DISTRIBUTION OF INDUSTRY BILL

HL Deb 13 June 1950 vol 167 cc592-637

4.18 p.m.

Debate on Second Reading resumed.

LORD CLYDESMUIR

My Lords, may I bring your Lordships' House back from this Schuman intermezzo to affairs nearer home, the Distribution of Industry Bill? I would do so by complimenting the noble Lord, Lord Lucas, on the speech with which he introduced the Bill. It was a speech illustrated with a wealth of figures which gave considerable encouragement and, at the same time, did not show the feeling of complacency for which we are sometimes blamed in this country. This measure is a useful extension of the principal Act, the Distribution of Industry Act, 1945. It passed through the other place without opposition, but not without discussion; I note that considerable space in Hansard was occupied by the discussions in another place. I think it right that it should not pass through this House without discussion.

I hope that your Lordships' attitude will be one of friendly welcome to the Bill with discussion and, if possible, useful suggestion. I feel myself in agreement with the purposes of the Bill and with its terms also as amended. Your Lordships will recollect that it was amended in another place to meet a point raised by the Opposition to provide in certain circumstances for an appeal to the High Court in the event of a dispute arising between the Board of Trade and the owner of a property to be taken over under Clause 1. That was the one point about which the Opposition showed some anxiety during the Second Reading of the Bill, and it was fully met by the Government in the Amendment which they introduced.

The Bill has some useful though not radical provisions. It enables the Board of Trade to acquire unused industrial buildings. It provides for other easements. It provides assistance in the way of housing grants. To that I attach much importance, because the housing situation still remains intractable in this country, and is one of the real difficulties with which the development areas have to contend. The Bill also provides for assistance in the cost of transferring key labour. In this House we are fortunate in having the benefit of the advice of a number of noble Lords who have had practical experience in working out the policy, not of this Government alone but of successive Governments, over a long period of years, coping with the depressed areas, the distressed areas, the special areas and the development areas, as they have been called in this period of evolution.

The noble Lord, Lord Lucas, referred to some noble Loris who would speak. Lord Bilsland has practical experience of industrial estates in Scotland—and I may tell the noble Viscount, Lord Samuel, that in Scotland we do call them industrial estates. We also expect to hear from Lord Adams who has similar experience in the North of England, Lord Piercy, Lord Ridley, and my noble friend Lord Selkirk, who was Commissioner for the Special Areas in Scotland before the war. He was Commissioner during a singularly difficult and interesting but formative period when he dealt very successfully with some of the hardest areas in the whole country, and left his post only to join His Majesty's Forces. Although, as Secretary of State for Scotland, I did not appoint him, with great regret I accepted his resignation on the first day of the war when he came to me and said he wanted to rejoin the Royal Air Force. It will be a pleasure to have the contribution of these noble Lords who have this practical experience, and I will content myself with a few observations only. As I say, I enjoyed the speech of the noble Lord who introduced the Bill, and in passing would only comment that he would do well to visit the Highlands of Scotland in the autumn of the year; he will thus combine pleasure with duty. I now understand the reason why a move was made to include that area among the development areas. It is a very pleasant place to visit at the right time of year, and I hope the noble Lord will make a thorough tour not only of the Highlands but also of the industrial areas of Scotland.

I said a moment ago that this question has a history from which we should not shrink in our review of the subject today. In another place the President of the Board of Trade gave certain figures which I do not think were repeated to-day by the noble Lord. They were figures of the numbers of unemployed at differ- ent dates since the problem first began to be tackled in those areas. At the peak time in July, 1932, there were nearly a million—932,000—persons unemployed in special areas. In July, 1938, this figure fell to 553,000; that is to say, in six years it fell by 379,000, which was a considerable improvement but still left a hard core. Then came the period of the war, when unemployment virtually disappeared. That was followed by the recession after the war, the period of changing over, and in June, 1946, the figure of unemployed in those areas was 200,000. In June, 1949, it had dropped to 120,000; but there was a slight return to greater unemployment, and in February of this year the figure was 144,000.

I acquit the noble Lord of complacency, although he did speak with pleasure of the achievements of the Government. If this were a mere matter of arithmetical progression, he should appear before us to-day in a white sheet, because had the diminution of unemployment for the last six years been at the same rate as front 1932 to 1938, we should to-day have no unemployment at all in the special areas. But this problem is not one that can be dealt with by arithmetical conclusions; it is a hard human problem that has to yield to Lard and commonsense thinking, and the steady pressure of wise and consistent policies. That is why I welcome this Bill to-day, because it is on that line that successive Governments have carried out a consistent policy, yet one developing to suit changing conditions. Various stages have been carried through during the last eighteen years. In 1934 there was the Special Areas Act which first set up the Commissioners. In 1936 there was the Special Areas Reconstruction Act that launched the Special Areas Reconstruction Association Limited, which, as your Lordships will remember, was enabled to provide loans in aid of capital expenditure. Next there came the Special Areas Amendment Act of 1937 which created a fund of £2,000,000 for major capital undertakings not already covered and promoted the establishment of site companies which were to provide factory accommodation.

May I now come closer to modern times? During the war the Coalition Government (which embraced all Parties, and therefore the credit should be shared amongst all Parties) carefully examined the prospects of post-war unemployment, and the Distribution of Industry Bill was based on the Coalition Government's White Paper of 1944. That Bill became the Act of which we speak to-day and which we shall extend by this Bill. It is true to say that the present Government have fully used the powers conferred on them by the Act of 1945. I should like to pay that tribute, and in good humour I would also say that instead of trying out nostrums which are not wholly proved as yet, they have wisely fostered private enterprise and guided and encouraged it to come into those areas. I would pay that tribute and say that I think that is the way still to continue to deal with these special areas. I am not going to enter on the wide and controversial field of nationalisation, but I do feel that in working on this special area problem we should use all means possible, and one of the means that we must turn to is to guide, encourage and foster private enterprise to set up in those areas. I do not think there is any dispute about that in this House.

I am aware that there is some criticism of the whole policy in regard to the development areas which comes from parts of the country outside those areas. The word "favouritism" has been used. There are parts of the country which feel anxious about the effect of the development of this policy of the transfer of industry. For example, a few days ago we saw the statement that the City of Edinburgh expressed anxiety about competition from Glasgow and Dundee. The City of Edinburgh, the capital city of Scotland, by rare foresight and energy has built up a high degree of employment within its boundaries. Your Lordships will be aware that its activities are not only of an industrial but also of a cultural nature, and it is to-day a flourishing city, known far and wide. I do not think it need be afraid of the development of this Act, but I sound a warning note that the working out of this policy must be carefully watched so that established industries are not taken away from sure foundations in such places as the City of Edinburgh. It is natural that they should feel an anxiety, for the powers are considerable; but it is the use of those powers, with wisdom, foresight and common sense, that really tells in the, end.

The recent inclusion of Merseyside among these areas was, I believe, well justified. I had hoped that the noble Lord would make some statement about it, but as he promised to give any figures that were required in his final speech he may be able to say whether an improvement has yet been observable in Merseyside. It should not be forgotten that there are other older areas where the problem is just as acute. The problem has by no means been solved, but a big impression has been made upon it. The period has been one of difficulty. For instance, the restriction on capital investment to meet the dollar situation has added to the difficulties of those who were wishing to found new industries in the development areas; and unless those industries met the test that they would earn dollars they had little or no opportunity of starting up. I am not going to widen the discussion by saying whether or not these restrictions on capital investment are necessary. Perhaps they were inevitable. But I make the statement, which I do not think will be refuted, that when they can be eased, that will in itself help towards the solution of the problem of these areas.

The problem has been described as one of structural unemployment, a strange phrase, yet probably an accurate diagnosis if it is held to mean, as I take it that it does mean, unemployment caused by changes in demand for particular goods rather than a wide and general trade depression. For example, the areas affected have in the past specialised in the heavy industries, which are increasingly challenged in the export field. Bear in mind that shipbuilding affects many industries, heavy and light. A ship is a symposium of a hundred trades, for very many trades enter into the building of one vessel, and so a recession in shipbuilding has immediate and wide repercussions. Shipbuilding is still very active, although fears were expressed some months ago that there might be an early recession. That has not yet come along, but there are tendencies, as noble Lords know, in world shipbuilding which indicate that the present state of affairs will not go on indefinitely. We must be watchful for any recession in shipbuilding, which would have an early effect on employment in these very areas with which we are dealing.

We must, therefore, I believe, continue this policy of the development of special areas. It is a policy justified by results. It is also strong medicine, as is indicated by the fears of other parts of the country. Therefore, it must be used with thought and deliberation. On the one hand we must avoid the mistake of giving too little to afford any real help and, on the other, we must avoid the mistake of lack of discrimination as to the type of industry which should be encouraged to go into the area. It is no use planting an exotic flower on strange soil if it is not going to grow, and it is no use trying to bring an industry to a place if it has little prospect of success. These are statements which are well understood by noble Lords, but they bear reiteration today when we are considering the question of these areas. The noble Lord, Lord Lucas of Chilworth, said that he felt that phase one was ending and phase two was beginning. I do not think that this Bill will usher in phase two, it is not radical enough. But it is a useful extension of the principal Act and it may be that a new phase is coming. I would favour a continuation of the present policy, wisely administered with a watchful regard to future trends.

4.34 p.m.

