The Economy of North West England

HL Deb 26 February 1992 vol 536 cc313-43

5.58 p.m.

Lord Wade of Chorlton rose to call attention to the economy of the North West of England; and to move for Papers.

The noble Lord said: My Lords, I cannot help but note that women are a far more interesting subject than the economy of the North West of England and I can hardly blame them for that.

I must declare an interest in this subject. Having been born and bred in the North West of England and having a very close connection with its industry, land and its people, I am a great believer in it. I am very proud of it. I draw the attention of noble Lords to the economy of the North West today because I believe that it presents enormous opportunities for investment, for people and for Great Britain to make an ever greater contribution not just to the economy of Europe but to the economy of the world.

In the North West we have a great history and tradition of economic growth. We were the first people to see the opportunities of the Industrial Revolution. The North West is the home of many of our leading inventors, producers and entrepreneurs who have laid the foundation of the wealth not just of the North West but of the nation as a whole. We take great strides as regards railways, canals, shipping, computers and in all the other major industries of this country.

Traditionally, we have been manufacturers of commodities which have been sold throughout the world. In recent years there has been a greater understanding of the need for quality and the marketing of that quality throughout the world. The region is second only to the South East in levels of employment and output. Our GDP is now running at some £42 million per annum.

However, I must draw attention to the fact that in 1979 the North West represented about 11.1 per cent. of the total GDP of the UK, whereas in 1989 the figure was only 10.2 per cent. That shows that we in the North West must catch up with the general increase in the level of economic activity which has taken place throughout the UK over the past 10 years. We have an enormous range of economic and commercial activities that are spread throughout the largest and most effective companies in the country. I can only mention one or two, but all noble Lords will be aware of the importance of ICI and its chemical industry; of Turner and Newall, which is now producing car parts to sell throughout the world, including Japan; of Rolls-Royce, Ford, Vauxhall and Pilkington, to name but a few of the enormously important companies on which lies the base of our economic growth.

The Mersey Valley, which I remember because it is very close to where I have lived throughout my life, has now the largest concentration of chemical and related industries in Europe. Shell's largest United Kingdom refinery is at Stanlow and from where I live, if the wind blows in the wrong direction I am very much aware that it is there. The company tries to burn off all the surplus but some of it does not get burnt as well as it might.

There are now other major oil complexes in Fleetwood and Whitehaven, Alderley Park and Macclesfield. In terms of pharmaceuticals we are now the second most important area in the country. Biotechnology has made enormous strides and there are new investments in the Merseyside area, as well as in other areas in the region.

The headquarters of British Nuclear Fuels at Risley, Warrington, is very important to us in the North West. BNF has led the way in terms of technology and its scientists are now leading the world handling nuclear fuels and their waste products. That in itself is an opportunity because those skills are producing a much safer industry than many people believe it to be. One of the great successes has been the opening to the general public of nuclear fuel establishments, enabling visitors to be shown how safe these activities are by people who understand what it is all about.

In referring to the large range of business activities that we have, I should like to use one example to draw the attention of your Lordships to another aspect. British Vita is also a very important company in the North West. It is based north west of Manchester and makes foam products for the automotive and furniture industries. It is now exporting 80 per cent. of its output into Western Europe. It has been one of our fastest growing companies throughout Western Europe, with many subsidiaries there as well as direct exports. The company tells me that a most important key to its success is the stability of the exchange rate. We have had many debates on how to deal with the question of stable currencies throughout Europe, but what is of most importance to the manufacturers and exporters in the North West of England is a stable exchange and monetary system which allows them to invest and plan ahead in a known financial position.

There is no doubt that the demand throughout the EC countries for a stable monetary system has come from a drive from their commercial and industrial investors. Companies give that push to politicians for a more a stable currency. That push will come more and more from our industrialists and it is something of which we must be aware if we are to play our part in Europe. If we want to get the full benefit of the market that that presents then monetary stability throughout Europe is a very important aspect. I shall refer later to the importance of the low levels of interest and inflation as part of the long-term view that business needs in order to plan ahead.

Financial services have taken enormous strides in the North West. There are now 60 different banks in Manchester and they are offering a very wide service. They are essential for financial support if companies are to grow and invest.

I cannot help referring at this time to one of the problems that has arisen in the North West and I know that it has been referred to by bankers and financiers in the past. Because we have a large range of small companies providing services to larger companies the question of payment can become extremely important. The impact on the cash flow—particularly of large companies, on the margin of profitability and existence—is that if a large buyer starts to pay very late and then asks for another month's credit, that can be the very factor that puts a smaller company into bankruptcy.

I remember when I was exporting cheese from Cheshire to a large company in the United States. I must admit that it was a very important customer. I received a letter from the company to the effect that it planned to build a major new store that would increase the throughput of the company. When completed the company would be able to buy double the amount of cheese that it was buying from us at that time. However, the project had to be financed and in order to finance it the company said that it intended delaying payments for two months. I thought that that was very nice in the long term, but the immediate short-term effect could turn a successful company into one that cannot survive for very long.

The whole question of payment, particularly from large companies to smaller companies, will ultimately have to be addressed by government, particularly as we move into the EC and the single market where there are different rules and regulations which do not apply here.

Industry has had to adapt. We have had a difficult recession which has impacted on all companies. Many smaller companies have gone to the wall because for various reasons they could not survive. The larger and more efficient companies have made changes which have made it possible for them to survive and to make profits. However, in order to do that they have had to make considerable changes in their staffing. Therefore, we now have large companies having to make decisions concerning job losses. That is an area which is becoming considerably serious in the North West. I believe that the North West can tackle many of those problems if allowed to do so and to use its own initiative on how best to tackle them.

We have to understand that more training will be needed. Undoubtedly people will have to change their jobs more often. If there is a different financial structure that gives stability in terms of interest rates and currency fluctuations, and the currency market in Europe stabilises, there will be greater volatility in the employment of people as they move about. We can already see the change within companies which at one time employed a number of people needed at their peak of production. Those companies are now employing fewer people at the trough of production and using sources of labour from employment agencies to make up the difference. That means that people will have to be trained and have the opportunities to do different jobs. We shall have to invest in a wider range of opportunities for people to move into as industry fluctuates.

The cuts in the defence industry are especially important to us in the North West. I am delighted that my noble friend Lord Chalfont will be speaking later in the debate. No doubt he will refer to that situation with more expertise than I can. I shall not refer to his company but I shall refer to British Aerospace, which I understand is to shed some 3,500 jobs as a result of the defence cuts. Those people are very highly skilled and able workers whose ability has made an enormous contribution to the economic strength of this country. They are important not only for what they produce in the North West but because they are producing on a world scale. It is essential that a way is found to utilise those skills and resources for the benefit of the people in the North West and for the nation generally.

An organisation which I believe is doing a marvellous job in this regard is NIMTEC; that is, the North West regional technological centre. NIMTEC is taking a great initiative in moving people from one company to another to learn new skills and using the skills of people who have lost their jobs to train others who want to move into that area. NIMTEC receives certain funds from the Government but it also raises its own funds from supporters and companies throughout the North West. It does an excellent job and I believe could be called on to play an even more effective role in the retraining and the management of people as they move from one sector to the next.

The development corporations in the North West have been enormously successful. When set up they have been able to cut through the red tape and the planning regulations in order to let new development and investment take place quickly, to the benefit of everyone. I support them enormously. There is the possibility of the Olympic Games coming to the North West and being based in Manchester in the year 2000. Mr. Bob Scott, who is the leader of the campaign, has been working enthusiastically to bring the games to the North West. That is something to be admired. I hope that the Government will give us their support to enable that to take place. What is needed is not so much resources as an ability to turn the efforts of everyone involved, through the Government's leadership, into a British bid which can bring prestige, benefit and enormous investment to the whole of the North West.

Output per head in the North West is consistently higher than the national average by as much as 12.5 per cent. People may not appreciate or realise the fact that 98 per cent. of all companies on Merseyside have been without strikes of any kind since 1982. One of the points that concerns us on Merseyside and in the North West—the noble Lord, Lord Sefton, will no doubt make similar remarks on this matter—is that the benefits and opportunities of Liverpool and Merseyside are missed. The opportunities on Merseyside for investment as the future unfolds will be enormous. Merseyside has solved so many of its problems. If anyone has money and wants to put it into buildings, into a factory or into people he could not put it into a better place than Merseyside. I hope that more and more people will do so.

