Regional Policy: Imbalance in Prosperity

HL Deb 14 January 1987 vol 483 cc553-90

3.3 p.m.

Lord Taylor of Gryfe rose to call attention to the situation which arises from the difference between the prosperity of the South-East of the country and the decline in other areas, and the case for an effective regional policy to redress this imbalance; and to move for Papers.

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. On Monday of this week, eloquent tribute was paid in this House to the memory of the late Lord Stockton. I want to recall that in 1936 he fought an election in Stockton and declared in his manifesto: I want to bring before the South, London and the Government, the really desperate position of some of the distressed areas (and the North-East in particular) and to demand effective action for the relief of unemployment".

I think it is appropriate to remember our late, distinguished colleague by returning to his concern today, and that is the simple purpose of the Motion before the House.

I suggest that before we discuss controversial matters in relation to regional policy we should try to establish common ground on a number of principles. First, I think we can agree that regional prosperity cannot be achieved in the absence of national prosperity. Secondly, I think we can agree that there is a regional problem and certain parts of our country have suffered disproportionately from the collapse of manufacturing. Thirdly, if there is a an upturn in the economy the disadvantaged regions will be the last to respond, for in the absence of an effective regional policy it is the industries in the prosperous South which have been able to invest and modernise.

Fourthly, the division of our country into a prosperous South-East and a decaying North is unjust, dangerous and wasteful. This does not suggest that there is no poverty in the South-East or pockets of affluence in the North. But measured in terms of unemployment, housing, average household spending and the general quality of life, we are moving towards a two nation situation.

Fifthly, an effective regional policy can make some impact in redressing these imbalances, and the Government have a responsibility to pursue such a policy. It cannot be left to market forces. Here I suspect that the consensus ends. I am arguing that the Government are failing to discharge that responsibility.

I notice that the Prime Minister has recently declared that the North-South divide is a myth. The Sunday Times last Sunday apparently dismissed the concept by the unique device of counting the number of Porsches sold in Newcastle. I live on Clydeside. If the Prime Minister or the Sunday Times reporter will accompany me down to Port Glasgow where one in four of the male population is unemployed, they will receive the true facts of the situation.

These are decent people. Many of them are skilled tradesmen, with families, who seek the same comforts and opportunities as all of us. They have built luxury liners and great battleships. They have sustained and protected us in wartime. Today they feel rejected and humiliated. They are anxious to work. When Nissan advertised 240 vacancies on the shop floor of the Newcastle factory, 11,500 people applied for the jobs. This is the reality of the North-South divide.

In the South-East unemployment is 8.5 per cent. In the North-West it is 14.2 per cent.; in the North it is 16.6 per cent. The average weekly expenditure per household nationally is £156. In the North it is £131. In the South-East it is £186. The South-East weekly average household income was 51 per cent. greater than that in Northern Ireland, which is a special case, and 41 per cent. higher than in the North of England.

The trouble is that, instead of diminishing, these regional disparities are increasing day by day. For example, 94 per cent. of the jobs lost since the Government took office in 1979 have been in the depressed areas of Scotland, the North, Northern Ireland and the Midlands, while the South has lost only 6 per cent. of the jobs in that period.

It is suggested by some market economists—mostly Conservative—that market forces will adjust these regional disparities because if there is a surplus of labour in the North, so the theory goes, it will cause wages to fall and employers will hire more labour; while in the South-East the reverse will take place. If there had been any justification for that view it would have already happened. But that has not taken place. The same distressed areas exist today as there were at the end of the First World War.

The other main market mechanism—the migration of labour and capital—has also failed since it tends to be the employed and the skilled who migrate. Today, because of the high cost of housing in the relatively prosperous South-East, no unemployed person can afford to move—even if he has a bike! The average price of a dwelling in the South-East is 70 per cent. higher than it is in the North. The failure of the market mechanism to correct regional imbalance makes government intervention a necessity.

The present situation is wasteful. Schools, hospitals, houses, transport and recreation facilities already exist in the North, while pressures in the South require public investment in all those services. Such is the pressure on land in the South that a building plot in the South-East costs 28 per cent. of the total cost of a house. In Wales it is 7 per cent. and in Scotland 9 per cent., so there is a continued inflationary pressure on the price of housing.

Everyone in business knows that economic growth depends on the entrepreneur and the innovator. In the absence of employment opportunities in the regions the bright young people inevitably drift to the South and leave the regions impoverished. The tendency towards centralisation in control of large companies following the recent merger mania drains the regions of their bright managerial talent.

Privatisation and the creation of large private monopolies have also contributed to centralisation. The international companies whose investment we have welcomed in the regions tend to have their headquarters elsewhere and the regional plants are branch plants which inevitably suffer with the downturn in any economic activity. It is necessary that we should stress to the Monopolies and Mergers Commisson, which examines cases of mergers, that it should consider the regional dimension.

I am frequently asked whether the regional policy works. The DTI recently asked that question and commissioned two Cambridge economists to study the matter. In a recently published report they revealed that between 1960 and 1981 an estimated 630,000 new jobs were created as a result of positive regional development policy.

I should like to say a word about the Scottish Development Agency. It could provide a model for an effective regional intervention in other parts of the United Kingdom. It has an investment function. It supports venture capital projects. It encourages inward investment. It has a responsibility for advisory services to small businesses and initiates schemes for urban renewal. It is a success story. However, I give the Minister a word of warning. Accountability of the SDA and similar bodies to the Minister and his civil servants must never be confused with control. These bodies must retain the freedom of the entrepreneur.

I should like to say a few words about how the Government discharge their responsibility. I confess that, as in other areas of the economy, their performance is sadly inadequate. In November 1984 the Government announced a new policy, the objective being the reduction of regional disparities in employment opportunities. This placed a greater emphasis on support for purely labour-intensive projects and withdrew subsidies from large capital investment, ignoring the fact that it is precisely capital investment in modern plant which will raise the competitiveness of industry, on which the regions depend. The high-technology industries, for example, are not always highly labour intensive. Capital investment provides the necessary stimulus to cost reduction which assists industry to expand.

Behind all the so-called justification for the new policy of November 1984 emerged the distressing fact that in a period of increasing unemployment problems in the regions the Government have cut regional development grants. In 1982–83 the amount was £900 million; in 1983–84 it was £700 million; and it is expected that between 1985 and 1988, £300 million will be spent on regional aid. I ask the Minister: what is the wisdom of this policy that cuts regional support, which is employment creative, and with the money saved pays people to stand idle in the dole queues? It is madness. Perhaps the Minister will pay some attention to employment-creative support in the regions so that he can take people out of the dole queues.

The Government have confessed that their policy will not work. In their submissions to the European Regional Development Fund they confessed that they did not see any possibility of unemployment being reduced right through to the 1990s. I should like some assurance from the Minister as to how he honestly sees this new policy working. There have been two years of it and it is not working. Is it not time that we had some reconsideration of this strategy?

This is not only an economic matter. I should warn the Minister that the present two-nation situation creates dangers for the future unity of this country. People who feel neglected and who feel that their voices are no longer heard may be tempted to pursue desperate solutions. The latest opinion poll in Scotland reveals that 81 per cent. of the voters are opposed to the present Government. Even the separatist Scottish National Party is now attracting 18 per cent. of the votes against 11 per cent. at the last election.

That is the climate in which the demogogues of nationalism can flourish. The citizens of the "other nation" can readily reach a stage of disenchantment with our existing democratic institutions if they feel that they are not being heard. I want this nation to survive as a unit. I want the democratic institutions of this country to prosper, but they cannot do so on the basis of these economic facts.

What would the Alliance do to deal with the situation? First, we would take steps to increase the number of jobs as part of a national strategy by spending on investment and infrastructure rather than tax cuts, since regional disparities are at their narrowest when national unemployment is low. Secondly, in calculating government expenditure, including government purchasing and location of Civil Service departments, the regional factor would always be taken into account.

Thirdly, there would be an extension of regional development agencies, on the model of the successful SDA, to other disadvantaged areas and they should work in partnership with private enterprise and be given wider powers to raise finance from private capital markets. I suggest that if these policies were pursued there might be some impact on the present depressing situation of increasing unemployment and hopelessness in the regions. My Lords, I beg to move for Papers.

3.20 p.m.

Viscount Brentford

My Lords, I am grateful to the noble Lord, Lord Taylor of Gryfe, for introducing this Motion. This subject is being discussed in the media and throughout the nation at the present time and I believe that it is right that your Lordships should also formally consider it.

As the World Bank has said, we are going through a structural adjustment as the nation moves from its traditional manufacturing base to a wider one including the service industry and new high technology. As the noble Lord, Lord Taylor of Gryfe, said, the decline in manufacturing and the resulting unemployment situation is not the same thoughout each region. Although there are difficult and unpleasant figures that can be quoted, I believe that we need to look at this question not on a regional basis but on the basis of smaller areas. That is what I shall be proposing to you in a moment.

I should like to suggest to your Lordships that there are three underlying assumptions that ought to be kept in mind when we consider this matter since we all aim to be positive and want to produce answers that help toward mitigating this world-wide problem. The first assumption is that we want industry, including high technology, to expand in this country both for the benefit of the nation and in order to mitigate the unemployment situation. This is required particularly in places of highest unemployment. I believe that as high technology industry expands and the computer bases increase so will our young people, who are perhaps the most discouraged by unemployment, receive encouragement.

It is not sufficient for this country to have a service industry. A service industry needs manufacturing and serves it. And, my Lords, manufacturing industry must continue. We must always bear that in mind.

Secondly, I believe that research is vital for industry and perhaps that has not always been sufficiently emphasised over the past 50 years. The pattern needs to be a partnership between industry and the universities. The universities and polytechnics are vital for research and for training. We have recently been looking at the reports of your Lordships' Committee on Science and Technology and I believe that there are matters there which need further consideration.

Thirdly, the information that is obtained through research and otherwise needs to be disseminated both formally by means of publication and also by person to person contact. It is important for people who are working in the academic field on a particular subject to have plenty of opportunity to discuss their work formally and informally with those in industry who are dealing with the same subject. I shall return to that topic in a moment.

Let us take the example of Cambridge where, I have been told, very good communication takes place between the university and local industry, not only in formal settings but also in discussions over a cup of tea or the various other kinds of drink that are imbibed. Such communication sparks off ideas and leads to the application of the results of research.

I should like now to turn to my proposal, which is that we need to consider much more clearly the need to focus in one place the resources for one industrial sector. I shall illustrate this by picking out at random the suggestion that all the resources for biotechnology should be focused at Middlesbrough in order to produce a biotech centre for Europe. This would mean that certain requirements had to be met. First, it would mean recruiting key academics in the biotechnology field for Middlesbrough Polytechnic. Secondly, the best courses for biotechnology should be focused on Middlesbrough Polytechnic. Thirdly, there should be special incentives for firms which are working in biotechnology to set up in Middlesbrough. Fourthly, Middlesbrough would need to publicise its role throughout the world by advertisements, exhibitions and so on. Fifthly, leading employers, such as ICI, should participate in this field (in the recent past ICI has cetainly done work in biotechnology).