LORD BILSLAND

My Lords, I rise with great diffidence to address your Lordships for the first time and I crave your indulgence. I wish to speak of the effect of the distribution of industry policy and of the problems which await solution particularly in the Scottish development area. The principal Act has shown itself to be an effective measure, and has done much to restore the economy or the development areas with marked psychological effect. In the Scottish development area about 60,000 new jobs have been created directly, with a considerable addition of indirect employment also. One of the most gratifying features, to which the noble Lord, Lord Lucas, has referred, has been the very high reputation earned by labour, particularly women, in the new light industries.

In the major part of the Scottish development area there is no longer cause for concern over the employment of women in the present state of trade and industry, but there remain the problems of finding many jobs for men and dealing with the difficult question of secondary labour. There is good reason for encouragement, but none for complacency, for the task is by no means complete. The rapid progress which has been made has not been fully consolidated nor its stability tested. The unemployment rate, though very low compared with pre-war experience, remains obstinately about double that of the United Kingdom average, and there are various factors likely to affect the position adversely. The economy of the Scottish development area is very closely concerned with shipbuilding and ship repairing. The heavy industries in that area are employing 20 to 25 per cent. more than they employed in 1938, a rate which is unlikely to be sustained, and as activity declines that will affect a considerable number of ancillary industries of a lighter type. Furthermore, the closing of uneconomic pits will add some redundant miners to the numbers of unemployed.

It should be realised that the restrictions necessarily imposed on capital investment in the autumn of 1947 have had the unfortunate effect of considerably retarding the progress of development and, in Scotland, of preventing, to some extent, a balanced development. The restrictions laid down that no projects could be accepted after October, 1947, unless they fulfilled the export earning or import saving requirements of the investment programme. Therefore, they meant the postponement of the establishment of many projects with good long-term employment prospects, and the extension of existing businesses which did not comply with the regulations necessarily imposed. They have also prevented further development of the very small project which has been proved to be so valuable. I illustrate that to your Lordships by the case of a small business which started on the Hillington industrial estate twelve years ago in a factory of 1,200 square feet, and after a few intervening moves recently took over a factory of 60,000 square feet. That, I think, is an illustration at once of the potential value of the small project and of the elasticity of the services provided on the industrial estate.

With regard to the effect of the restrictions on the balance of development, I would direct your Lordships attention to Glasgow, which was included in the Act of 1945. There was inevitably difficulty in the built-up area in selecting sites that delayed full application of the Act to Glasgow. At the date of the imposition of the restrictions, the progress made in Glasgow was small in relation to the problem and in relation to the progress elsewhere. On five estates covering a total of 140 acres no work has been done. Since the war, unemployment in Glasgow has varied from 20,000 to 25,000 in total, the lowest figure since 1946 being 19,661 in June two years ago. Despite the creation of several thousand new jobs the figures remain obstinately stationary and show that the new projects have been served by redundant or imported labour. Estates are partially undeveloped and they make only a relatively small contribution to the problem. There are 6,000 unemployed in the civil engineering and building industries in the Glasgow area to-day, almost all unskilled, of course. I submit that such labour should be used in civil engineering development on the undeveloped estates so that building of factories may begin when the restrictions are removed. I am encouraged to feel confident that these factories would be taken up for the Industrial Estate Company in the past six months have received inquiries for over 2,250,000 square feet of factory space on Glasgow estates.

There is another section of the Scottish development area where a serious problem is arising—namely, Kilmarnock, where there exists a long-standing native industry of a valuable character, to which has been added a number of new projects, including a very important project from North America. The requirements of the native industry and the new development are causing a labour demand in excess, by over 1,000 workers, of what the district can supply. Urgent action, which has been too long delayed, is necessary to provide housing to meet these demands. It is difficult to avoid the conclusion that the position at Kilmarnock points to a lack of directive to ensure co-ordination of physical and industrial planning. Restrictions on building have also prevented any work being done on the industrial estate or on the new town of Kilbride, where in a year's time over 400 houses will be occupied. It is regrettable that here it has been necessary to depart from the policy of building factories parallel with housing to provide the elements of a self- contained unit, but it is obviously necessary to provide labour for projects which are more immediately required.

I refrain from commenting on the Highlands development area as a Government plan is promised very shortly, but I feel bound to observe that the opportunities for development there will be seriously affected by the recent increase in freights. It is the policy of the Government to ensure that, other things being equal, purchasing Departments shall place their orders with factories in development areas. It is the experience in Scotland that the purchasing Departments prefer to place orders as near London as possible. I submit that if a comparison is to be made between prices quoted by factories in development areas and those quoted by factories elsewhere it should be made on the basis of price at factory. This is a difficult point but it is one of importance to Scotland which, with only 10 per cent. of the population, supplies considerably more than 10 per cent. of the national production in a considerable range of industries.

I believe that the provisions of the Bill are useful. It is obvious that the power to make grants to assist the transfer of undertakings to development areas should be used only in exceptional cases which can be fully substantiated on strictly economic grounds. As the noble Lord, Lord Clydesmuir, has said, that provision has caused anxiety outside development areas. I submit that the development areas should not be regarded in isolation. In Scotland, as elsewhere, there are developing areas such as the coalfields of Fife, the Lothians, and Ayrshire. It is essential that we should not repeat the past error of segregating the mining communities and making them dependent on one industry, and it is necessary to consider the amount of development to be carried out in development areas in parallel with the problems of the developing areas.

A further point is the need for considerably increased devolution of authority to industrial estate boards in the development areas. In present circumstances, the need for a measure of control at the centre is obvious, but if the boards were entrusted with greater authority, a large volume of duplication of effort, both regionally and at the Board of Trade, could be eliminated, with considerable saving to the taxpayer. Reference has been made in another place to the possibility of the co-ordination of all industrial estate companies in one national board. I consider that that would be a retrograde step, which would meet with strong resistance from Scotland. Developments under the Development of Industry Act owe a great deal to the pioneer action of the Commissioners for Special Areas before the war. My noble friend Lord Selkirk was one of them, and to-day he plays a valuable part in the application of the distribution of industry policy in Scotland. They also owe a great deal to those who carried out the executive functions, and here I would refer to my noble friend Lord Adams. The principal Act has been an invaluable measure, and I submit that the Bill to supplement its provisions is worthy of the support of your Lordships.

4.46 p.m.

LORD ROCHDALE

My Lords, I am sure you will all agree with me that the noble Lord, Lord Bilsland, had no need in his opening remarks to refer to his diffidence in speaking. It has been a great pleasure to have the opportunity of listening to one who speaks with such obvious enthusiasm on his subject and with such unrivalled knowledge of the whole policy of the distribution of industry and its practicable application. I think there can be but few in your Lordships' House who have had the day-by-day experience on this subject which the noble Lord possesses. When I say that there can be but few, I am particularly glad to see that the noble Lord, Lord Adams, who is a not too distant neighbour of mine in the North-West, is also to speak to-day. It is a great honour to have the privilege of congratulating the noble Lord, Lord Bilsland, on his maiden speech. The whole subject of the distribution of industry is so complex and far-reaching, extending far outside the development areas, that I am sure we all hope that the noble Lord will speak to us on many occasions, not only on this topic but also on the number of kindred topics affected by it.

I shall speak briefly, because I have addressed your Lordships on this subject at length on more than one occasion before. There are, however, one or two specific points that I should like to make. I welcome any measure which may help to clear up some of the remaining diffi- culties and some of the new difficulties that are coming to light in what I believe otherwise to be the successful application of the 1945 Act. About eighteen months ago, shortly after the Distribution of Industry White Paper was published at the end of 1948, I introduced a Motion, in your Lordships' House asking that the White Paper and the subject in general be considered. At fiat time perhaps I sounded somewhat critical, but if so it was merely with the intention of issuing a word of warning lest, in a bold attempt to overcome the immediate problems in the development areas, we inadvertently swung too far and overshot the mark, creating for ourselves a number of other problems, perhaps in ether areas. In an interesting and valuable speech, to which I listened with great attention, the noble: Lord, Lord Lucas of Chilworth, made one or two remarks which made my criticisms not entirely unjustified.

This Bill is a simple one. Its objects are limited and they are designed to deal with specific problems which I imagine have emerged as a result of actual cases. I had rather hoped that Lord Lucas would give us some examples of problems which had occurred and which, for want of the provisions of this present Bill, could not he so easily dealt with. However, the noble Lord is going to reply, and perhaps it is not too late. The sort of thing I have in mind is this. Taming to Clause 1, the acquisition of industrial premises, I wonder whether the noble Lord can say whether this is merely precautionary, or whether the Government have in mind at the moment particular premises to which they hope to apply this clause as soon as the Bill becomes an Act. Assuming that the latter view is correct, I would ask the noble Lord whether these premises are for the most part premises that have been constructed since the war. I believe that this is a point of some importance, because no building of industrial premises has been possible since the war except with Board of Trade approval. The extent to which some of these are now not in use for industrial purposes may be an indication of the extent to which enthusiasm—very laudable enthusiasm—to get new industries into these development areas has been allowed at times to overrun discretion. I do not say that in any critical sense. I realise that in the development areas enterprise is essential, and that you cannot have enterprise without an element of risk. But I am moved to ask this question, in a genuine attempt to obtain information, by a remark made in another place by the President of the Board of Trade when moving the Second Reading of this Bill on April 4.