An interesting development in the North West is a different way of employing people. I understand that throughout the UK some 500,000 people are now employed by employment agencies. The agencies employ experts and specialists in certain areas of industrial activity and then hire them out to companies as they need them. I cannot find a specific figure, but my researches suggest that probably half of those 500,000 people, and certainly over a third, are employed in the North West. Some 200,000 people in the North West may in fact be employed in manufacturing industry, but statistically are counted as employed in service industries because employment agencies employ them. These companies have highly skilled people whom they can move about and I believe that we can use them to much greater advantage. They are private companies which are willing to put resources and effort into retraining people. They are doing a great deal already to find outlets for people who will lose their jobs because of the changes referred to earlier.

The next area to which I should like briefly to refer is communications. We now have in the North West, prepared and paid for by the Government over the past 10 years, some of the finest motorway structures and systems anywhere. Cheshire has more motorways than any other county in the whole of England. Manchester Airport is now becoming an important international airport. There is an urgent need for a second runway, an issue which will have to be decided very shortly. I trust that the Government will support that proposal. The number of flights through Manchester Airport has doubled in the past 10 years and could double again in the next 10 years. Manchester Airport would gain from its shares being owned by the general public and not, as is the case now, by the Greater Manchester local authorities. This would give it an impetus to take a wider perspective of the whole of the North West and would be to the region's benefit.

We shall gain much from the Channel Tunnel links which will be put through by British Rail. When the tunnel is completed in a couple of years' time it will be possible for freight to travel from the North West to the main German and French centres in about 18 hours. A passenger will be able to travel from Crewe to Paris in six hours without getting off the train. That will be of enormous benefit to trade and other activities in the North West.

I believe that great opportunities will come as a result of the GATT negotiations. During the 1950s and 1960s, and prior to us moving into the CAP in the 1970s, Merseyside was the main importing port for cereals and other grown raw materials from Canada and the United States. We could return to that situation when the GATT negotiations are completed and when decisions have been taken on world prices for cereals and other commodities. This will bring back the opportunity for us to add value to products coming in from Canada and America. The North West could then become a centre for such added value use, both as the place to which the products will come first, and as the place where we can then add value to them for easy shipment on to the rest of Europe. A great commercial opportunity will be presented over the next few years as these matters are decided. The Port of Liverpool will be a key to this issue. Today it has reported record profits and record tonnage through the port. The removal of the legislative restrictions on labour practices proved an enormous benefit to Liverpool.

Time is beating me. I am a great supporter of the North West of England. I see a great opportunity for it to grow and develop, but it will grow and develop from the freedom and initiative of people themselves and not from what governments do. It has grown over the past 10 years because this Government have dealt with matters in that way. We have been left alone so that companies can use their own initiative and take their own views. It is when government get close to these matters that they make mistakes. We now have an opportunity over the next 10 years to bring enormous capital to the North West and for it to be the engine for moving Great Britain out of what is now a recession into what I hope will be great success in the future. My Lords, I beg to move for Papers.

6.17 p.m.

Lord Sefton of Garston

My Lords, I apologise to noble Lords for the fact that they should be looking at my noble friend Lord Taylor of Blackburn and not at me. He had some problems with dates and it was thought better that we should both be here at the appointed time.

I extend my thanks to the noble Lord, Lord Wade. I certainly would not dream of diminishing in any way the salesman's talk that he went through in regard to the North West. But I must say that I did not recognise the North West that he described in the context of the United Kingdom or of Europe. When we knew of today's debate some of us who had decided to participate in it went to Regional Trends to see how the North West is doing in relation to the United Kingdom. We all read the figures. I have decided not to use those figures because so few people appear to be interested in them that it would be a waste of time to do so. I would rather talk about the North West in the context of the wider economy.

I take this opportunity to correct a misapprehension on the part of the noble Lord, Lord Wade, about my belief in the Port of Liverpool as an efficient company. I have never had any doubt about the efficiency of the Port of Liverpool ever since Mr. Fitzpatrick became its chief executive and got together with the trade unions to tackle the job. The noble Lord, Lord Wade, may be thinking of my remarks on the Merseyside Development Corporation, which is a different kettle of fish, if I may use that description. There is no doubt about the efficiency of the Mersey Docks and Harbour Company.

During our previous debate on the subject, the noble Lord referred to restrictive practices. I should like to point out to him that there were indeed restrictive practices in Mersey docks. Most of them were completely and utterly supported by the employers. That was because the profession of stevedoring creates a situation whereby you must have the men to man the boat, but in the old days at the beginning of unloading only a few were required. Therefore, the employers turned a blind eye to what came to be known as a bad restrictive practice. It went on for years.

It is not all the fault of the trade unions. When we look at the way that the dock board finally became efficient, credit must be given to the trade unions. They worked very well with the employers. They accepted thousands of redundancies and managed to get them on to a more level footing. However, the problem was that once the system became efficient then of course it damaged the prospects of work for the dockers, who were made redundant. The number of dockers has dropped from 50,000 to about 2,000 at present. That was symptomatic of what was happening in that part of the North West.

When I looked at the statistics, I realised that a very good case could be made for saying that there should be more central government assistance to the North West. However, the speech of the noble Lord, Lord Wade, seemed to point the other way. Indeed, he painted such a bright picture of the North West that one might believe that everything was all right.

Perhaps I may give your Lordships an example of what has happened since the last war in a small place in Merseyside. I know it well; it is called Garston. It is two miles square. It had two copper factories, one of the world's largest firms of construction engineers, one of the largest manufacturers of bobbins for the textile trade, three docks, Dunlops (which made practically all the golf balls that were used in the country) and a large tannery. But not one of those organisations is left in that part of the North West.

As a reflection of that fact, there used to be six banks in Garston but there is now only one. That is symptomatic of the long-term decline in the North West of England. It is not just because it is the North West; it is because it is a peripheral area of Europe. I do not think that we have as yet faced up to the situation; namely, that the problems we have in such areas are caused by the fact that we are a periphery of Europe and are, therefore, losing out. Moreover, unless we tackle the problem, we shall continue to lose out.

I think that the Government should look at the North West, Northern Ireland or Scotland and realise that, unless something is done about it, what they are seeing there is the future for the United Kingdom. Over and again in this House I have referred to the activity which takes place here in government circles as regards the provision of jobs in London and the provision of facilities for civil servants. There is no such provision in the North. I know that I shall be told that some jobs have been moved to Merseyside, but the number is considerably less than the number of jobs that were promised in 1979. Indeed, at that time 3,500 were going to Merseyside and we were starting to build the offices; but as soon as this Government took office they scrapped the project. Since then we have had 1,800 jobs in one place and 600 in another. It is all too late.

I should like to point out the parallel to that in the international field. What are the Government doing about the growth of government activity in the golden triangle in Europe? How are we to spread the activity caused by the European government into the peripheral areas of Europe? The Government seem to be doing almost everything to prevent activity coming here from Europe. Certainly, by their hesitance in regard to the finances in Europe, I think that they have quite clearly indicated to the rest of the world that there is not much possibility of the central bank of Europe, or the centre of the financial undertakings in Europe, coming to London. That is because the Government still do not realise that we are very much on the periphery of Europe; and that is how we shall stay. Even today a magnificent new building is being constructed to house the MPs and the officials who make the Euro-activity such a prosperous one for that area. That will continue until we realise, as I said before, that we are on the periphery of Europe and that we must do something about it.

I give your Lordships another example of something that happened in the North West. The first time I visited America I went on a fact-finding tour for the City of Liverpool. We were taken to Chicago and San Francisco. All I could hear when I talked to the leaders of the financial world in San Francisco and Chicago was praise for Liverpool. That was because Liverpool was the home of one of the biggest insurance companies in the world. When the San Francisco earthquake and the great fire of Chicago took place what happened? The Royal Insurance Company of Liverpool paid up on the dot, overnight, and settled every claim. Let us compare that with the attitude that we now have here in the capital, at Lloyd's in the City of London, where numerous people are squirming to get out of the obligation to pay up on a risk that they undertook voluntarily.

Why is that attitude prevailing? It is prevailing because of the attitude that we have had over the past 10 or 12 years: everyone wants everything and they want it now. Such people go into Lloyd's as names, but as soon as they have to pay the bill they start squealing. It will not be long before they ask the Government to get them out of their obligations. The attitude that prevailed in the past is not the kind of attitude that prevails now.

