DISTRIBUTION OF INDUSTRY BILL (Hansard, 13 June 1950)

§ THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD LUCAS OF CHILWORTH)

My Lords, the Bill which I ask your Lordships to give a Second Reading this afternoon could, I think, rightly be described as marking the next step in the determination of His Majesty's Government to grapple with the problem of what are known to-day as "development areas," and were known years ago as "distressed areas." Before I deal with the Bill, I think it would be agreeable to your Lordships, if I utilised the opportunity which is presented to me this afternoon to review the progress that has been made since the principal Act was passed in 1945 to date, because, as I know all your Lordships will realise, we are coming to the end of what I could perhaps appropriately call "phase one" and we have now to face the future. From 1945 until the end of 1949 new industrial developments in the development areas provided jobs for over 200,000 individuals of whom 120,000 were men. That, in itself, I submit, is a great achievement. There have been great achievements right through the development areas and I think that sufficient has not been said of those achievements. I am not going to weary your Lordships this afternoon with a lot of figures, but I am going 577 to give your Lordships some, because I think we cannot properly assess what has been done in this connection without some background of figures.

The first figures I should like to give your Lordships relate to what has actually been spent on new factory construction in the development areas. I am going to give these statistics to your Lordships in such a way that I shall distinguish between Government finance and private finance. I do not believe that this is a Party matter at all. I am sure that all of us, to whatever Party we may belong, are intensely interested in solving the difficult problem of unemployment in the development areas. I will give you first of all totals for the whole of the development areas, relating to the number of buildings. The total approved is 1,645, of which 1,025 have been completed; and 206 are still under construction. Those licensed but not started total 104. The estimated building cost of the total—that is, of the 1,645 which I have just mentioned—is £110,731,000. Those licensed and not started account for £3,431,000, under construction £47,375,000 and completed £41,726,000. Those figures are all estimated building costs. The Government have provided finance to the extent of £28,835,000. Private finance has provided £81,896,000. Details of those figures show that Government finance in respect of premises licensed but not started is 1748,000, under construction £6,096,000, and completed £21,034,000. The figures for private finance are: licensed but not started £2,683,000, under construction£41,279,000, and completed £20,692,000.

That is the position to date. I could, if your Lordships are particularly interested, give your Lordships these figures broken up showing how they refer to each development area. I will not read them out unless I am asked to do so. If any noble Lord is interested in any particular area and wants the figures for it I shall be perfectly willing to give them in my reply. As noble Lords know, the Government—and this was wholly Government financed—did build a number of factories in advance of requirements. The object of so doing was to have ready-made factories into which to put prospective industrial concerns without their having to go through the process of building a tailor-made factory. These 578 factories range from units of 1,000 to 1,500 square feet up to units of about 33,000 to 35,000 square feet. The number allocated and occupied is 180; the number allocated but not yet occupied, 18; and the number unallocated, 12. These cover an area of approximately 5,000,000 square feet. Of the total industrial development to-day, less than 100 buildings are being erected in development areas; that is why I said that we are coming to the end of our present programme. Of the completed factories, 481, costing over £20,000,000, are Government factories built on industrial sites or on industrial estates. In terms of estimated building costs more than half of all the factories completed since the end of the war in 1945 have been sited in development areas; and in terms of the number of projects 35 per cent. have been sited in the development areas. This compares very favourably with the position after the last war, when the development areas, or distressed areas as they were then called, received only 7 per cent. of the new factories built in the whole of the country.

When I had the privilege of addressing your Lordships in the debate on the Motion on the economic situation, moved by the noble Lord, Lord Cherwell, I said I had just returned from a visit to the development area of South Wales and I told your Lordships some of the impressions I had gained. During the Recess, to acquaint myself the better with the subject of the debate this afternoon. I made another journey. I made a tour of the development area on the northeast coast. And if this weather lasts until the Summer Recess I assure the noble Lord, Lord Clydesmuir, that I will go to Scotland. In my tour I saw exactly the same thing as I saw in South Wales. A marvellous amount of work has been done. I saw trading estates and factory sites in some of the worst derelict areas.

§ LORD LUCAS OF CHILWORTH

I will see if we can alter it. But whether they are trading estates or industrial estates, it is an inspiring sight to see some of these developments. I saw one just outside Jarrow, the new Bede Estate, that to-day has thirteen factories in operation employing over 1,000 people in an area which was absolutely derelict before the war. Any of your Lordships who has any knowledge of the North-East coast, of Jarrow and South Shields, of over twenty years ago, would be amazed at the bright-eyed girls who are working in those factories. I went over the factory of British Celanese where they are doing a remarkable job of work with labour which had never seen inside a similar factory until two or three months ago. I went over what is perhaps the finest wool spinning mill in the world—and I do not think that that is an exaggeration. It is just outside Darlington and is a wonderful project which covers some 4,000,000 square feet and cost £6,000,000 to build. It now employs just under 2,000 operatives; eventually it will employ 3,000 to 3,500. It is a wonderful conception and to one who spent his early life in an engineering shop the latest thing in machinery was a joy to see In my previous speech I told your Lordships about the marvellous developments at Margam and about the nylon spinning mill in South Wales. If I were an advertising agent for the Board of Trade, I should be tempted to say to industrialists, "Come to a development area and decrease your costs," because I see from the Press that British Nylon Spinners have been able to reduce their prices by 20 per cent. since operating this huge factory at Pontypool. Perhaps it means that if an industrialist goes to a development area he can immediately bring his prices down.

