§ Mr. Lewis Stevens (Nuneaton)
I have been fortunate enough to come second in the ballot. My debate is on the west midlands.
I hope that it is appropriate for me to mention the recently deceased hon. Member for Mid-Staffordshire, Mr. Heddle. He was a good friend and colleague. I pay tribute to the work that he did not only for his constituents but, in conjunction with his west midlands colleagues, for a wider group of people. His advice and energy will be greatly missed. On behalf of my colleagues in the west midlands, I send our deepest sympathy to his relatives at this tragic time.
The west midlands has recovered remarkably well economically and is now in a far better position than we envisaged at the beginning of the 1980s. That is startlingly highlighted by the change in the number of unemployed in the west midlands area. In the early and mid-1980s, unemployment in the west midlands was much higher than those of us who have lived there for many years ever anticipated.
The west midlands was once a booming area in terms of skills, choice of jobs and wages. Everything was improving for many years for the working people of the area. We could see little end to that success—and then, in the 1970s, it ended abruptly. Since then, unemployment in the area has fallen from over 15 per cent. to about the national average. In my constituency, unemployment has fallen to under 5 per cent., which has given rise to the other problem of skill shortages.
The west midlands has improved enormously. A variety of changes has taken place which is not completely due to the efforts of the west midlands. It is easy to assume that our style of industry has existed for many generations. In fact, it has continually changed. This century there has been a change from many tiny industries and backyard companies to larger ones.
Until well into the century, there were few extremely large firms within the west midlands. The region contained a mixture of small and medium-sized firms that covered a tremendous range of industries. Strangely enough, as we have overcome the problems of the 1970s and early 1980s, the range of skills and of work undertaken within the west midlands have grown. Some of the old skills, such as nail making and chain making, disappeared long ago, but now many new skills have been introduced associated with high technology and science-based industries.
It is important to consider how the new developments will cope with the immediate problems. We are told that 1990 could be a hard year and that the economic growth generated by the Government's policies of the past few years may slow down. The west midlands is still heavily dependent on engineering and manufacturing. Those industries are important in terms not only of jobs, but of exports. Much of our export growth depends on the manufacturing industries, and if the growth of those industries slows it will affect our exports. The impetus for growth has been with us for a few years, but if growth slows down, it may become difficult to regain the momentum which is so important to future growth.
Investment is one thing that affects momentum and growth in the engineering and manufacturing industries. At the moment, our interest rates are high, as the 455 Government have rightly decided that such interest rates are necessary to guard against high inflation. High interest rates, however, often lead to a reduction in investment in the manufacturing and engineering industries.
I am delighted that the Under-Secretary of State for Industry and Consumer Affairs is on the Front Bench as he also represents a constituency in the west midlands and he understands its problems. Perhaps my hon. Friend could pass on to his Treasury colleagues our concern that investment might be affected by the present high interest rates. Perhaps the Government should consider offering some help to keep the momentum going.
It may be worth considering some tax changes on, for example, depreciation of capital plant and machinery. At the moment, a 25 per cent. allowance is available for the first year, but perhaps that could be increased. Perhaps some better incentives could be introduced to allow some total write-offs during the first year. Tax incentives on investment should also be considered, as the immediate economic future will largely depend on such investment in engineering and manufacturing.
As a result of grants from the Department of Trade and Industry, as well as advice, we have seen the development of new industries. In the west midlands there are two excellent science parks at Warwick and Aston universities. Some of the old skills and the old knowledge have been the basis on which new ideas, such as courses on advanced manufacturing techniques, have been developed. Such developments are extremely important, as one of the keys to our competitiveness and to the improvement in the west midlands has been the improvement in productivity. It could be cynically suggested that there have been significant increases in productivity in certain industries because they were not very good in the first place and that, therefore, the rate of improvement was bound to be exceptional. It has been exceptional.
We must improve, and continue to improve, our productivity if we are to be competitive. In about two years' time, in 1992, we shall have the single market. For many of our industries in the west midlands, that is an opportunity and not something about which to be pessimistic. As competition grows, so does the emphasis on productivity. Many of our industries and many of those involved in them fail to make productivity one of the highest priorities. However, for most manufacturing units it is the key to their future success, investment and development.
This does not mean that things will be cheap. We shall not have cheap labour; we must increase the return on the resources that we put in. We want to obtain a better output rate from the resource of capital and people. That is how we have improved, particularly in the west midlands. It is why industry is returning there and new industry is coming in. Productivity must be one of our highest priorities if we wish to maintain that development.
We are attracting industry throughout the region. New industries, such as the distribution industry, have been attracted to my own area of Warwickshire. If we are to attract such industries, we need good infrastructure systems. A motorway runs through the middle of my constituency, and there is a rail network from north, south, east and west. The constituency is therefore ideally placed. That in itself creates traffic flow problems.
There are moves to improve the infrastructure within the west midlands and I am sure that some of my hon. Friends will go into that in detail. Organisations such as 456 the urban development corporations enable such moves to happen faster. We must not allow red tape and bureaucracy to interfere with what we are doing and slow up the improvements. Often hon. Members are carried away with their bureaucratic and overall planning sense. We know how we want to plan and achieve our aims. However, industry, commerce and our general structure develop as individual parts. Although there may be some co-ordination at a higher level, we need the ability to get on with the job and make decisions quickly. The Black Country urban development corporation can move much faster than it could under any of the previous systems.
There is another sense of urgency. Not only are there insufficient skills in some trades, but they often occur in surprising trades. There are skill shortages among turners and grinders. Whoever thought that districts such as Coventry and Birmingham would be short of such skills, but they are. Shortages also occur because of demographic change which brings to the fore the importance of training.