The noble Lord, Lord Wade, has great faith in market forces. He mentioned British Aerospace. Well, British Aerospace has said quite clearly that it is building a successful aeroplane—the 125—at Broughton in Clwyd, which is just outside the North West but which affects the area. But what is the company's attitude to the 125? It is talking about selling off that part of the business. It is a profitable concern that can make £50 million a year but the company is going to sell it off because the short-term interests of British Aerospace say that it should be sold off.

I watched a recent television programme in which short-termism was exposed. The programme showed how that had led to the failure to develop several inventions; for example, penicillin, the jet engine, and so on. Why was that? It was because market forces had again dictated to firms that they could not afford to develop the inventions that were made in this country.

Once again time catches up with us. I have two, three or four examples of where firms in the North West are getting rid of operations either because they cannot obtain the cash or they are not willing to carry on with the development of certain projects because they cannot afford to look at the long-term prospects. Somehow or other this Government and the country must get out of that habit. We must get into the habit of realising that we are competing with a very big area of land in Europe and we must match its ability to invest.

I shall conclude on the same note that I used on the last occasion that I spoke. I address my remarks to all parties. We must make up our minds. Europe is there and whether we like it or not we are part of it. We must not become a periphery of Europe like Merseyside has been a periphery of the United Kingdom for the past 50 years. The consequences of that were well illustrated in a recent editorial in the Daily Telegraph, which referred to a photograph of Great Britain at night. It described the swathes of light down the east coast and in the South East, but said that the rest of the country was in darkness. It went on to talk about the tragedy of the people in the South East and in the eastern parts of our land who could not see the stars at night, almost completely ignoring the fact that the darkness on the photograph meant non-activity in those dark areas. The dark areas were on the periphery. It is no wonder that Scotland wants to be independent or that we are hearing similar demands from everywhere else. The peripheries of this country have been neglected for too long and I am afraid that they will be neglected still more in the future.

6.31 p.m.

Lord Chalfont

My Lords, I am grateful to the noble Lord, Lord Wade of Chorlton, for introducing the debate. Both he and the noble Lord, Lord Sefton of Garston, referred to the relative lack of interest shown in it. Perhaps I may point out another small fact. Although 11 noble Baronesses rose to speak in our earlier debate on the subject of economic opportunities for women, not one noble Baroness has felt moved to speak on the economic problems facing the men and women of the North West. I mention that purely as a statistical fact, not necessarily drawing any great lessons from it.

I do not want to follow any line taken by either of the two noble Lords who have already spoken but shall concentrate on a small part of the North West. As many of your Lordships know, it is an area in which I have a special interest. I refer to the Furness peninsula—that little area of the North West with the Cumbrian mountains to the north and the bay of Morecambe to the south. It is not only a remote part of the North West but, culturally and socially, it is an isolated part of England.

The main town is Barrow-in-Furness. I believe that the reason that I want to talk about that town will be fairly obvious. It is the home of Vickers Shipbuilders, my own company. The town is especially interesting and crucial to me because over the years, since the latter part of the 19th century, Barrow has become increasingly dependent on the great industry of shipbuilding. Before that—after the discovery of coal and iron ore in that part of the world—Barrow was a great iron and steel-making town. That was until, in the 20th century, the cold hand of modern economics was laid on the area and the steelworks closed down. More recently—for the whole of this century—Barrow-in-Furness and the whole of the surrounding area has been a shipbuilding centre. For 100 or more years, Barrow has produced merchant and naval vessels for the defence of the United Kingdom and for exports, which have been of great benefit to the economy of the United Kingdom.

Generations of the people of Barrow—"Barrovians" as they call themselves—have built ocean liners, tankers, cargo vessels, battleships, cruisers, destroyers, frigates and, of course, submarines. As the demand for more and more specialised and sophisticated warships emerged, it became difficult for Barrow to continue to make merchant ships as well as naval vessels. It had to decide on what it was going to specialise in. It was not entirely a free choice, but Barrow chose to concentrate on warship building. By the 1970s, the whole of the town and its surrounding area had become dependent on warship building—on the building of both surface ships and submarines.

When in 1986—not so long ago—the shipyard was privatised, it became Vickers Shipbuilders or VSEL. There was still a good chance and a good reason to believe that this country's naval programmes alone could provide a good future for the people of Barrow. In those far-off days, there was no fear that there would be a sudden reduction in its work or any great change or crisis in the economy of the area. While it continued to build its submarines according to the naval programmes of the time, Barrow believed that there would be time to diversify and perhaps to move away from its total dependence on warship building.

However, the whole scene suddenly changed. There can be no doubt that it changed for the better in world terms. The disintegration of the communist empire and the virtual disappearance of the Soviet threat made it possible for the West to change its defence plans. It is arguable that the West has changed those defence plans too quickly, too suddenly and unwisely, but that is not an argument in which I intend to become involved this evening. All I shall say is that the British Government's new defence policy, which was the result of those great changes in the international situation, and which was published under the name that is now familiar to most of us—Options for Change—has had an enormous impact on the defence industries of this country, and especially on communities such as Barrow. I do not want to make any value judgment in the context of this debate on the changes that have been made in the shipbuilding and, especially, the submarine programmes because in the current circumstances it is right that our defence policy should be reviewed. My point is simply the impact on communities such as Barrow has been enormous and, in many senses, could be disastrous.

For 25 years, between 12,000 and 14,000 people in Barrow have been employed in the business of shipbuilding. Today, that number is down to just over 10,000, and it is still declining. The business plan of my own company envisages that by the middle of the 1990s the number of employees will be reduced to 7,000. In other words, the workforce will have been halved. When I tell your Lordships that a quarter of the population of Barrow is employed in the shipyards, the impact on the people of the town and its surroundings will become obvious.

The next largest company to my own in the Barrow area employs 500 people. That gives some indication of the impact that the changes will have. I need hardly say that, apart from those who are directly employed in the shipyards, other people are affected, such as the families of those employees, and the people who keep the shops that provide them with their goods. In addition, the pubs in which they drink in the evenings and the restaurants to which they go out to eat are also affected. It is not difficult, therefore, to envisage the impact of the changes on that small, tightly-knit community, which is virtually a company town. Barrow is virtually a shipbuilders' town.

Barrow is a tough, resilient and independently minded community. Members of your Lordships' House do not have constituencies, but I think that I can say that, if we had, Barrow would be my constituency. That is why I am deeply concerned about the future of its people. They have met their challenges in the past resolutely and toughly, but this is perhaps the most serious crisis that the people of the area have faced.

I know that Her Majesty's Government share my concern. I am not suggesting that their attitude displays any complacency or lack of interest. They have already offered financial support to the extent of something like £7 million for setting up factories to attract new industry to the area. Barrow Town Council, the county council and VSEL are working together to solve some of the problems. I want to make the point—this is perhaps where I find myself somewhere in the middle of the argument that seemed to he developing between the noble Lords, Lord Wade and Lord Sefton—that there may be no community in this country, not even in Europe, which is so dependent upon one industry. It follows logically from what I have said, that that must now change. It is changing. The initiative known as Furness Enterprise, which is funded jointly by VSEL, Barrow Town Council and Cumbria County Council, is attacking the problem; but it is attacking it at a time when there is not just a national recession but a worldwide recession. It makes the task a hundred times more difficult than in times of greater prosperity.

Although I believe that the people of the area are a special case, I also make the point that they are not asking for government handouts. The people of Barrow and their families are much too independent and fiercely proud for that. Whereas the noble Lord, Lord Wade, said that there must not be too much government intervention, and others say that market forces cannot be allowed to run not in the area, I find myself somewhere between the two lines of thinking. We should ask the Government to help Barrow, but to help Barrow to help itself. There are some vital needs. There is a need for incentives to attract new industries to the area to take the place of shipbuilding which, by the logic of events, is drawing to a close.

We need improved communications networks, especially the road link to the M.6. The noble Lord, Lord Wade, said that the whole of the United Kingdom is richer in communications than it has ever been. That is true, but it is not true of Furness and Barrow. We need a new link to the M.6 to bring Barrow into the structure and fabric of the United Kingdom. In the post-war environment we need to attract new industry to the town which is filled with skilled, experienced and hard working people who will turn their hands to anything they consider to be dignified and worthwhile. There are men and women in that community who, over the years, have made a major contribution to the peace and stability which we all enjoy. When the Minister replies, I hope that he will give an assurance that they will not be left alone to pay the full price of what is now called the peace dividend.

6.43 p.m.