I do not intend to go through a catalogue of what has happened in all these development areas, because your Lordships will have the good fortune this afternoon of hearing the informed and authoritative opinions expressed by the 580 noble Lord, Lord Bilsland, who is chairman of Scottish Industrial Estates Limited and chairman of the Scottish Council; by the noble Lord, Lord Adams, who is managing director of the West Cumberland Industrial Development Company; by my noble friend, Lord Piercy, who is chairman of the Industrial and Commercial Finance Corporation and who has played a manful part in the financial arrangements of some of the firms who have gone to the industrial areas, and by the noble Viscount, Lord Ridley, who until lately was a member of the North-Eastern Trading Estates Limited. Before I close this account of what has been done, I think a tribute should be paid to the Planning Division of the Board of Trade and to the chief regional officers of the Board of Trade and their staffs in all these areas. They have been the nerve centres. They have planned it all in consultation with the industrialists. I am certain that my noble friends, and especially the noble Lord, Lord Bilsland, who has a unique knowledge of what has been done in Scotland, will wish to join me in paying tribute not only to the officials of the Board of Trade but also to the officials of the estate companies who have done such a first-class job of work.

That is one side of the story—the success side of the story. To be fair to your Lordships I am going to tell you of the other side. In spite of all that has been done, in spite of the fact that in the development areas we have been able to provide employment for 200,000 people, the sad thing is that to-day we are not keeping pace with the tide of unemployment. The total unemployed in the development areas is 144,500; 107,300 men, which is 4.2 per cent. of the number of males registered for employment, and 37,200 women, which is 3.5 per cent. of the number of women registered. Again, I am not going to give a lot of figures, but I feel that your Lordships should realise that in the whole of the development areas the total insured population amount to approximately 3,500,000 people. Unemployment in the rest of the country is infinitesimal. As I say, it is not only the fact that male unemployment in the development areas is 4.2 per cent. which is so disturbing, but that we must expect that it will increase. I will not weary your Lordships with the figures of male and female unemployment, but I 581 shall be happy to supply them to any noble Lord who desires to have them for a specific area. In spite of the fact that during the last twelve months employment in surplus war factories and new factories increased by 40,000, the level of unemployment shows no improvement compared with 1949, and is 9,000 greater than it was early in 1948.

There is no problem concerning women, as we anticipate that there will be a shortage of female labour. The grave anxiety is to find male employment. I do not disguise my anxiety, or that of my right honourable friend the President of the Board of Trade, or of His Majesty's Government, because this unemployment will increase as displacement in existing industries increases through redundancy in the next few years. When all the projects I have mentioned are complete, they will find employment for approximately another 67,000 males. As I have told your Lordships, at present we have 107,000 males unemployed. If we base our calculations of the rate at which those 67,000 will be absorbed upon the time it has taken to absorb labour in new factories in the past, they will not be absorbed for another three years, and on and on these redundancies will go. They will occur in the six main development areas, and in pockets in those areas. We must expect substantial increases in shipyard towns, where the ship-repairing industry is due to lose still further workers, and where the shipbuilding industry will begin to feel the contraction of their labour force. In these industries, the examples I would mention are the Tyne, the Wear and the Clyde. There will also be increases in coal-mining areas where uneconomic pits are being closed (the two chief examples being North-West Durham and Lanarkshire), and also in the tinplate and sheet steel areas of West Wales, in consequence of the re-organisation and the setting up of new strip mills. The very efficiency of these industrial conceptions adds to our problem. When the Margam project is fully completed—which is likely to be in 1952 —-it will cause great redundancy in existing tinplate works, and that will add further to our problem.

We have also the problem of the disabled worker, particularly in South Wales and the mining areas. The present 582 unemployment figure in South Wales is 30,000, of which approximately 10,000 are registered disabled workers. There was the conception of the Grenfell factories which were put up following the report of Mr. Grenfell, who was a Member of Parliament, to cope with the problem of the pockets of silicotics. Where we could not move them to the work, we had to build factories to try and absorb them into employment in the Welsh mining valleys. We built ten factories but, the truth must be told, they have not been an unqualified success. One reason for this has been that the employers have found it almost impossible to comply with the conditions. When they had these factories on a much reduced rental basis they were to employ 50 per cent. registered subnormal workers. They now find it impossible to do that, to man the factories using that type of employment. I am afraid we must look at this dreadful problem of the silicotic all over again. Some of these men are over forty and fifty, years of age; we must not allow them to rot in idleness but must find them useful employment. There is also the problem of the Remploy factories. It would break anybody's heart to see it. I saw men practically 90 per cent. disable being found useful work to keep them employed. But to attempt to run these factories on anything like a commercial basis is something which would frighten the most skilful production engineer alive to-day. Yet we have to tackle that problem.