That is what I should like to recommend as worthy of consideration. It could be argued against the proposal that surely Middlesbrough in the past has had that sort of focus in shipbuilding and steel-making. However, there are two points that I should like to make against the argument that this idea has been tried and failed. First, research needs to be the new factor—a partnership between academics and industrialists. That is the new pattern and is the way forward to the new technological age into which we are moving.

Secondly, surely the lesson has been learned that a new industrial focus is needed before an old industry collapses. We all know that we are living in an era of accelerating change. We cannot get away from the fact that old industries must come to an end and new ones start. That fact has to be faced. Before old industries die it is important that a new industry should be born and started up, ready to take its place. Before the old dies the new must be born. That is my suggested industrial focus strategy for the regions.

3.27 p.m.

Lord Sefton of Garston

My Lords, I also should like to echo the thanks to the noble Lord, Lord Taylor of Gryfe, for introducing this subject. I am sorry that we do not have longer time in which to discuss it. I am certain that almost everyone on this side of the House, and I think some Members on the Cross-Benches, would agree with me that it is a great pity that the consensus to which the late Lord Stockton referred—and which was referred to after the First World War as building a land fit for heroes and encapsulated in the phrase, "Never again will the economic problems of this country be solved by mass unemployment", to which so many politicians in this country subscribe—is not found inside one party. It is indeed a great pity that the present Government are maintained in office because the opposition to that Government is split.

I shall not go into details about the responsibility for that situation but it is a very sad reflection on modern politics. I do not think that there is any need for anyone to argue that there is a North-South divide and that it is severe. There is no doubt about it. If anyone had any doubts about that on the last occasion that we discussed this question, since then they have only had to read the national press—the serious papers—to be convinced of the fact that there is a North-South divide. Amazingly, the Prime Minister does not seem to accept it but seems to think that something could be done locally to get rid of the North-South divide. I think it is about time that someone from the Conservative Party took the lady on one side and whispered in her ear the real truth about our economic situation.

Worse still, however, that kind of attitude illustrates another form of divide. I quote the Secretary of State for the Environment, Mr. Ridley, who said that such areas—he was referring to Merseyside and Tyneside—had been in the firm control of the Labour Party since before the war. The decline was because of forces within our control. He tried to show, and actually said, that the responsibility for the problems in those areas lay fairly and squarely with the people and their leaders, whom he associated of course with the Labour Party. Someone should have told him before he went to the North-West to look up his political history, because in fact over the years of decline Merseyside was fairly and squarely under the control of the Conservative Party.

Is it right to blame Merseysiders for the fact that shipping moved down to the South-East with the advent of the container trade? Of course it is not. Was it right to blame Merseysiders when an organisation such as Tate and Lyle, in which industrial relations were nearly perfect, decided to close, or when Dunlop's decided to close? There were many other firms on Merseyside with excellent industrial relations. Was it right to blame the Merseysiders when they closed? Why did Mr. Ridley come to the North-West to lay the blame on those people? He was simply appealing to the base motive of selfishness. He wants to demonstrate to the Tory heartland that it is not the problem of the people in the South; they can solve their own problems up North.

When we debated the Queen's Speech, the Leader of the House, with pleasure in his eyes, defended his Government's attitude to the problems of the regions and informed us that they had spent £465 million on regional aid. No doubt he was glad to boast about that. Let me give your Lordships some of the figures. I put down a Question in the House not long ago to which I received a reply from the Minister. I asked what the difference paid in wages to Civil Service staffs in London was as opposed to anywhere else in the country; i.e. London weighting. I was told that there are 124,000 civil servants in London alone who receive extra payments which in total amount to £150 million per year. That is much more than the aid sent to parts of the North-West.

Not only that, the expense in the South-East is so great that, as I have said before, there is a levy for London on the rest of the country. In parts of London the Government pay to the local authorities £87,685,000 in lieu of rates on government buildings. Let me give a comparison. In Liverpool they pay £9 million and in Westminster alone they pay £53,198,000. Those are only two of the extra costs met in London.

If we add to the 124,000 civil servants in London who are being paid for by the rest of the country support on the basis of one for one for jobs in the community, we have a figure of 250,000 people. Can anyone imagine the consequences if the Government were to transfer 5,000 of those civil servants to any part of the regions? Those 5,000 people sited in the middle of Liverpool would rehabilitate Liverpool and transform the economic situation almost immediately.

What did the Government do? Their first act was completely to destroy the consensus that had been arrived at across the broad political spectrum that at least 3,000 civil servants should be transferred to the area. That was nothing but a pay-off to those people who did not want to see that happen.

Five minutes have already gone. The time allowed is much too short. I conclude by saying that I rarely speak in a debate upon which there is no vote. But if we are serious and if we mean it when we say that something should be done about the North-South divide and about re-establishing the consensus that existed when we thought it advisable that unbridled capitalism should be controlled, we should perhaps make a start here. We should put down a Motion on which we can all vote and express our feelings so that the Government will look at the problem of the imbalance which exists among the regions. That means not only that something should be done about the North but that something should be done about the problems that exist in the South-East, because they are considerably worse than I have heard anyone mention.

3.35 p.m.

Lord Grimond

My Lords, as this is a short debate, I shall confine what I have to say to Scotland which is a part of the country about which I know a little. I should like to start, like other speakers, by congratulating the noble Lord, Lord Taylor of Gryfe, on his Motion and the admirable speech with which he introduced it.

I take over several of the points made by the noble Lord but I do not wish to repeat them. He started by saying that the problem was a longstanding one, which indeed it is. It is notable that so far our efforts to redress the balance between the regions have not been successful. One major cause of that—it is to the major causes that we should look—is the centralisation of this country. Our usual habit is not to go to the cause of our troubles but to try and palliate them. In this case, one of the major causes of the imbalance and failure of the regions is that power and influence are centralised in London. That means political and, following that, financial and social power of all kinds. If we want to strike at that cause, we must look again at devolution, probably for the English regions and certainly for Scotland and Wales.

Recently at any rate all parties have been in favour of devolution in varying degrees and at different times. It is high time, when the feeling in Scotland is rising again, that all parties should look carefully at what can be done to devolve government.

My second point is that the Government are not everything when we come to discuss power and influence. What are important are the major institutions of a country or a region. In those institutions of course I include the head offices of businesses. What is so damaging for Scotland is that constantly since the First World War it has lost control over its main activities and businesses. That is going on now.

The Government cannot do everything, but they can do a certain amount. I should like to congratulate them on some of their efforts. When they wound up the British National Oil Corporation they set up a headquarters in Glasgow. That is an example which they should follow. They also attempted, as the noble Lord, Lord Sefton, said, to move some of the civil servants to the regions and to Scotland. They seem to have lost enthusiasm. They lost a great opportunity when carrying out privatisations, one of their main policies, by not setting up, for instance, electricity and gas corporations in Scotland, and by not going further in the case of the savings bank and having a separate Scottish savings bank or putting its headquarters in Edinburgh. That point is becoming more and more important as services take over from industry, as the noble Viscount said.

One of the most hopeful things in Scotland is that Edinburgh and the central belt may become a centre for financial services and for the higher technologies. They are doing so, but the Government must give encouragement and contracts and see that when they privatise the process of privatisation is dealt with partly through Scottish institutions and that advantage is taken of the opportunity to set up some headquarters in Scotland.

My next point is that there is a considerable amount of saving in Scotland but there are few local means of channelling it into local needs. Other countries have a less centralised banking system than ours. It is desirable to have local outlets for local savings, not just in government stock but in local enterprise and business. A look could be taken at the powers of the Highlands and Islands Development Board. It could conceivably take on some of the functions of a merchant bank and even be authorised to take deposits. Something must be done to keep local savings in Scotland.

Lastly, it seems to me time that the law relating to takeovers was looked at again. The example of Guinness and Distillers is horrifying in many ways. One of the most horrifying things about it is that probably one of the largest and most important Scottish companies—Distillers—was taken over by means which are a disgrace to any financial centre in the world. That may have done great damage not just to the reputation of the City and the companies but to the people in Scotland and the working of the Scottish economy. It seems disgraceful that that can happen without there being any effective powers to deal with the matter retrospectively.

It was also, I may say, rather shameful. It was not only the Guinness board, but it was actively encouraged, so far as I can make out, by the board of Distillers. So I hope the Government will look at the lessons to be drawn from this unhappy incident when it is over and take whatever steps are necessary to strengthen their powers in the case of takeovers.

3.40 p.m.

The Lord Bishop of Manchester

My Lords, much is being said in this debate about the North-South divide and especially about deprivation in the older industrial areas in the country. The first point I should like to make is that the northern areas are wonderful places in which to live if you have the money: wonderful scenery, excellent road networks, especially around Greater Manchester where I live; warm and friendly people, including many from the ethnic and cultural minorities who enrich our common life. But there is no doubt at all about the disparities we have in this country. As has rightly been said, there have been growing disparities between the comparatively affluent South-East and other regions in Britain.

If you look at the figures, for example, for the city of Manchester and the city of Salford—and these could be paralleled with many of the other older industrial areas—the statistics are quite horrifying. These are places into which back in the late 18th and 19th centuries, people crowded from the countryside and also from overseas—Ireland in particular—and later from other parts of the British Commonwealth or the Empire, as it then was. They manned the factories which made Britain the workshop of the world.

Unemployment in Manchester has now increased from 11 per cent. in 1978 to 24 per cent. in 1985, and in some areas of the city more than half the adult male population is now unemployed. We have congregations in my diocese of Manchester in which hardly a single person has a paid job, and by 1985 nearly one-third of the residents of Manchester were claiming supplementary benefit. That was at a time when not everyone entitled to it in fact claimed it. Unemployment is not of course the only cause of poverty. There is very low pay, and recent research has indicated that nearly half of all those in work in the city of Manchester earn poverty wages. So there are very great disparities in our country today and I think we must take them very seriously—more seriously than any government perhaps have taken them in recent years.

They show themselves in every field of life. If you take health care, for instance, the Black Report back in 1980 showed a terrifying picture of what was happening in inequalities in health care. More recently, Professor Townsend has stated that the health gap between rich and poor is widening with an increasing proportion of the population having very poor living standards. When it is said, perhaps rightly, that too many people who live near poverty suffer from ill health, particularly in later life, because they smoke too much, drink too much and eat the wrong kinds of food, it should be realised that this in itself is a result of inequalities and poverty.