The six training and enterprise councils to be set up in the west midlands will have a key role to play in the development of training. The emphasis is on speed. We want the TECs not only to work, but to work quickly. If the momentum for change, improvement and growth in the west midlands is to continue at the necessary pace, the TECs have an important role to play.
Many organisations—enterprise agencies, and county and district councils—have played an important part in the development. However, it is essential to keep up the momentum. The west midlands will face competition from abroad and from other parts of the country. We are not the only industrial region, although we may think that we are the most important and the best, and many other areas compete fairly with us to attract new industries and trades.
Engineering remains the key in our area and in this country. It is one of the main wealth-producing industries, and such industries cannot be replaced by service industries. Perhaps not many jobs will return to manufacturing and engineering, but it is essential to maintain the volume of output. We must use new methods and systems, even though we do not need the same size of manual work force.
There has been a change in our engineering industries. The number of jobs in them is now more constant and there are fewer redundancies, but change is continuing and many former manual jobs have become more technical and professional—and that puts the emphasis on training.
The future of engineering is the future of the west midlands. I hope that the Government will continue their policies of economic growth and that they will not ignore the great claims of manufacturing and engineering, claims which are those of the west midlands.
§ 10.2 pm
§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
These debates provide all of us who bother to apply to initiate them with the opportunity to discuss matters of great importance to our areas, and nothing is of more importance in the west midlands than manufacturing industry.
It is easy, as we did in the past, to blame trade unions and to say that industry would have done better had it not been for the Red Robbos of this world—as my hon. Friend the Member for Birmingham, Northfield (Mr. King) and I know so well. British Leyland had its problems, to be 457 sure; it became Austin-Rover and it is now Rover, and trade unions and their members had to understand that things had to change if manufacturing industry was to prosper.
Time has moved on since 1979 and the unions have changed, whether because of legislation or by inclination. Capitalism has to move on as well. I have been involved in raising money for manufacturing industry in the west midlands and Birmingham, so I know that some things must change. Mr. Branson, of Virgin, got tired of being quoted on the public stock exchange, and one or two other companies have also tired of that. They feel unappreciated. Branson sold out to a Japanese company, not because he wanted to be disloyal to this country—he made quite a few millions on the deal—but because, as he said, too many people in this country who invest in shares and companies think of the long term as six to 12 months, whereas the Japanese and Germans are willing to think of the long term as five to 10 years.
In the same way that trade unions learned their lesson, capitalism in this country must learn that long-term investment is not a matter of six to 12 months but, as the Japanese and Germans discovered, of five to 10 years. If that lesson is not learned, this country's investment potential will be precious little.
The Government must learn of the effects on industry whenever the pound falls gently or floats gently. In 1980, when the pound was valued at $2.40, manufacturing industry in the west midlands was collapsing about our ears. Britain was unable to export, but when the pound fell against the dollar to $1.50 or $1.20, our export trade began to prosper. The same applies today. As the pound falls, our exports begin to prosper.
The unions learned their lesson, but capitalism has yet to learn—as have the Government—that it is wrong to imagine that a strong pound helps to fight inflation. It does not. Nor do high interest rates help industry. Whenever I hear Ministers or ex-Ministers—among them, former Chancellors of the Exchequer, happily—claiming that high interest rates and a high pound help to kill inflation, I cannot follow their logic. The Government's present policy is much sounder.
Industry in the west midlands wants not so much a stable pound as a pound that is at a lower level against the dollar and lower interest rates. Exports and our general prosperity will then climb.
§ 10.6 pm
§ Mr. David Gilroy Bevan (Birmingham, Yardley)
This is the time of year to send Christmas cards of good news, and the debate provides an opportunity to send greetings to every citizen in the west midlands. At the same time, it is necessary to recall ghosts of Christmas past. I am reminded of the necessity to do so by the report of the Confederation of British Industry's west midlands region and Coopers and Lybrand, which notes changes in the region, the recession between 1978 and 1983, and the period of regeneration from 1985 to 1989.
My hon. Friends and I remember the dark times of the 1960s, when no industrial development certificates existed, when there was no new building, and when grants were being given everywhere except in the west midlands. That continued for decade after decade, until the dictum of 458 weakening the weak became the dictum of weakening the strong. Birmingham and the west midlands generally were reduced in all their trappings. About 250,000 jobs were lost, and the regional unemployment rate was 30 per cent. above the national average. There were about 14,000 acres of derelict land, rents were falling, and incomes fell by about 8 per cent. Those were the years of decline, and they are the spectres of Christmas past.
Since then employment has picked up to an extraordinary extent. For the 40th month, running the unemployment rate has fallen, and although there has regrettably been a reduction in industrial employment, there has been major growth in all the service industries, especially tourism. That has helped to regenerate the west midlands still further. There has been an increase of at least 25 per cent. in the redevelopment of derelict land, and rents have risen for all classes of property—industrial, office and commercial.
My hon. Friend the Member for Nuneaton (Mr. Stevens) mentioned the excellent developments in training, and at a time when we are sending Christmas cards it is no bad thing to remind ourselves of the recent improvements in the employment rate. In November, unemployment in the west midlands had fallen to 5.8 per cent.; in Coventry and Hinckley, it was 6.1 per cent.; in my city of Birmingham, it was 7.2 per cent.; in Dudley and Sandwell, it was 6.8 per cent.; in Walsall, it was 6.3 per cent.; and in Wolverhampton, it was 8.7 per cent. Throughout the area, it had reached an almighty low. In my constituency, which has one of the lowest unemployment rates in Birmingham, there was a reduction of 28 per cent. in one year, up to last July, and a reduction of 42 per cent. in two years.