I have given your Lordships the other side of the story. What has to be done? The problem is still that we have to diversify industry even more. The plain fact is that these development areas are still far too dependent upon the basic industries. To take South Wales as an example, that area still contributes 21 per cent. of the total production of crude steel of this country, 98 per cent. of the tinplate production and 50 per cent. of sheet steel. That is in spite of the great development of steel production all over the country. I feel that we must bring other types of industry into these development areas, and in order to do so we may have to take some bold and imaginative steps. Persuasion has done a great deal. We have succeeded in persuading a number of firms to go to South Wales, the largest being British Nylon 583 Spinners. Many industrialists still feel that if they go to these development areas the local labour will be found to be unsuitable—they say that it is not factory-conditioned. I asked the management of every factory I visited in South Wales and on the North-East Coast three questions. One question was: "Did you come here willingly?" They said: "At least we came here in fear and trepidation." I asked: "Are you sorry you came?" They said: "No, we are very glad we came." I asked: "How do you find the labour?" They said: "We have no difficulty whatsoever." In the debate to which I have referred I cited to your Lordships the fact that British Nylon Spinners in South Wales now employ 3,750 employees. They took half a dozen key workers there who trained first-class foremen in under thirteen weeks out of ex-miners and Welsh policemen. When I was on the North-East Coast, they told me in Jarrow that the girls of the North-East Coast were so intelligent that they could be trained as first-class operatives for working these highly specialised machines in under three months. Do not forget that one girl could mind four machines, sometimes to the value of £16,000. They are some of the most intricate machines. Therefore, in my view it is a fallacy to say that you cannot train this labour.

There is one other point which I should like to mention. While we have had really good co-operation throughout the country from the local authorities, there have been unfortunate examples to the contrary. I came across a case where the local authority thought that the influx of key workers to train the local labour provided an opportunity to exploit them by raising the rents of the houses in which they lived. There was another case brought to my notice only the other day. Just outside Southampton, a town of which I have some knowledge and which may well come into the category of an area where the loss of ship repairing will have an adverse effect on its employment, there is a huge industrial project—the erection of the most modern power station which will satisfy the needs in the whole of that area. A large number of men will be employed while it is being built, and it will stimulate employment over a wide area by giving adequate supplies of power to industry. But some 584 member of the local authority, for reasons best known to himself, must raise a hornets' nest of ill-informed comment to damn the scheme from its inception, without regard to the long-term interests of the area or the employment of its inhabitants.

I now come to the Bill, with which I need not bother your Lordships in great detail, because it is so simple. This Bill seeks to do three things. It extends the powers of the Board of Trade in development areas to acquire existing factories that are not in substantial use. At the present time the Board of Trade have no power to acquire factories, but only to acquire land upon which to build factories. This Bill extends that power to acquire factories that are not in substantial use, and if there is any disagreement between the Board of Trade and the occupier or the owner, as to whether it is in substantial use, the matter can be taken to the High Court to determine whether or not it is in substantial use or whether within a reasonable period it will be in substantial use. That, in short, is the first thing this Bill seeks to do.

It also seeks to enable the Board to secure, by agreement, the granting of easements of all sorts that will help them to develop these factories which they have acquired, either by agreement or compulsory acquisition. It may interest noble Lords to know that we intend to have these factories handed over to the estate companies in the same way as those they are operating to-day. The Bill seeks to give power to the Board of Trade, with the consent of the Treasury, to make grants in exceptional circumstances in respect of expenditure or loss arising in connection with the establishment of industrial undertakings in development areas. Quite frankly, this is to induce industrialists, whom the initial financial outlay might otherwise deter, to site projects in development areas. This your Lordships will find in Clause 3. The words are intentionally wide, and I hope no noble Lord will want me to define what are "exceptional circumstances," because my reply can be only that every case will be judged on its merits, and the consent of the Treasury will be required. There is no intention of giving any continuing subsidy. This is, to use a well known phrase, "a once-and-for-all pay- 585 ment," and it can cover many things. Clause 3 also enables the Board of Trade to make grants to housing associations for furthering projects of housing accommodation for key workers.

The third thing which the Bill seeks to do is to extend the powers of the Minister of Labour to enable payments to be made towards the cost of transferring key workers to undertakings, or branches of existing undertakings, newly established in the development areas. This power is needed to cover the case of key workers who move to the development area but who will remain in the employ of the firm. As I have said, that is another side of this problem and I do not think I need say any more about it. I hope not only that I shall have the benefit of the informed and authoritative opinions of noble Lords who have been greatly interested in this problem, but that noble Lords in all sections of your Lordships' House will give us the benefit of their advice. It is in that hope that I now beg to move that this Bill be read a second time.