I should like to turn to another point which deals with a matter mentioned by the noble Lord who has just spoken—namely, attempts by the Government to divert into the development areas business, and particularly Government contracts, that might otherwise go elsewhere. This is only indirectly connected with this Bill, but as it was discussed during the Second Reading in another place I take it that I shall be in order in referring to it now. As I understand the position, the intention is that in the event of a Government contract being put out to tender and a firm outside the development area quoting a lower price than a firm inside that area, the Government Department concerned (I imagine this also applies to nationalised industries) will go to the firm inside the development area, give them the competitive price from the firm outside and ask them to take some of the order at that lower price. Then, I understand, they will go back to the firm outside the development area and accept their tender for the balance of the contract. I have spoken to one or two industrialists who have shown a certain amount of concern as to what exactly this procedure means. On the face of it, a procedure like that would seem to cut right across the whole basis of industrial tendering. A firm may quote a particularly low price for the whole of an order, but may be quite unable to accept that price for part of the order only. As your Lordships are well aware, in many cases, particularly when it is not a standard article, it is more expensive to make small quantities than to make large quantities. For a Government Department to adopt this way of doing business might (I do not say it would) lead to unfair treatment of certain firms. It all depends, of course, on how it is to be applied. I understand that the details of what I have tried to outline are at present being worked out by the Board of Trade, and I am hopeful that when the noble Lord replies he will be able to tell us what progress has been made.

I now come to my last point. I do not think we should forget that, although it has been stated that this Bill should not be regarded as providing a subsidy, in effect it has some of the characteristics of a subsidy, in that it tends to create an artificial balance as between the development areas and other industrial areas. I would not for one moment say that at present this is not a proper thing to do, but as time goes on, and as we advance further into what the noble Lord described as phase two, it may become unhealthy. I therefore make the plea that we do not stick too rigidly to what may be decided to-day, but that we keep the whole policy under constant supervision so that it may be adjusted, as necessary, to meet changing circumstances.

4.56 p.m.

LORD ADAMS

My Lords, I feel sure that your Lordships will also extend to me that kindness and indulgence which is always extended when a member addresses the House for the first time. It gives me great pleasure to be able to do so to-day, because I, like the noble Lord, Lord Bilsland, have spent the greater part of my life dealing with this complex problem. As a matter of fact, I come from the worst distressed area of all, which even to-day is often by-passed by Ministers and Parliamentary Secretaries. It will have been noticed that when the noble Lord mentioned where he had been, and where he is going, he did not even seem to know that West Cumberland existed. That is due to our isolation. Our problem was so complex that a representative of a previous Government, who is now a member of your Lordships' House, decided that there was no hope at all for West Cumberland. He was followed by a Commissioner for Special Areas, who recommended that the young people should be transferred out of West Cumberland, and that the old people should be assisted by way of social service and public assistance until they finally reached the cemetery.

These expressions, made by responsible people in those days, caused the people of West Cumberland to rebel, and out of that rebellion came the finest voluntary body ever established in that area. Irrespective of politics, work or anything else, the people combined to put their house in order. In some districts we had 87 per cent. unemployed, and an overall figure larger than that for any other place in the country, To-day, I am pleased to say, we have reduced the highest percentage of unemployment of 87 per cent. to 1 per cent.; and we have reduced the overall figure for the whole of the county from 35 per cent. to a little over 1 per cent. To-day we have 51,000 people working, where in 1936 there was work for only 16,000. We now have work for 14,000 women, whereas in the old days there was work for only 200. The other day I was talking to a man on one of the trading estates who wanted to thank me, my company and the Government for all they had done for him. I said: "I do not know you." He said: "I had six children brought up on the means test who never worked, but every one of those children is to-day working on these estates, and instead of the means test packet of 28s. a week we now have pay packets amounting to £30 a week."

That case could be multiplied all over the county. To-day in West Cumberland we do not talk about our area as one that wants charity. We have now proved that, given the chance, the people in those areas are as well educated and as adaptable as people in any other area of the country. I welcome this extension to the Act, especially after the experience in West Cumberland of successive Governments. It has given so much confidence to private industry in the area that more money has been invested by private industry in West Cumberland since the end of 1945 than was invested in any previous fifty years. Private industry has now the confidence that West Cumberland can stand on its own feet, and the people of West Cumberland now have confidence, through the aid that they have received, that they can stand on their own feet.

These development organisations are not charitable. Money is loaned to our company by the Government, who pay interest at a little over 1 per cent., and they make us pay 4 per cent. for using it. Besides putting people into work we have now a great economic asset to the country and to the district. The first property built by the Trading Estate Company is to-day three times more valuable than it was when it was built, and its value to the morale of the people and their health is such that we cannot measure it in terms of money. Why do His Majesty's Government ask now for these further extensions? We must have assistance in housing, because we must house the key worker. We cannot train 70 per cent. of the population three times in ten years, as we have done, without some assistance. We first had to train the people how to work, and I have had the experience of watching a father and his son training together. We then had 50 per cent. trained in war work, and since the war we have had to re-train that 60 per cent. back into civil work. We have fifty new industries with 123 new kinds of processes, starting from the unskilled and going to the scientific. Local authorities have had to make a complete turnover of all their basic services which were laid down for every industry; they have had to be modernised for modern industry.

In housing, we are far behind the rest of the country, because we had the longest period of distress. For every house built in West Cumberland, three were built in other areas. If we want key workers we must have houses, and I hope that the intention to give assistance will be implemented. We haw companies now who are prepared to form housing associations to build houses for their key workers, so that they can bring in those key workers and thereby bring in more employment. There is a fear that we might induce some key workers to come from Scotland or somewhere else to large development industries in our area. One of those industries is making scientific instruments which were formerly a monopoly of other countries. People cannot be trained to make scientific instruments overnight, and they have to be trained in relays. That is valuable work, and in that way we can make ourselves independent. There are also manufacturers from America and Canada who want to come over here to make heavy machinery. They want their key workers housed. We have been importing practically the whole of our heavy earth-moving machinery, and a great deal of our mining machinery. That is now being made on the spot. Why should it not be made in Cumberland? We have the coal, the limestone, the coke and the iron ore. We make the best iron and we make the best steel. We used to send it out, but now, for the first time in 400 years, we are making a finished product in our own district from the minerals found in the earth of our own county, and not sending those minerals out to make some other district a luxury area while we live in poverty.

I want to encourage anyone who will build houses to assist the local authority. Under existing subsidies many local authorities cannot build the required number of houses to house the people who have been on their waiting lists for years. If we can get the assistance of other people, it will be a valuable help to the area. In one instance we can find work for 1,000 people in a large war factory without the Board of Trade or anyone spending another penny in reconstruction, because the premises are there if the key workers' housing position can be solved. I also welcome Clause 1, which empowers the Board of Trade to take over existing buildings which are not fully utilised. The noble Lord, Lord Rochdale, referred to one factory which he knows used to employ 3,000 people but which to-day employs fewer than 700 people. It is deteriorating and wasting away. Why should we be building new factories when one is already standing with everything that is necessary—gas, water, electricity and everything else? I hope that when this Bill goes through it will be utilised to make full use of buildings already standing and thereby relieve the need to use building materials which are to-day in such short supply.

I should also refer to the transfer of workers. It is not only the transfer of workers which matters, but also the educational problem. To-day we have to work our schools in relays. We are compelled to have one class in the morning and another at night, so that the people who wish to improve their education can do so while they are following, their work. We, an ex-distressed area, have reached the point where the education authority are putting up temporary buildings because the demand for labour in West Cumberland is for people of university standard and not ordinary primary school standard. We have to find technicians and scientists. We have people of higher school certificate standard who cannot get into the universities but who are prepared to go into these industries if this assistance is forthcoming. I do not want to see this used to unbalance people—there are cases where people are transferring from high-class production. It may take those factories twenty years to get fully staffed so I hope those people will get some assistance.

There is another problem in these areas which is very difficult, and that is the question of transport. The noble Lord, Lord Bilsland, did touch upon this matter. I hope that the Ministry responsible for transport will straighten out our great difficulties in the West Cumberland area. We have the most antiquated transport system in the world. As a matter of fact, we have plans which have been in existence since 1865 and which have never been put into operation. We have been asking for outlets since that date, and we are still asking for outlets. We are told that we are isolated, and yet we are only thirty miles at any point from the main road. The transport conditions are so atrocious that modern stock cannot be used and you cannot move quickly. It was laid out for the movement outwards of heavy minerals, and was never intended for the bringing in of raw materials or the sending out of finished products. Above all, if we are to retain not only the new industries but the older industries, the freight charges in areas like West Cumberland must be brought down to a level with those in other parts of the country. Why should we have to pay more? I think the solution is to have an equalisation of charges, so that the people living in those areas will not be thrown out of competition on account of high freight charges. I trust that the equalisation of these charges will be considered by the Ministry responsible.