Where else has that good news been repeated? The figures for claimants of unemployment benefit in the west midlands have improved tremendously. In my constituency they fell by 54 per cent. in the three years from November 1986 to November 1989, in the west midlands county they are down by 51 per cent. and in the region they are down by 56 per cent. They are 51 per cent. down in Great Britain as a whole. That is another indication of the massive improvement in the quality of life for our citizens.
All this is attributable to the regeneration that has taken place right across the spectrum, to the efforts of the people of the west midlands and to the fact that investment in the area has ben helped by the regional grant that is now sometimes received. I understand that 22 per cent. of the grant for the whole of England flows back in the lifeblood of industrial investment in the west midlands, and 12 per cent. of that of the United Kingdom as a whole. That investment is evidencing itself in many ways.
Earlier this week, I asked the Secretary of State for the Environment how much money had come into Birmingham recently. I was told that the second largest grant in the city, amounting to £6.2 million, had been provided for the Waterlinks project, which had received £10 million. We heard excellent news from the Secretary of State for Transport, who had met our requests for investment in the Heartland spine road, which will redevelop more than 2,000 acres in the area. When I said that I hope that that would be capped by approval for the electrification of the cross-city line—which I initiated when I was chairman of transport in the area—we got a nod and a wink that that would soon happen.
We see investment everywhere—in the transport support grant for the new heartland scheme, the Lichfield road, the middle ring road, the north-south road, the 459 Dudley southern road, which will cost £46 million in total, for roads in Shirley and for the A44 to A422 link. There has been a massive cash injection into local road infrastructure. The amount that we had budgeted for— some £5 billion—will become £12 billion during the next four years.
All the arteries and highways serving the west midlands will be redeveloped and widened and will have carriageways added. The M6, M54 and the M5 are all needed to speed goods from the factory. Extra productivity has resulted. For example, in the car industry export production has increased by 32 per cent. over last year, and commercial vehicle export production has increased by 22 per cent. There was total extra production of 8.5 per cent. on cars last year and 11 per cent. for commercial vehicles. No wonder we defend the car industry in the west midlands and Birmingham, and no wonder they were successful in their representation that they should remain British.
It is wrong for anyone to accuse a former Secretary of State of not having done precisely what Conservative Members and my Opposition Colleagues asked them to do. They kept Land Rover British. That marvellous situation was achieved at a small cost, and now those industries are thriving, as are the aeronautical and car components industries.
Orders are coming in for every conceivable product. Last week a £150 million order for extra rolling stock for new trains to be used in the Channel tunnel was ratified for Metro Cammell.
Next year, I trust that we shall have the pleasure of passing the second part of the Bill to introduce light electric railways. The first part of the Bill, costing £60 million, has already been passed by the House. That will link Wolverhampton with Birmingham via West Bromwich. The next portion of the Bill, costing £240 million, will join up the areas between the national exhibition centre and Fiveways via the Heartland and a third line will join Wolverhampton and Dudley. The scheme will provide the west midlands, which has suffered at least £420 million in losses as a result of traffic congestion this year alone, with an alternative cheap, cost-effective, environmentally acceptable form of extra transport that will supplement rail and bus services.
When the Bill is passed, the west midlands will have one of the most modern systems of transport in the world, and that is just one of the massive new capital injections made in the area.
The issues that could bring us down, and that could render a Christmas card less acceptable, are interest rates that are too high for too long and Germany's ability to use an extra 1 million skilled workers at cheap rates from the east in its aided economy. That economy was developed by the Americans from nothing, with great goodwill and benevolence. New factories were developed out of the rubble and they were given a new trade union structure. I believe that there are only 14 trade unions in Germany.
Another problem would be a massive intrusion of an immigration force that would drain the west midlands of its natural resources in housing, benefits, and health care, for example. Another difficulty is that young labour is moving away. It is estimated that a frightening 23 per cent. of 16 to 19-year-olds will move away between 1989 and 1995. We must prove by all this investment and 460 confidence, by having rectified the years of neglect and by the years of achievement, that ours is a vital area for the young to live in.
If I could write just one message on my Christmas card, it would be that we are living in an area which will be one of the most dynamic, excellent, residentially desirable and most strategically salient in Europe.
§ Mr. Bruce George (Walsall, South)
I congratulate the hon. Member for Nuneaton (Mr. Stevens) on his success in the ballot and on giving us this opportunity. The hon. Member for Birmingham, Yardley (Mr. Bevan) centred his speech around a Christmas card. I remind him that Christmas cards are based largely on myth, tradition and fantasy. I listened with respect to the hon. Gentleman, but some of what I heard fits that description.
I share the hon. Gentleman's vision. I, too, want to create a dynamic economy and to build out of the crisis and deprivation—"rubble" is too strong a word—an economy of which we can be proud. I want to make the west midlands again the powerhouse of the British economy.
It would be wrong to speak in propagandist terms. Although I want a healthy, vibrant private sector, I believe that the regeneration of our area depends also on a healthy public sector. The past decade has not been one of undiluted success which we can willingly laud and trumpet. Much of the infrastructure of our region has been destroyed, and there has been what often amounts to a malevolent attack on local government.
I am not an uncritical analyst of local government—far from it—but I believe that much of what it has done has been useful. I include in that the West Midlands county council, which, ironically, Labour opposed when the Conservatives wanted to set it up, although the roles were reversed in the end.
I believe that the West Midlands county council performed a useful role as a catalyst for economic regeneration. It provided many public services and Fulfilled a co-ordinating function. At its demise—"destruction" would be more appropriate—a vacuum was left which has not been filled.
I want to recreate in our region not public sector hostility to the private sector and the private sector hostility to the public sector, or Government hostility to the public sector, but partnership.
