DISTRIBUTION OF INDUSTRY

HL Deb 27 March 1957 vol 202 cc802-16

3.4 p.m.

LORD BILSLAND rose to call attention to the effects of the working of the Distribution of Industry Act, 1945, upon industry and employment to make certain suggestions; and to move for Papers. The noble Lord said, My Lords, twelve years have passed since the Distribution of Industry Act, 1945, inaugurated a positive policy to promote employment in certain defined areas, and I wish to suggest to your Lordships this afternoon that the time has come to review the results achieved by that policy; to establish how far it has been effective in its purpose, and to consider what further action is required. There is no doubt that the policy has had a beneficial result. It was inaugurated by the White Paper which was framed by the Coalition Government. The Act was passed by the Conservative Government which followed it and was put into force by a Labour Government. Broadly speaking, therefore, in a Party sense this is a non-controversial question, and I hope it may remain so.

My knowledge of the working of the distribution of industry policy was gained as Chairman, until a year ago, of Scottish Industrial Estates Limited, charged by the Board of Trade with the provision of factories under the Act; and also as Chairman of the Scottish Council, an independent representative body in Scotland which endeavours to promote Scottish welfare on a broad front. But this, of course, is not a Scottish matter alone; it is one which affects the country as a whole, and I wish to deal with it as such.

The Report of the Royal Commission on Distribution of Industrial Population, presented to Parliament in January, 1940, generally styled the Barlow Report, and to which I shall refer by that name, pointed the way to the policy enunciated by the Distribution of Industry Act, 1945. I suggest that the Barlow Report is worthy of study to-day. Its findings were that heavy urban development, and particularly the increasing concentration of industry in London and the Home Counties, were producing an alarmingly unbalanced distribution of industry. The Report declared: A reasonable balance of industry and population throughout the country should be a main feature of national policy during the coming years. Further, it stated: It is not in the national interest, economically, socially or strategically, that a Quarter or even a larger proportion of the population of Great Britain should be concentrated within 20 to 30 miles or so of Central London. On the other hand it said: A policy (i) of balanced distribution of industry and the industrial population, so far as possible, throughout the different areas or regions in Great Britain; and (ii) of appropriate diversification of industries in those areas or regions, would tend to make the best national use of the resources of the country and, at the same time, would go far to secure for each region or area, through diversification of industry and variety of employment, some safeguard against severe and persistent depression, such as attacks an area dependent mainly on one industry when that industry is struck by bad times.

I suggest that that is a sound statement. It may be thought that this is no time to raise a matter of this kind, when we are enjoying a state of full employment, taking the country as a whole; but I suggest that that would be a superficial view. I shall endeavour to show that the maldistribution of the industrial population, to which the Barlow Commission drew attention with such force seventeen years ago, has been and is being still further intensified; that there remain persistent pockets of unemployment in various parts of the country, and that the figures of unemployment are not always a true reflection of the position, on account of migration of labour from various parts of the country, mainly from North to South, to an extent which I suggest is beyond what is healthy and natural. This is, of course, in addition to the large-scale emigration overseas which is taking place and which points to a feeling of a lack of opportunity at home.

I shall also suggest that account should be taken of two factors that have emerged since the Barlow Commission made their Report: namely, the development of new coalfields and the consequent creation of new communities where employment will be required for miners' dependants; and secondly, in some cases, the provision of employment for what is termed the "overspill" of population from large centres to new areas. If, as I feel, the Distribution of Industry Act, 1945, with all its successes, has fallen short of the full achievement of its purpose, there is, I submit—and this is one of a number of points I wish to put to your Lordships— a case for a review of the position to-day, on the lines of the Barlow Commission, to recommend, in the light of experience and of the facts of to-day, what action is necessary to correct the weaknesses, whether within or outside the development areas, and to provide, as may be necessary, for the new factors that have emerged, to which I have just referred. I would go further. Unemployment throughout the country is no real problem to-day. The most urgent problem is the attainment of full development, of the maximum use of our resources and the achievement of the fullest efficiency. In the past twelve years, I suggest, the tempo of change has been greater than at any time. We should be thinking out a policy to meet the new stresses and opportunities; for we dare not lag behind. The distribution of industry policy is a policy of limited aim. I submit that the national purpose and the policy to effect it should be reviewed to take account of and provide for the needs in the field of industrial development created by the conditions of to-day.