Lord Joseph

My Lords, I too thank my noble friend Lord Wade for introducing the debate. I shall try to concentrate upon the difficult question of how a region flourishes. What causes it to flourish? What causes a country to flourish? Before I embark upon that subject, I feel the need to reply to the noble Lord, Lord Sefton, and to say something about the deep and important subject raised by the noble Lord, Lord Chalfont. Of course, I shall not convince the noble Lord, Lord Sefton, but I believe that he will agree that the whole country, not just Merseyside, has had to become internationally profitably competitive to keep jobs.

Sometimes the fault, when we have not been competitive, has been that of the trade unions; sometimes management; and sometimes a combination of both. The noble Lord, Lord Sefton, does not convince me that our problems are particularly and solely because we are what he calls peripheral. There are some formidably competitive and fully employed countries, such as Japan, that are way out on the edge of the map from our point of view; and yet look at our high streets and see how much they penetrate. We have to become internationally profitably competitive, and that provides the background for national prosperity and for regional prosperity.

Lying behind successful firms—large, medium and small, and my noble friend Lord Wade has given a brief roll call of some of them in the North West—are a group of people of whom most of us do not know the names; most of them are unsung; most of them are even unrecognised when they die—obituaries seldom refer to them; they are—we have a French word for them—the entrepreneurs, the job creators. Sometimes they create small firms; sometimes the small firms grow; sometimes they exist and flourish in big firms that encourage them departmentally; but they are phenomena that are far too little recognised in this country. Sometimes they are engineers; sometimes they are generalists; sometimes they are administrators; mostly, they are impatient for something—sometimes for money; sometimes for fulfilment and satisfaction; sometimes for solving a problem; sometimes for respect; and they are the salt of the earth. They do not come because of good education, and they do not come because of good birth. They do not come because of happy homes or unhappy homes. We do not know how they come. They come in abundance in some peoples. Look at the Chinese and how they flourish almost wherever they are.

We used to be enterprising as a country. Look at the inventions we pioneered. There was the agricultural revolution; the commercial revolution where we rivalled the Italians in our credit inventions; and then the industrial revolution. We were known for our enterprise. Somehow it has dwindled in this country. It may be a bit of snobbery or distaste for trade; but there it is. We rely for much of our enterprise upon people who come in from abroad— God bless them! We have our own people. There is an abundance of talent, but trade is not seen, as it were, as respectable, essential and important.

I welcome the reference made by my noble friend Lord Wade to the achievements of entrepreneurs in the North West. Many of them have been the founders of what became great industries, but the conundrum for us is: how on earth do we encourage them? The Government cannot do much about it. The Government can remove discouragements. They can take care that their tax system does not demotivate. Even the people of Barrow—I have huge respect for them and for what the noble Lord, Lord Chalfont, has said that they have done—will note that in St. Helens a parallel situation existed with the Pilkington Glass Company. Even in Consett —I was the Minister concerned—the overwhelmingly large employer of Consett's people closed. But the people of St. Helens and Consett show what can be done through enterprise, some of it locally generated, and some of it from outside.

Among the many things that must be done within Barrow—no doubt a bit by government, as the noble Lord, Lord Chalfont, said—is the encouragement of enterprise within the community. One would like to see respect paid to local entrepreneurs, be they small, medium or large. We must recognise—I hope that the noble Lord, Lord Sefton, and I can agree on this point —the ferocious mobilisation of talent that goes on when inventions occur, wherever they occur, or new markets are opened up.

I remember the case of the scanner which was invented by EMI, I think. It is said that General Electric in America mobilised engineers in scores, mobilised credit, mobilised design and research and development, and put up on the factory wall, "We are at war with EMI. We must destroy them", and it captured the world market. That is the tone of the game. It is fierce and it is entirely understandable. I hope that my noble friend Lord Sefton will not interrupt me. We are all limited on time and he must accept that the competition is ferocious and sometimes we are the competitor. Look at our performance in pharmaceuticals, in the engineering industry and the defence industries and aerospace. We are the formidable competitors who take markets from other people, so we have our own successes.

I ask: what can the Government do? The noble Lord, Lord Sefton, may not agree, but I do not believe that the Government can do much through more spending. Every time they spend more they have to tax more or borrow more and put up interest rates. We reach the silly situation where the Government subsidise public sector Peter at the cost of dismissing private sector Paul. There is not much fun in that, over a certain point. So it is not as easy as that. The Government must find ways to encourage local enterprise and the first step towards it is that people should understand its importance.

I regret that we do not even have a word for the character who works the magic, the Aladdin who creates jobs. Very often people go through the bankruptcy courts and suffer personally. If one reads, as I have read late in my life, Samuel Smiles, one sees to what extent the families of the entrepreneurs often suffer because of the intensity of the desire of the entrepreneur to succeed, for whatever combination of motives.

I beg my noble friends occasionally to dip into Samuel Smiles for some of the anecdotes that were translated into, I think, 70 foreign languages. The Khedive of Turkey showed to the British ambassador at the time his proudest possession—the book by Samuel Smiles on his shelf.

I do not mean that the entrepreneur should be glamourised or notorious; I simply mean that there should be respect and understanding. It is important that there should be encouragement of the links between the universities, the polytechnics, as they were, and local businesses. Noble Lords may be familiar with a book called The Cambridge Phenomenon describing the avalanche of new small hi-tech companies in Cambridge which owed their birth probably to the part-time presence of scientists from the university. It has dwindled in recent hard days, but it is still a phenomenon.

We must hope that in the local colleges there is training in business planning so that entrepreneurs may at least make coherent plans. I hope that in regions like the North West credit facilities will increasingly encourage entrepreneurship. I cannot suggest a way in which we can achieve the flair of people who have the reputation for enterprise that once we had, but I suggest that there is a great deal to be done in the North West to encourage what it has always had—enterprise—in the future, as in the past.

6.53 p.m.

Lord Taylor of Blackburn

My Lords, I too am grateful to the noble Lord, Lord Wade, for initiating and encouraging the debate today. Most of us who come from the North West will agree that it is a proud part of the country. I used that word once before in this House; we are a gradely lot as well. I should explain that by a "gradely lot" I mean that we are good and sincere people who want to get on in the world and do the best for the people with whom we live and work.

Over many years, right from the Industrial Revolution, the North West has experienced all kinds of struggles. We had difficulties at that time and then, in my lifetime, there were the problems of the cotton industry in the 1930s, the slump and the depression. In the past 10 years, particularly recently, we have had many changes. In my area of Lancashire, the cotton industry has virtually gone out of existence.

We realise that there is only so much that the Government can do, only so much that they can give. We realise that we are competing with other parts of the country; all we in the North West want is our fair share of the national cake. It is important. We are looking again at the ways in which we can rejuvenate our industry and I am glad to say that a different attitude is now growing throughout the North West: an attitude of partnership between local businesses, local authorities, educationalists and so on who are now coming together more than ever before.

I am also glad that there is now the will to work closely with education, training and retraining. We realise what has already been said, that things are constantly changing. No one can afford to stand still. Therefore it is important that we recognise that people will change their job several times in a lifetime. We as a country, rather than a region, must provide more opportunities for training and retraining.

In the North West we are not getting the full opportunities. We are proud of our establishments: the universities and the polytechnic in Lancashire which will shortly become a university. We are proud of the University of Manchester, the University of Lancaster and the Polytechnic of Lancashire, as it now is. I do not know what name it will use, as there is a dispute at the moment over its name. Nevertheless, we are proud of our institutions, our training colleges and what they do to help improve the lot of industry. We are also proud of our cultural activities in the North West: the Liverpool Philharmonic Orchestra, the Halle Orchestra in Manchester. These are all part of life and part of the economy of the region. That is great.

Over the years time and time again we have looked at ourselves and at the various aspects and changes that are taking place. I support the noble Lord, Lord Chalfont, on the situation in Barrow which is different from the rest of the region. Barrow is isolated and deserves a little more of the national cake than even some other places in the North West.

With respect to the noble Lord, Lord Joseph, I do not believe that we can compare geographically the situation in Barrow with the situation as it was in St. Helens. St. Helens was a completely different area and in those days there were more opportunities for people there to diversify than in Barrow where opportunities are limited. Therefore I support the noble Lord, Lord Chalfont, on that.

One point I wish to get over is the partnership aspect of the change. None of us can be isolationist. I was a director of a company that found itself in difficulties recently. I know the problems of a company in that position, even with all the efforts that are put into trying to solve them. I know how difficult it is when we have to tell people that they will lose their jobs and how we must try to change things. It does not just involve the people who will lose their jobs and their families. As the noble Lord, Lord Chalfont, said it involves the local shopkeeper and the surrounding community; they suffer in the many ripples from the one plunge of someone being dismissed or made redundant. These are the difficulties we face.