I have long abandoned the view held by many of my hon. Friends—[HON. MEMBERS: "Where are they?"] There are not many more on the Conservative Benches—that the major conflict is between British capital and British labour. The conflict is British industry against everyone else abroad and we need consensus, harmony and working together. The Government have got the balance wrong. The public sector is pre-eminent in providing the infrastructure, and the infrastructure in our region is collapsing.
I am not saying that a multitude of public sector companies exclusively should be created in the region. I hope that, when Labour is returned to office, we do not indulge in the same hostility against the private sector that the public sector has faced in the past decade. Our goals may be the same, but the way in which we seek to achieve 461 them clearly differs. I should like the public sector and local government to have an increased role in the regeneration of our industries.
Much of the industrial health of our region was based on the motor vehicle industry, which has declined in recent years. Mention has been made of a recent report, but reports produced in the 1960s revealed the beginning of a crisis that was not properly recognised by Government or industry. The chickens came home to roost with a vengeance. The difficulties in the 1970s were followed by a critical period when unemployment in my constituency increased from below 5 per cent. to approaching 20 per cent.
The hon. Member for Yardley spoke about the continuous fall in unemployment in recent years. However, despite that reduction, unemployment in my constituency and in many others in the west midlands is still higher than it was when the Conservative Government took office. I do not belong to the group of people who, whenever the unemployment figures are published, make carping criticism and complain that unemployment is too high. Although unemployment is falling, the tragedy of our region is that the apparent improvement in the unemployment statistics is due partly to the fact that new industries have been developed, but many of the new jobs that have been created are part-time and low-paid.
The hon. Member for Yardley stressed the importance of the service sector, but we must have a strong manufacturing base. The many reports of the Low Pay Unit reveal a rather different picture from that described by the hon. Gentleman.
Mention has been made of the role of the Black Country development corporation in industrial regeneration. 1 was not happy that the development corporation was established, because, as a supporter of local government, I firmly believe that, had proper resources and powers been given to the local authorities, they could have provided much of the regeneration of the region.
I still do not like the lack of accountability of the development corporation. I welcome its resources, but I am irritated by the fact that the Black Country development corporation is endorsing and supporting shopping developments in Sandwell that I fear will have an adverse effect on shops in other parts of the region. Although I welcome the construction of new roads, it is ironic that, as a Labour Member, I should be approached by business men in my constituency who are most anxious that the Black Country development corporation gives them proper compensation for the virtual liquidation of their companies as a result of road construction.
Two years ago—I hope that the Minister will consider this—I attended a public meeting at which the spine route was discussed. The local authority decided that the brunt of road construction would not be borne by residents—many people would have been adversely affected by the construction of the road from Wednesbury to Moxley—but that industrialists would fall on their swords for the collective good. At least 20 factories in my constituency were in the line of route of the spine road, which is important for the regeneration of the area—I make no criticism of the concept of the road.
What the owners of those factories told me caused me some anxiety, and it should cause Conservative Members 462 even more anxiety. Those small companies have been offered compensation for their elimination from the site, but it is insufficient for them to purchase comparable facilities nearby. The managing directors of the companies were worried, because one of the alternatives facing them was to take the inadequate amount of money and retire.
It may have been impolite to raise this matter in the House before doing so with the BCDC, but I hope that it will consider carefully the way in which it provides compensation for companies adversely affected by development. I hope that it will provide something of benefit not only to those who will use the road but to the companies and to those in employment who might suffer.
We heard much about the importance of transport. Our region is largely based on, and has had almost an obsession with, the motor vehicle. I welcome what the hon. Member for Yardley said. He has done much for the midland metro, which is an example of the public and private sectors working together. He lauded the private sector, yet much of his speech was devoted to one of the great achievements of public investment. The West Midlands passenger transport authority has decided to look not a year or two years ahead, as politicians normally do, but a decade ahead. It has recognised that we must transfer passengers from the roads to the railways. I endorse the concept and operation of the metro, although a number of my constituents will be adversely affected because their gardens will be removed.
We wish to see not only the metro but a good rail network established. In my area—this is almost unprecedented—a small rail line has been opened, but some of British Rail's rolling stock is pretty ancient. We do not need a re-run of the debates that we have had over the past few days. The railway industry should receive not less but more subsidy. Anyone reading the statistics would conclude that the amount of investment per head in our rail network is deplorably low vis-à-vis our industrial competitors. A good rail network is critical to the speed with which goods are transferred within the manufacturing process. As someone who regularly uses the M1 and M6, I say, please improve the motorways, but the infrastructure of the west midlands must be based partly on a good rail network.
We have heard about the importance of education. One of the Government's trumpeted aims is to establish city technology colleges. While I believe that the Black Country development corporation is largely doing a reasonably good job, when we consider the major educational authorities to which we might defer, we would not instinctively put the BCDC high on the list. It has a great deal to do to regenerate industry in the west midlands. However, it should not assume a serious role in education.
In my town, in the constituency of my hon. Friend the Member for Walsall, North (Mr. Winnick), a city technology college is soon to be established and the Minister is very enthusiastic about it. However, the Walsall council education committee was not consulted in the process of establishing a large college or school in the area. At the moment, the authority has the difficult task of trying to match the number of comprehensive schools with a declining number of pupils. There are varying estimates of how many comprehensives will have to close. One will certainly close, and a few months ago the suggestion was that three might have to close because there are simply not enough pupils to fill them.
463 At a time when schools are being closed, it appears to be perverse logic to build a CTC with Government endorsement. I cannot accept that the kind of education that will be provided in the CTC could not be provided in a comprehensive so long as it had the proper resources. The establishment of the CTC is another manifestation of political ideology being elevated to such a point that it has a distorting effect.