What I have in mind is that many of our factories are out of date; but with taxation and building costs at the current rate it is becoming more and more difficult to undertake rebuilding. If we lock abroad, we see that in the United States, for example, the practice is increasing whereby industrial corporations rely on financial institutions of one sort or another to finance building and rebuilding programmes, in order that they may conserve resources for the provision of plant. It is a fact that in Germany much of industry has been re-housed since the war. In Great Britain, industry must use its resources—seriously limited by taxation as they are—to the fullest extent in re-equipment of plant, as a first charge on resources, in order to compete successfully in the markets of the world. But, too often, amounts that are ploughed back are insufficient to meet requirements for plant in full. The most modern plant, I suggest, requires the most modern layout to operate effectively. This, I admit at once, is a larger question than distribution of industry as such, but I submit that it is relevant to the general concept. Therefore, I venture to suggest that if the review which I have urged is undertaken, as I hope it may be, its scope should be enlarged to embrace this question.

From such a review there should naturally follow a fresh declaration of policy in all these matters. In the latter stage of my association with distribution of industry affairs there was a lack of a clear policy regarding them. My feeling that there remains a lack of clear policy, other than a very negative one, finds support from two facts. The first is that it will be nine years this year since any Government issued a White Paper reporting on the results of the Distribution of Industry Act, 1945. The only White Paper issued on this subject—in 1948—sprang from the requirement of the 1945 Act that a review should be made after three years. The Government of the day were not bound to publish the detailed results of that review, and I think it is to their credit that they did so. The second fact is that fifteen months ago a unanimous Report by a Select Committee on Development Areas was presented in another place, although I am not aware that any decisions have been announced on that Committee's recommendations.

The Government attitude towards the development areas, and towards development of industry policy generally, appears to have undergone a substantial modification in the last year or so. For example, there was the announcement in another place in June of last year that Government assistance for the provision of factories in the development areas would be forthcoming for only a very few projects of special urgency and importance. The presentation of estimates for the development areas for the forthcoming financial year may clarify the matter. Meantime, this modification raises an important question, to which I hope that the noble Lord, Lord Mancroft, who is to reply to this discussion, will make reference. The question is that a major Act of Parliament has been rendered practically inoperative by this announcement without any declaration of policy regarding its replacement.

My Lords, I wish to look at what has so far been achieved by distribution of industry policy before pointing out where I feel that it has failed. By the end of December, 1956, factories administered for the Board of Trade by the estate companies in the development areas throughout the country had provided just over 44¼ million square feet of factory space. That included a little over 5 million square feet which had been built before the Act came into force, and about 13 million square feet of space taken over from other Government Departments. The number of workers employed in these factories was of the order of 190,000. Unhappily, almost from the beginning of the operation of the Act the tempo of progress has been seriously affected by the economies imposed by our recurring financial difficulties. In 1947, for example, there was a temporary slowing down of factory building in the development areas. In 1948, the White Paper to which I have referred stated that building projects for the development areas not already approved must be held up for at least six months, and many were at that time definitely and finally turned down. Moreover, most regrettably, all advance standard factory building was stopped. In July, 1951, it was announced that further economies would have to be affected, and that even more rigorous tests would be applied to all applications for factories. In 1952, there were further restrictions, and in June, 1956, the announcement to which I have already referred was made in another place.

The development areas' share of industrial building in the country as a whole, on the average of the years 1945 to 1947, was over 50 per cent. For the two succeeding years the figure fell to 17 per cent. For the years from 1954 to 1956 they ranged from a low of 17.3 per cent. to a high of 18.9 per cent. Although the Distribution of Industry Act has achieved beneficial results, it is clear that the improved conditions in the development areas are due in large measure to the revival of the basic industries in these areas, and the fact remains that, despite the Act, maldistribution of the industrial population is still on the increase, pockets of persistent unemployment continue in being and the true employment position in certain areas is masked by the migration of population to other areas.