As has rightly been said, particularly by the second speaker in the debate, some of the problems that we are facing now are from technological change, over unemployment in particular. In the North-West, textiles were a great employer. Now you can go to those textile mills which are still in operation and see modern machinery being operated by a handful of operatives compared with those who kept the machines going in the past. They are achieving greater output at the same time.

I agree with those who have already stated that we cannot go back to the old days and simply revive traditional industries. But what we must surely do is not to allow change to cause great suffering, as in the days of the Industrial Revolution. One of the things which we have around our area in the North-West is the splendidly imaginative museums which illustrate what life was like in the past. But is is a very sad picture because it also shows the grinding, terrible poverty which afflicted people in the 19th century at a time when much of Britain's industrial wealth was being created. Small numbers of people grew very wealthy; large numbers suffered terrible hardship. Change was not managed well. That must not happen again.

Today we are in the grip of another revolution with even deeper and more far-reaching effects. A recent study from Edinburgh University has put the challenge in front of us very clearly. The problem is how to distribute equitably the benefits of technological change without destroying the incentive to innovate when the technologies being adopted no longer require the kinds of tasks for which large numbers of people are needed.

We are not doing very well in facing up to that challenge. Some people today are getting very much richer and we are not distributing equitably those benefits. This study goes on to point out that we live in a society that is able to produce more goods with less labour time than ever before and which in historical and global perspective is in the midst of a veritable orgy of consumption of colour TVs, hi-fi sets, home computers, video recorders, food mixers, dishwashers and deep freezers; yet governments proclaim that we cannot afford more public services and industrialists insist that we cannot afford a 35 hour week. The real problem is not public expenditure; it is private expenditure.

I do not decry what has been done in the regions. I was very impressed when just before Christmas I visited the Salford Quays development, a partnership between Salford City Council, central government and private developers. But much more is needed and many voices in the North are now calling for a change of policy.

Mr. John Morris, president of Manchester Chamber of Commerce and Industry, at a dinner attended in December by the Prime Minister, said: What we are calling for is an end to 'central' government and a move towards 'national' government … This would represent quite a fundamental change in management as well as policy. It would mean locating government departments where they are most economical, co-ordinating policy and work of all government departments at regional level, developing a national plan for infrastructure development, and consciously seeking to invest in the untapped economic potential of the regions". We must not assume that jobs will come back in traditional ways, but a prime point of policy must surely be to manage change rather than simply drifting with it, to the hardship of so many people in this country.

My last word comes from a manual of perhaps a personal and even a national instruction over 2,000 years ago: A body is not one single organ, but many. Suppose the foot should say, 'Because I am not a hand, I do not belong to the body', it does belong to the body none the less … If one organ suffers, they all suffer together. If one flourishes, they all rejoice together". Perhaps that is a text for national and international policy today.

3.48 p.m.

Lord Elliott of Morpeth

My Lords, I listened with great interest to the speech of the noble Lord, Lord Taylor of Gryfe, and I very much appreciated, as I am sure we all did, his sincerity in expressing his fears on the industrial imbalance between North and South and the consequences which he and others fear because of it.

I am taking part in the debate for one principal reason, which is to warn that this constant suggestion of there being two nations within the one is inaccurate. It is potentially immensely damaging not only to the North but also to the economy of the country as a whole. I think we need to face facts a little more than we are doing. It is so easy to stand up and say that there are two nations within the one. It is so easy for a newspaper or a television company to display on the front page or flash on the screen a picture of a derelict shipyard in the North-East of England. It is so easy for us all, I believe, possibly to get the wrong impression.

I live in the North-East of England, I have done so all my life. As my area is one of the principal places always quoted in the context of the North-South divide, I feel it necessary to dispel the engendered impression that my area is depressed, derelict and in despair. It is nothing of the kind. I disagree also with the suggestion in the second part of the Motion, if I may say so to the noble Lord who moved it, that we need an effective regional policy to redress the imbalance. It is my contention that we have an effective regional policy which is working. There is, of course, always room for improvement. I will try, in the short time available to me, to give my opinion on areas of that policy which, from the experience of their success, can be strengthened and play a greater part in the enormous task of converting old industry to new.

This is the basis of the whole problem, and no one should underestimate what an enormous task it has been. But a great deal has been achieved, as I have said on other occasions, not only by Conservative governments but by governments of both parties in their periods of office. For instance, in the city of Newcastle there are today two colleges of technology. At this very moment 30,000 young people are getting some form of training. Neither college existed when I became a Member of Parliament for that city 30 years ago.

Training is a problem which remains, and it is one to which we need to give more attention. But, in the North-East of England today—here I refer to the speech of the right reverend Prelate the Bishop of Manchester—the quality of living is high for those who have the money, that is the 82 per cent. of people who are in employment.

In the North-East of England we have the finest road network in the country—again, a tribute to both parties when in office. The scars of the Industrial Revolution have been largely removed, and this process is continuing. The all-important training in modern skills has been substantially provided. No one should underestimate the enormous problem presented by the decline of old industries but the achievement in redressing the industrial balance should be appreciated.

Many new firms have been encouraged to establish themselves in the North-East; and they are providing ever-increasing employment. There are now 22 Far East companies in the region. In September last year my right honourable friend the Prime Minister opened the largest such enterprise, the Nissan plant. Every area in the country wanted the Nissan plant, but it is right there in the North-East of England. Exactly a week after its opening, I had the privilege of opening a factory for Superbadge Limited of Hong Kong, which will provide 300 new jobs. And we have Komatsu at Birtley, and many others. To us, this movement shows continuing progress.

I turn to the encouragement which regional policy is giving to those parts of the northern area with the greatest difficulties. During the recent recess I visited the area of Derwentside as the guest of the Derwentside Development Agency. I made the visit for two reasons. First, I had been impressed by the success of the agency; indeed, I have spoken of it here on a previous occasion. Secondly, it is of particular interest because, in a region that has known the enormous challenge of industrial change, the challenge was a formidable one on Derwentside. In the space of a few years leading up to 1980, 15,000 jobs in coal mining disappeared. In September of 1980, the Consett steel works closed with the loss of 10,000 jobs.

The Derwentside Development Association was formed in the face of sheer necessity, and it has been remarkably successful. It has known two external substantial aids; one, the involvement of the British Steel Corporation task force, the other—and I quote the chief executive on Thursday last week— The superb support of the Department of Trade and Industry and the continued enthusiastic interest in our agency of all Government departments". There is no doubt in my mind that it was very strong local commitment which led people in this area to get up and go and to refuse to be borne down by the closure of industry. Their own indigenous achievement is a very considerable one. I visited the Consett steelworks with a group of students many years ago when I was very young. It was on a dark November evening, and I remember the flames, the heat and the noise. I thought it was the nearest thing to hell on earth I would probably ever see. All that is left of the Consett steelworks today is a large aerial photograph of it on the boardroom wall. The actual steelworks have been demolished. It was the largest industrial reclamation programme in Europe. The 650 acres where the works stood are now green fields. This joint effort on the part of local people and the Department of the Environment was a tangible symbol of required change.

At the other end of the town, there is a new industrial estate. In 1980 there was one empty advance factory there. Today there is only one vacant plot. There are 200 new companies in shining new buildings, and 3,000 new jobs have been created. Best of all, in these buildings are ex-steel workers and ex-miners who are coping with modern skill requirements.

I hope that no one will imagine that this is a temporary situation. City institutions are not reluctant to invest in the North-East of England. It is not a "river flowing uphill" situation, as a letter to the press said a little while ago. There is considerable City interest in the North-East of England. North-East England wants more venture capital and seeks to encourage it. So the town of Consett, which was once said to be dying, flourishes today. There is an example here of what can be achieved in other areas by existing regional policy.

I make one plea finally to the Government through my noble friend. There are areas of recent regional policy which are extremely successful. The local enterprise agency support scheme, which is comparatively new, is good. The pound-for-pound grant is exactly what is needed to encourage local initiative with a helping hand.

I conclude by suggesting that the North-East of England, far from being a depressed region, is one of optimism and determination. I quote the chairman of the development agency in Derwentside: We are a proud people. We do not want just straight Government investment here; we want a helping hand". I believe that, through present development area policy, we are on the way towards solving our major problems.

3.55 p.m.

Lord Parry

My Lords, no doubt the noble Lord, Lord Taylor of Gryfe, will take the courtesies and my respect for him for granted, and perhaps even the noble Lord, Lord Elliott, will accept that I understand and appreciate what he was saying in the contribution he made to this debate.

We are the products, and in some ways the prisoners, of our environment. I was born and bred in Wales and have lived there all my life. It is a beautiful country. It is peopled not by a regional body but by a nation. It has its own language; it has its own culture; and it has weaknesses that are long-standing within its economic background. These weaknesses have not been cured despite the policies which have been entered into by successive governments in Britain since 1945.

If I were to select at random one constituency, a constituency that was won in 1951 by the noble Lord the Leader of the Opposition who is sitting before and below me, the constituency of Anglesey, we should find there an unemployment rate in excess of 26 per cent. for the male population. That unemployment rate is one which has endured for a very long time indeed; there is long-standing unemployment. That is not deny that the island of Anglesey is beautiful beyond belief. It has mountians that attract people to visit it. It has encouraged industrialists to invest in it; and some of the policies of successive governments have in fact been effective.

I could snatch a number of points at random from the pages of reports I have been reading over the past 48 hours which would prove that there is depression in the economy of Wales; that those very beautiful areas are the most blighted in terms of employment and human opportunity; that the communites that have been built within them have deteriorated beyond all belief through the past 50 years; and that the aspects that sustained them have gone to the wall. Having said that, one must not then stand up in this Chamber to defend in a party political sense the policies of one's government without recognising the vital policies of all successive governments: we have failed to cure the radical imbalance in the economy of Great Britain.

As I am speaking for Wales, let me now identify places and percentages. When you take income tax as a percentage of total personal income, Wales is bottom of the league. When you take personal income before tax (that is, by range of income) Wales is third from the bottom of the league, topping only Northern Ireland and the West Midlands. When you take regional employment, Wales is third from the top, with 16.9 per cent. unemployment—greater than anywhere else other than the northern United Kingdom and Northern Ireland. We cannot get away from this, which is the product of 50 years of political history and of changes in the economy.

More than a quarter of the men have been unemployed for a very long time. If you look at the Employment Gazette for January 1987 it shows that between March 1985 and June 1986 the numbers of employed in Wales fell by many thousands. If you look at production and construction, the numbers fell by many thousands; if you look at production alone, it fell by a great deal; if you look at manufacturing, it fell in Wales. Indeed, one noble Lord earlier referred to the service sector and its inability to provide for the total economy, despite the expansion of tourism, which is vital and a very important contribution to our economy. The service sector increased but it was the only part of the economy that grew. We cannot sustain the British people on a service economy only. That has never been part of my argument nor was it a part of that of the noble Viscount, Lord Brentford. I wholly agree with what he had to say.

