§ 3.10 p.m.
§ LORD POLWARTH rose to draw attention to the state of the Scottish economy, with special reference to the policy of Her Majesty's Government for the distribution of industry; and to move for Papers. The noble Lord said: My Lords, my motive in introducing this motion is to give an opportunity for a general discussion on the state of the Scottish economy to-day. A general debate of this kind, though a regular event in another place, is something of a rarity in your Lordships' House. I believe that the last occasion on which we had such a debate was some five years ago, on the Motion of my noble friend Lord Dundee, who I am glad to see is one of the two speakers who will be replying on behalf of Her Majesty's Government to-day. But to resume our sittings after a Recess with a debate of this kind must, I think, be unique. If to some of your Lordships it may seem out of place to debate a subject of this kind in the context of the momentous events, national and international, that have occurred since we last met, I would urge on a number of counts that it is highly appropriate that we should discuss this subject to-day.
§ First, there is the widespread and growing concern at the increasing slackness in the economy and the rising tide of unemployment. But there is a wider significance, too. Scotland reflects in miniature, yet in a more pronounced form, many of the problems facing the whole of the British economy: problems of inadequate growth and of the need to make the fullest possible use of our ail too scarce national resources if we are to hold our own in the world to-day. It is fitting that we should have this debate on the eve of the discussion which we believe is to take place in the National Economic Development Council tomorrow on this whole question of economic growth, and at a time when events in Brussels and Paris are driving us to what must be a complete reappraisal of our economic course.
§ I make no apologies for limiting the field of this debate to Scotland. While we are proud to be an integral part of the United Kingdom, we are nevertheless 21 still a country in our own right with our own history, customs, traditions, and, clearly, our difficulties, too. Scotland stands to-day at an economic crossroads, and while it is Scotland we shall be debating to-day, I sincerely hope that what we say may be of concern and help to those of your Lordships who are concerned with similar problems in other parts of the Kingdom, among them, no doubt, the noble Viscount, Lord Hailsham, who I am particularly sorry is unable to be here to-day. He is, I gather, engaged on the duties of one of his multifarious concerns, other than the North-East of England. To those of us who have been trying for a number of years to put the Scottish economy on a sounder basis it is a matter of interest to find that it is only in the last few months, since the North-East of England also has felt the full rigour of the economic wind of change, that the public at large have been faced with the fact that these are not just local problems, to be dealt with by local measures, but problems of national concern demanding national solutions.
§ The immediate cause of this concern is the realisation that half a million people in Britain to-day are out of work, one-fifth of those people in the one-tenth of the population resident North of the Border. In the North-East and Scotland one worker in 20 is on the books of the labour exchange. The conscience of the British people has been stirred, as witness the spate of articles and radio programmes, delegations and deputations and manifestos. It is indeed right that the country should be concerned at what is not only a grave social and humanitarian problem but also a gross neglect of its all too scarce resources.
§ But, my Lords, we shall be deceiving ourselves if we think that unemployment, any more than famine, in those countries Where it occurs, can be dealt with by emergency measures, pushed under the carpet and conveniently forgotten. Because, just like famine, as sure as night follows day unemployment will return to haunt us unless we tackle it at the roots and deal with the causes responsible for it. Unemployment is an outward sign of a deep-seated economic disease, the imbalance and inadequate growth of the economy. Equally, we shall be deceiving ourselves if we heed the cries of the alarmists, of those who 22 cry "Woe! woe!" and would have us believe that we are down and out. Nothing could be further from the truth. There is a great deal in the Scottish economy which is sound and holds promise for the future, and if we face our undoubted difficulties with a cool head and a determination to solve them, I believe that these prospects will be realised.
§ The clues to their solution, I venture to suggest, lie in the history of our industry, its birth, its growth, its structure. The Treaty of Union, of which a copy is in the Library and will be familiar to your Lordships, opened the seas to the great trade in commodities between Scotland and North America and those other overseas countries which laid the foundation of the greatness of Glasgow and the Clyde. The mechanical skills evolved to process these commodities, coupled with the development of Scotland's resources of iron ore and coal and the discovery of steam, brought in the great engineering achievements of the 1800s, which by the turn of that century had made Scotland the undoubted leader of the world in heavy engineering and shipbuilding. A few years later these industries were expanded and strained to their utmost limits to provide the sinews of war. But for them the fruits of victory were bitter; the ensuing depression and unemployment are something that many of your Lordships will remember far better than I can.