The Barlow Report is illuminating on the progressive tendency towards maldistribution of population. The Ministry of Labour prepared for the Commission a statement showing the changes that had occurred in seven specified areas compared with the rest of great Britain. The specified areas selected in 1801 (the Report goes back a long way) contained 45 per cent. of the occupied population; in 1931 they contained 73 per cent., and in 1937 79 per cent. of the insured population, the proportion of this number in London and the Home Counties in 1937 being 26 per cent. of the total insured population of the United Kingdom. In 1937, therefore, 79 per cent. of the insured population lived and worked in 27 per cent. of the total area of the United Kingdom. It is not possible to make an exact comparison between these specially prepared figures and current statistics, but it is a fact that in 1955 the Greater London area, which extends from High Wycombe to Southend and from the North of Hertfordshire to the border of Sussex, contained 29 per cent. of the insured population of Great Britain, and that, notwithstanding the provisions of the Distribution of Industry Act, over 20 per cent. of industrial building approved for the whole country between 1945 and 1956 was located in that area.

I have referred to the persistence of pockets of unemployment, both within and outside the development areas. At the last count, the United Kingdom figure of unemployment was negligible, at 1.8 per cent.; for Greater London, it was 1.1 per cent.; for Wales, 3 per cent.; for Scotland, 3.1 per cent.; for North Lanark and Greenock, in the development area, 4.2 per cent. and 6.6 per cent.; for the North East of Scotland, outside the development area, and on the Moray Firth coast and in the Buckie area, 9.1 per cent. and 8.4 per cent.; and for four Scottish fishing ports, which are outside the development area, and in which activity in fishing is unlikely to be resumed, 20 per cent., 25.7 per cent., 11.9 per cent. and 24.1 per cent. respectively. In Wales there is a similar situation. The most recent figure of the percentage of unemployment in the Anglesey district is 10.5 per cent.; in Caernarvon, 8.2 per cent.; and in Port-madoc, 10.5 per cent. I do not wish to take up your Lordships' time with quoting more figures, but there are many districts in England with an unemployment rate five or six times the national average.

With regard to what I have termed the migration of labour, the Barlow Report shows that from August, 1928, to the middle of 1937 nearly 150,000 men and 40,000 women were transferred from depressed areas under Ministry of Labour arrangements to find work in other parts of the country. About one-third of them returned. But to quote the Report: in the 18 months ended mid-1937 some 61,500 unemployed men moved on their own initiative, either to take up employment they had found on their own account, or to look for employment. The official figures of inter-regional migration of work people between 1937 and 1955, after the Act to redress the balance had been in operation for ten years, show that the London, South-Eastern, Eastern and Southern regions gained 87,000 workers by migration, and the Midland region, 15,000; while the East and West Ridings lost 21,000, the North-Western region 17,000, the Northern region, 12,000; Scotland, 31,000, and Wales, 16,000. These figures, which, if dependents are taken into account, constitute a considerable migration of population, show, I suggest, the continuance of a geographical pattern of development that has been persistently in progress for half a century but one which, I submit, is undesirable.

It is clear from the facts I have stated that one cannot accept the ingenuous view, which appears to be gaining currency, that the distribution of industry picture to-day is simply one of a comparatively featureless level plain of prosperity throughout the country, undisturbed except for an upsurge of unemployment here and there. The increasing centralisation of industry in the South and Midlands, of which the Barlow Commission took a serious view, is still to-day the central problem in the distribution of industry in Great Britain.

There are two further factors, to which I should like to draw your Lordships' attention, which have, or may have, an effect on the distribution of industry—namely, the development of new towns, mainly sited around London, and the defence cuts. I do not deny, of course, the need for the new towns, but if assisted expenditure is maintained on factory development there and cut to the minimum, as it is meantime, on development area factories, one cannot evade the fact that that constitutes a distortion of the distribution of industry policy as contained in the Act. As regards the defence cuts, I should like to ask whether consideration is being given to their effect on the distribution of industry and employment. It has been reported, for example, that the vast aircraft factory at Blackpool has been closed and that production is being concentrated at Kingston-on-Thames. In Scotland we have bitter memories of the concentration of rearmament, other than shipbuilding, in the South before the war.