Let me take some more figures. The third digest of Great Britain regions tells us that households in Wales were relatively less likely than others in Great Britain to have most consumer durables. We did rather well for washing machines, which is not surprising, since cleanliness is next to godliness in our little country. We did fairly well for deep freezes and televisions. These are important, although they are not altogether basic. However, the Welsh people spend less as consumers per head. Expenditure was lower in Wales than in any other region of Britain apart from Northern Ireland and the northern United Kingdom. Within that expenditure the Welsh spent 2 per cont. more on food, drink and tobacco than anyone else in any other region of Great Britain.

The effects of the coal strike on the gross domestic product cause general concern, and there was also a decline in the value of the gross domestic product. However, as a matter of pride, Wales had the highest proportion of all regions of children under five in maintained schools. We were beaten only by Scotland, Northern Ireland and the South-East of England in numbers of pupils aged 16 in maintained schools. We have the third highest figure in Great Britain for school-leavers intending to go on for higher education.

This small nation of Wales is attempting to sustain itself and to make a major contribution within the economy of Great Britain. It is also attempting to sustain its culture and language. The very fact that there are depressed areas in the North or South is reflected within the small nation of Wales. Unemployment is high in the North. The traditional industrial regions are in the South. However, I discovered, in association with the noble Lord, Lord Prys-Davies, who helped me to prepare some of these notes, that there are large pockets of high unemployment and depression very close to the major capital city of Cardiff. There is therefore a complication within that area.

We have a very great problem to which we have to address ourselves. I ask the Minister this question. Are the Government prepared at the end of this debate to say yes, it has been terribly difficult, despite the efforts of the Welsh Development Agency and the commitment of the present Secretary of State for Wales, to cure the difficulties in the economy of Wales? Will they give us time for a debate so that we do not have to race with our figures and tumble over our words in trying to express our concern? Will the Government tell me during the reply to this debate that they appreciate that there is a very great need for the regional imbalance as it affects Wales as a nation to be attacked in a more aggressive way?

4.03 p.m

The Viscount of Falkland

My Lords, we are very grateful to my noble friend Lord Taylor of Gryfe. I am particularly pleased to have a lucky colleague on these Benches. This is the second time that he has been lucky in one of the ballots for the Wednesday debate and it is the second very topical and important subject he has brought before us.

In 1984 I had the great privilege of being a member of your Lordships' Select Committee on Overseas Trade. I am very glad to see my noble friend Lord Ezra, who also served on that Committee. It is well known that we drew attention to the malaise in this country and the dangerous drift towards which our manufacturing imbalance was leading us. At the end of the period of 10 months during which we sat together one of the most important matters we emphasised was the need for a change of attitude in this country—an attitude towards wealth creation and the participation of all people in a new atmosphere of wealth creation which did not include only those who were employed but the unemployed and those who were going to be employed.

Attitudes have changed since we produced that report. Although several of your Lordships have referred to these terms, I am not encouraged by the slogans and catch pharases which unfortunately we are always having to tackle. These days it seems that the press and the media have to over-simplify these problems into one or two words or a phrase. I think that the "North-South divide" and the "two-nation state" are not helpful phrases. I can understand that we are nearing an election—whether it be this year or next—and the two major parties are assuming combative and confrontational postures. This is the way we carry on our affairs in this country. It is something which we on these Benches would like to see changed.

The atmosphere at the moment is creating the kind of article which we saw in the Sunday Times last Sunday and to which reference has been made by my noble friend Lord Taylor. The article began with the very curious point that no such thing as a "North-South divide—as they referred to it—existed because 150 Porsche motor cars had been sold in the Newcastle area. I find that curious not only because it is totally irrelevant to the problem of our nation—but why did they not mention Jaguar? This morning I called the public relations director of Jaguar motor cars, who told me that they too sell a vehicle for what he described as "young thrusting people". I do not know whether we have any young thrusting noble Lords in this House, but the article might well have mentioned a British car. Why mention a German car? Of course it is nonsense. Cars are bought by people who have windfalls or a lot of disposable income. This has nothing to do with the problem.

The article also drew attention to the fact that employment was being created in this country in large shopping centres in retailing and in the service area. This is so but it does not contribute to the new wealth-producing process of this country which we need fundamentally to create. That has been eroded by the disappearance of over 20 per cent. of our industrial base. We need to develop this wealth-producing process, and it can only be developed regionally because of the speed with which solutions have to be reached. The variety of solutions which have to be proposed need to be effected on a regional as well as a national basis. I have to give credit to the article. It pointed out that in one region there has been a great deal of innovation and energy to create interest and employment. Perhaps I may refer to the right reverend Prelate's biblical analogy. The underlying pathology of our problem is very complicated. How we get the arms, hands and legs together will take a great deal of ingenuity and skill on the part of not only government but of everybody in the private and public sector.

I feel that the Government have not entirely failed us in this area. It is fashionable to criticise the YTS schemes, but they have accomplished a great deal. I was talking today to the public relations officer at Jaguar. He told me that he had three sons who were successful. They achieved at school and went straight into employment. However, he had a daughter who unfortunately did not achieve that level of attainment. She went to a YTS scheme, which taught her a great deal. At the end of that she developed self-confidence and was exposed to various opportunities where she could express her skills and develop her potential. She is now earning a good salary in the legal profession. I believe that there are many such instances.

We need to develop our real asset in this country: our individuals, our people, and particularly the young. The Government are on the right track but they have to recognise that there needs to be much more input from individuals in the regions. The Manpower Commission is contributing usefully with its Restart schemes and its job clubs. I believe that this will result in young people being able to express themselves, to handle their aspirations, to stop being victims and to take control of their destinies. This will help to counter the malaise to which I have referred. I hope that we shall be able to develop this subject in the future in a longer debate, because it is a vital one.

4.10 p.m.

Lord Belhaven and Stenton

My Lords, the noble Lord, Lord Taylor, has raised a very important issue in the debate, and I am sure that we are all grateful to him for giving the House an opportunity to discuss it. I feel that I can make a very modest contribution if only because, in the past 12 years, I have spent seven years in the island of Islay in the Hebrides and five in South-East England; so to some extent I have a foot in each camp. However, like the noble Lord, Lord Grimond, I must confine my remarks to Scotland because unfortunately I do not know much about northern England except when I go through it when travelling from Scotland to London.

I should begin by saying that the problem is not new, and I will give a historical illustration. One of my ancestors in the 17th century had 11 sons. He lived in Scotland, and the union with Scotland must have come at a very fortunate moment for him because, of his 11 sons, only one remained in Scotland. One of his 11 sons became Bishop of Salisbury and another the first Scottish barrister to practise at the English bar. I do not know what happened to the rest of them. One could say that it was a family success story, but not so much of a success story for Scotland which had lost a number of obviously rather talented sons. Scotland has been losing talented sons ever since, as have Ireland and Wales, and now in the North of England they are to some extent in the same predicament.

We have heard from the noble Lord, Lord Taylor, and others that Scottish nationalism is getting more support than it used to. All that I would say about that—and I have thought about the problem for a long time—is that Ireland has tried political independence, but as regards retaining its population and industry this seems to have had no effect whatsoever, good or bad.

What then is the answer? Can we give talented people what they want in their own country and in the area in which they live? I know that the noble Lord, Lord Taylor, in his work in the Forestry Commission and elsewhere has practically dedicated his life to the proposition that we can and that we ought to do it. He has emphasised this in what he has said today. Taking the Alliance politics out of it, I would say that I agree with most of what he said. I hope that my noble friend Lord Lucas will take serious account of what the noble Lord, Lord Taylor, said. I have no intention of repeating it.

As to regional development boards, tourist boards, the Highlands and Islands Development Board, we have tried them all over many years and they have all in their way contributed towards the aim of giving young people work and incomes in the places where they live. This is all very commendable because no civilised country can willingly allow and connive at wholesale depopulation of large areas of its territory such as happened in the Hebrides in the last century. The Hebrides in particular is aware of depopulation, and, indeed, of dereliction. It is a continuing threat in those areas. One needs no further reminder in the Hebrides than to look at the remains of the old villages of the 18th and 19th centuries, and a few miles beyond them. Therefore, as I say, in that area the threat is not new and unfortunately continues.

The trouble is, I think, that no matter what we do—I am talking of the outlying areas, not of the industrialised areas of northern England and Scotland—it will be very difficult to stop the populations of these areas from falling. One reason I find is that, of the young people who live in remotish islands, the enterprising ones want to get out and find what the world is like. It is not much good creating a few more jobs in hotels, distilleries and so on if they are going to go away. One should try to mitigate it, slow it down, and give the people who want to stay a chance to stay.

If one takes the other side of the noble Lord's Motion, I think the movement of the population into South-East England will continue. I do not think that anyone will be able to stop it in the foreseeable future. It is part of a worldwide trend. We have only to look 300 miles away at Paris to see that the same problem is happening across the Channel.

We will also have to face the fact that people are not just going to come from remote areas into the United Kingdom. I am thinking in particular—because I have been abroad for a few weeks—of the ramshackle socialist economies of eastern Europe where people have no kind of a standard of living that anyone would put up with in this country and where they would leave if they had half a chance. Also, there is the fact that their governments are now less willing to prevent them from leaving so that we are finishing up with visa controls and such like. How long we will be effective in stopping these people from coming here and, indeed, whether we are effective at all in doing so, I do not know, but I leave that as a last thought for your Lordships.

4.16 p.m.

Lord Carmichael of Kelvingrove

My Lords, it is always very difficult to speak for a short period in a debate such as this. I believe that we are already running over time, so I shall try to allow your Lordships to recover some of the time.

One of the worries about the whole question of the North-East divide was brought home to me very forcibly recently when I attended a seminar on the Channel tunnel. I have always been very pro the idea of a Channel tunnel. It may seem a strange way to begin to speak in such a debate. It was in about 1964 in another place that I made my first speech about it. In the past few months particularly I have become more and more concerned about the Channel tunnel. What originally sold it to me, I suppose, was the idea that goods would be able to be put on a train in Scotland, the North-East or the North-West of England and driven straight to Italy, Germany, France or Spain. What has become apparent to me now is that we are not really producing any goods in Scotland, North-East England or North-West England that are likely to be sent through by train in that way, so I am having serious doubts about it. I still like the idea, but to my mind the original purpose seems to have gone.