I want to see a well-paid, efficient region which contributes to the regional and national economies. This country is a member of the European Community and much has been provided by way of infrastructure funds to the region, and in particular to Birmingham. We are engaged in a co-operative venture to create a new economy for the region.
I hope that all Conservative Members will agree that there must be a co-operative venture between the public and the private sectors. If we can get the balance right, we will have a more soundly based regeneration. At the 464 moment, business men in the region are sad about the interest rates which are making high investment difficult, and that investment is the goal which in the long term will create secure jobs.
I welcome this debate and hope that, in some small way, it will contribute to an understanding of what is happening in the region. I hope that the Government, in the final part of their over-long period of office, will have another deathbed repentance—of that in the House at the moment—and recognise that the public sector should not simply be the whipping boy or be eliminated or emasculated.
I hope that the Government accept that we should have a healthy system of local government in which the Government have confidence, provide it with proper resources and allow it to build council houses to help create a powerful and effective building industry—an industry which is ailing at the moment. Hopefully, we will then see the regeneration of our region, which, despite what has been said, we still await.
§ Mr. Roger King (Birmingham, Northfield)
In his succinct opening remarks, my hon. Friend the Member for Nuneaton (Mr. Stevens) placed great emphasis on the ability of the west midlands to maintain the momentum of economic growth that it has achieved over the past few years as a result of dramatic changes in the structural make-up of the region. Old industries which in many cases have been in the region for several hundred years have fallen by the wayside and new opportunities have sprung up. Some of those new opportunities have involved higher technology, and much of our industry has had to embrace new working schemes in the new technology. Much of it has been done successfully.
I cannot start my contribution in any better way than to emphasise that the one momentum that we must keep going in our region is transport. It is apposite that we are having this debate just a day after the opening of the first section of the northern link of the M40 motorway—11 valuable miles which will eventually comprise a second motorway link between Birmingham, the west midlands—the heartland of the country—and London. That section is many years overdue. When one considers this matter in the context of a completed motorway programme around the west midlands conurbation and the existing motorway system, one can begin to see the infrastructure for which we have long asked and which we must have to survive in an increasingly competitive European, let alone world, environment. We have certainly made some great progress.
I look forward to my right hon. Friend the Secretary of State's promised existing motorway stock, including the widening of the M6 and parts of the M54, although I am not yet aware when the work will start. We certainly look forward to a dramatic improvement in the M6 north of the west midlands conurbation towards Manchester and the north-west—something that is now of vital importance. It is one of the most heavily congested roads in the world. We must face the challenge of accommodating the traffic growth that is now occurring.
The west midlands is a wide area. It covers not only Birmingham, the black country and Coventry, but a significant section of middle heartland countryside such as Shropshire, Warwickshire, Worcestershire and Herefordshire. It comprises a wide, disparate area with many commercial and industrial disciplines. The birthplace of industry is in Shropshire, in Telford new town, which has enjoyed phenomenal expansion over the past 10 or 15 years. One need only visit the area to realise the tremendous achievements of the past decade or so. Many hundreds of new businesses have come from all over the world. It is a successful area for development, and the improvement in prosperity in the area is dramatic.
Much of our base industry circulates round the motor industry. That encapsulates the history of the west midlands industrial region. The rise—not so much the fall—and regeneration of the motor industry has been well catalogued by many writers and politicians. This is not the time and place to deal with its chronological history. However, the industry is still of major significance to our industrial capabilities. That is particularly so as the motor industry has gone through huge worldwide convulsions. We have seen the arrival of the Japanese in our country, starting as partners in joint production facilities such as we enjoy at the Rover plant at Longbridge in my 466 constituency. Those activities have been most successful, and have proved a lifeline for the Honda company. We are seeing it expanding production again as a result of co-operating in developing necessary new models in a competitive marketplace.
Of course, we have also heard the announcement that Toyota is going to an area which, is not, strictly speaking the west midlands, but it is just across the border. It has had a major impact on the west midlands, in that the vast concentration of component industries in the west midlands conurbation will take up the challenge and supply components not just to the Rover, Honda and Toyota factories but to Nissan, as many are already doing. I ask my hon. Friend the Minister to note that there are warnings that the European Commission is planning to jeopardise that.
As we all know, many member states have made voluntary agreements with Japan about the level of imports from Japan. It is significant that some countries—for example, France and Italy—have steadfastly refused to allow much of their markets to be penetrated by Japanese production. Of course, this will change as a result of the open market in 1992, because the European Community will have to have a policy towards Japan. The European Community's present scheme is called voluntary restraint agreements, whereby the total level of Japanese production or sales into the European Community will be no more than 12 per cent., rising to 16 per cent. At the moment it seems that that 12 to 16 per cent., which will grow over a number of years, takes into account Japanese production in satellite plants in Europe, which means Britain. That will be a severe setback for our motor and components industry.
If artificial restraints are placed on Japanese badge cars that are sourced and made in this counry, it will be a black day for our car production. We need to be ever-vigilant to ensure that the European Commission does not pull a fast one on British industry now that we have got our car industry act together and can look forward to closing our present balance of payments gap. Although I look forward to its being closed over the latter part of the next decade, the fulfilment of that hope could be put in jeopardy unless we get the right voluntary restraint agreements which discount Japanese production from transplanted factories that have been set up in this country, or anywhere else in Europe. If we do not resolve the problem, much of the progress that we have enjoyed in the past few years in the motor industry, which is the powerhouse of our region, could be jeopardised.