I referred earlier to two factors that may affect the balance of the industrial population: first the development of new coalfields and the need to consider employment for miners' dependants; and, secondly, the provision of employment for population moved to the new towns from what is termed the "overspill" of large centres of population. In Scotland, there are two main new coalfields—in Fife and Midlothian. As the Scottish Council have produced reports regarding the employment problems that arise, I shall not pursue that question to-day. As regards the overspill, I would remind your Lordships that in every large centre there are slums of industry, as well as of housing, and I suggest that the provisions of the Act, enlarged as may be necessary, should be used to facilitate the transfer of selected firms to new factories where such transfers can be carried out on an economic basis.

May I sum up the case I have endeavoured to make? I believe that the Distribution of Industry Act has had beneficial results, on the whole, notwithstanding national economic difficulties since 1945. I submit to your Lordships, however, that the time has come for an authoritative review, on the lines of the Barlow Commission, of the results achieved, and that this review should be followed by a fresh declaration of policy. I should hope that, as a result of such a review, effective machinery would be set up to keep the position of the country as a whole under constant review, to ensure action being taken regarding, and, so far as possible, in advance of, difficulties arising. The machinery I envisage would be charged with the task of keeping under review not only areas of abnormal unemployment but maldistribution of population, undue migration, assisted re-housing of industry, where a case can be made for it, and problems of employment arising in new coalfields and in new areas created by the overspill from large centres. The Barlow Commission made representations in that sense; but I do not go so far as they did in pressing for a National Industrial Board.

It has frequently been said, and was said by the Select Committee, that the size and boundaries of the development areas are out of date. Whilst it is true that a change of boundaries may lead to constant agitation for further change, the economy is never static, and the maintenance of the original boundaries, apart from the additions that have been made to the areas, appears unrealistic. If the Act is to remain, and an active policy replaces the present state of suspended animation, the boundaries should be reviewed from time to time. In a review of the boundaries, however, I submit that the state of unemployment should not be the sole criterion. The percentage unemployed in relation to the national average may be entirely misleading. The position, I suggest, should be judged and the action governed by the state of need of the area, whatever the need may be; whether to arrest decline or to promote development in developing areas, where it can be shown that assistance in such areas is in the national interest.

The proposals I have submitted to extend the facilities of the Act may be criticised on the ground of spreading too thinly the benefits of the Act. I do not accept that criticism. They may be further criticised on the ground that they are beyond what our economy can afford. On that matter, I would point out that Board of Trade expenditure on the provision of factories for the period 1951 to 1956 was £21.8 million, while for the period 1951 to 1955, a year less, the Exchequer contribution for permanent housing was £196 million. It is of interest to record that there are very good prospects of the industrial estate companies being able to show, within a comparatively short time, a direct return on the factories at a rate greater than the cost of Government borrowing to finance them.

Finally, I make two submissions concerning administration. First, I suggest that the machinery for dealing with applications for factories is still too complicated and cumbersome. Some years ago I had a discussion with Ministers concerned with this subject on behalf of the Scottish Council, and I am not conscious of any material improvement in procedure. The main reason for that discussion was the criticisms I had received on a visit to the United States of America in an endeavour, on behalf of the Scottish Council, to interest American businessmen in operating in Scotland. My second submission on administration is that the Board of Trade should give the maximum autonomy possible—much more than they had in my time—to the boards of industrial estate companies, formed, as they are, of experienced businessmen. For many years when I served on one of these boards I suffered a sense of severe frustration. The Distribution of Industry Act has performed a useful purpose, but not the full purpose it set out to achieve. For the reasons I have stated, I hope that inquiry may now be made into the working of the Act, and that, as a result of such action as may be shown to be necessary, it may still further promote the progress of our national economy. I beg to move for Papers.

3.35 p.m.

LORD MACDONALD OF GWAENYSGOR

My Lords, it falls to me to offer to the noble Lord, Lord Bilsland, the congratulations of his fellow Peers. He seemed to have a little doubt in the early passages of his speech whether now is the time to introduce this Motion. I do not think he need have any doubt whatever. The case he made in itself indicated that now is the time to consider whether the 1945 Act is doing what it should do for the whole of industry throughout this country. I would also compliment the noble Lord on what, to me, was a speech remarkable in its clarity and conciseness, and especially in its constructive strength. It may be that I shall not agree with some of the suggestions that he made, but there are a number which I shall support.