The partnership aspect in the North West is great. I am very proud of the way in which my own town of Blackburn is tackling the situation with partnerships. The Groundwork Trust, the Prince of Wales Trust and other schemes are working together with the old established associations like the chambers of commerce, the chambers of trade, and so on. They all realise that they must pool their resources and knowhow.

The noble Lord, Lord Joseph, spoke about entrepreneurs who have helped a great deal. I can think of entrepreneurs in my lifetime in my own area, such as the people who introduced the tufting industry. In east Lancashire we are proud of starting the tufting industry and what it brought to the area. We are also proud of Netlon which was introduced and developed by an entrepreneur. These are important industries that have created jobs not just in my own town and region but throughout the world.

The situation is changing so rapidly that we have to be able to recognise change when it comes along. We must be able to recognise and encourage a budding entrepreneur. Central government and regional organisation must provide him with the essentials he needs to develop his skills and ideas.

Some time ago, during my chairmanship of the finance committee in my town, two entrepreneurs came to us and said, "We have got money from the banks to buy machinery but we haven't got any capital to build a factory. What can you as a local authority do to help us?" Our job was then to build a factory for them and help them all we possibly could. In three years they had bought the factory from us. That was good. This is where local authorities can help if they are allowed to do so. Through partnership schemes they are doing this sort of work, and long may it continue.

We are not crying for additional help in the North West. We are just crying for our fair share of the opportunities to develop.

7.1 p.m.

Lord Harmar-Nicholls

My Lords, these Wednesday debates are the most valuable and enlightening of any of the debates that we have, much more so than when we have a crowded Chamber with Front Bench flags flying. We have had quality contributions from the noble Lord, Lord Chalfont, who spoke as the head of a very big organisation in a very important part of the country, and from my noble friend Lord Joseph.

Also, it is valuable and delightful to see the contrast even on the same Bench. It was interesting to hear the negative and rather dismal approach of the noble Lord, Lord Sefton. My spirits, however, were raised by the excellent contribution by the noble Lord, Lord Taylor. That sort of enlightenment is typical of the Wednesday debate atmosphere.

I agree with the noble Lord, Lord Chalfont, and recognise his problem. Rather than St. Helens, to which the noble Lord, Lord Taylor, referred, I would ask him to keep in mind the amazing survival of Corby. There, a similar problem to that being experienced in Barrow occurred in the steel industry. The miraculous revival in Corby perhaps offers hope to the noble Lord and his associates, given a favourable world atmosphere for trade and the sort of approach that he mentioned. Nobody wants complete freedom or dog-eats-dog, as some people try to describe privatisation; nor do we want the dead hand of complete nationalisation. There must be partnership of both. That is what we have in Corby, and it would be very valuable in overcoming the problem that the noble Lord, Lord Chalfont, described so vividly.

The only reason I am in London today is that the initiator of the debate is a friend of mine and I know his views. I thought that it would be helpful to come as a witness to support those views. My claim for being a witness who is entitled to be listened to is that for a number of years I was the Member of the European Parliament representing most of the North West area that is under discussion today. Very few people have a better idea as to how opinions are going than a parliamentary Member who, if he does his job properly, has access to the people who are in management at the top and has knowledge of the trade unions and their representatives at the bottom. Certainly, if you are a Tory, you are made very well aware of the problems of the shopkeeper and the small businessman. I had all of that in the area to which my noble friend referred.

The noble Lord, Lord Sefton, called it a rosy picture. The picture that my noble friend described was the picture as I saw it—not only as I saw it but obviously as other people saw it. The fact is that in recent years we have had 600 overseas companies accepting the North West as the base for developing their business in Europe and the rest of the world. Those people are interested in putting their investment where they think it will be useful and beneficial to them and to the people they employ. They chose the North West. That is the sort of evidence that would cause me to come down on the side—call it rosy, or what you like—of my noble friend rather than accept the dismal, upsetting picture painted by the noble Lord, Lord Sefton.

My own businesses are in the West Midlands, next door to the North West. The problem there is identical to that of the North West, and the story being told about the North West would be exactly the same there. I found that the skills, the energy and the sense of responsibility that existed in the part of the North West that I represented, which was something like eight or 10 local authority areas, were really outstanding. That is what my noble friend was saying. It was for that reason that over 600 companies were prepared to bring their investment to that part of the country. The other point that my noble friend made was the absence, by and large, of industrial unrest.

The only weakness that I find in the North West —and I do not think even the noble Lord, Lord Taylor, would be altogether pleased—concerns the local authorities in terms of their enterprise and the objectivity of people who want to make a success of things. Too much of what I would call party politics is allowed to be brought into their job. I was a local councillor for 20 years. At the beginning of that time there was no party squabbling. People were elected as councillors because the local people knew them. In terms of whether they were Tory, Labour, Liberal or whatever, they retained all that, but their personal standing, character and sense of responsibility were what caused them to be elected. That was reflected in the council chambers. That situation does not now prevail.

My noble friend made a most effective plea for people to pay proper regard to the advantages of bringing investment to the North West. One of the problems, however, could well be the reputation arising from the antics of some local authorities. I do not think that that is a true picture of what is happening in those areas, but in these days of media control it is what hits the headlines, and it is the most damaging of all.

Along the lines of what my noble friend Lord Joseph said, what bothers me—and this applies to other regions as well as the North West—is the resistance in so many quarters to reducing taxation. If one takes a penny off the pound they will put it back. I cannot understand that approach.

The North West provides a good example of what I shall say. I could give figures but I shall not take up your Lordships' time. We are living in an age when, thanks to medical advances and more sensible living, people are living longer. I am an old age pensioner so I can say things about pensioners without being accused of looking in from the outside. The number of people who are beyond working age is growing, and that is good. At the other end of the scale—and the North West is a good example—people are staying in education longer in order to obtain the skills which my noble friend mentioned. The noble Lord, Lord Taylor, referred to the polytechnics and schools. That is also right. However, those two large sections of the population are using up money. I do not criticise that. The old, who are past working age, and the larger group of young people, who are not yet an economically productive part of the population, have to be paid for.

Those groups are paid for by that little group in the middle. Those are usually people who are at the age when they are raising their own families and facing normal family expenses. They are the people I want to help by reducing taxation. They are the people it is vital that we help if they are to produce the wealth that is necessary if there is to be the compassion which we sometimes talk about. If that can be brought about, then eventually, when we come to the end of this world recession, we can use those skills and the entrepreneurial risk-taking which my noble friend spoke of, and once again we can reach the top of the league.

It is vital that we should do so. In my lifetime we had the Royal Navy; that got us somewhere. We had an industrial pre-eminence which was unsurpassed; that got us somewhere. We had financial control which others did not have. We have none of those now. Those were assets which we inherited from our Victorian grandparents. They have gone. We must now depend on our own production, our own skills, our own sense of leadership and, if the noble Lord, Lord Sefton, will allow me to say so, our own optimism in order to generate the right climate for moving ahead.

7.12 p.m.

Lord Rochester

My Lords, as someone who, like the noble Lord, Lord Wade of Chorlton, lives in Cheshire, I am delighted to speak in what for me has been a most interesting and informative debate.

In preparing for the debate I naturally considered the extent to which the present state of the economy in the North West of England differs from that elsewhere in the UK. With that in mind I looked at the latest regional seasonally adjusted employment figures. Although, if Northern Ireland is excluded, the percentage of unemployed in the workforce in the North West is marginally higher than anywhere except in the northern region, it is not substantially higher than in the country as a whole. With one or two exceptions, therefore, of which Barrow may well be one because of its dependence on one industry, as the noble Lord, Lord Chalfont, reminded us in a memorable speech, the region does not appear to have a claim for exceptional treatment as a specially deprived region in that respect. In saying that, I do not for a moment want to minimise the seriousness of the employment position in the North West, as elsewhere in the country.

Similarly, I examined the regional trends survey published by the CBI earlier this month to see how far the views of employers in the North West as to manufacturing prospects differed from those of their counterparts elsewhere in the UK. Here I found that, together with employment, new orders and output have continued to fall over the past four months. However, in contrast, output is expected to rise over the coming four months for the first time since July 1989. Similarly, home and export prices are still falling, but unit costs appear to have risen by less than at any time since results were first collected in July 1988. That, for what it is worth, is the view of the CBI.