If one looks at the area that I come from, Strathclyde, the west of Scotland, where we are famed for our heavy industries, even up to 1960, 42 per cent. of our population was in heavy industries as against only 38 per cent. for the whole of the rest of the United Kingdom; so one will realise how dependent we were on heavy industries. Since 1974, a matter of 12 years or so, we have lost 20,000 jobs; 56 per cent. of the workforce in metal manufacture, 17,500, which is 56 per cent. in vehicle manufacture; 13,200, which is 42 per cent. of those previously employed in shipbuilding. In textiles there has been a reduction of 44 per cent. of the workforce, and in mechanical engineering a reduction of 53 per cent. of the workforce. That makes it very difficult for me to be enthusiastic about the possibility of our being able to make the use of the tunnel that I thought was going to be one of its major helps to the United Kingdom.

In his introductory remarks the noble Lord, Lord Taylor of Gryfe, spoke about the fact that we had an infrastructure in Scotland and the North of England that it would be quite wasteful in national terms to ignore; in other words, it would be wrong merely to duplicate the infrastructure that we had in the North and leave it derelict while we built up an infrastructure in the South and solved all the problems. I think it was my noble friend from Liverpool who made the point that the South will have its problems if it does not already have them, because the problems are building up seriously in the South.

In the evening Standard night after night I find that many jobs in the building industry are vacant in the South-East and people are wanted to come from the North. I know lads who come from the North. If they are young and have no commitments, they get on very well for a period because they do not need to buy a house and can live in lodgings. However, they cannot really settle down in the South-East, partly because of the incredible cost of housing. That does not mean that I am advocating that houses should be built for them; I want us to get the jobs back up in the North.

The noble Lord, Lord Grimond, talked about centralisation mania and in my view what he said is absolutely true. We have far too much centralisation, particularly in the South of England. We in the North do not want people to move up to the North; we want jobs to go up to the North. I must say that I believe that when my own party was in power it did not do as much as it could have done in this respect. I am not saying that this is a solution to everything but it would certainly be helpful if some of the Civil Service jobs could be moved up to Scotland. I do not know what the figures are now, but I shall certainly put down a Question to ascertain them.

Some years ago I put down some Questions and discovered that if a young man or woman in the Civil Service in Scotland wished to stay and work in Scotland they needed a 70 per cent. pass in the Civil Service examination. However, if they were willing to go to Newcastle, then partly because of the big new NHS complex there they could manage with a 60 per cent. pass. But if they were willing to go to work in London they were grabbed if they had a 50 per cent. pass in the clerical examination. In fact, I believe that one could manage with considerably less.

It would be interesting if the Minister could check with his own department and find out where many of the letters for his department are typed. I think he would be surprised to find out that some are typed in Edinburgh, some in Newcastle and some in Liverpool. It seems crazy to me that with the pressure on jobs here we send letters up there to be typed. It is nationally wasteful to build up the South-East in this way. I think that is one means by which we could alleviate the problem.

However, that is only tinkering with the problem. The real problem for British industry is surely the fact that we have never spent enough on research and development and on investment. When I think of the figures for Clyde shipbuilding—the Clyde used to be the greatest river in the world for ships—I realise that Connels Yard—it has now gone and there is nothing left of it at all—spent £2 million on development and they thought that they were doing a great job. At the same time the Swedes were spending £20 million and £30 million on a single yard and we were expected to compete with that.

As a nation we have never, since the Industrial Revolution, spent enough on research and development. When matters were going well immediately after the war industrialists said that we did not need to reinvest, that everything was going well and that we were getting the orders. When the orders began to go down they said that we could not afford to invest any more, and so they did not do so.

I should like to emphasise one of the things that we must do. It is the only solution ultimately for Britain because we cannot get a solution from the City of London. The money that is being made there is fancy money or Mickey Mouse money; it is not real money. I know that the Minister will come back to that matter when he replies, but we have seen in the past few months the ridiculous situation there now is. Huge fortunes are being made, but where they are being made is beyond most of us. We must start investing in industry, and one of the ways to get out of the difficulty that Britain is undoubtedly in is certainly not to be cutting back on university and higher education where the real solutions lie.

There is no quick way out. There will be a slow build-up if Britain is ever to get back again to the position of even having a chance of decent competition with the rest of Europe and the rest of the world.

4.25 p.m.

Lord Winstanley

My Lords, in supporting my noble friend Lord Taylor of Gryfe, who so admirably introduced this debate, I shall restrict my remarks to the two subjects for which I have been given specific responsibility by my party in your Lordships' House: that is, health and broadcasting and the media in general. So far only my noble friend Lord Grimond has not overrun his time. Perhaps I may try to follow him.

Taking health first, we need look no further than the Black Report on inequalities of health to see the extent to which people in the North are disadvantaged from a health point of view as against those in the South-East and in the South in general. In common justice that is something that ought to be remedied. We do not all believe in equality but I think that we all believe in equality of opportunity. Surely that means the opportunity to stay alive and perhaps the opportunity to remain fit and well. We shall not have that kind of equality of opportunity until we remedy the underlying factors—that is, the extent of unemployment, bad housing, low pay and perhaps the decaying environment in which people in the northern industrial cities have to live. It is a matter of justice.

As a matter of justice let us not forget that over the centuries the wealth of Britain has come out of the North. Surely it is time that we put some of it back. If noble Lords go up to the Pennine Hills and look out on either side of those hills they will see spread in front of them monuments to centuries of greed; monuments to taking wealth out and putting nothing back. That wealth should be put back and perhaps the people in the North can deal with it themselves if they are given the opportunity.

Of course, as the noble Lord, Lord Elliott, said, there are prosperous people in the North. The trouble is that so many of them are Londoners. When I use the term London it is customary in the Manchester sense to include Hampshire, Wiltshire, Dorset and all points south of the Wash. However, it is the recruitment that is in London, and because recruitment is in London people are moved from London up to the provinces. They are frightened to death to start with. If they go to Mancheser they live in Prestbury or Wilmslow; if they go to Merseyside they live in perhaps Formby or the Wirral. They live in fear and trepidation of being promoted and having to move back to London again where they could not possibly sustain the same quality of life as they enjoy up there.

The problem is that those opportunities ought to be available for the people born and bred in the North. However, they are not available to them because the seat of power is down in the South and that is where posts and appointments are made. The noble Lord, Lord Grimond, was absolutely right. What one has to move is power and influence. He spoke of metropolitanisation. Therefore, let me deal briefly with the media and broadcasting. There is no more overmetropolitanised organisation than the BBC. The only badge of success for an employee of the BBC out in the regions is a single ticket to London. It really is time that power and influence in the BBC was moved away purely from London.

With regard to the Civil Service, the noble Lord, Lord Sefton, talked about thousands of civil servants. Much has been done: part of the DHSS is up in Blackpool and part is in Newcastle, and so on. What is needed is not just exercises like that. One does not devolve by shifting the typing pool from the Department of Transport 30 miles up the Thames. One has to move the top people and one does not have to move many of them. If the control of the National Health Service were situated not in the Elephant and Castle but, for example, in York, then very quickly the heads of those firms which build hospitals would settle around York so as to be close to the people giving out the contracts. The people who supply the drugs—the pharmaceutical companies—would soon settle up there too. One does not need to shift a lot of people; one needs to shift a few top people. Once one does that one gives opportunities back to the North.

I date the beginning of the widening of the gulf between the North and South as stemming from the time when the Manchester Guardian stopped being the Manchester Guardian and became the Guardian and moved editorial responsibility and control down to London, because with that it moved recruitment. We would never have seen journalists like Neville Cardus or perhaps Francis Boyd if recruitment in those days had been purely in London. It is not that people in the North are better; they are just different. They do not get opportunities unless the point of recruitment is situated in the North.

Let us look at the media in general. Let us look at television. I have mentioned the BBC. The idea now is that the independent television companies should give much more of their work—it is said perhaps 40 per cent.—to independent production companies. Where are they? They are all in London. Do we want to finish up with nothing in broadcasting in the North except transmitters transmitting programmes made in London to the North? We need companies like Granada, which has left the seat of power up in the North, recruits in the North and does its work in the North. There need to be opportunities for the other smaller regional companies, Tyne-Tees, Border, Grampian and so on, to make their contribution to the network. One does not want an arrangement whereby there are more and more production companies growing up in London so that recruitment remains in London and opportunities are denied to people in the North.

I conclude by saying that we owe it to the North of Britain to put back some of the wealth which has been taken out of the North over the centuries. That is a matter of common justice. In the North we do not need hand-outs; we merely need power and influence. With that we should soon be able to put our affairs in order and also put affairs in order down in the South as well. My Lords, even the compass points North!

4.30 p.m.

Lord Seebohm

My Lords, I was particularly glad to hear the noble Lord, Lord Taylor of Gryfe, speak about the North. I spent nearly 20 years of my working life in the North starting in 1932 in Sheffield where I worked until the war. At the time I went there, one in three was unemployed. Sheffield was pulled out of the slough of despond but not by government planning which, to my mind, was doing more harm than good. I suffered a 10 per cent. cut in salary which was not very welcome when I had recently married. What really cured Sheffield was war, and the preparation for war, which brought us into a state of prosperity. Perhaps we will have to have another war before we can get back to full employment.

The idea that the Government have powers to cure all these evils is hopelessly exaggerated. Any notion that we can cure or bring down unemployment by one million overnight is not only nonsense; it is dangerous nonsense. We must realise that it is not the Government who will improve the situation. They can help. But they can only do a certain amount. If the Government are so powerful, why is it that British Leyland, one of the jewels in the crown, cannot sell a car or manufacture cars that nobody wants? On the other hand, they cannot take any credit for Jaguar, now producing such a good car that people are apparently paying a £3,000 premium over the list price for early delivery.

The answer is something quite different. It is important to remember that according to the Employment Gazette issued by the Department of Employment there are more unemployed in the South of England than there are in the North. It is no good clobbering the South in order to spread misery evenly over the country. What we must do is reinforce success wherever we see it and, as the noble Lord, Lord Taylor of Gryfe, said, create wealth wherever we can find it.

I am not an industrialist. But one fact that sticks out a mile is that 215,000 vacancies in the job centres are not being filled because people lack the required skills. In the North of England there are very highly qualified people with masses of skills. But they are the wrong skills. They are the skills required in industries that have died. There is a hopeless mismatch of skills. I urge the Government to spend far more money on retraining. This must happen and the North is the place to do it. It is necessary to pay a responsible wage to people while they are being retrained in order to restore their morale.

I have spent all my life in the financial world and I can talk about that. What now clogs investment is the quite ridiculously high interest rate. It is quite scandalous. If one wants to know the real interest rate one looks in the Financial Times to see what rate of interest industrial institutions are prepared to pay on indexed Government stock. It is 3 per cent. or less, That is the real rate. Taking inflation at 3½ per cent. the base rate ought to be 6½ per cent. and not 11 per cent. With industry having to pay probably 12, 13 or 14 per cent. for money in competition with something of the order of 4½ per cent. in Germany, it is possible to see what an enormous disadvantage this represents.