One problem in the west midlands, although it is not confined to our area, is that of investment. It is essential that our industry invests in the new products and equipment that are necessary to taking up the challenge of 1992 and fighting off competition from wherever it comes. It seems that much of the current investment is confined to big manufacturers. About 22 per cent. of all English payments of regional assistance are made to businesses in the west midlands conurbation. That is extremely encouraging, but it is unfortunate that they are almost entirely restricted to large businesses.
Medium-sized and smaller businesses are not getting that assistance because they cannot raise the necessary money themselves to add to the amount of regional assistance for which they would qualify. They cannot raise that money because interest rates are higher than they would like. We have an opportunity to ensure that such 467 businesses invest, but the opportunity is running out. If we do not encourage them to make those investments and to take up the opportunities, we could be caught short in 1992.
I am not the Chancellor of the Exchequer, but now is the time to make our Budget proposals and to put forward our ideas. One way of targeting assistance to small businesses would be to introduce a small business interest rebate scheme. Businesses that invest could attract an interest rebate after their financial year end. If it was for no more than 5 per cent., the rebate would not cost the Exchequer a great deal, but it would be enough to encourage small businesses to make those vital investments.
The image of our area is not very good. About 65 per cent. of companies that have been polled reckon that the image of the west midlands is poor in a variety of respects. We must put that right. The hon. Member for Walsall, South (Mr. George) made some relevant remarks about the role of the old county council. It is true that it did some good work, and certainly the assets that it collected for itself in its 12 or 13 years of existence were huge. The residuary body is constantly handing out cheques to many authorities as it liquidates those assets. However, the county council played an important role as a co-ordinating body for the disparate schemes that were available throughout the west midlands county. The trouble was that it required a whole body of councillors to be elected and a bureaucracy to be set up. There are many schemes in the west midlands and many opportunities with training courses, investment schemes, urban development corporations and Birmingham Heartlands, which are all helping our area. We also have an inner-cities policy.
However, what we really need is someone to co-ordinate these things. I do not believe that we need a separate body or council. We do not need to go to all the trouble of elections, because if the Government would allow it, our Members of Parliament from both parties could set up some regional body of Members of Parliament to act as the guiding body. Perhaps one of my Conservative colleagues could become a regional co-ordinator, or even the governor, of the west midlands. It is only a suggestion. We need someone to take the lead and to present the image of our area constructively. He could co-ordinate all the many agencies and target assistance where it is required. We would welcome that.
It is a question of image. We have a certain momentum and we want to keep it going. I am sure that, given the opportunities, industry in the west midlands will rise to the occasion and our prosperity will continue.
§ Mr. Gerald Howarth (Cannock and Burntwood)
My hon. Friend the Member for Birmingham, Northfield (Mr. King) has made a typically robust and helpful speech, as he did once before. On 25 June 1983, he introduced a similar debate on the economy of the west midlands to that which my hon. Friend the Member for Nuneaton (Mr. Stevens) has introduced today.
I made my maiden speech in the 1983 debate. Hon. Members on both sides of the House contributed to that debate, but the circumstances of the west midlands then, were very different from those which prevail today. That debate was characterised by accusations from the 468 Opposition that the industrial outlook in the west midlands had never been so bleak. The hon. Member for Birmingham, Erdington (Mr. Corbett) said:I hope that neither the Minister nor Government Back Benchers will claim that they can now see light at the end of this dismal tunnel. There is no real prospect of that—only of worse."—[Official Report, 25 June 1983; Vol. 46, c. 892]The hon. Gentleman, unfortunately, is not in his place tonight, but I hope that he would be the first to accept that he was wrong. My hon. Friends have tonight shown him to be wrong. Even the hon. Member for Walsall, South (Mr. George), who takes a rather more pessimistic view than my hon. Friends and I do, would agree that the evidence overwhelmingly shows that there has been change.
That change is reflected in the unemployment figures. In the west midlands in 1983 unemployment stood at 15 per cent.—in November 1989 it was 5.8 per cent.
§ Mr. Howarth
It would have been lower than 15 per cent. in 1979, but it would not have been lower than 5.8 per cent. In the Walsall travel-to-work area, which affects both my constituency and that of the hon. Gentleman, the unemployment figure has fallen from 17.5 per cent. to 6.3 per cent.
Those figures show the change. The economic foundations laid in the early 1980s have paid off with dividends. There is no longer any land in my constituency available for development. It has all been taken. New industries are locating to the west midlands. Recently, a garden furniture manufacturing company moved its production facilities from Jutland, a high-cost area in Denmark, to the west midlands because that is the best place to locate. Indeed, it has moved to Cannock in my constituency.
In the debate in 1983, I said that people had to be lean and hungry. I referred to a company which had no receptionist, merely a telephone in the entrance foyer with a sign saying, "Pick up the telephone and ring '0' for inquiries." Today that company, Albion Pressed Metal, at the gateway to Cannock, employs more people than ever in the automotive industry. It is proving highly successful and won a major training award this year.
I will take up the point made by the hon. Member for Walsall, South about the private sector. The railway line to which he referred runs into my constituency, and I pay tribute to Staffordshire county council for bringing forward that railway project. It has not done much for the shops in Hednesford, however, because people now want to shop in Walsall rather than locally and the train helps them to do so.
Although there are no pits in my constituency, many miners live there. Despite the dramatic cut in employment in the coal industry, both Littleton and Lea Hall collieries have thrived, producing record outputs week after week. I pay tribute to the miners for what they have done.
Another subject of my maiden speech was the Cannock community hospital, for which people of all parties campaigned for more than 50 years. This wicked Tory Government who do not care about health care are providing the £18 million to build the Cannock community hospital which, it is hoped, will open in 1991.