I hope that this Bill, which I gather is accepted with virtual unanimity—because it is not a political Bill: it is a human Bill—will prove successful. We who have been dealing with this problem of bringing people from distress and sorrow into economic stability, independence and happiness cannot but wish it well. This is indeed a problem; it involves all classes of workers—the unskilled, the semi-skilled, the skilled and the scientist. I wish to pay my tribute to the help we have received in West Cumberland. And to-day we are importing workers. We are giving people the chance to live in one of the most beautiful counties in this country. We think that if these difficulties were removed there would be no need for new towns, for people would like to come into such a beautiful county as Cumberland, with its lovely hills and lakes; and it is a sparsely populated area. In helping the key workers, in education, in allowing us to take over these buildings, and in the assistance given to private industry the County Council have shown an example of the team spirit. I thank your Lordships for the patience with which you have listened to me and for your support of this Bill. I, for one, welcome your Lordships' interest in this Bill, which will mean so much to the life of the people I represent.

5.12 p.m.

VISCOUNT RIDLEY

My Lords, I am very glad to have the opportunity in following the noble Lord, Lord Adams, of saying how well he has acquitted him- self on this the first occasion that he has addressed your Lordships' House. I have had the pleasure of being in touch with him over a long period of years in connection with the work he has been doing, and though I should not like to say that we who had been working on the North-East Coast are jealous of him and of the results of his work on the West Coast we should at any rate like to emulate his activities and his success. He spoke very modestly in describing the present situation in West Cumberland in comparison with what it was some years ago. He could not say what a great part he himself has played, but all of us know that the improvements there are due very largely-to the noble Lord's energies and activity.

I was grateful to the noble Lord who introduced the Bill for many of the things he said, and in particular for his reference to the skill and adaptability of the people in the development areas who are being re-trained and newly trained for different kinds of industry. That is an opinion which has been expressed locally in these areas for many years, and it is satisfactory to hear that the noble Lord also is able to express it. While supporting the Bill, so far as it goes, I would take the liberty of criticising—not in an unfriendly or unenthusiastic way but, I hope, in a helpful way—the methods which are being used in carrying out the work under the present legislation. The noble Lord said we were coming to phase two, but I rather suggest it might 'be phase three, because we still look back to the beginning which was made before the war, under quite different legislation and in an experimental way. The foundations of the present work were, in fact, laid then. It is difficult to say what would have happened had there not been a war, but it is undoubtedly true that, considering the time which elapsed after the beginning of the special areas legislation until the outbreak of war, quite a lot was done.

It is interesting to consider the results of the work of the Special Areas Commissioners. I believe that they were responsible for a good deal more effective and useful work than they have been given credit for—hampered as they were by legislation which was very strict and narrow in its terms. Phase two, then, began after the war or, rather, after the 1945 Act. I suggest that what we now want is phase three, and I think it would be putting it a little too high to say that the Bill before your Lordships to-day is in fact introducing phase three.

In considering the Policies which seem to he necessary to cure the difficulties which we find in these areas, it is necessary at this stage to go back a little and to consider the objects not so much in human or social terms, in the way of finding employment, but in terms of the economic facts which underlie the distribution of industry. I think we shall all agree on one supposition: that diversification of industry will offer a wider chance of continuous employment in any area where there is now too much industry of one type. But one must remember that the troubles which we had at the beginning of the Special Area Committees were largely due to the concentration in those areas of the heavy and basic industries. They were also closely connected with the fact that these industries were at that time almost our principal export industries; it was from them that a large part of our original industrial prosperity in the country as a whole was built. Are we quite sure to what extent we can afford to aim at a reduction in the proportion of these industries? Are we quite sure that in diversifying we are right in trying to make a distinction between capital and consumer goods industries at the present time? The industries concerned with heavy engineering and capital goods are at least among the most prosperous in the country. I do not expect an answer to these questions to-day, but I think we have arrived at a time when a new assessment of the objective in these terms might well be made.

We have arrived at the stage where unemployment has been very substantially reduced. In the North-East, an area which I know, it is down to a little over 3 per cent. This, of course, is still more than double the rate existing over the whole country, and we are faced with the prospect of an increase in that figure. The noble Lord who introduced the Bill referred to that matter. We have to face in a certain area in North-West Durham an almost certain reduction in the number of men engaged in coal-mining, following reorganisation by the National Coal Board. Probably similar plans are made for other areas. It is a question of closing the least economic pits and concentrating production on those which are most worth while. We are told that a large number of men are likely to be redundant in that part of the country and are not likely to be absorbed elsewhere. We have not yet been given any definite information as to numbers or the expected dates, but the prospect seems to be almost a certainty.

We also have the possibility, to put it no higher, of reduced employment in shipbuilding, ship repairing and marine engineering. Nobody knows that for certain. At the moment, it looks less likely than it did. There are people who have been making strict comparisons between the numbers at present employed and the numbers who were employed in 1938 or 1939. I do not believe that any of these comparisons is reliable, because the conditions are not comparable. So many factors surrounding them have changed in the intervening time. Methods of construction and repair, and types of auxiliary machinery and fittings have changed considerably and are bound to affect those figures as figures. Unfortunately, I think we are justified in having some fear that there may be in a few years' time a number of men in those industries who are likely to be out of employment. Both these problems which we may have to envisage are problems of the employment of men. It is on the employment of men, rather than on the employment of women, that I feel we must now begin to concentrate. It is a most difficult question to face when we have arrived at a stage where unem- ployment is 3, 4, 5 or 6 per cent., even in a small part of one of the development areas—a very small figure from which it is difficult to get skilled men of the category required for any new enterprise. It is difficult to decide immediately whether a factory should be built, on the probability of men being half-employed, while the men are still working in the shipyards. I think it is going rather to the extreme to imagine two alternative continuous forms of employment operating side by side.

We have, however, quite definite indications of some parts of these development areas where there is room for improvement, and there are much more definite indications in the mining areas such as the one to which I have referred. But I do not think it can be claimed that in meeting these difficulties the present Bill is anything more than useful. I believe that what is required, in order to go to phase three and take a further step in planning with a view to a change in the structure of employment which may be necessary, is a different attitude in the administration of the present Act and also, later, of the measure which we are now discussing. Until the Government decided that it was necessary, for reasons of economy in foreign exchange, to restrict the programme of capital expenditure, we had arrived at a situation whereby a large percentage of new factory construction and extension which was going, on in the country was in fact being done in the development areas, When that time was reached, the general instructions under which the Government machine operated were that no new factories were to be erected and no large extensions were to be built unless they satisfied the needs of dollar exchange. They were to be either firms manufacturing goods which we could export for dollars or firms manufacturing goods which we could consume here and thus save importing goods from dollar areas.

That, in a general sense, was an inevitable result of the situation in which we found ourselves, but it had a very definite result on the progress which was subsequently made in the development areas. I apologise for quoting figures to your Lordships and I will make them as few as possible, but the number of factory buildings which were built in the whole country in 1947, according to the statistics which I have been studying, was 831. Of these, 36 per cent. were in development areas. In 1948 it was 1,053 and of these 21 per cent. were in the development areas. In 1949, of a total of 2,341, 16 per cent. were in the development areas. That, of course, refers to the numbers of certain types of building, and does not say anything about the expenditure on them or the numbers employable in them. But here, over a range of figures of that sort, it is possible to say that the numbers employable in the buildings in different categories will be at much the same rate. So there seems to be there definite evidence that the policy of restricting new buildings to dollar-saving industries is having a serious detrimental effect on the further provision of permanent employment which may be made in these development areas.

I believe that it is worth looking further ahead and considering whether it would not be wise in a few selected places to build up our employment capacity without always having regard to dollar-earning policy. Of course, the present restriction operates in two ways. First, it prevents the building of a factory in a development area for any firm who have not any dollar potentialities in kind. Secondly, it rather adds urgency to the needs of firms outside the development areas which are important in the dollar exchange situation, because it is so much easier for them to say: "It is quite impossible for us to move into a development area. We are earning so many dollars that we cannot be disturbed. We must have our extension alongside us." To what extent those two factors operate individually I do not know, but I think that the total of the two is having a detrimental effect on the objects which we are after in this Bill.

Further, we must now consider the results of this policy, not in totals of people employed or hoped to be employed but in the kind of employment which has been achieved. We have results for the North of England development area. Over the period from 1945 to the end of 1949, they show that in all the factories built, whether privately financed or Government financed., whether war-time factories or adapted Royal Ordnance factories and so on, of an employment potential (which is an expression used to describe the number of people that each employer anticipates he will employ in his factory) of 88,000 people, 43,000 are to be women. By comparison the results actually achieved are of course even less satisfactory. They show a total of 46,000, and they include 24,000 women and 21,000 men. It is a very good thing to be able to provide employment for women and to increase the family income; it means that the purchasing capacity of the family is improved in many ways. I submit, however, that it is a great pity to do more for the employment of women when there are still probabilities and, in some smaller areas I would suggest, even certainties that there are likely to be men unemployed. It seems to me entirely wrong that there should be any risk of the men not having work whereas their wives have opportunities for it.

I know that the question of employing men or women has been discussed and has exercised the minds of those in Government Departments responsible for it, but I believe we have now to think again. We must have a positive approach anti think out how we can get industries which employ men. Let us not allow any more factories employing women to go to such and such an area. This scheme started off with great enthusiasm. It was operated at first in a simple way, merely by the granting or refusing of building licences to firms. Indeed, at the beginning any firm which had any possibility of employing a number of people was either given a building licence or had a factory built for it; it was merely a question of saying how many people it was going to employ. I am not saying that in too critical a spirit, because I think it was right to start off with enthusiasm to build up the totals; but now it is right to be a little more critical.