Quite apart from the international disadvantage, I invite the House to consider a company such as GEC which has at times accumulated a billion pounds in cash. All it has to do is put that on the market and earn 10 per cent., taking no risk and doing nothing but look at it. What incentive, frankly, has that company to invest in new enterprises which no doubt carry a high risk and where there is no possible adequate return for at least five years with the result that shareholders lose possibly £500 million? If interest rates were reduced, the situation would be quite different.

When I returned from the war, the Bank rate was 2 per cent. In the first five years when we started ICFC, the International Commercial Finance Corporation, all the money was borrowed from the banks at 2 per cent. That enabled us to start small businesses and growth businesses on the basis of 3½ or 4 per cent. The company with which I was concerned issued irredeemable preference shares at 3½ per cent. Something has to be done. It may require international co-operation. I do not know quite what the answer is although if I had more time I could give some possible solutions. If the Government have thrown in the towel in order to protect our foreign exchange rate, heaven help us.

4.35 p.m.

The Earl of Lauderdale

My Lords, first of all I agree with the noble Lord, Lord Seebohm, in his comment that the Government's powers in this matter are grossly exaggerated. I also agreed with the noble Lord, Lord Winstanley, when he said that we do not just want hand-outs. The fact of the matter is that all countries have negative passive regions. Passivity is everywhere exaggerated by two factors. One is the migration of labour-intensive industry to where labour is cheaper. Secondly, there is the consequential freezing up of local entrepreneurial, enterprising skills. All governments, irrespective of party and whether or not they are planners or marketeers, if I may use the term, try to hold the advancing desert at bay. They all try to do so by pumping in activity centres (growth centres as they are called) and infrastructure in an endeavour to make water run uphill.

I refer to Scotland because that is where I belong. What has been done during almost 40 years since 1950 is quite astonishing in terms of infrastructure. At Thurso we have had Dounreay—the Atomic Energy Authority; at Inverness the HIDB; at Fort William the pulp mill; at Dundee a Technology Park; at Bathgate the British Motor Corporation; at Grangemouth and Mossmorran petrochemicals. No fewer than four new towns have been created and no fewer than three new universities have been set up in addition to the five already there.

A motorway network has been developed at great cost with some flamboyant bridges—the Forth Bridge, the Tay Bridge, the Kessock Bridge, the Cromarty Firth Bridge and even a causeway over the Kyle of Tongue. Three international airports have been developed. I approve of this development. But it has all been done for the sake of a population equivalent to half that of London, a population which is one-tenth of that of the United Kingdom—5 million all told.

Still this is not enough. It has not stopped the rot. There is no sign of Scotland developing the atmosphere and the spirit and the go, go, go enthusiasm of Hong Kong or Singapore. The reaction is more like that of the Falklands. The real question is how to regenerate the spirit.

I have only three suggestions. Nationally-based wage bargaining has proved a disincentive to the development of industry and business in the passive

regions. I well remember that when BMC came to Bathgate the cry went up from trade unions—I have been a trade unionist: I am not against them at all—"We will not let them push our wages down; we will stick out for the highest wages we can get". I am sure that national wage bargaining is a real disincentive to development of the passive regions.

Secondly, local authority power to milk business and industry by means of rates is a disaster. I hope that the Government's studies of the rating problem—we are well aware that this is very much in the forefront of Government's thinking—will take due account of the principle (and I should like to establish the principle) that the power to make rates for business and industry should be a national power and that business rates should be graded according to areas of opportunity or passivity.

The third point worth looking at is the treatment of tax and in other ways of the companies exploring for and developing oil and natural gas. They still have a great future in the North Sea and elsewhere. The Government have many ways of leaning on those companies, and do not hesitate to twist their arms in all sorts of directions, particularly for the promotion of research.

The Government could very well apply a differential system for the levying of royalties on oil and gas developed from the Continental Shelf, and make the diminution—shall I say?—of royalty takings a reward for the creation of work in the workless areas.

The problem is terribly simple yet terribly difficult. It is, first of all, how to make water run uphill. That is what this is all about. The second thing is how to elicit intitiative of the Hong Kong/Singapore style rather than the, I have to say, supine negative attitude that is exhibited—shall we say?—in the Falklands.

I believe that this Government, through the noble Lord, Lord Young of Graffham, are tackling the business of restoring incentives for individual enterprise. I believe that that is the key. I also appreciate the way in which the noble Lord, Lord Taylor of Gryfe, opened this debate by saying that it is common ground that in the strength of the economy lies the key to the whole problem.

4.42 p.m.

Lord Taylor of Blackburn

My Lords, I too am grateful to the noble Lord, Lord Taylor of Gryfe, for initiating the debate. I come from a region of the country, the north-west region of Lancashire, which has boasted over the years of the way in which it has contributed towards the national wealth of the country. We are a proud people. We do not come before the Government at this time with a begging bowl in our hands, but we come asking for what we think is right and due to us, because so much has been taken away over the years.

Let me remind your Lordships of the position as it was, and as it is, in the town whose name I bear in my title, Blackburn. Prior to the 1914–18 war Blackburn was the largest weaving centre in the world, with 80 per cent. of its population employed in the textile industry. Over the years change has taken place, and now we are down to roughly 1½ per cent. of the working population being employed in textiles. From 80 per cent. to 1½ per cent. is a big jump.

Your Lordships will remember that shortly after the last war one of the slogans that the Government were using was, "The nation's bread hangs by Lancashire's thread". This was commonly used throughout Lancashire to encourage people to go into textiles. But of course shortly afterwards the developing nations of the world started to use their own textiles, so that Blackburn and towns such as Burnley, Accrington and Colne and all the east Lancashire valley changed from textiles and went into light engineering and also electronics.

At the same time that this was taking place—and this change was a revolution—we in the local authorities were changing too. We were renewing our schools, because most of them at that time were old, Victorian-type schools; and it can be said that over this period schools changed along with industry changing. We realised in education that we had to look at new technology. We have built new technical colleges, and now we have a polytechnic in Lancashire at Preston. All these are making a contribution, but we still face the difficulty of a population that is getting elderly, that is ageing. A lot of our younger people no longer can stay because there are not the jobs. Years ago a lot of them got on their bikes and left.

Also what happened was that when our own people were not going into the textile industry a lot of immigrants came into the textile industry. When the industry went they had nowhere to go, and so they are still left there. Statistics prove that the growth in population is with the ethnic minority. If the ethnic minority go on increasing as they are doing at the present time, they will by the end of this century become the majority in north-east Lancashire, creating problems.

My colleagues in the teaching profession who teach these children at the ages of 14 to 16 see depression written over their faces because they know that there are no jobs for them when they leave school. They know that they cannot get on their bikes and go. They know that they have nothing facing them at all. All the problems come from this, and they grow. These are the difficulties.

In such a short debate time does not permit us to do justice to this subject. It is difficult, because one would like to quote figures and bring in all kinds of arguments to prove our case. We believe in partnership. We believe in partnership with government, industry, local authorities and the churches, because the churches have played an important part in the growth and improvement within the area. But we cannot do this if one partner does not realise its responsibility, and the partner that we want to realise their responsibility are the Government.

We want the Government not just to lay out money on wasted schemes, but we want to improve our infrastructure. We want to improve our drainage system and our housing stock. These are things we rely on and things we cannot do on our own. Therefore I plead in this debate for the Government to look again at the regions and try to work out some system and some help to enable us to go forward as one nation. We do not want any division. We want to be part and parcel of the United Kingdom. Therefore we appeal to the Government to see and recognise the problems that we are facing.

4.48 p.m.

Lord Ezra

My Lords, my noble friend Lord Taylor of Gryfe in the admirable way in which he introduced this Motion took an objective view of the situation, which has indeed been followed by all other noble Lords who have spoken. It is important that one avoids exaggeration in this difficult situation. To claim that all that is North is in great difficulty and recession is as wrong as to claim that everything in the South is doing very well. What we need to do is to be selective in our understanding of this situation and find the measures within the total economy of the country that will resolve the problem areas.

In order to find the measure of the situation it is important to look at different industrial sectors as well as at different geographical areas. I took as an example the sector of construction—it is one in which I happen to be personally involved—and I therefore contacted the Building Employers' Confederation to get their view on the situation in so far as their industry was concerned. They told me that in their latest quarterly survey they considered that the building industry as a whole has begun to recover from the 1980–81 recession, but that nevertheless there were some inequalities.

For the most part this recovery had been in the private building sector, in house building and in industrial and commercial work. There had been a continuing fallback in the workload in the public sector, noticeably in housing repairs, which I viewed with some alarm in view of the many reports we have had about the poor state of the housing stock in the public sector.

However, the main feature which emerged from their last survey was the continuing gap between the activity of their members in the North and the South. That was illustrated by the fact that their northern firms reporting work at full capacity came to only 32 per cent., whereas in the South it was over 50 per cent. That was associated with an even more disturbing feature because in the North 56 per cent. reported no difficulty in recruiting building labour—that is bricklayers, carpenters and joiners—but in the South only 27 per cent. were in this category. In other words, 73 per cent. of building firms in the South currently have recruitment difficulties.

This is a most unfortunate state of affairs. Natural market forces, far from correcting this, appear to be adding to the problem. The demand is growing in the South and the building firms are finding it difficult to satisfy the demand. The demand is reduced in the North and they have adequate access to skilled labour. So here is a major issue to which we should be addressing ourselves. In the limited time available I cannot quote any other examples, but many have been mentioned during the course of this debate to illustrate the nature of the difficulties between North and South that exists today.

I believe that we need to take much more vigorous action, in spite of all the efforts so far made. What worries me slightly about the solutions being attempted at the moment is that there are so many of them. There are a large number of initiatives—Government inspired, privately inspired or jointly inspired—all very admirable and worthy, but there is a degree of duplication and there is a degree of difficulty in knowing which ones are likely to go forward.

I must say that I was very impressed by the remarks of the noble Viscount, Lord Brentford, who suggested that perhaps we should concentrate the effort in a structural and sectoral way in different areas, bringing these areas' initiatives together in order to replace by careful selection industries which, by the evolution of time, are going out with those that are coming in. Therefore what I suggest, to sum up in the short time available—and I am giving my successors another two minutes—is, first, that we look at this problem objectively and see what the specific problems are; and, secondly, that we seek to co-ordinate the many initiatives at present being taken to resolve them.

4.53 p.m.

Lord Simon of Glaisdale

My Lords, I spoke on this matter during the economic debate on the Address and again, with your Lordships' indulgence and by sleight of hand on my part, I confess, in the debate on the Canary Wharf railway. I will try not to repeat what I said then, or indeed what has been so well put today in so many of your Lordships' speeches. I particularly do not want to go back on what I said about Teesside last autumn, because I entirely agree with what the noble Viscount, Lord Brentford, said on that matter today.