The 1945 Act was anticipatory legislation, and that is never easy legislation. It is much easier to legislate with a problem before you than to try to anticipate a problem that may or may not arise later on. The Coalition Government thought it wise to make some preparation in regard to the distribution of industry. Obviously they had in mind that in the 1930's there was a vast scourge of unemployment, and they confined their attention to the areas affected by that unemployment—they are the areas included in the First Schedule. The history of the passage of the Bill through both Houses of Parliament is now well known to all of us. It was moved in another place by Mr. Hugh Dalton; during its passage the European War ended, the combination of Parties broke up, and the Bill was carried through this House and another place, finally, by a Conservative Government. I refreshed my memory over the week-end by reading the debates that took place then in both Houses, and obviously there was not much enthusiasm for this Act; and there was less in your Lordships' House than in another place. There were doubts and misgivings in your Lordships' House as to whether the Bill, as it then was, was dealing with a problem that would or would not arise; and one can understand the difficulty.

It is true that in Wales this Act has done much good—not throughout Wales, but in a part of Wales. That happens to be the part that was most seriously affected by unemployment before the war. Those of us who knew that area before the war, like my noble friend Lord Hall, and occasionally visit it today, do see a difference. Then we saw idle mines and thousands who had been unemployed for years trudging along the streets. I met one man in the Rhondda Valley during those years who was married, with two children, and had never done a day's work; from fourteen years of age to twenty-four he had not done a day's work. To-day it is different, and when you go through these valleys you not only see the pulleys running round the collieries, but you see factories dotted here and, there as a result of this legislation.

I am not quite sure that South Wales would not have got along for the first ten years after the war without those factories. I am glad to see them, because they have introduced variety in South Wales, but I am not sure that the basic industries themselves would not have employed all the employables in South Wales without them. That is why I am not entirely in agreement with my noble friend Lord Bilsland as to whether now is the time to have a review. I would agree that ten years after the operation of an Act of Parliament seems to be a normal and reasonable time to have a review, and had they been ten normal years I should not have minded. But they have not been ten normal years. The first ten years after a world war of six years' duration could not be a normal period. That is why I am not sure whether we can judge the operations of this Act, in view of the fact that that was an abnormal period. It may be that Members of your Lordships' House will not agree, but I am not sure whether the election of a Labour Government in 1945 did not affect this problem. I would submit that the nationalisation of the mines was a big factor in stabilising employment in the industrial areas. That came about as a result of a Labour Government. That was not anticipated when this Bill was before Parliament.

I do not want to quibble at all on the value of this legislation; it has been very valuable indeed. As I have indicated, South Wales has benefited, and whether or not it could have maintained its employment for all the employables without the benefits of this legislation does not make any difference to the value of the legislation to Wales. But I want to emphasise that it is largely, if not entirely, confined to South Wales. I travel almost weekly from north to south by car or train. Whichever way I travel, I notice the difference in South Wales as a result of this Act. In Mid-Wales, and particularly in North Wales, I notice the difference in the conditions.

I thank the noble Lord, Lord Bilsland, for the figures of unemployment he gave us—in Anglesey 10 per cent., in Caernarvonshire very little less, and in Merionethshire a similar figure. I know that when one gets down to numbers it makes a difference. Ten per cent., of a small number when compared with 10 per cent. of a large number does not appear so bad. I know that the percentages, when expressed in numbers, are hundreds in some cases and may be dozens in others, because the number of people in the area is small compared with the number in South Wales. What your Lordships must remember, however, is that it means the same thing to the unemployed person, whether he is one of a big number or one of a small number. Something needs to be done to deal with this problem in North Wales, and this Act does not deal with it.