I think it is no good waiting to see what firm in an area outside a development area is going to ask for an extension or for a new factory. We must now look through the whole range of industry and determine which is likely to be an expanding industry which will employ men in the near future; and we must approach the firms and try to put the idea into their minds that if and when they expand (as it seems to us they will have to, because of certain economic trends), they had better think of the development areas. It requires a sort of analysis followed by the right kind of salesmanship, and that means an emphasis in the opposite direction to that given by Government Departments so far. Unless we adopt that method, I do not think we shall be able to achieve much more permanent improvement.

It is rather difficult to say how it is to be done. Perhaps there is no real part of the Government machine which is ideally suited for it. Whether the trading estate companies or the industrial estate companies, as they are otherwise called, would be the people to do it, I do not know. I do know, however, that before the war the company with which for many years I was connected did attempt in a tentative way to carry out that policy. We undertook a certain amount of exploration in salesmanship, and I do not see any reason why anybody engaged on this work should not be encouraged to do so. Of course, it means a certain slight change in the relationship between the companies and the Board of Trade. The companies are now much more closely within the Government machine than they used to be before the war, and are much more subjected to day-to-day close working with the Departments. In that way they lose a certain amount of the independence, the initiative and—I do not say the enthusiasm, but the freedom with which they started off in trying to tackle this problem. I hope the companies may be encouraged to think for themselves rather more than perhaps they have been invited to do lately, and work to tackle the problem in that new way.

I referred earlier to part of County Durham where it was almost certain that the National Coal Board would have to close pits and reorganise in such a way as to make a number of men surplus. It is impossible to obtain any knowledge of how many those are to be, or even precisely where they are to be. Many of us there have been working in an independent organisation, mainly concerned with research into these problems, and thinking about these matters for a long time. We have the benefit of the research departments at the university, and of the research of others experienced in business and trade union life, and so on. A group of us, together with an association of local authorities, have been trying seriously to study this problem. We have collected as many facts as we can, but we Lind it impossible to get any information from the National Coal Board as to what they intend to do. Here, surely, is a clear example of how a thing could be planned if the planning were set about in the right way. There must come a stage at which the coal mining national plan and general policy must be resolved; there must be a decision at some time. Had it not better he, if possible, accelerated? To start with, an estimate of the number of men who may or may not move should be made, and a definite step should be taken in that area of North West Durham, coupled with a combined building of factories. There should he a much more positive approach to industry, a careful search for and analysis of suitable kinds of industry, and a combination of all these methods to try and solve the problem—and in that particular locality it is an extremely difficult problem indeed.

I regret to say that in that part of the country nothing has been done. Some land has been bought for possible use as factory sites, but nothing further has happened there. It is such a difficult problem that everybody concerned has felt rather inclined to think it over carefully before moving on. But, clearly, the time must come when something must be done. Furthermore, we have no knowledge at all of the results of the research work on these problems which has been done by the Government, both centrally and regionally. I see that during the discussion on this Bill in another place, the President of the Board of Trade referred to the useful and effective work done by his research organisation. I am sure that work has been done, but nothing has yet appeared that the public or those interested in working on this problem can get to know. It is rather a misfortune that all this work should be closed in within the Government machine without drawing on the interest and enthusiasm of many other people who are interested in it. Of course, I know of the activities of what is known as the Clay Committee, who are advising the Government on the future design of research staffs for this purpose. A certain amount is being done and it is a pity that it cannot be brought to a head and be made available to those interested.

My Lords, the things I am suggesting are really matters for administrative action under the present Acts and also under the new Bill. In passing, there is one point to which I should like to refer—namely, what happened to Clause 9 in the 1945 Bill. That was the clause which was taken out by Parliament. It provided that no factory should be built or extended substantially without the approval of the Board of Trade. It was taken out because it was felt in the non-development areas that that was going a little too far. It was then put into the Town and Country Planning Act. I regretted that very much, not because I did not wish to see it used in order to help in the development areas but because I felt that it was being put in the wrong place. I believe that what is happening now is that in the non-development areas it is impossible for the Board of Trade to give certificates for certain building because it is not for a development area. And from what I hear they have felt bound to give certificates for factory extension which, although not the same as a building licence, does form part of planning approval. I think that that is a matter which probably needs to be studied again. I should have liked to see something in this connection put into the distribution of industry legislation and taken out of the planning legislation—not necessarily the clause as it was originally, but perhaps something of the sort, though less strict in its wording.

So far as it goes, this Bill seems to me a very useful measure, though I have some doubt as to the extent to which some of the matters contained in it are necessary. I wonder very much whether some of the things which are provided for are not being done at the present time. Take for instance Clause 2, in which power is given to do work on land by agreement. I should be very much surprised to learn that, in fact, that is not already being done. And indeed why should it not be so? If this present legislation has corrected a mistake in that respect so much the better. Clause 3, I think, might be useful in exceptional cases. I am, however, a Fide puzzled—and I saw nothing in the reports of the debates on Second Reading in another place which enlightened me—to know exactly how persons affected will be better off than they are under Section 4 (1) of the existing Act. The wording is not the same, but I should have thought that Section 4 (1) of the existing Act very largely did what is now proposed. However, if it is thought that the present words give more adequate powers and if it is the intention to use them—as I have no doubt it is—with discretion and wisdom, I am all for them. There is another point in that connection. Section 4 (1) in the present Act has been used to make annual grants or loans. In a large number of cases Government factories have been let at rents which are in fact less than the present economic cost. This inducement was one of the things for which those of us concerned in these matters were always pressing, and I am glad that it is now being given. It seems to me that it is a substantial inducement which, used in the proper way—it cannot of course he granted in all instances; every case will have to be considered on its merits—will be very useful.

Clause 3 (2) gives power to make grants to housing associations when the Board are satisfied that the grants or loans would further the provision in a development area of dwellings for persons employed or to be employed in the area. In the existing Act, Section 3 (2) allows any Minister of the Crown to make grants or loans towards the costs of meeting services, and the services include houses. It may be said that here housing is itself the object, and that providing it for key workers and management personnel is not a basic service but a particular one. Nevertheless, I welcome this provision, because over the last two or three years the President of the Board of Trade has undertaken to make substantial loans to the housing association of which I am chairman for the construction of houses for management personnel. We are building quite a number of houses, and the Board are lending us a substantial amount of money. I gather from what is in this Bill that it must have been illegal for him to do that at the time, and I am glad to think that the operation is now being legitimised. In view of recent legislation, however, I am a little surprised that this has not been made retrospective.

I would not have your Lordships think that I am quibbling about the powers that are put in this Bill. I am not. I am, however, surprised that it is necessary to put all of them in, and I am sorry that the Government have not been able to be a little more imaginative in their approach. I believe that a new assessment of the administration in this connection, along the lines which I have endeavoured to suggest, will provide the right means for finding a proper solution of the problem. We must look at the problem as it is to-day, combined with what we can estimate for the future in such matters as the trends of the economics of this country, rather than hark back to periods before the war and recall what unemployment there was then and what conditions, generally, existed. It is only by following such a line that we shall be able to create a new and balanced structure. It will take a long time but, speaking on behalf of many in the North who are concerned about this problem, I say that I appreciate the intentions and aims and objects of the Government, and the way they have kept them in view in framing this distribution of industry legislation. In making these criticisms and suggestions I hope that the noble Lord who moved the Bill will appreciate that the points I have stressed derive largely from our experience over a number of years in watching this problem and in thinking about it.

5.47 p.m.

LORD PIERCY

My Lords, the scope of this Bill is limited, but what it does try to do is useful. I think it is in the spirit of the observations of the noble Viscount who has just spoken if I say that even if some of the matters dealt with in it might seem to fall within the scope of the existing Act the present Bill does serve to throw them up in clear and useful fashion. As concerns the powers for the Board of Trade to acquire existing premises, it seems to me there must be sense in buying rather than building if there are buildings available, subject to proper safeguards. So far as I can make out, the words added to the relevant clause of the Bill in another place satisfied those who were critical in that respect. The extension, if it is an extension, of the power to grant removal and resettlement expenses to workers moving into development areas seems to me a very useful provision. The rubric of Clause 4 speaks of "key workers." I fancy that the words of the Bill go a bit wider. I do not complain; for it seems to me that anything which will promote the mobility of working people is a good thing. It is certainly true that in many cases you need to move key workers into development areas. I had a point on Clause 3 of the Bill which enables the Board of Trade to make grants to meet exceptional costs in respect of expenditure or loss arising in connection with the establishment or transfer of undertakings to development areas, and which further empowers the Board of Trade to make grants or loans to housing associations. I think the principle there is good. I was particularly pleased with the reference to transfer of undertakings. As many of your Lordships know, there are two sides to the problem of bringing new firms into development areas. On the one side there are inducements, and on the other what might be called negative sanctions. For instance, a man might have an excellent business in Clapton and what he may think is a certain increase in business if he can extend his plant and premises. He is told that he cannot extend in Clapton. After trying every possible avenue, he finds he cannot get anything in London, but he is offered factory space in South Wales. It may be, if he is sanguine enough, that he will accept the factory space in South Wales. I know of two or three cases of that kind which have ended in misfortune, where concerns have set up another factory 200 miles away and have found that they could ride one horse but not two. Situations of that sort can perhaps be more reasonably solved by the provision of powers to make a contribution towards the expenses of moving an entire undertaking, if it is practicable and economic and appeals to the owners of the undertaking to do so.