I think it has appeared today, and indeed on other evidence, to be a gross oversimplification to speak about a North-South divide. But what is quite clear is that there are pockets of stagnating economy in parts of the country, mainly in aggregate in the North, and pockets of vital, moving economy, mainly in the South. The stagnating economies are mainly those of the old manufacturing industries. I so much agreed with what the noble Lord, Lord Ezra, said about that; and that should condition our approach.

However, what one gets is not only stagnation in parts but also a seething increase in economic activity in other parts, which is almost as dangerous. To those of us who remember the late 1940s and 1950s it calls to mind a boiling labour market, resulting in economic inefficiency. There was a shortage of skilled labour, resulting in what were popularly called at the time bottlenecks. The noble Lord, Lord Carmichael, referred to that and the noble Lord, Lord Ezra, has also just referred to it. Those I think are equally dangerous economically: stagnation and a boiling economy, with a not sufficient trained labour force, quite apart from the social evils which have been dealt with today so admirably, notably by the right reverend Prelate.

I hope your Lordships will bear with me if I do not argue every point but rather state the conclusions which seem to me to have been established by other noble Lords. It seems to me there are certain incorrect and inappropriate measures to take. We should view with considerable reserve any proposals to raise vast new sums by new borrowing. The reason for that is that borrowing keeps interest rates up, and the more you borrow the more you have to maintain your interest rates and the more you postpone bringing them down. That point, again, was made by my noble friend Lord Seebohm. The second point is this. It is no use trying to prop up a declining industry which is in a secular decline. The noble Lord, Lord Taylor, mentioned textiles. The prime example of that was under the Weimar Republic, where money was poured into trying to keep up a declining textile industry at the expense of new industries, with the result that the economic recession hit Weimar Germany far harder than elsewhere.

I entirely agree with the approach of those of your Lordships—it is also that of the Government—who say that what we need is to replace these industries which are in secular decline with the new high-tech industries. At that point, as will be clear in a moment, I have to part company with the Government because it is clearly the policy of the Secretary of State for Employment—and I put this forward specifically in the employment debate—to relax planning controls in the South-East with the aim of making it easier for new high-tech industries to establish themselves there. That seems to me precisely contrary to what the proper planning approach should be.

It is quite true, as has been said, that by inhibiting development in the South-East you do not necessarily promote it in the North or elsewhere in these other stagnating areas. You do not necessarily do so, but you tend to do so. What you also do is avoid the shortage of skilled labour that was referred to by the noble Lords, Lord Carmichael and Lord Ezra. You dampen down the economy where it is overboiling and you tend to promote it where it needs stimulation.

The other matter of which one should be very wary—this was mentioned by the noble Earl, Lord Lauderdale—is government intervention. The fact remains that even the most non-interventionist government—and the present Government are more non-interventionist than any since the war—intervene massively in the economy. One has only to think of the spin-off that will come from the Channel tunnel if it is built, involving great government expenditures even if the Channel tunnel itself is privately financed.

Then there are the universities. I thought that the decision to close university courses in the North, to the advantage of the South, was simply deplorable and quite inexplicable, except on the basis that there was no co-ordination of regional policy in the Government. On the contrary, I so agreed with the noble Viscount, Lord Brentford—

Lord Beaverbrook

My Lords, will the noble and learned Lord give way for one second? I think the House might like to remind the noble and learned Lord that time is of the essence.

Lord Simon of Glaisdale

My Lords, I am so sorry that I have overrun my time. Perhaps I may just draw attention to what was said by the noble Lords, Lord Sefton and Lord Carmichael, as well as by other noble Lords, about our policy of concentrating government in London, giving a London weighting, so as to make it more difficult to devolve it, instead of sending it to the provinces.

5.3 p.m.

Lord Sandford

My Lords, I should like to start by giving the noble Lord, Lord Taylor of Gryfe, top marks for topicality, but, if I was correct in understanding him to be adding his voice to those who see this as a North-South issue, low marks for diagnosis.

My responsibility in these matters is as chairman of the South-East Regional Planning Conference, comprising the 32 London boroughs, the 12 home counties and the 92 shire districts in those counties. To do our work we have to do as my noble friend Lord Elliott said you had to do and look underneath the regional statistics. If you do that, you see something quite different from a North-South issue. You see what my noble friend Lord Brentford described as the world's first industrial nation still undergoing major and painful structural change in all its parts—North, South, East and West. It is not a North-South divide. To think, and still more to act, as though it was greatly hampers and inhibits proper treatment.

Perhaps I may illustrate as briefly as I can the point that I have just made. South Tyneside is a metropolitan borough of 158,000 people, suffering from our decline in the share of the world's shipbuilding. It has 16,000 unemployed. A comparable borough in London, Tower Hamlets, has 145,000 people and, suffering from the total disappearance of the London docks it has the same unemployment figure, 16,000. St. Helens, riddled with dereliction from the early days of the Industrial Revolution, has unemployment of 14,000. Islington, an almost exactly comparable borough in London, has unemployment of 17,000, slightly higher. Calderdale, better known as Halifax, one of the textile metropolitan boroughs which the right reverend Prelate mentioned earlier, has unemployment running at 10,000. An almost exactly comparable borough in size in London, Hackney, has double the unemployment. Unemployment is what concerns us most and that is why I have been deploying those particular arguments based on unemployment statistics.

But other people will look to the home counties and say how affluent they are compared with other places in the North. I ask your Lordships to take Surrey and a factor of affluence—home ownership. Home ownership is high in Surrey but it is higher still in the proud county of the noble Lord, Lord Taylor of Blackburn, Lancashire. Let us take qualifications in higher education. It will be years before the people living in the boroughs of east London and the shire counties further down the Thames catch up with the level that has been reached by Newcastle. They are about three times lower. Let us take the ethnic minorities, with all their disadvantages. They are far more heavily concentrated in London than in the North. The figure is three times what it is in Manchester and twice what it is in West Yorkshire.

I ask your Lordships to consider the condition of the housing stock. It is a major factor in the matters which we are discussing. One-third of all the unfit houses in the whole country are in London, and whereas in the rest of England the amount of unfit housing is gradually falling, in London the stock is deteriorating rapidly.

That is the diagnosis and now to the remedies. I first want to agree very much with the noble Lord, Lord Seebohm, and my noble friend Lord Lauderdale that the first thing is to avoid giving the impression that the Government and regional policy can do very much. They can do a great deal to make matters more difficult but they cannot do a great deal to make them better. As the noble Viscount, Lord Falkland, said, much more lies within the human spirit itself. The most effective remedy comes into play when more people come to the view, and then act on it, that the revival of their fortunes and those of their neighbourhood lies to a very large extent in their own hands.

But of course there are things that can be done by policy and planning and by local authorities and central government. In the South-East the strands of policy which our members are pursuing (all within their own region) are these. The first is the renewal of the infrastructure and improvement of the housing stock, which is getting worse at the moment, in the inner city boroughs. The work that is being done in the docklands is good, but it is nothing like enough. It is a matter primarily for the local authorities. Then there is the retraining of the labour force, as my noble friend Lord Elliott and the noble Lord, Lord Seebohm, said. Until you do that, it is very difficult for much else to happen. Next we seek to encourage development in the east of the region, particularly on the eastern banks of the Thames estuary, and linked with that to make the most of the opportunities provided by the completion of the M.25—not, I hasten to say, by allowing development in the green belt.

None of that planning activity does anything, I submit, to make life more difficult for the other regions. It is quite true that the Channel tunnel, which the noble Lord, Lord Carmichael, and others have mentioned, provides an opportunity to do something for the other regions. Members of conference have just encouraged me to write to the Secretary of State for Transport pointing out that it would be quite wrong for the Channel tunnel to be designed in such a way as to give all the benefits to the South-East. It must be designed in such a way as to enable goods, traffic and passengers arriving to disperse throughout the kingdom.

Finally, I should like to agree with the noble Lords, Lord Carmichael and Lord Grimond, that one of the things we suffer from is an overcentralised system of government. I should like to commend as a defence against that the existence, from which we have benefited for 20 years in the South-East, of a regional planning conference. During the passage of the London government legislation and the Bill to abolish the metropolitan counties, I urged upon the House and on the Government the adoption of this happy arrangement in other parts of the country. That fell on deaf ears at the time. I repeat it again because I think that if the party political divisions and the divisions between the shire counties and the metropolitan boroughs can be overcome and conferences of this kind formed, it will help to press forward the matters which are being discussed this afternoon.

5.12 p.m.

Lord McIntosh of Haringey

My Lords, the Companion to the Standing Orders gives me approximately one and a half minutes to speak. I hope that the Minister will be able to use a red pencil to give me something closer to the five minutes to which I might otherwise have been entitled. I shall waste a little time in congratulating most sincerely the noble Lord, Lord Taylor of Gryfe, on his initiative. He must be pleased at the standard in this debate as well as at the number of interventions.

I suspect that my colleagues put me up to reply from the Dispatch Box in this debate as a Londoner and that in doing so they thought that it would be possible for me, from the prosperous South, to be generous to the deprived regions of the North. The noble Lord, Lord Sandford, has effectively demolished that argument. Indeed, the statistics which have been produced since the topic for debate was put down have reinforced his points very clearly.

In London, since this Government came to power unemployment has increased by 242 per cent., and in the South-East as a whole it has increased by 224 per cent. Differences in gross domestic product per head are not only great between London and other parts of the country but are actually increasing. The GDP per head in London is 125 per cent. of the national average. Generally speaking, it can be said that the pattern of prosperity as well as patterns of employment and unemployment give no support to the simplified ideas of a North-South divide which have to some extent been current.

That is not to say that things are not desperately bad in many parts of the country. The evidence for that comes from the Government's own report to the European Communities in the form of its regional development programme for 1986 to 1990. I shall take only a few examples from the Government's own analysis of regional problems. In the North-East a loss of 200,000 jobs since 1978 is noted. That is almost one in five of the workforce. Almost half the unemployed have been unemployed for more than two years. The report uses the phrase "bleak job prospects".

In Bradford the industrial infrastructure, was built to serve 19th century manufacturing industry and is largely unsuited to modern needs". In Humberside the fishing industry has been devastated by the European Community's common fisheries policy. According to the European Community's second periodic report, Merseyside is the fifth most disadvantaged region in the Community of Ten.

I shall skip over the other regions of which equally devastating things could be said. As regards Scotland, noble Lords will not like what is said as Scotland is described as, one of the most peripheral areas in Great Britain".

Lord Lurgan

My Lords, England is peripheral to Scotland!