Overall, although the recession continues to have severe effects in North West England, as elsewhere in the Kingdom, it cannot fairly be claimed that economic conditions are appreciably worse in that region than in other parts of the country. Indeed, the more I thought about the matter the more I came to feel that any proposals which I might put forward in this debate aimed at improving the state of the economy in the North West would be much the same as those appropriate to the UK as a whole.

Against that background I would not recommend a return to a system of regional development grants. I do, however, support my party in advocating wider use of regional development agencies, with central government seed-corn funding being available for agencies where regions are in need of special assistance. That could be of help in the case of problems such as that referred to by the noble Lord, Lord Chalfont.

North West England possesses a number of excellent universities and polytechnics which have great potential to assist in the economic development of the region. It is vitally important to strengthen still further the link between those higher education institutions and regional industry. I was very glad that the noble Lord, Lord Taylor of Blackburn, mentioned education in that context. I am not sure whether the University of Keele can be treated geographically as one of those universities, but for some years until recently I had the privilege of being pro-chancellor and chairman of the council of that university and I can vouch for the excellent work that has been done in developing its science park for the benefit of the locality.

At a lower level of government, local authorities could also be of help if they were encouraged to exercise rather more flexibility in the field of economic development than they can at present.

Perhaps I may go on to say that I very much agree with what my noble friend Lord Ezra said in initiating a short debate in your Lordships' House two weeks ago; namely, that what industry throughout Britain needs is not a consumer-led recovery but one which is investment led. That means the diversion of resources to stimulate industrial investment. That would not involve a substantial increase in public expenditure because it would provide additional tax revenue, reduce the pressure on social expenditure and, above all, ease the increasingly heavy burden of unemployment.

In that connection it is noteworthy that of the various proposals put forward by my noble friend on that occasion to reactivate the economy nationally, three in particular are also favoured by the CBI. The first is that industry should be given greater incentive to reinvest in new plant, machinery and research through an increase in investment allowances. Secondly, steps should be taken to stimulate investment in the infrastructure. That would provide sorely needed work for the construction industry. The latest indicators of future trends in construction activity which I have obtained from the Building Employers Confederation suggest a worsening of recession in the industry until at least the end of this year. That certainly applies in North West England.

Further investment in transport, especially rail transport, is urgently needed, not least in preparatory work for the freight links from the North West to Europe that are essential if the region is to take full advantage of the single European market and the opportunities offered by the changes in Eastern Europe.

Traditionally manufacturers have used the Channel and Humber ports for exports and more recently the developing facilities at Felixstowe and Harwich. However, routes to those ports are becoming increasingly congested. If the North West is not to become increasingly isolated on the periphery of the new Europe—to use the words of the noble Lord, Lord Sefton of Garston—north/south and east/west access by road, rail and air must be improved as a matter of urgency. I have in mind, among other things, development of the region's airports, particularly Manchester, which was mentioned appropriately by the noble Lord, Lord Wade; and perhaps electrification of the Liverpool-Manchester-Leeds rail line.

Thirdly—here I can best speak from my own experience—in my view there is need for greatly increased investment in training. I have said it all before but it bears repetition. The view of my party is that training and retraining invariably should be increased when unemployment rises. We think it important that the skill level of the workforce should be at least maintained against the tendency of unemployment to reduce it. I regret that, as I see it, the Government have recently decided to do just the opposite once again. Training and Enterprise Councils are understandably concerned about how little they are to receive to finance both youth and employment training.

I cannot expect the noble Lord, Lord Strathclyde, to respond on behalf of the Government to the various suggestions that I put forward. One at least must await the Chancellor's Budget Statement and another is an employment matter on which the noble Lord may not have up-to-date information, knowledgeable though I recall him to be on the subject of training from past exchanges across the Floor of the House. But I did not feel that such consideration should prevent me from placing my views on record, all the more so because every one of the proposals that I have made is highly relevant to the state of the economy in North West England.

In conclusion, let me simply say that from long experience in the chemical industry in the North West, I can vouch for the fact that the resourcefulness, skills and dependability, particularly in emergencies, of the working population in the region are second to none. Perhaps your Lordships will forgive me if I add that during the war I served in a Lancashire regiment which was converted to tanks. In Normandy all the members of my tank crew came from a deprived area of Liverpool—Scotland Road. To my dying day I shall be thankful for all that they did for me then. What the people of North West England now need above all is the opportunity for their talents to be fully utilised once more.

7.24 p.m.

Lord Dean of Beswick

My Lords, I join with other speakers who have taken part in this discussion in expressing my appreciation to the noble Lord, Lord Wade, for initiating the debate. One tries to be objective in this matter but, while he painted some pictures of optimism, there is another side to the story. As someone who lives in the area, at the risk of being called miserable I feel I must highlight some of them.

The noble Lord, Lord Wade, spoke about the history of the North West. He was right when he said that it has always had its innovators and produced a stable labour force. He then spoke of how a stable monetary system would benefit the area and of stable or reducing inflation. No one could cavil at that. People like to operate in a stable situation so that they can plan for the future. Ups and downs are of no use to anyone. He talked about cash flow and how sometimes big firms, if they did not produce money on the nail, could drive some of the smaller businesses out of existence. I say with some regret that in the past one of the industries most prone to that—I speak of the past and not the present—was the building industry with its subcontractors. I understand however that that situation has been speeded up and now almost eliminated.

The noble Lord referred to retraining. It is true that people may have to be retrained once, twice or even three times in a lifetime in order to have an opportunity to remain in something like full employment. But it is no use training people for jobs that are not there. There must be jobs for them to fill when the training is completed. The noble Lord, Lord Wade, referred to the announcement by British Aerospace of cuts of 3,500 jobs. It has saddened me lately, when I go back to Manchester, to see the local television programmes. They used to show a balance sheet with, on the one side, jobs going out of existence and, on the other side, jobs being created. Sadly, it now seems to consist of jobs being lost. That is a statement of fact. I am not being miserable. That is happening. Jobs are going out of existence; 300 jobs, 400 jobs, 500 jobs, and even on occasion 1,000 jobs at a time are disappearing. One has learned to live with it, but it does not go down very well.

I differ from the noble Lord, Lord Wade, on one of his observations. He said that the development corporations have been an outstanding success. I do not expect the Minister to reply to that today. However, I was offered a post by Her Majesty's Government on the central Manchester development corporation but I chose not to serve because that is not my way of doing things. The only person to whom the industrial development corporations are answerable is the Secretary of State—whether it is good or a bad Secretary of State. In my view that is not the best way to impose accountability. In fact, in my opinion, the most important development corporation in the North-West area was the Trafford Park one, if we speak in terms of regeneration. For some reason that was never published, the Government, after about 18 months, removed the first chairman of the Trafford Park Development Corporation. It may have been for reasons of his inactivity. I do not know why he was moved, but obviously he was not a success.

I do not speak of the same kind of refurbishment as that mentioned by the noble Lord, Lord Wade. Take the area of Manchester from which I come and from which I take my name. I was there last week opening a sheltered housing scheme for boys who had been in trouble in prison, run by the society known as Selcare. The area is an absolute industrial desert. It used to be known as the workhouse of the world. There were numerous engineering factories employing 2,000 to 4,000 people; they have gone. Chemical factories have gone. The only large pit in Manchester has gone. Sadly a dispute is taking place in what is probably the last engineering factory of any size in the area at GEC-Alsthom in the Openshaw plant. So that is the situation.

I understand the point of view of the noble Lord, Lord Chalfont. If I were a nasty piece of work I could say that Barrow will see what will happen and what has happened in the areas that I represented. It will see what happened in Consett and other parts of the country. I think that Consett is nearest to the Barrow situation. I do not want to see that happen. I believe that Barrow should be encouraged. If it needs funding or some preferential treatment, that should be given. It is not only the factories and the shipyards that will die; it is the communities which will die and the youngsters will leave. They will not tolerate the situation any more. They will leave Barrow and we will have almost a ghost town on our hands.

The noble Lord, Lord Joseph, considered that we ought to set Japan as our example because of how well they accomplish things. But they do not operate on the same cricket field as we do. In 1977 or 1978 I had the privilege of going on a parliamentary visit from another place to Japan. We went to a shipyard at Kure. The shipyard had built so many enormous tankers of a quarter of a million tonnes or half a million tonnes that it was now putting them in mothballs. Being an engineer I asked, "What are you building now?". He replied, "We are building a huge quarter of a million tonne drilling rig". I said, "What will you do after that?". He said, "I don't know". I said, "This town lives off this shipyard. There is nothing else". The Japanese engineer said, "We'll not let the town die". The idea that the Japanese government do not become involved is nonsense; they do become involved.