The point I want to make on that provision is a little different and rather on the lines of the remark of the noble Viscount, Lord Ridley. When one sees the provision for making grants in this Bill one is bound to recall Section 4 (1) of the 1945 Act, which gave the Treasury power to make grants and loans to concerns in development areas on the recommendation of the Board of Trade. To a layman the powers in that Section might have seemed sufficiently wide to cover the objects of the grants mentioned in the present Bill, but I think I should be right in dissenting from the noble Viscount, Lord Ridley, and saying that the Treasury have never used the power to make grants under Section 4 of the 1945 Act and have confined themselves to making loans. There may be some legal catch in the 1945 Act. Therefore, I can understand that this provision in the present Bill may be useful, if it is properly used.

Of course it gains by being expressed in the concrete form of indemnifying an undertaking for the expenses or loss incurred in establishment or transfer. But a certain element of doubt still remains in my mind. Under the 1945 Act a somewhat elaborate machinery, in fact a rather high-powered Committee, was set up to advise the Treasury in connection with these loans and grants. In this Bill we have the grant-making power vested in the Board of Trade, not in the Treasury, and this Committee, having been set up to advise on loans, does not come in on grants. It seems that there will be two separate founts of financial assistance for these undertakings. There may be an explanation of that. Perhaps it lies in the fact that the Board of Trade, in spite of the wide wording of the Bill, mean to limit the exercise of this clause to specific things and to purposes extremely limited in time. However that may be, it leaves one with a slightly uneasy feeling to see that we are giving money for various purposes in the development areas from three sources—the Board of Trade, the Ministry of Labour and the Treasury.

So much for the Bill, with which no one quarrels. As the noble Lord who introduced the Bill said, this is an opportunity to say something, not of course much at this hour, on the principles of the policy—and a good deal has been said. What I should like to say, and I would back it up with a few practical arguments, is that the administration of this so-called distribution of industry policy is by no means a simple and easy matter, and the difficulties tend to be a little under-rated. The whole conduct of the policy tends to be simplified. To put that point in its right light I should like to say a word on general theory—not on the slogans about "taking work to the workers" and "grouting the special areas" but just on the pure theory. That undoubtedly originates in the notion, rather derided in another place, of structural unemployment. Structural unemployment refers to cases where some part of an industry disappears more or less permanently. It is not merely a matter of a temporary variation in the volume of unemployment in an industry, but a case of part of an industry become moribund. Structural unemployment became prominent in the 'twenties, the fundamental reason being the restriction of certain markets overseas owing to changes that had taken place in the distribution of world industry. Being largely an exporting country, with large industries based on export, we were and still are vulnerable to changes of that sort and liable to structural unemployment arising from that cause. In the domestic sphere the closing down of pits is something comparable, causing in a strictly local area the disappearance of employment.

Structural unemployment again may arise through new inventions. The great example of this is the introduction of the strip mills in South Wales, rendering the old fashioned rolling mills obsolete and destroying the raison d'être of a large part of the industry. Thirdly, structural unemployment may arise out of the drawbacks of too much specialisation in industry in a certain place. For instance, extreme fluctuation in such an industry as shipbuilding causes recurrent abnormal unemployment. We can have an industry which tends to throw out a certain number of men at an early age, mostly because of occupational diseases, such as silicosis, or because at a certain age men become unable for heavy work. They may be highly successful industries, but these are some of the drawbacks which cause structural unemployment. And we have the case, often found in areas of heavy industry in the past, where there is excellent employment for men and none for women. It is upon that rather compact range of analysis that this policy is founded.

What are the objects at which we should aim? In the first place, if we have structural unemployment in the first of these two senses we have to apply measures of correction. It may be to take work to the workers, or it may be the alternative, which has by no means been sufficiently considered in the past, of wisely devised measures for the transference of population. I know the argument against this: that we have the whole social apparatus there, that people are living in their homes and do not want to move. No one who goes in a train through the Midlands, and the North can rate highly the social appara- tus in the shape of the squalid housing that he sees from the windows of the train. Apart from correction like that, which means either moving in new industries to take up the surplus labour or doing something to transfer part of the industry, which deals with the first type of structural unemployment, you may deal with the second type of structural unemployment by trying to bring about a balance in the local industries which takes off the edge from the acute unemployment in the case of a depression. In a place where there is no employment for women you may introduce employment for women. In a place where a large number of men are thrown out at an early age, or partially disabled, you may introduce policies for specially employing them—you bring in the light industries to balance the heavy. Where you have acute cyclical fluctuations, which may be in a capital goods industry like shipbuilding, you may be able to bring in consumer industries.

Those are the obvious lines of policy, and they are more easily stated than carried out. The point I wish to make on that slight sketch of the theory is this. Supposing you have analysed the problem and applied policies along those lines, although you have made the area as a social unit less vulnerable to the onset of special unemployment you are still bound to be left with the liability to acute unemployment in that part of your major industry, whatever it may be, which remains there. The only remedy for this would be—as somebody said in another place, and as was touched upon this afternoon—if in some way you "double-banked" your industries, so that in time of trouble the shipbuilder would have a ready-made industry in the locality to which he could go, and there would thus be alternative employment. That, obviously, is fantastic. To measure fairly what you are after in the development areas policy, it is to produce a better social balance in the place, to get fuller employment and, by diminishing the proportion of employment in the major and specially vulnerable industry, to make the total area of devastation (if I may use that word) in the time of deep depression smaller than it otherwise would be. But on your industrial map, when you look at the figures of unemployment over a period, you will see, and always will see, the special conditions of these areas of great export industries showing through, just as I understand that from an aeroplane you can see showing through the grass the remains of a Roman settlement.

That being the picture, I come back to the practical point I want to make on the administrative side of this policy. We have heard a great deal to-day—some of it enthusiastic, realistic and thoroughly justified—of what has been done in the development areas. I want to apply the necessary corrective to that by pointing out that none of it is so easy as it might seem. I admit that the whole apparatus is much more effective than it was. The trading estate as a device was developed before the war. That was excellent. The development area as a new administrative device is again an excellent invention. It de-limits the area you are treating, and enables you to apply your remedies within that area; and you can therefore apply more potent remedies than if they were general measures. But in development area policy the Departments concerned need to be very sparing in exercising the power of scheduling development areas, as they might easily schedule too many, with the result that they would merely create a problem outside those areas. John Morley said that dealing with a social problem very often was like trying to knock down with a hammer a bubble on a steel plate—the bubble always came up on another part of the plate. Whether his physics were right or not, that metaphor is applicable to social policies.

The essence of starting and running a development area is to plant in new undertakings. Practice shows that you have to offer inducements. Merely to offer factory buildings was a great inducement a year or two ago, and it may still be so. Incidentally, I hope that the factories we have built are reasonably fully occupied. I did not quite catch the figures when the noble Lord, Lord Lucas, spoke, but I assume that that is so. Factory space combined with local labour is undoubtedly a potent attraction, and if you fix a low rent as well—a sort of concealed subsidy—that makes it even more potent. But there is the other side of the problem of finding such new concerns to plant in the area as will take root there.

During the last few years a financial concern which I know about has had an insight into the affairs of some 300 companies, new and old. Over a period of five years it was inescapable that a certain number would get into trouble. Equally, of course, in the administration of a concern of that sort one is perpetually looking over these cases and trying to understand them. Anti in my experience this fact has emerged: out of the experience, as I say, of about 300 concerns, all those which haw run into difficulties over the last five years are, with one or two exceptions, new concerns started since 1945, or which developed out of concerns started during the war.

That is a striking fact. One would expect to find it in the development areas, too. We have had some experience of development areas; and what we find is that the proportion of trouble is much greater there, where the concerns are mostly new, than in the country at large. In this period of five years we have assisted some forty-five undertakings in development areas, and of those thirteen have run into trouble. We have invested in those forty-five concerns a little over £2,000,000 The provision we have had to make against losses is £300,000, which is nearly as large a figure as we have had to provide in respect of some £16,000,000 invested in the rest of the country. The inference I draw is that not only is new industry vulnerable in the country as a whole but that it has up to now proved to be specially vulnerable in the development areas.

I do not suppose the officials concerned would be prepared to deny that in 1945–46, when this policy began, the selection, which no doubt was difficult, proved also in many cases not to be particularly good. It may be that in those days, when a firm was brought into a development area and given valuable factory space, there was not sufficient insistence on good industrial experience, proved management capacity and reasonably adequate means. But without those three things, and without a position in a good trade or industry, it is extraordinarily difficult for any concern to go into a development area and make good. Now development areas, even at present, offer many privileges for the incoming industrialists, and.those privileges are increased by the provisions of this Bill. I think the selection cannot be too rigorous even if it means a certain proportion of "empties." The develop- ment areas, so far as they consist of small concerns and not concerns like the British Nylon Spinners, should be a nursery of sound industries not a sort of Robin Hood's Cave to which broken and landless men resort.