Unquestionably, we face some difficulties. I salute my right hon. Friend the Chancellor of the Exchequer for his 469 recognition of the role of interest rates and the fact that there is work to be done to ensure that British manufacturing industry, about which we all care, is able to compete internationally. If there is one message that I wish to convey to the House tonight, it is that it is vital that we in the west midlands do not talk ourselves into a recession. In my discussions with manufacturing and other industries, few people tell me that they are not doing well, but they are worried about future business confidence. We owe it to them not to talk down the prospects for British manufacturing industry.
I conclude on a personal note. In the past 36 hours, I have shared with my colleagues in the west midlands the tragedy of the loss of one of our colleagues there, the former Member for Mid-Staffordshire, John Heddle. I hope that you will not think it amiss, Mr. Deputy Speaker, if, as the hon. Member who now represents part of the constituency that my hon. Friend so ably represented from 1979 to 1983—Burntwood—I pay a small tribute to my late hon. Friend. He was a most dedicated, enthusiastic and kind Member of Parliament who will be remembered with affection and gratitude not only by his own constituents but by those of my constituents whom he represented so ably between 1979 and 1983.
§ Mr. Richard Caborn (Sheffield, Central)
As only a short time remains to debate this matter, I shall curtail my remarks. I thank the hon. Member for Nuneaton (Mr. Stevens) for initiating the debate. His speech was constructive but I detected in it, as in the speeches of other Conservative Members, a little anxiety about the future. He referred in passing to possible structural weaknesses in some of the developments in the west midlands.
When I was given the job of responding to the debate, I looked up some of the economic and industrial indicators for the west midlands. I was surprised at the depth of the recession between 1979 and 1983. The area suffered probably one of the greatest declines in employment of any region and experienced a near collapse of its manufacturing base. A massive 21 per cent. of companies were lost in that period. In that four-year period, more than 250,000 jobs were lost in manufacturing industry. That was a massive and unmanageable loss, which created many problems.
The turnround of the past three years has been referred to this evening. One must ask whether it was due to development of the infrastructure and sustained growth or was in response to a boom. That question gives rise to some concern. The manufacturing statistics show that the upturn experienced from 1986 to 1989 does not bring the sector back to the level of 1978; there is still a long way to go. One must accept that the services industry has mitigated the rate of unemployment. There has been a rise in activity in that industry.
Much has been said about investment. It is true that the west midlands has benefited from 20 per cent. of recent inward investment in the United Kingdom—investment in the region has increased by a factor of four. In the main, however, the investment stems from buy-ins, which means that it is equivalent to zero investment. Although I do not want to diminish the importance of inward investment, one must decide whether it is new investment or a buy-in 470 and therefore a zero gain. It is also interesting to note that the west midlands is lagging behind the rest of the country in terms of its contribution to the growth in GDP experienced since 1981. GDP per head in the west midlands remains 10 per cent. adrift from the rest of the country. In 1987–88, the rate of investment in the west midlands was 10 per cent. below the United Kingdom average.
The hon. Member for Nuneaton referred to training, but since 1979 the number of apprenticeships in the west midlands has fallen by 70 per cent. Of all the figures quoted, that one has the most serious implications for the region. The hon. Gentleman referred to turners and millers, but if we do not train them they will not be available.
It is worth assessing how the west midlands will fare in 1992. We usually compare the region with Yorkshire or the south-east, but it is important to compare it with the European regions. I have studied the GDP per capita of the länder of West Germany. Our best region in terms of GDP per capita and productivity growth does not even match the worst of the länder. The other interesting factor is the way in which economic development and the subsequent benefits have been distributed in West Germany. In the United Kingdom the south-east is over-heating while the northern regions are under-utilised. The tax regime at the federal and länder level acts as an equaliser. Therefore, the economic benefits are distributed across Germany and the country takes considerable advantage of them. A study of the economic indicators for West Germany and France show that the west midlands is at a major productive disadvantage.
The Henley forecasting centre has made a study of the expected growth of the west midlands from 1988 to 1995. From the data fed in it appears that the region will grow at a rate of 2.6 per cent. of GDP per annum up to 1995. That means that it will lag behind France and West Germany, which will become our major competitors.
I agree that we should not talk down the west midlands or any other region, but we must be realistic about what things will be like post 1992. Most people are reaching the conclusion that we have a major structural weakness. That weakness is apparent from the role of venture capital, and the attitude of the financial institutions to the manufacturing base. Research and development is under-funded and unco-ordinated, although I accept that the science parks, to which reference has been made, are a positive development. Our transport infrastructure is also weak.
The greatest weakness, however, is the tendency to pump ever more resources into the south-east. We heard recent evidence of that from the Government. We are to spend billions to try to relieve the congestion in the south-east. The Government should heed the suggestions of their hon. Friends tonight and should follow an interventionist policy to attract development away from the south-east to the midlands and to Yorkshire. We should look at the major structures, particularly the infrastructures, where that development can take place.
It will be interesting to hear what the Minister says in his reply because, apart from one, all the speeches, from both sides of the House, have been critical—sometimes constructive—of the Government's policy towards development in the regions. That is true for not merely the west midlands, but for most of the midlands and the north. An overhaul of the policies for the regeneration in the 471 regions is needed. The Audit Commission's report which was published in the middle of this year said that the patchwork quilt of grants was totally unco-ordinated and now so complex that even businesses could not understand what they were being offered.
The Government are in a hell of a fix. Unless something is done about these weaknesses in the near future, 1992 will expose them even more.