Unfortunately I cannot develop the argument about whether our people compete on the same playing field as the Japanese in relation to contracts. We cannot debate that in the limited time available. However, I do not believe that anyone knows the Merseyside area better than my noble friend Lord Sefton. I know that he has criticisms of his own area but basically he is absolutely right in what he says about Liverpool. It now has a chance to recover. It has had a tremendous history of success. Like most other big cities it has had spasms which it could well have done without. That was not the fault of the ordinary Liverpudlian. But the city is on the way back. I believe that it will be very successful.

I was glad that my noble friend Lord Taylor made reference to the educational facilities in the North West. Many people do not know that UMIST, the universities of Manchester, and Salford, plus the polytechnics, make up the biggest educational centre of that type in Europe. It exports its learning through students all over the world.

We have to consider what is taking place. There is a malaise over certain areas of the North West that will not ease for a long time. Despite some of the nice things that the noble Lord, Lord Wade, said, with which I do not disagree, the situation is fast deteriorating. For instance, unemployment in the North West has now gone up to 322,000, an increase of between 60,000 and 70,000 in the past 12 months. The noble Lord, Lord Rochester, was right. The only two areas which show a bigger percentage increase are the North East itself and Northern Ireland. That situation continues.

Let us consider another statistic which indicates what is occurring. There has been a tremendous increase in the number of houses that people have lost. They have come before the courts because they have fallen behind with their interest payments. Such cases were up 50 per cent. by the middle of last year. I understand that the latest figures indicate a still accelerating trend. If that is happening on that scale, one cannot say that the area is doing particularly well; it is not.

In addition, a number of companies are going into liquidation. The figure quoted was about 1,900 last year, which is 40 companies a week. Although new companies balance the figure, the deficit remains. Let me cite some figures which indicate the enormity of what is occurring. I believe that I am entitled to say something about Manchester itself since I am a Mancunian, although I was privileged to be a Member of Parliament in another place for the great city of Leeds, along with the noble Lord, Lord Joseph.

For instance, in the 12 months to December 1991 unemployment rose in the North West by 23.6 per cent., in Greater Manchester by 26.4 per cent. and in the city by 19.2 per cent. However, one of the appalling figures is that male unemployment in the centre of Manchester is over 20 per cent. Those people have to live with that situation. They see no signs of change. Some people may consider that things are getting better, but they are not.

I live in an area on the outside of the city of Manchester. It is known as Tameside. Part of it was formerly Denton Urban Council. It was one of the new metropolitan districts that was pulled together in the early 1970s in the government reorganisation. It consists of Ashton, Stalybridge, Denton, Audenshaw and all those areas. It is quite a stable, normal (what I call) mainly working class to slightly upper class area. They are very good, thrifty, hard-working people. The industrial workforce is superb. However, I have the Advertiser, which is the free paper delivered through the door. It is not a Labour Party paper by any means. Apart from the sad story of a girl who had been missing who was found dead in the reservoir, the headline states, "Evictions rocket" and the article reports that repossessions almost doubled in 1991. It states, "Borough's jobless up a third last year". There is no point in the noble Lord, Lord Harmar-Nicholls, because he was a European MP some years ago, stating that everything is all right. If one goes around that area and tells those people that they are doing well when they are losing homes and jobs, I know what they would say to the noble Lord. If he stands for election again as an MEP he would be on the loser's box not the winner's box.

I wish again to express my appreciation for the debate. I believe that the Government must take serious note of the situation. There are things that can he done. I hope that the Government will read today's debate and, if possible, bring forward some form of assistance for those areas that have real problems. It is a patchwork situation. Some areas are harder hit than others.

7.38 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)

My Lords, may I first congratulate my noble friend Lord Wade of Chorlton on obtaining this debate on what I am sure we all agree is a very important subject. I know that the noble Lord is an energetic campaigner for the North West of England. He has done his region a service and this House too in initiating today's debate.

I have had the pleasure of numerous visits to the North West of England. It is a region which can lay claim to be one of the most fascinating regions in the whole of Europe. It is a region that is steeped in history. I was slightly confused by as to whether the red rose worn by the noble Lord, Lord Dean of Beswick, is for Lancashire or for the Labour Party.

Lord Dean of Beswick

My Lords, I can assure the noble Lord that it is for both, but it is a Lancashire red rose.

Lord Strathclyde

My Lords, the area has been steeped in history since its time as the northern frontier of the Roman Empire in Britain, through the civil war of the 1640s and onward to the first industrial revolution. The region has for a long time been the cradle of entrepreneurial drive and talent. Personalities such as Arkwright, Crompton, Brindley and Francis Egerton, the third Duke of Bridgewater, spring to mind. Your Lordships will need no reminding that the Duke introduced inland navigation to England and with the aid of Brindley began the canal connecting Liverpool and Manchester. The region can claim some of the greatest scientific minds in history, notably the great British chemist John Dalton who produced the first table of atomic weights in 1803. There are many other "firsts" which one could claim for the North West region, including the first viable computer at Manchester University. I touch on this brief history to acknowledge the hard-earned experience of the region in economic matters, an experience which is relevant to its future.

Nowadays, the North West faces a highly competitive international market. The North West has shown itself capable of tackling challenges such as this in an energetic manner in the past and has the qualities to do so again now. Perhaps I may first put the North West in context within the United Kingdom. As my noble friend Lord Wade has noted, in both employment and output terms the North West is second only to the South East in size, having a gross domestic product in 1990 of £47 billion, equivalent to 10 per cent. of GDP. There are 2.4 million people in the region, representing 10.9 per cent. of the national total. Of those, nearly 661,000 are employed in manufacturing. That latter figure is significant. The region's manufacturing provides 27 per cent. of employment, compared to a national figure of 23 per cent. That is why the North West feels particularly strongly about manufacturing industry; a view which the Government acknowledge and accept.

There have of course been problems in the decline of the traditional industries such as textiles, coal and steel and, to a lesser extent, the ports. However, with that decline has come a diversification which has moved the region's industrial make-up closer to the national pattern than used to be the case. Within this diversification there is strength. The sectors represented range from engineering, the food industry, chemicals, the defence industries, motor vehicles and traditional industries such as textiles, footwear and clothing, furniture and so on. The services sector provides the region with the largest body of service industry employment of any region outside the South East.

Important banking, finance, insurance and business services are provided in the region which combine to make Manchester and Liverpool major centres of commerce, transport and education. Despite its past decline, Liverpool remains an important port and its recent performance since the abolition of the National Dock Labour Scheme has been most encouraging. As the noble Lord, Lord Wade, said, Manchester has more than 60 domestic, merchant and international banks represented there. Elsewhere in the region there are important ancillary activities including the Barclaycard Centre in Liverpool and, in Chester, the headquarters of North West Securities and St. Michael Financial Services.

From my previous position as Minister responsible for tourism I can vouch for the strength and diversity of tourism in the region. A spectrum ranging from the unsurpassed delights of Blackpool to the sublime beauty of the Lake District, with industrial heritage in projects such as the superb Albert Dock in Liverpool, the North West is a treasure trove of tourist attractions.

Despite the diversification—indeed, by way of a paradox, perhaps because of such diversifications—the North West has been and is affected by industrial change. For example, the contraction in the defence industries, to which noble Lords have rightly referred, is affecting Lancashire and Barrow-in-Furness in particular. The Government agree that it is important to retain skills and encourage diversification. The DTI was pleased to have assisted with the securing of European Commission perifra grants for projects in Preston and Barrow to do that. I know, too, that the companies affected are working with agencies to counsel those made redundant so that their skills might be retained for the region. That continuing cycle of industrial change has made its impact on the North West, as has the present recession. I regret that unemployment remains high; at 10.6 per cent. it is second only to the northern region. The region has its particularly prosperous areas, of course, in Cheshire and parts of Lancashire and Cumbria. However, that does not blind us to the overall situation. That is why the Government are so determined in their policy to defeat inflation and thereby create a stable economic environment in which companies can grow and prosper.

The people of the North are tough. I know from personal experience that the further north ones goes the tougher they become. They are very tough in Scotland. I am optimistic about the future of the North West. The asset side of the balance sheet is particularly strong. I have already referred to the diversity of the economy. That diversity now helps the region to ride the business cycle much better than it would have done with an over-dependence on the larger old-established industries. Many world renowned companies operate from the region. They do so because of the good supply of skilled and adaptable people available to work in their companies and the high quality infrastructure which services the region.