I should not like to end on a note of criticism. If this were a Committee debate, I should have a number of detailed points to make about the administration of the trading estates companies, and the policy generally. Instead of that, I should like to say that, taking it by and large, remarkable progress has been achieved in these development areas. Great energy and great faithfulness has been shown by the industrialists and administrators like Lord Bilsland and Lord Adams who have taken the burden of the day. A great many of the regional offices of the Board of Trade are excellent, and to-day their officers are experienced people. All the same, I think that the testing time of the development area policy is still to come. It is a policy which should be recognised by all those concerned, the Ministers, the Department, and the local organisations, to be an extremely difficult policy. If you are going to pluck success, it will be like plucking honey out of thorns, and the utmost skill and care is needed for that.

6.12 p.m.

THE EARL OF SELKIRK

My Lords, the noble Lord, Lord Lucas, will agree that we have strayed a good way beyond the comparatively narrow limits of the Bill we are discussing. However, I do not think he will complain, because he gave us a fair example himself which took him a good long way from the Bill. This discussion has been remarkable, particularly for the two maiden speeches, and I should like to associate myself with congratulations offered to the two noble Lords. The noble Lord, Lord Bilsland, spoke with wide and long experience of the position in Scotland. He is regarded, and always has been, as the embodiment of wisdom on that subject, drawing experience over a long period. And I do not think anyone could think of West Cumberland without at once recalling to mind the name of the noble Lord, Lord Adams.

The noble Lord, Lord Lucas, has introduced this Bill with great frankness. He has told us of the difficulties which confront us as well as of the progress which has been made. The third phase which was suggested by the noble Viscount, Lord Ridley, is one in which the development areas become gradually fused into the whole country. Of course, their work is not at an end, but it will gradually assume a more comparable position with the rest of the community. It is important to try and put them in their position both in space and time. So far as space is concerned, I should like to recall the words of the fifth recommendation of the Montague-Barlow Report which I think still stands: The continual drift of the industrial population to London and the Home Counties constitutes a social, economic and strategical problem which demands immediate attention. I will not stretch that problem further, but I understand that in the last five years —I may be wrong in this figure, but if so I am sure I shall be corrected—something of the order of 19 per cent. of the industrial building of this country has in fact been carried out in London and the surrounding country. That means merely that we have reached the stage when London and the surrounding country are getting their fair share. Admittedly before the war they were getting more than their share. I admit that bombing has made it necessary to replace a good deal, but it still seems to me that we are not facing up to the problem envisaged in the Montague-Barlow Report. Arising out of that matter, I would ask one question: Why is the National Coal Board in London? Is it more important that it should be in contact with the political forces or with the mining community? I say, with respect, that it should probably have been centred in a mining area, possibly Yorkshire, but I do not think that the place for the National Coal Board and other national Boards is necessarily in London.

I have dealt with space, and now I should like to turn for one moment to the element of time. I think it is a great pity to consider the development areas apart from the time element; in this I am afraid I must take my own part of the country, because I do not know the details of other areas although I do not doubt that they are substantially the same. It is fair to say, speaking of the central coal belt in Scotland, that in the last forty years there has been something approaching a complete revolution. The number of those engaged in the coal industry has been reduced to nearly one- third of what the figure was in 1910 or 1911. In one town with which I am closely familiar I believe that in 1910 there were 11,000 men employed, and today there are 1,000, all of whom have to travel. That represents an enormous change. I may carry the point one stage further and say that, whereas in 1930 35 per cent. of the population were engaged in coal mining—and here I confine myself to the county of Lanarkshire—to-day there are only 16 per cent. That means that in twenty years the numbers not engaged in coal mining have doubled, and you cannot account for that entirely by the alteration of the level of employment. What is significant is that during the whole of that period the net population of the whole area has not diminished.

I should like to draw one or two deductions from what has happened there. The population of this country has great immobility: it is extremely reluctant to move. That is quite apart from housing problems and other difficulties. I think it is fair to say that that is rather a good thing. I would again take as an example the county with which I am most familiar, Lanarkshire. What, in fact, is the expenditure in that county on development of roads, sewers, services, housing, and industry? It is obviously a guess, and one could guess at different figures, but I think it is certainly conservative to say that it is not less than £100,000,000—it may be £200,000,000. Now £100,000,000 is at least three times the total Government expenditure on development areas over the last five years, and the area concerned is about one-twentieth in population of all the development areas. I am seeking, therefore, to put in proportion what is being done in the development areas compared with the whole development of the area concerned. What would happen if these areas were allowed to develop (as they have been in other places like America) into ghost towns and the population went? The whole of the development of sewers, services, and houses would become useless and wasted expenditure. It is undoubtedly sound economic policy to see that these areas are developed and maintained to the highest value possible.

The second point is the maintenance of established industries. I submit that the increase of employment is probably, to a great extent, due to established industries. I do not underrate the importance of the development schemes, but in the area I have in mind the increase of employment since 1920 is, I think, about double—60,000 people. Not more than 10,000 of these are directly attributable to the industrial estates. I think those figures are roughly right. This means that the established industries must be maintained. We have heard to-day about Government contracts in development areas. The President of the Board of Trade has expressed some dissatisfaction in this matter and I am glad that he is dissatisfied, for I have never heard of anybody in a development area who felt he was in an advantageous position in respect of a Government contract. I am sure that more care should be taken to see that the nationalised industries do not damage established industries in development areas.

Perhaps I may be allowed to refer of the ordering of wagons and coaches. Many of these are made in development areas. There is only one customer of any importance in this country—the Railway Executive—and if that contract is not placed with great care it may result in wiping out some existing industries. Or take mining machinery. It is common knowledge that the National Coal Board have grossly over-ordered mining machinery and in fact they have imperilled the very existence of some of the finest industrial plant in this country. The Board have actually had to sell mining machinery in South Africa in competition with machinery produced in this country. It is no use building up development areas if you are going to take away with one hand what you have given with the other. This is a matter which requires very careful consideration indeed.

The third point I wish to mention is that of secondary labour. This also is a matter which requires careful consideration. May I take again the county to which I have referred? The present developments show a likelihood of an increase in jobs of about 9,000. The number of unemployed is 8,000. If anyone thinks that those two figures fit he is just "kidding" himself, for 50 per cent. of the 8,000 is composed of secondary labour and many of those men do not fit in with ally of the schemes. Neither Remploy factories, rehabilitation centres, Government training schemes, nor indeed the Register of Disabled Persons, fit their case. There are certain factories which are of a storekeeping character, and these could be used for persons of low physical and even low mental capacity. There is another course which is suggested to me by what the noble Lord said in introducing this Bill in speaking of green labour, and that is to take some of these men—in my own area two-thirds of them have been unemployed for one year or more, and I should be surprised if the figures for other areas were not much the same—and give them a subsidised wage for a short period to see whether they can be drawn out of their sterile occupations. I know that that suggestion might be regarded as a bold one in some quarters and looked upon with disfavour, but something must be done which is not being covered by the present development. Diversification will not do this particular job: something more is required.

There ought to be greater decentralisation to the areas concerned, particularly the industrial estate boards. Efforts have already been made to get responsible individuals to run these organisations, and I think that some degrees should be recognised. Noble Lords have spoken about housing and about transport; a great many of these problems could be dealt with on the spot. But there are three things in particular which must be the responsibility of the State industrial boards. The first is their relationship with their tenants: a tenant must know to whom he is responsible and with whom he makes his rent agreement. The second is responsibility to their staffs. This is tremendously important, for the staffs are very fine people. Thirdly, the industrial estates should be responsible for amenities. Every effort is now being made to make industrial conditions attractive in industrial estates.

It is of the utmost importance that the scope in which the Board of Trade authorise development to take place should be broadened. It is quite wrong to use the Distribution of Industry Act as a means of bolstering up foreign trade. That is just nonsense, and it is not the intention of the Act. The intention of the Act is to build up and strengthen the economic life of the areas and to create a dynamic economy. This development should not be confined to dollar-earning industries. It is absurd to ask a man with a factory of, say 1,200 square feet or whatever it may be, if he is going to earn dollars, when the wretched man who wants to operate has not the foggiest notion whether he can earn anything at all. I am wholeheartedly behind the distribution of industry, but I think it is important that it should be kept in perspective. It is of the greatest importance that industries should not be allowed to damage other areas. Moreover I think it is very important that the scheme should be of lasting effect. We know how industries are established, but we also know how industries fail. This matter should be constantly under review. I personally have much pleasure in supporting this Bill.

6.28 p.m.

VISCOUNT ST. DAVIDS

My Lords, I wish to speak on this Bill from two points of view. First, I am myself a small manufacturer who has moved a business into a development area since the war; and, secondly, I believe that I can say something of value on the subject of Section 4 of the Distribution of Industry Act, 1945, which may be relevant to the provisions of this Bill. My excuse for speaking at this late hour is that I do not believe I have ever yet bored noble Lords—for the simple reason that I have never spoken long enough to do so. I have made it a practice never to speak for more than a quarter of an hour, or twenty minutes at the most, and I shall keep within those limits to-night.

Something occurred in 1945 when Section 4 of the Distribution of Industry Act was going through, which I do not believe Parliament intended. It was stated in the Bill that the Advisory Committee should have power to advise the Treasury to make loans or grants to industries moving into these areas. The two possible courses are obviously intended to meet very different circumstances. For example, an industry which was not over-strong on the capital side might be a very good runner in a new area if its capital were slightly strengthened by a loan. That loan, of course, was for a purpose which would bring revenue to the company and would thus allow the company to pay back the loan, plus interest on it. A grant was for something quite different. It was, in my opinion, for something which needed doing and in fact, as your Lordships have already heard, had not been done.