§ A second time the call came, in 1940; and again in the '40s these same industries played their full part in a victory Which had, fortunately, consequences less dire for Scotland. This fact was in large measure due to the vision and devotion of a small group of Scotsmen who had resolved that the unemployment of the '30s must never be repeated and that to this end the industrial base of Scotland must be broadened and brought up to date. We owe a very great debt for this to, among others, two Members of this House, the noble Earl, Lord Elgin and the noble Lord, Lord Bilsland, who, I am glad to see is to speak to-day. Their principal tool was the concept of the industrial estate, the first of which was opened at Hillington, near Glasgow, in 1937, and which proved a powerful magnet for the newer and expanding industries. Some of these, notably electronics and the manufacture of aircraft 23 engines, came to Scotland as a direct consequence of the war. Others followed soon after the war, many of them thanks to the untiring efforts of Lord Bilsland and his colleagues, who sold Scotland to North America, with the resultant flow of American industry in the following years.
§ Another reason why they came was particularly the availability of factories to rent at attractive rates. As a result, we have to-day in Scotland a whole range of new and growing industries which were unknown before the war—for example, precision engineering, chemicals, instruments, clocks, business machines and many more. Now we have our own sheet steel manufacture, and the motor industry is taking root. Scottish industry has a new look and a broader base than at any time before.
§ This is a good start, but it is not enough. Over the last ten years, while employment in Britain has increased by 11 per cent., in Scotland it has grown by only 2½ per cent. Largely this is due to the continuing differences in the pattern of industry. For example, the primary industries—agriculture, fisheries, forestry and mining in particular—accounted in 1961 for nearly 9 per cent. of Scottish employment, compared with 6 per cent. only for Great Britain as a whole; and most of these are industries where employment tends to decrease.
§ Here I must cross swords with those who refer to these and to other industries, like shipbuilding, as "declining" industries. Contracting in employment, yes; but declining, no. This does not mean that they have had their day. In many cases they have adjusted themselves to new levels of demand and increased their efficiency. Our agriculture and forestry are second to none, and I hope that some noble Lords will speak about them in more detail to-day. Our shipbuilders are winning orders despite thin markets and against world competition. Our coal mining, despite a period of drastic reconstruction, is showing a remarkable increase in efficiency in the last few months. These and others of our traditional industries have still a great and vital part to play in our economy.
§ But, quite apart from the contraction in the primary industries, we are faced with the fact that manufacturing industry in 24 Scotland provides only 35 per cent. of all employment compared with 40 per cent. in Britain as a whole. The remainder is taken up with the primary industries and the services. So within the manufacturing industries alone in Scotland, because of the greater proportion of contracting industries—contracting in the sense that they are employing fewer people—we have recently been losing some 10,000 jobs a year, or double our true proportion of the total for Great Britain; while because of an insufficiency of the growth industries we have been creating only some 15,000 new jobs a year, which is again about three-quarters of the proportion for the country as a whole. The net result of 5,000 jobs a year increase—that is, the 15,000 less the 10,000—is not enough for a healthy economy, even if it continues; indeed, in the last year there has probably been an overall decrease in total jobs.
§ At the same time we are going through a period of general slackness and uncertainty in trade which is particularly hitting the traditional industries; and so it is no wonder that we find ourselves with 100,000 people looking for jobs. This is no surprise to us in Scotland, and in particular to those of us who work with the Scottish Council (Development and Industry). It is a fact that has lain behind much of our thinking and policies for the last fifteen years. It was our increased concern at the outlook that led us, three and a half years ago, to set up the Committee of Inquiry into the Scottish Economy. After two years of intensive research and study the Toothill Report, as it is now familiarly known, came out unequivocally in support of the need for a positive policy of encouragement of regional growth—encouragement of the industries with prospects of growth in the places that were favourable to their growth, instead of merely tinkering with the problem of unemployment as and when it appeared. It is now over a year since that Report was published, and it is interesting to see how widely it has since been acclaimed, even if not yet in the innermost places of the Treasury and the Board of Trade. But we take hope from the signs we have lately seen that something of the kind is under close consideration at this time by N.E.D.C.
§ It is sometimes said that Scottish conditions are not favourable for these growth industries. It is encouraging to 25 be able to give the lie to that propaganda, because our researches show that over a recent period, taking, I think, the 29 most rapidly growing British industries, these showed as high a percentage rate of growth in Scotland as in Britain as a whole; and some of them, notably office machinery, radio and electronics, show a considerably higher rate of growth. That is highly encouraging, and it is something that we must make more widely known. We must break down the resistance of so many industrialists to moving out of the cosy proximity to mass markets, to suppliers, to Government Departments—indeed to the whole London complex—into what to them is wild, unknown and uncomfortable territory. We must dispel ignorance and at the same time compensate for the real obstacles and disadvantages which we realise do exist in the process of moving and setting up in a new locality. Therefore I sincerely believe that industrialists have every chance of expansion and success, as proved by the record of those that have already come.