The people are the region's main asset. I referred to the hard experience gained from industrial life over the past 200 years. The people in the North West have good, marketable skills and a flexible, adaptable approach. That is evident from the very diversification to which I have referred. The infrastructure is very good. There is a well-developed motorway network and I have not forgotten that the M.6 around Preston was the first motorway to be opened in Britain. North-South links are well developed and my colleagues in the Department of Transport are examining the issue of East-West links which would assist the region to serve the northern part of the European Community, as it is now and as it may be in the future, particularly the Baltic states. The rail network is comprehensive and is the subject of an intended uprating for the West Coast mainline which will benefit European travellers as well as national ones. Reference has been made to Manchester Airport, which is a major economic wealth generator in its own right. It is England's only category A gateway airport outside London and is recognised as Europe's fastest growing airport. It handled 11 million passengers last year and projects to double that by the turn of the century. Such development, complemented by airports at Liverpool and smaller airports at Blackpool, Carlisle and Barrow, are essential in attracting inward investment and in retaining the quality companies which the North West presently enjoys.

An additional and influential factor in such inward investment, both from overseas and from within the UK, is the quality of life in the North West region. I know from my travels that it is a beautiful region, embracing the Lake District through to the Cheshire Plain and the Lancashire Pennines through to the Wirral Peninsula. Historic towns such as Chester, Lancaster and Carlisle combine with the industrial heritage and popular culture in music and sport to make living in the region a real pleasure.

Lord Taylor of Blackburn

My Lords, will the Minister mention the three major football teams of Manchester, Liverpool and Blackburn?

Lord Strathclyde

My Lords, indeed, and I should not like to forget Everton. No doubt the list is infinite.

Those assets will prove extremely attractive, I hope, to the members of the International Olympic Committee when they meet to consider the venue for the millenium games. I am delighted to say that since my noble friend Lord Wade asked a question at the beginning of the debate my right honourable friend the Prime Minister has announced that for the Manchester Olympic Bid £55 million is to be provided to pump prime the essential investments necessary to mount a winning effort. The games would be the north west's largest ever inward investment, providing 5,000 jobs as a permanent basis and an economic stimulus which would carry the region forward for many years. I know that the whole House will welcome that announcement and will congratulate my right honourable friend.

The Government recognise though that these strengths are essential to meet the challenges that face the region today. The region's problems have arisen in the main from the scale and speed of the adjustments which it has had to make to its economic base. Although much has been done, a number of challenges remain. I have referred to the high level of unemployment and it is compounded by outward migration of the younger and perhaps more enterprising individuals. The industry infrastructure still contains too many scars from the 19th century, together with a growing shortage of suitable sites for the inward investor. The Government have recognised the issue of urban decay and in the two major conurbations and the numerous industrial towns in the region they are doing something about that, through their urban development and city challenge programmes and the activities of the DTI's own task forces. There is a need to retain and develop the skills of its workforce more rapidly, particularly in the face of the declining school-leaving population.

The region's 14 Training and Enterprise Councils are busy working on that vital issue. The noble Lords, Lord Taylor of Blackburn and Lord Rochester, spoke at length about training and retraining. They also spoke about partnership, which is so fundamental to the TECs. It is a partnership between the private sector, government, business, employers and potential employees so that they can find work in the long term.

As noble Lords would expect, the Department of Trade and Industry takes a close interest in the performance of the North West economy. After all, the national economy is composed of regional economies. Their performance affects not only those who live there but the nation as a whole. One suspects that there are a number of contributory factors affecting the performance of North West manufacturing touching on size, industrial make-up and industrial inheritance. It is for reasons like these that much of the North West qualifies as an assisted area for DTI purposes, and as an Objective 2 region for European funding.

The DTI spends many millions of pounds on assistance to industry and commerce in the North West. I am sure that your Lordships will be familiar with the Enterprise Initiative, which covers support in the fields of financial assistance for jobs, exports, the consultancy initiatives and technology schemes. Your Lordships may be interested to note that since 1984, when regional policy was last reviewed, 63 per cent. of all employees in the North West live in areas qualifying as assisted. In the intervening years, around £220 million has been offered on nearly 2,000 projects with an investment value of £1.78 billion and projected to create nearly 33,000 new jobs and safeguard more than 23,000 jobs. The regional development grant scheme, which is now closed, made offers valued at £246 million and its replacement, the regional enterprise grant, has so far made offers totalling £10 million, representing a total investment of £65 million.

The consultancy initiative has been particularly successful in the North West, with applications running far beyond the region's economic weight. In the four years since January 1988, when the initiative was launched, more than 13,000 applications for consultancy were received; 10,000 have proceeded and 6,000 of those are already complete. On export promotion, the regional office has an active client base of over 3,500 companies and I am pleased to say that the single European market campaign has received a very positive reaction in the region.

The department does not operate alone of course. Colleagues in the Department of the Environment spend considerable sums of money through the urban programme and the urban development corporations. The departments co-operate together in the city action teams which are working in Manchester, Salford and Liverpool and in the task forces, of which there is currently one in Moss Side/Hulme in Manchester, in the Granby-Toxteth area of Liverpool and more recently in the Wirral. In addition to that, the Cumbria action tam has been operating since the summer of last year when a package of assistance for Barrow-in-Furness and West Cumbria was announced in recognition of substantial projected job losses derived from their dependence on a dominant single industry.

The noble Lord, Lord Chalfont, with his great knowledge and experience of the area, referred with great feeling to the problems of that town. I am glad to be able to refer to the Government's activity in that area to assist Barrow to deal with its problems. Of course, that assistance is kept under review.

More important than central government activities are the actions of the people in the North West. It was a delight to listen to my noble friend Lord Joseph, who was such a distinguished Secretary of State at the Department of Trade and Industry and the Department of Education. It was enlightening to hear his restatement of the importance of the marketplace, enterprise and the entrepreneur. It was a delight also to listen to my noble friend Lord Harmar-Nicholls who enthused us with his optimism for the North West gained from his knowledge as a Euro MP. He is correct to highlight the success of inward investment in the North West.

I am sure noble Lords will agree that without their own will to succeed, the provision of central government support can achieve little. One of the reasons I am so optimistic about the North West's future is its ability to help itself. Its residents have an energy and commitment to their region second to none. My noble friend Lord Wade has demonstrated that this afternoon and on many other occasions. So, too, have noble Lords who have participated in this debate.

I am sorry that the noble Lord, Lord Sefton, is so depressed but I hope that he has taken note of what everybody else has said and will be duly encouraged. I am encouraged, for example, by the activities of 31 of the region's top businessmen who have formed themselves into a grouping called the business leadership team. Many billions of pounds of turnover is represented by that team, which is presently led by the noble Duke, the Duke of Westminster. Their co-operative efforts and joint vision of the North West's future offer real evidence to encourage us. For these groupings represent the people of the North West, who themselves provide the main constituent of successful recovery and continued growth. The other ingredients are present in the infrastructure, the quality of life, and much hard-earned experience. I am sure that that mixture of talents and assets will provide a prosperous future for this remarkable region. I thank my noble friend Lord Wade for the opportunity which he has given us this evening.

7.55 p.m.

Lord Wade of Chorlton

My Lords, I thank all noble Lords who have taken part in the debate. I was fascinated by the various views expressed. The noble Lord, Lord Dean, reminds me that I used to go trotting racing in Droylsden in the 1950s but unfortunately, that is no more.

Clearly, the key to success in the North West, as in most economies, is the partnership to which the noble Lord, Lord Taylor, referred, and gaining the necessary investment for the new opportunities which will be available. That is more likely to happen if there is enthusiasm, drive and encouragement rather than a blackening of an area which, I believe, is one of great opportunity.

We have not had an opportunity to refer to the rural economy so perhaps noble Lords will bear with me while I read an old Cheshire rhyme, which goes thus: A Cheshire man went o'er to Spain To trade and merchandise. When he arrived across the Main A Spaniard he espies 'Thou Cheshire man' quoth he 'look here These fruits and spices fine Our country yields these twice a year Thou hast not such in thine. The Cheshire man then sought the hold Thence brought a Cheshire cheese. 'You Spanish dog, look here' saith he You have not such as these: Your land produces twice a year Spices and fruits you say But such as in my hand I bear Our land yields twice a day"'. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.