A grant was to take away from a company a disadvantage that any company or industry must suffer if it moves into a new area where nobody will know the methods of the new trade. It will have to sit down and train every single one of its workers. I know this. I have done it with my own company. We started our particular trade hundreds of miles from anywhere where there were already trained workers. In fact, it cost us about £100 a head to train our workers. If we had moved into an area where such an industry was already established, we could have taken unemployed workers already trained in that industry and employed them at once. As it was, we had to train them, and we suffered a disadvantage which we should not have suffered if we had not gone to that particular area. For that purpose a grant might have been in order.

When the Distribution of Industry Act was going through Parliament in 1945, a clause was in fact put in, quite justifiably, which I believe was meant to apply only to loans. I cannot remember the exact number of the clause, but it was a clause to the effect that this loan should be given to a company only if the capital of that particular company was insufficient. That was perfectly justifiable for a loan and a sensible provision, but it stultified altogether the purpose of the grant. It meant, in fact, that the grant and the loan were tied together, and that a firm could not apply for a grant unless in fact they were already short of capital and therefore needed a loan. As a result, of course, the Treasury gave no grants but gave only loans.

That is the position to-day. It seems to me that there would be a considerable case for clarifying that position in the present Bill. I think that should be done. However, I agree with the noble Lord, Lord Piercy, that it seems odd to set up another body to finance industry when we have already not only the banks, the I.C.F.C. (which the noble Lord, Lord Piercy, runs with skill and care) and, of course, the Treasury Advisory Committee, but now also the Board of Trade doing the same job.

I want to talk now more about the position of the small manufacturer. After the last war, I set up my little textile business in Pembroke, which is a sort of "little pup" off the distressed area of South Wales. It is even more isolated than any other distressed area in the country. As it is a dead end, its communications are not of the best, to put it mildly. But I have found definite compensating advantages. I know that my transport costs are higher than normal. That is a disadvantage which might be looked at. I might add that it is not only the cost of transport which is a disadvantage; it is also the infrequency and other aspects of transport, quite apart from its cost. But I have found that the workers in the area were as good as those to be found anywhere. I have found that at Pembroke, and I believe it is true of anywhere in this country.

I believe that in this country we have the most flexible set of workers anywhere on earth. If anybody doubts it, let him remember what happened in the last war. We were faced with trained professional armies, trained almost literally from their cradles. We sent out to fight them a most wonderful conglomeration of what started as armed civilians, more or less, and within a comparatively short period of time they were heating the professionals of other countries. We know, for they did it. They were trained in the Armed Forces, then they were re-trained in industry and they picked up their new trades. Nobody will deny that they did them very well. The same is true of peace. Any man or woman can, if he or she wishes, sit down and in a comparatively short time learn a new industry. When he has learned that job, which does not take long, I believe that he can be backed against any worker on earth, and against most of the old workers who have been doing that trade since boyhood.

That period of training, however, does cost a firm which is moving into these areas a considerable sum of money, not only in wasted time and low production but also in the spoilage of materials. In some cases, in some trades, of course, the materials spoiled may be of considerable value; they may be scarce and hard to come by. Therefore, I believe that we need something particularly done about this subject of grants. So far as my own business goes, of course, it is now too late. We ran through by ourselves and carried it on our own shoulders. We managed it and we bore our own losses. But it is a serious matter for a small firm which has a very small capital. That should be seriously looked into if we intend to move as many new industries as we would wish into these areas.

6.39 p.m.

LORD LUCAS OF CHILWORTH

My Lords, may I first add my congratulations to the noble Lords, Lord Bilsland and Lord Adams, on two of the best speeches which your Lordships have heard for many a long day. It is remarkable that two of this country's greatest experts upon this subject should make their maiden speeches on the same afternoon with such force, with such knowledge and with such conviction. I feel elated to think that we shall in future be reinforced by two such experts in our attempts, attempts not only of the Government but of all noble Lords in every part of this House, to grapple with this great problem. I thought the noble Lord, Lord Bilsland, did well to call attention to the problem of redundancy which will occur in the shipbuilding and ship-repairing areas, as well as in the mining areas. My noble friend Lord Adams chided me for not going to West Cumberland. I thought my noble friend gave the answer. He reminded me of Rudyard Kipling's hero, Bill Adams, the man who is alleged to have won the battle of Waterloo. I can only think that Lord Adams has most successfully won the battle of West Cumberland. And since it has the lowest unemployment rate it the whole of the development areas and is fast becoming a prosperity area, and will perhaps soon qualify to be removed from the development area category, I do not think my noble friend requires anybody to give him any moral or indeed any other kind of support there.

My Lords, having dealt with the two maiden speeches, may I now try to answer just one or two points in the debate, which I. think has been on a remarkably high level? That, I think, was assured because the noble Lord, Lord Clydesmuir, opened for the Opposition, and he always sets such a nice pace and such a high tone in any debate in which he takes part. I hope he will forgive me if at this late hour I do not give the figures he wanted. They are of such interest that perhaps I may suggest that, if the noble Earl will put down a Non-Oral Question I will then answer it in the OFFICIAL REPORT, giving the figures that he sought about Merseyside, Clydeside and Lanarkshire—that is, the amounts spent on development, the number of projects and the rate of unemployment.

The noble Lord, Lord Rochdale, had one or two questions to ask, one being whether, in putting forward Clause 1 of this Bill, giving the Board of Trade a right to take over factories, either by voluntary or compulsory acquisition, we had any particular factories in mind. The answer is: No, we have not, but we do know of cases where factories built and completed by private finance, before the restriction on capital investment came about have been left vacant—for what reasons I do not know. It may be that too high a rent was being asked. There may be many reasons for it, but at least they are empty. I think the noble Lord will agree that in these days no factory should remain empty if it can be usefully employed upon productive work. The other point he raised was about Government contracts. This matter is being explored, and the necessity for the exploration was well explained by the noble Earl, Lord Selkirk, and the noble Viscount, Lord St. Davids. If you are going to try to induce industrialists to go into areas where the whole force of their economy would dictate that they should not go, and thereby to place themselves at a disadvantage in a highly competitive race, what are you going to do? It is no good putting up factories to employ this labour unless you can find work for them to do. That is the great problem we are facing, the problem of what the noble Earl, Lord Selkirk, called secondary labour. The point is to get this upon a commercial basis, because otherwise you might have to go back to the old, old theory of putting the men on the seashore and getting them to dig holes for the next high tide to fill in overnight, so that they can start again next day. The answer is to find productive work which will allow them to compete in the open market, and make useful things, and not merely to provide work for them in making useless things.

One other word about Government contracts. The noble Lord knows that if a contractor makes a stipulation that his contract or his tender is for a certain amount, then he cannot be asked to make half that amount at the rate that he has tendered for the whole. But the whole subject is being looked into. Something will have to be done. I will grant the noble Lord that it will have to be done, in fairness to both sides. But do not let us get away from the fact that we have to bring in work to these development areas when we have put the buildings up and when we have put the labour into them. It is useless to say that if they have got natural disadvantages they have got to overcome them somehow. The noble Viscount, Lord Ridley, made a most interesting speech and I will endeavour to study it closely. He rather chided us that we had put into this Bill a lot of things we could have operated under the principal Act. The short answer is that we could not, and if we could have done so I should not have been wasting your Lordships' time this afternoon. The other rather chiding remark he made was that he thought perhaps some of the provisions of this Bill were to legalise things that we are doing. May I say, in a rather humorous manner, that at least we have at last made honest women of ourselves.

The noble Lord, Lord Piercy, made one comment about Treasury grants and loans, and Section 4 of the original Act. I think perhaps the noble Lord should bear in mind that under the original Act a grant could be made only when the firm requiring the grant or loan could not obtain the finance from any other source. That still holds good. The firm that we might want to introduce into a development area may be one which can command good finance in the open market. The special circumstances, which I have not defined, and which, very kindly, no noble Lord has pressed me to define, might make it very difficult for another firm to get that finance. That is where this clause comes into effect. Whether or not the circumstances are special is not for an advisory committee to decide; it is for His Majesty's Government to decide, through their appropriate Department, which in this case would be the Board of Trade. These are special circumstances which will be judged on their merit, and on that alone; you cannot lay down any hard and fast rule or set of regulations as to what in future will constitute the special circumstances. That is one reason. One other reason for the word "grant" appearing in the clause which deals with loans to housing associations is to overcome a technical difficulty of accounting in Scotland. That usually presents us with many problems.

With regard to the noble Earl, Lord Selkirk, I regret that I forgot to mention the important part he played as Special Commissioner in the old days of the special areas. I apologise for that. I thought his contribution was most useful, refreshing, and informative. I shall read it with great care, and I will see that the attention of my right honourable friend is also drawn to it. I think that while there was a lot of wisdom in what the noble Earl said that was apparent to him and to anyone who listened to him intelligently, it may in some particulars have escaped the notice of those who did not attend closely to his words. He mentioned Government contracts and I have dealt with that matter. I have also replied to his point about the subnormal areas. I thank all noble Lords for the way they have greeted this Bill. It has been refreshing to listen to the well-informed speeches which have been made upon it and I hope that your Lordships will now give the measure a Second Reading.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.