§ I am glad to see that we are hearing less to-day from those who advocate a policy of complete laissez-faire, who believe that the workers should move to the work, wherever the employer in his wisdom decides that that should be. Nobody wants an employer to set up where it is clearly uneconomic for him to do so. But what about the social and other costs of increasing industrial congestion in the South; the cost of housing, of roads and of services, the pressure of demand forcing up both land prices and wage rates, with the resulting burden of extra expense which may not be apparent to the individual employer, but which inexorably come home to roost in higher costs and taxes? Nor can we fail to ignore the effect on our lives in the social and amenity fields—the surroundings in which we live, the conditions in which we work, and one stresses and strains of travelling between the two.
§
Some of your Lordships may have seen a letter in The Times last week from the chairman of one of our leading national building societies, and though he is referring principally to the problem of encroachment on the green belt area of London, his words are true in a wider context. What he says is:
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There is urgent need to move the magnet of employment to new fields away from the present large cities, so that families can live and grow up away from the depressing restrictions of megalopolitan Britain.
§ Two months ago, as your Lordships will recollect, on the Motion of the noble Lord, Lord Molson, we debated most thoroughly this question of distribution of industry and population, and there was universal agreement on the need to check the drift to the South. I will not attempt to go over that ground again. It cannot be in the interests, economic or social, of the North or the South that in the last ten years 88,000 more people have moved out of Scotland than into it—half of those 88,000 in the last three years. And if we are to achieve the increase in national production which we have set ourselves, of 4 per cent. a year, it is as clear as daylight, first, that it cannot be done so long as large parts of our resources are under-employed, as they are in Scotland and the North-East to-day; and second, that it is neither desirable nor indeed physically possible to achieve it by speeding still further the shift of population from North to South.
§ What then can be done to check this trend and to boost our rate of industrial growth in Scotland to the point where its own momentum will carry it on? First, we must have confidence in our ability to help ourselves. But to those who say that self-help is what we lack, we must reply, with all the force at our command, that no part of Great Britain has done so much for itself to diagnose its own economic problems and to put them right: as witness the fact that of all the new jobs created in Scotland in recent years 80 per cent., or four-fifths, have been in native Scottish concerns and not in relation to those coming in from outside. But in a world in which, for better or worse, Government is so closely involved in every aspect of our affairs, we seek an equal effort on their part. Their principal means of creating industry are the stick of the industrial development certificate and the carrot of the Local Employment Act. We in no way belittle what has been achieved by them and by the industrial estates, the new towns and in other ways. But I believe they have nearly reached the limit of the power of the stick. If you go on beating a donkey it becomes obstinate and sulky, and that is what some be-laboured industrialists have done. At a 27 time of stagnant trade they have decided to do nothing rather than move at all.
§ If we are going to attract the new industries we need, and to help our own ones to grow, we must have a bigger and a juicier carrot. The scale of grants and loans must be increased, and they must be offered with an open hand. What may be enough in boom times is just not sufficient to-day to offset the real costs and difficulties of setting up new, highly capitalised operations as well as giving some real inducement to move. Much has been made of an average figure of £1,400 of Government aid for every job created with it in Scotland, but this takes no account of the fact that much of it is in the form of factories let for rent and of loans bearing interest and due to be repaid. On our calculations the amount of actual subsidy per job is more like £200, which is roughly the same as the cost of one unemployed man's benefit for a year. For the first two years of the Act's operation, expenditure on Scottish projects—or investment, which I calculate it really is, as to some six-sevenths of it—averaged £22 million a year. If that were doubled, which I think it should be at least, it would be a small price to pay for a prosperous Scotland, and a flea-bite compared with some of our spending on more passing things.
§ Then, my Lords, we must, if the industrialists will forgive the analogy, let the donkey see the carrot. It is no use hiding it in your pocket. As we have said time and again, we must be able to "sell" the benefits of the Act to potential customers. Just now we cannot tell them; we can only say, "You must argue your case with the Board of Trade Committee". Of course all cases will not be the same, but at least let us have some standard minimum figures, and let aid be granted wherever the potential exists for growth, and not be cut off as soon as unemployment in a particular place declines. In this field firmness and continuity of policy are essential.
