlands are suffering considerable hardship as a result of the recession and high unemployment, poverty is a relative matter, and we —like previous Governments —do not accept that a simple poverty line can be drawn. To use the supplementary benefit level as a definition of poverty must be mistaken. Apart from anything else it would mean that whenever the benefit is increased in real terms, more people would be defined as being in poverty.

I am not denying the amount of genuine hardship that exists, particularly among the unemployed, and the hon. Member is perfectly right to draw attention to it. The problem of unemployment is one of the most serious facing not only this Government but Governments throughout the industrialised world. We, however, have suffered more than most because unemployment in this country has been rising for the past 20 years.

The west midlands—the black country in particular—has been particularly hard hit by market shifts. The root causes are familiar: the area has depended on traditional industries that have suffered setbacks in recent years—"metal bashing", heavy engineering and motor vehicles —industries that were overmanned, slow to change, and slow to adapt to new technology. There has had to be a fundamental shift from the old industrial pattern to new technologies such as electronics, and advanced manufacturing. It is particularly in those new technologies that hope for the future is to be found. Fundamental changes take time for their full effects on the local economy to be felt, but there are already a number of encouraging signs, and the region should not despise the expanding service sector as a source of jobs and wealth.

I do not wish to imply that manufacturing is of lesser importance, and it is encouraging that the downward trend in manufacturing employment has eased considerably since 1983. We need a prosperous and competitive manufacturing sector, but it is unrealistic to expect the share of manufacturing in total employment to return to the levels of the past. The whole direction of our policy since 1979 has been designed to reverse the long-standing deterioration in the competitiveness of our economy and to create the conditions in which enterprise, initiative and wealth creation can flourish. Manufacturing and service industries have responded well since the trough of the recession, but there are now five jobs in services for every two in manufacturing, and a substantial number of the new jobs created over the past two years have been in the service sector.

Despite difficult times, contracts are being won and new jobs are being created. I hope that the hon. Gentleman will think it only fair if I put some of these on the record. I must admit that I was rather taken aback when he told us of the profits that are being earned in his constituency and in the area, and to hear his accusation that these profits —he cited the companies, many of which are household names—are being sent abroad to Thailand where they will be used to start competing businesses. I do not know of any such instances. If he has further details, I hope that he will send me a note to enlighten me. As I say, I was quite unaware that any of the companies he mentioned were funnelling their profits directly out of the country in the manner he described.

GEC, Rugby, has won a £250 million contract to build a power station in China, and GEC Turbine Generators, Coventry, will carry out part of the work. Metro-Cammell at Birmingham won two major contracts in late 1985, one worth £65 million to build rolling stock for British Rail, and the second worth £22.5 million, from Hong Kong's mass transit railway corporation. British Leyland's Land Rover UK has won a £70 million a year contract to sell four-wheel drive Range Rovers in the United States. The hon. Member will be interested to know that at 7 o'clock tomorrow morning I am catching a train to Birmingham, and I shall be visiting Land Rover and Range Rover in the morning. This contract will primarily benefit the Land Rover plant in Solihull and, if successful, could lead to new jobs. That is one of the matters I shall be discussing in the course of my visit.

Mr. Jim Callaghan (Heywood and Middleton)

How many jobs will the contracts that the Minister has enumerated bring to the area represented by my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards)?

Mr. Clark

I cannot answer that, but I am interested to hear of these contracts, and it is one of the subjects about which I shall be seeking further information when I visit the factory tomorrow.

The new Guy Motors industrial park has opened in Wolverhampton on the site of the former British Leyland-owned Guy Motors. The park accommodates 28 small factory units, about half of which have already been let, and will create 140 jobs. Lucas Aerospace at Wolverhampton is reporting excellent growth in 1985, and increased orders for military and civil aircraft. Hundreds of jobs could be created in Walsall if a proposed £17 million shopping development and canalside marina goes ahead.

Unemployment in the region fell between December 1984 and December 1985, and unfilled vacancies increased by over 20 per cent. in the same period. Over 96,000 people were placed in work by the public employment service alone between April and December last year, and many more will have found jobs by other means.

Mr. Bob Edwards

There are 20 people chasing every job in the west midlands.

Mr. Clark

Yes, the hon. Gentleman makes his point again. The position remains serious, but I know that he would not wish to exclude the good news that I am reporting to the House. Unemployment is falling and unfilled vacancies have increased.

The growth of self-employment in the region is encouraging, especially since the west midland has traditionally depended on large employers. The latest statistics show 206,000 self-employed people in the region — 20 per cent. higher than three years earlier. The region's recovery is gradual, but we are seeing the beginnings of a welcome turnround in its fortunes.

I said earlier that we should not disregard the potential of the service sector. The west midlands contains well established tourist attractions, and existing transport links and available accommodation make Birmingham an ideal centre for conference tourism.

Mr. Edwards

Is that a substitute for manufacturing?

Mr. Clark

If it will generate the same level of prosperity and as many jobs, it is a substitute in the terms in which the hon. Gentleman addressed the House.

In 1984, 12 million visitors spent £440 million in the region, sustaining 65,000 jobs. About 85 per cent. of the employment is all year round, and three quarters full time. Day visits to and within the region accounted for further expenditure of about £300 million and employment for 20,000. Some estimates indicate that the opportunity exists to increase the annual value of tourism to the region by up to £150 million in 1990, creating as many as 15,000 new jobs. The hon. Gentleman was generous enough to acknowledge the level of regional aid which the Government have put into the region. I answered his point about the regional development fund grant for British Telecom.

The Government have a role in encouraging those positive changes. The severe economic problems of the region were recognised in November 1984 when the whole of the west midlands metropolitan county plus Kidderminster, Telford and Bridgnorth received assisted area status. Since then, the region has received offers of over £24 trillion by way of regional development grants. That money has helped create nearly 7,000 jobs and safeguard some 8,000 existing ones. Wolverhampton alone has received offers of nearly £2.5 million, helping to create nearly 1,000 jobs and safeguard a further 100.

That represents an impressive amount of Government assistance. It is also Government assistance focused directly on job creation. The review of regional policy in 1984 led to a new system of regional aid focused on job creation rather than encouraging capital-intensive investment by companies which were not expanding their work force significantly. We also made some service sector activities eligible for regional aid for the first time. We ourselves cannot create the jobs that are needed in Wolverhampton and the west midlands, but through regional aid we can, and do, help the people of the west midlands attract investment which creates jobs.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past One o'clock.