One could make many suggestions, but I would suggest, in the first place—and here I am in agreement with the noble Lord. Lord Bilsland—that it may be a good thing if the First Schedule of the Act could be looked at again. It was laid down solely on the number of unemployed in the various areas in the 'thirties; that determined what should go in the First Schedule. There was no other consideration. If it were based on the percentage of unemployment, some of these places in North Wales would qualify to be included in the First Schedule. I can well understand any hesitation on the part of the Government to disturb that Schedule. If they are unready I will not press it, but I would ask: what is the alternative? What can be done for those pockets of unemployment in North Wales without including those areas in this Schedule? The late Minister for Welsh Affairs, now Lord Tenby, was confronted with this problem last year. In fact, I think all the Ministers for Welsh Affairs, and those who have assisted them, have been confronted with this problem. There is this to be said: they did go out of their way to get acquainted with the Welsh problem. Might I say to the noble Lord, Lord Mancroft, that few men have done more to familiarise themselves with the problem than he did, and he knows the problem as well as anybody inside or outside your Lordships' House.

But what is going to be done? I referred to the noble Viscount, Lord Tenby, and I wish to quote what he said in the debate on January 30 last year, when dealing with this very problem. He referred to the fact that there were other ways of dealing with it, and he said [OFFICIAL REPORT, Commons, Vol. 548, col. 711]: It should be of assistance to industrialists thinking of establishing themselves in northwest Wales to know that the Development Commission is prepared in suitable cases to consider recommending the building of factories by means of the Development Fund for letting to approved industrial tenants. I do not know whether I can ask for information to-day and whether we can be told how many suitable cases have been found since January, 30, 1956. Is the reference to the "Development Fund" a development fund under the 1909 Act? If so, is that Act being used to the extent it could be used in development in North Wales?

If that is an alternative—and it may well be—I can see the value of it. I am not objecting at all to the fact that this area is not included in the First Schedule of the Act we are now discussing. What, I suggest, is the value of the Act is that it gives two inducements. It tells the industrialists in various parts of the country: "If you come inside the area covered by the Act you will have factories ready built, let to you at a low rent. Also, capital will be provided by the Treasury to develop your business." Is that possible under the suggestion made by the noble Viscount, Lord Tenby, when he spoke on behalf of the Government a year ago? Even if that can be done, I understand—and the noble Lord, Lord Mancroft, will know this better than I do—that the Treasury keep a firm hand on the extending of facilities, even under the Act. I have no objection to their keeping a similarly firm hand in dealing with the 1909 Act.

What I am asking, with regard to the pockets of unemployment in North Wales, is that if the Government are not prepared to include them in the Act they should take other action outside the Act to see to it that their problem is dealt with. After all, what is happening is a de-population of rural areas. I cannot believe that anyone in your Lordships' House believes that that is a good thing. But you cannot expect to keep the population in rural areas if you do not keep full employment there, with a good standard of life. In North Wales, in Anglesey in particular, efforts are being made to deal with this difficult problem. Factories have already been built to let at a reduced rent under the 1909 Act. Two factories were built in North Wales, one at Blaenau Ffestiniog, in Merionethshire, and the other at Pengoes, in Caernarvonshire. Reference has been made by the noble Lord, Lord Bilsland, to the various companies operating in these different parts of the country. In Anglesey we have Welsh Agriculture and Industries Limited. They have provided factories on a similar basis to those provided under the 1909 Act.

What happens in the development areas? The capital has been provided on the recommendation of the Development Areas Treasury Advisory Committee, which by now has acquired a great deal of experience in dealing with this problem. What I want to ask the noble Lord —I appreciate it is a big question to be put without notice—is whether he could tell us if the Development Areas Treasury Advisory Committee could function with regard to the development fund provided in the 1909 Act? Would it be possible for finance for this purpose to be provided out of the development fund and managed on behalf of the Development Commissioners by the Development Areas Treasury Advisory Committee? In this way the two inducements which have proved so successful in attracting industrialists to the scheduled development areas could be offered in those rural areas where there are pockets of unemployment.

The location of industry is never an easy thing. For some reason our natural resources locate our industry. If the coal is in South Wales, the collieries will be there and the industries will be there. To a large extent the location of industry is determined by our natural resources. In an agricultural area the employing capacity is much less than in a mining area. One appreciates how difficult it is for any Government—I think it is impossible—to direct. All that can be done by this Act is to attract industries to the areas where it is thought they will serve the national interest best.