§ One of our greatest attractions for industry is our supply of labour—probably 120,000 people over the next eight years. That is not only a challenge but, I believe, a great opportunity. What we lack, however, are the skills required by the new and developing industries of 28 the future, and we must ask the Government to help us tackle the retraining of these men and women on a vastly greater scale than at present. But if industry is to grow on the scale required, it will need other things, too, in the form of adequate services and amenities. Now is the time to, push on vigorously with housing, schools, roads, water and power supplies, and with removing some of the scars of our industrial past. What a chance to help our immediate employment problem while at the same time laying the foundations for our future strength! Communications are our lifeblood, and, apart from hastening on with the programme of roads, there are vital works waiting to be tackled in the way of bridges, docks and airfield improvements.
§ The State-owned corporations play a particularly vital part in the Scottish economy, both as suppliers of services and as employers of labour. There are parts of Scotland where roads cannot take the place of rail, as the recent weather has dramatically shown—not that rail by itself has been able to cope in all these circumstances. Air services are becoming progressively more important the further we are from the centre of things, particularly to those engaged in the operation and technology of our newer industries. Yet, despite the importance of these corporations, we are under the uncertainty of the poised axe of Dr. Beeching; and we have now heard that the noble Lord, Lord Douglas of Kirtleside, is seeking £1 million a year from the Government as the price of providing us with what we consider are adequate and essential air services. The events of the past week have given an added urgency to the need for a speedy start on plans for yet another great steam-generated power station in Scotland. This could run for its foreseeable life on the coal beneath our soil and, in the process, give jobs to 10,000 miners. Yet there is grave fear that it may be undercut in price by oil, despite the uncertainties for that inducement of future international events. Granted that all these State-owned industries must do their best to pay their way, nevertheless the Government have a duty, through them, to see that our essential needs, both economic and social, are met.
§ The Government should set a better example, too, to private enterprise in 29 trying to site more of its offices and research and other institutions in Scotland, and in giving Scottish concerns every chance to share in contracts of all kinds, particularly in the scientific and technical fields. My friends in these industries tell me how much time they have to spend in travelling and sitting on the doorsteps in Whitehall and its environs if they are to stand a chance of securing these contracts.
§ Finally, there is the broad effect on Scotland of economic and financial policy for the regulation of the British economy as a whole. There is no doubt that general prosperity is in Scotland's interest, but equally we are the last to benefit from it when it arrives and the first to suffer when it departs. I believe the time has come when we must differentiate in our fiscal measures between the more and the less prosperous parts of the country—whether by varying investment allowances for capital expenditure, or even by lowering tax rates for new industrial developments. I know that the Treasury will throw up their hands in horror, ostensibly at the idea of partiality as between one taxpayer and another; I know that it would mean work to devise and administer such a scheme; but I am quite certain that, with a will, it could be clone, and it would involve no more discrimination in the geographical sense than exists already between individuals in their personal circumstances. Relate it, if you like, to export performance, and say to any firm that, if they set up in a development district, they can have so many years free of profits tax on their export business. I believe that in that way the industries we are seeking would flock to our doorstep.
§ I have tried to set out briefly the principal measures which we believe are needed from the Government if they are to match our own efforts in Scotland to work, out our salvation. They are no hasty thoughts; they are the result of years of study and experience by those closest to the problem. What we seek is not charity, nor, support for an economy in decline. It is an investment in Scotland's future which will bring a good return. Much of our industry, our agriculture, our whole life is in good heart and holds high promise for the future. Our problems arise because we are in transition from a nineteenth cen- 30 tury to a twenty-first century economy, a transition that is bound to cause stresses and strains. If we are to win through to the promised land beyond, we must have a bold and vigorous policy for growth—a policy whose cost would be small in national terms.
§ My Lords, I realise that we cannot expect either of the noble Lards who have to reply to-day to; announce such a major decision. The N.E.D.C. are debating this subject to-morrow, and within a few weeks the Scottish Council are to have a meeting with the Prime Minister on the subject of growth. But the time for talk and deliberation is past. We expect action before it is too late. There must be no question, for example, of waiting for the noble Viscount, Lord Hailsham, to make a fresh appreciation of the problem there is, indeed, no need. With the exception of local problems and differences, the study, the diagnosis, has all been done, and has been done in Scotland by those in closest contact with the problems to be solved. It has truly been said that nothing worth while can be achieved without three things: vision to see, faith to believe and courage to do. These qualities have not been lacking in Scotland. We look for them equally in the Government responsible for our affairs, and we look for them soon. If they are forthcoming we shall achieve our desire, which is to play our full part in the progress and prosperity of the nation to which we all belong. I beg to move for Papers.