Lord McIntosh of Haringey

My Lords, it depends on your point of view, does it not? However, after a horrific survey of many particular areas in Scotland, the conclusion about the Orkneys and Shetland is that they now require more permanent jobs, as opposed to temporary oil-related jobs. That is indeed the case and the issue of the temporal and the short-term nature of oil industry related jobs must be referred to.

What is the response of the Government to these problems? Coming to the section on financial resources, we find that the Government almost entirely opt out of serious responsibility for the problems of the regions of this country. The noble Lord, Lord Ezra, referred to the overlapping of measures put forward by government and their consequent inefficacy. However, the fundamental point is that the Government think that, expenditure is responsive to the applications made for the various forms of assistance available". What that means is that the Government are not prepared to put the money there in the first place. They are simply prepared to produce limited measures and then be satisfied if the response from individual employers and individual local authorities is not adequate. The Government are quite honest in saying that they take account of expected European Regional Development Fund receipts when planning public expenditure and that if it were not for the European Regional Development Fund, expenditure would be lower than it is at the present time.

This is not the attitude of a government who really care for the economic prosperity of our country, despite the fact that the report says: Regional prosperity cannot be achieved in the absence of national prosperity". That is the fundamental fact that we have to face. With a government whose idea of economic policy is to strip away our national assets by privatisation and to use up the temporary benefits of oil-related industries in the form of tax cuts rather than in the form of investment in our infrastructure; whose idea of economic policy (and I wish the late Lord Kaldor were here to say this more effectively than I can) is to allow interest rates to be at a level that the noble Lord, Lord Seebohm, rightly referred to; in a society and economy where we have insane capital and currency movements between different countries—my Lords, I must be allowed to finish my sentence as I have taken much less than the time I was supposed to take—and where there is gambling in place of economic policy, can it be any surprise to this House that our economy is in the state that it is?

5.19 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)

My Lords, I apologise to the noble Lord opposite for breaking in. I have a feeling that the Clerk may very well break in on me in mid-sentence and I therefore feel obliged so to do.

I was disappointed that the noble Lord, Lord Taylor of Gryfe, in his opening remarks should have spoken immediately of two nations. Indeed, I believe that in his closing remarks he talked himself precisely into the depression which other noble Lords have been at great pains to lift us out of this afternoon. I do not believe that second time lucky in the ballot is necessarily to his good fortune.

I think it is with a certain canniness that he picked this subject area. I thought he put down the Motion extremely carefully. It is: To call attention to the situation which arises from the difference between the prosperity", and so on. The Government have never denied the existence of differences between the North and the South, the East and the West, and various other parts of the country. Of course there are differences; to deny that would be to deny our very history. Our nation has developed over hundreds of years and different parts have been influenced and affected by different factors at different times. The resulting variations between different parts of the country are of several kinds. There are economic differences, cultural differences, geographical differences and social differences.

Much is currently being said about the run-down of the North, but particularly in this noble House we must not fall into the trap of oversimplifying the problem and concluding that a simple solution is available. The noble Viscount, Lord Falkland, suggested that there exists a trap of oversimplification and that the media sometimes fall into it. There is no simple solution.

The noble Lord, Lord Taylor of Blackburn, spoke about his part of the country. I believe that the North of the country has an awful lot going for it. In the late 1960s I worked up there in Blackburn, Burnley and Bolton. I found there a people hard-working, industrious and proud. I believe that they remain so and are ready to work when the opportunity presents itself. I am certainly not blind to the problems. However, I see no grounds for some of the pessimism that has been expressed this afternoon.

There is much for government to do, especially in creating the overall climate of economic and fiscal policies conducive to the prosperity of all parts of Britain, a point to which several noble Lords referred. However, the Government cannot do everything. Much depends on the contribution of the wealth-creating sector of the economy, especially the private sector. Given co-operation among all the parties, a great deal can be achieved.

Indeed I cite an example in the Garnock Valley in North Ayrshire. Through the combined efforts of central government, the Scottish Development Agency, the British Steel Corporation, district and regional councils and local industry, some 800 new jobs have been created and many more have been safeguarded. The co-operation involved in this programme of regeneration has successfully served as a model for other areas, a point made by the noble Lord, Lord Taylor of Blackburn, in his call for partnership among all the interested people. Such co-operation is important whether it is for that kind of activity or for some of the others which he described.

Heavy industries such as coalmining, steel, shipbuilding and textiles were all pioneers of the Industrial Revolution in the 18th and 19th centuries. In the radically different circumstances of the late 1970s and the 1980s their fortunes have changed. Changes in demand patterns, in productivity and in technology have affected all of them, I add not only in this country but worldwide. Inevitably the changes have impacted on the geographical areas where such industries flourished and were traditionally concentrated. Their legacy, however, is such that the necessary changes cannot be accomplished overnight and certainly not within the timescale of a single government.

The right reverend Prelate acknowledged that to try to resurrect dead or dying industries located in the North or elsewhere would not help resolve our problems. We cannot go back. We cannot reintroduce outdated practices or outdated machinery. We have to look forward, not in the short-term but over a very much longer time frame. The answer cannot be reindustrialisation as we have known it but there has to be some alternative. We must look at our various strengths and determine how best to harness them to maximum advantage—and that means, I would argue, to the advantage of the nation as a whole.

My noble friend Lord Lauderdale, the noble Lord, Lord Seebohm, and my noble friend Lord Sandford expressed the view that central government could do only a limited amount. What is the role that central government should play? It certainly is not a simple matter of drawing a line between the South-East of England on the one hand, and the rest of Britain on the other; nor of drawing a line dividing North and South, or indeed any other lineal division, such as the noble Lord, Lord Sefton, attempted to draw. Other noble Lords referred to the problem in those terms. It does not work that way.

I am certainly not prepared to divide the country into North and South, though some commentators may well be so bold as to do so. There are great variations even between the regions. My noble friend Lord Sandford illustrated the black-spot problems across a wide band of the country. He drew some parallels with a series of figures. There are variations even within the regions, let alone between them. I shall give one example. One can compare an area of high unemployment such as Liverpool with Macclesfield, where unemployment is similar to that of the South-East.

The North is certainly not a huge barren waste. My noble friend Lord Elliott of Morpeth described a few of the newly attracted enterprises and by the example of Derwentside indicated how he thought the problems could be better faced and better met. The noble Lord, Lord Seebohm, in an extremely balanced contribution pointed to some of the areas in the southern part of the country that have problems.

I have been able to outline the complexity of the problems. Inevitably the solutions, too, are complex. There are many aspects—housing, health, education, training and industrial policies. Not one can be taken separately. All are integral to any solution and to the formation of any policy that has to be constructed. Therefore they have to be seen as a whole.

I mentioned housing. We are dealing with this problem through a number of programmes. For those areas with special social needs we have developed the urban programme, with the aim of securing economic regeneration, improving the physical environment and encouraging local initiatives to the benefit of the whole community. An example is our new urban development corporation initiative. Four new urban development corporations, in Manchester, Teeside, Tyne and Wear and the Black Country, have been set up to tackle dereliction and to regenerate urban areas. Each UDC will spend between £100 million and £160 million over the next six years. There are very successful employment measures. There is the community programme designed to improve the long-term employment prospects of participants. There is the enterprise allowance scheme, job release, new workers, adult and youth training schemes and others. The Manpower Services Commission is spending, roughly speaking, twice as much per head of the labour force, which includes the unemployed, in the North as it is in the South. I can hear critics saying that these measures do not create jobs and are of little benefit. I say that those critics are wrong. Ridicule the measures they may, but let nobody doubt that they are working.

Much publicity has been given in the press to the new government job figures illustrating just how bad the situation is. There is always a danger of quoting figures in isolation, and this is no exception. First, and very importantly, the 1984 census of employment does not take account of all jobs. It excludes the self-employed whose numbers have grown by 800,000 since 1979. Secondly, since 1983 the picture has improved greatly, with more than 1 million new jobs in total being created in the country, one-third, incidentally, in the North.

The third point is that the average percentage of those becoming unemployed who find jobs within the first six months is little different between those in the South-East and any other region. I think it is worth noting, perhaps in parenthesis and since much attention has been drawn to the so-called wealth of the South-East, that the South-East supports the economies of the less prosperous areas. That support is considerable. With over one-third of England's manufacturing industry by employment and GDP 17 per cent. above the national average, the South-East has considerable wealth-creating capacity, and that gives some support to the less prosperous areas.

During the past two-and-a-half years I and my colleagues have travelled a great deal overseas encouraging inward investment and we have received a number of delegations from other countries about the possibilities of setting up factories in the United Kingdom. I know from these discussions that grants are often low down in their order of priorities. Other considerations before how much grant come first—the stability of the workforce, the investment regime, financial exchange controls, transport infrastructure, and so on. However good the answers may be, one thing is quite clear. We cannot drag companies to the North or to any other part of the United Kingdom if they do not want to go. What we can do is make sure that all the constitutent parts needed to ensure the expansion of industry, wherever it chooses to locate, are there. I believe that we are doing that.

Some people have suggested that the changes we announced in 1984 to the regional policy amounted to sounding the death knell. That is a nonsense. The Government recognise the need for there to be a reduction in regional disparities in employment opportunities on a stable and long-term basis. We remain firmly committed to a regional policy which gives the best value possible from the considerable amounts of money which we are spending.

I would be quite wrong if I did not draw attention this afternoon to the announcement that my right honourable friend the Secretary of State for Trade and Industry has today made in another place with regard to the Government's plans for expenditure on regional incentives in 1987–88. The provision has been set at £419 million—an increase of £36 million on the provisions contained in last year's public expenditure White Paper. I should like to spend more time on that point but I merely draw the attention of your Lordships to it and advise that a press release is available in the Printed Paper Office.

I have listened with great interest to all the points made by noble Lords this afternoon. Many points have been made about what is or is not happening or what should happen in the other regions. I very much regret that there is not sufficient time for me to answer every noble Lord. We believe that we can talk ourselves into a state of depression. It is quite wrong to talk, or even to think, about a divided nation. We are one nation. We always have been and always will be. That differences do exist and may well continue to exist is unfortunate. However, I think I have demonstrated that, while we recognise these differences and the problems, we are convinced that our economic and industrial policies are the right ones to produce long-term solutions for the nation as a whole.

Lord Parry

My Lords, does the Minister have a word for Wales, if only goodbye?

The Deputy Speaker (Lord Airedale)

My Lords, I have to say that the time allotted for this debate has now elapsed and I must ask the noble Lord whether he desires to withdraw his Motion.

Lord Taylor of Gryfe

My Lords, I should like to thank all noble Lords from all sides, both critics and supporters, who have participated in this debate. I beg leave to withdraw the Motion standing in my name on the Order Paper.

Motion for Papers, by leave, withdrawn.