§ 11.6 pm
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)
The time left to me is short only because of the enthusiasm of hon. Members to participate in the debate, for which I am grateful. I pay tribute to my hon. Friend the Member for Nuneaton (Mr. Stevens) for initiating the debate. I fully associate myself with the remarks made by my hon. Friends about the sad loss of our former hon. Friend the Member for Mid-Staffordshire, Mr. John Heddle. He will be greatly missed in the House and in debates such as this. This is an appropriate time for us all to remember him, which we do.
I shall attempt, but inevitably fail, to deal with even a small number of the points made by all those who have participated in the debate. A theme ran through the speeches of Conservative Members. They recognised not only the great difficulties which occurred in the west midlands in the early 1980s—those of us who lived through them remember them well and will probably never forget them—but, equally, what has been done by people in the west midlands to regenerate the area, pick themselves up and get on to a completely new footing. It is important for us all to recognise that.
It was a little uncharitable of the hon. Member for Sheffield, Central (Mr. Caborn) to talk, as he often does—I have listened to him for many years with varying degrees of pleasure and often desperation—about grants, redirections and interventions such as we had in the bad old days. What both the hon. Member for Sheffield, Central and the hon. Member for Walsall, South (Mr. George) said was a sad reflection of the fact that, when looking back to 1979, they could talk about employment levels, but not productivity or profitability levels and the ability that west midlands' industry now shows in competing with the rest of the world. We all know that it could not do that in 1979. That was substantially the reason why we went through what we did in the 1980s.
I do not want to fall out, on this of all occasions, with my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), but I must reflect for a moment on an observation that he made. He made a number of interesting observations and a teasing reference to the fact that capitalism must move. I look forward to a new philosophy of capitalism—I do not know whether it will be known as Darkism—and I hope that my hon. Friend will elaborate on his thoughts on some future occasion.
My hon. Friend said that the fall in the sterling exchange rate parity had been an important factor in the improvement of our export performance. That is stating the obvious, and there is nothing wrong with that, but it leaves one reflecting on how the Japanese and the Germans have managed to export spectacularly successfully over the strengthening exchange rate parity of the yen and deutschmark. That suggests that the answer is not 472 necessarily exchange rates, important though they may he. It is more fundamental. It may lie in productivity differences, for instance.
The hon. Member for Sheffield, Central was keen to draw parallels with the Federal Republic of Germany, but it is significant that that country's labour force has been prepared year in and year out to accept pay increases related to productivity and performance. One of the key differences over the years between this country and Germany is the fact that even now we are claiming and often awarding ourselves pay increases averaging 9 or 9.5 per cent. which none of us could remotely imagine were related to economic performance or productivity.
§ Mr. Beaumont-Dark
I very much hope that we are approaching Darkism, which will mean a new age of light. Does my hon. Friend agree that one of the other great differences is that manufacturing industry in the midlands pays 18 per cent. for money, while industry in Japan pays 5 per cent. and industry in Germany 7 per cent.? If we had that advantage, we should really move forward.
§ Mr. Forth
I accept what my hon. Friend has said, but there is a danger of becoming involved in a chicken-and-egg argument. My hon. Frend understands better than most the relationship between the level of interest rates in a country and its international competitive position, which in turn is related to the other factors that I have mentioned. I well recognise the strength of feeling expressed in the debate and the problems caused by high interest rates, although the latest figures suggest that investment in the west midlands and throughout the country is holding up extremely well. That is encouraging.
I cannot deal in as much detail as I should like with the comments made by the hon. Member for Walsall, South. The best that I can say is that I shall endeavour to pursue his point about compensation to his local businesses. That is a classic example of the difficulties inherent in seeking to create what he described as a much-needed local improvement of infrastructure. I should appreciate it if the hon. Gentleman would let me have the details, and I undertake to have the matter looked into.
The hon. Gentleman mentioned in passing that he wanted subsidies for rail. Where will the money come from? It is all too easy to ask for subsidies, but the Government have tried to keep down tax burdens, both corporate and individual. We have enjoyed much success in doing that, but it inevitably means that we cannot pay the sort of subsidies that we would like.
That brings me in one leap to my hon. Friend the Member for Birmingham, Northfield (Mr. King) who, as ever, was upbeat and optimistic, as was my hon. Friend the Member for Birmingham, Yardley (Mr. Bevan) who, typically, told us how things were looking up. He gave many examples of the great strengths of the region. Those who, like me, have the privilege of representing a constituency in the west midlands want to ensure that the world knows that the region continues on the up and up and that business is attracted to the area. We do not always need bribes and subsidies to bring it in, either—the region is a good place to be and in the end that is the best and only good reason for investing there on a permanent basis.
I slightly regretted that my hon. Friend the Member for Northfield departed from his usual robust attitude when discussing a small business interest rebate scheme. I hope 473 that my hon. Friend will reflect on it and return later with details, such as how small the business would have to be, at what point the scheme would be triggered, whether there would be limitations on it, where the money for it would come from, what the rules for it would be, and so on. I must tell my hon. Friend, with as much generosity and friendship as I can muster at this time of night, that such a scheme—[Interruption.]—which is getting Opposition Members so excited is easier to suggest than to implement. I look forward, perhaps in the privacy of another part of the building, to hearing how my hon. Friend envisages the scheme working in detail.
Time has run out, but the debate has been useful and productive, not least for those right hon. and hon. Members who take a pride in the west midlands, what it does, and what it stands for. The region has weathered great difficulties and made enormous adjustments, and it has shown itself capable of making the adjustments so necessary for the future, with the imminent arrival of the single European market. We can take pride in the fact that our region stands tall and aims to succeed with the minimum of help and intervention because it knows what it wants to do and will continue to be very good at doing it. In that spirit, I thank my hon. Friend the Member for Nuneaton for allowing the House to debate the west midlands.