Devolution (Scotland and Wales) (Hansard, 5 February 1976)

§ Mr. Dell

Yes, statistics are as follows:

assistance to industry amounted to £473 million in the assisted areas of Great Britain. The table below shows how much of this expenditure was incurred on assistance for projects in Scotland, Wales and the assisted areas of England.

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Scotland and Wales account for approximately 22 per cent. and 10 per cent. respectively of employees—employed and unemployed—in the assisted areas, but receive respectively 31 per cent. and 17 per cent. of total expenditure. Expenditure in terms of £ per head of employees in the assisted areas in 1974–75 was:

England	37
Scotland	68
Wales	79
Great Britain	48

Industrial Development Certificates (IDC's).

In an article to be published in "Economica" in February 1976 Messrs Moore and Rhodes conclude that the IDC policy coupled with the Government's factory building programme diverted some 45 new factories each year into the development areas between 1960 and 1971. In that decade they were the most important single influence on the annual diversion of new factories from non-

RELATIVE EARNINGS IN SCOTLAND AND WALES
Earnings
(Source: Department of Employment Gazette)
(i) Average Male Manual Workers
As a percentage of United Kingdom figure	1960	1965	1970	1971	1972	1973	1974
Scotland	…	…	91.6	94.2	96.4	96.6	97.5	98.6	99.5
Wales	…	…	…	101.4	98.5	99.6	100.6	99.4	99.0	97.8
(Source: New Earnings Survey)

(ii) Average Earnings All Workers
As a percentage of Great Britain figure	1970	1971	1972	1973	1974	1975
Scotland:
Males	…	…	94.3	95.1	95.4	96.4	96.4	99.2
Females	…	…	93.9	95.1	95.1	96.1	95.5	96.0
Wales:
Males	…	…	96.0	96.7	97.5	96.9	96.9	97.0
Females	…	…	97.5	97.3	97.1	97.0	95.5	95.7

Unemployment in United Kingdom, Scotland and Wales.

Current unemployment throughout the United Kingdom is by recent historical

			Average 1960–63	1969	1970	1971	1972	1973	1974	1975	January 1976
Scotland
Percentage unemployed	…	…	3.5	3.6	4.1	5.7	6.2	4.5	3.9	4.9	6.1
United Kingdom relative	…	194	149	160	168	167	170	151	124	118
Wales
Percentage unemployed	…	…	2.7	3.9	3.8	4.3	4.7	3.4	3.6	5.4	6.8
United Kingdom relative	…	148	162	147	127	126	129	140	135	132

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development to development areas; investment incentives diverted 36 new factories a year, other policies diverted 40 new factories a year. When translated into employment terms the IDC policy generated of the order of 100,000 jobs in the development areas in the decade, roughly one-third of the estimated impact of regional policy measures. It is not yet possible to give estimates of the specific contribution of the IDC policies to employment in Wales and Scotland.

During periods when the IDC policy was stringently applied, for example, in the late 1960s, as many as one-third of IDC applications, as measured by the employment involved, in the Midlands and South-East Regions were refused. Evidence given by 25 large United Kingdom companies to the Trade and Industry Sub-Committee of the Expenditure Committee reveals that many of these IDC refusals have resulted in new factories being established in the development areas.

standards very high. However, the relative position of Scotland and Wales has improved significantly since the beginning of the 1960s.

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			Average 1960–63	1969	1970	1971	1972	1973	1974	1975	1967
United Kingdom
Percentage unemployed	…	…	1.8	2.4	2.6	3.4	3.7	2.6	2.6	4.0	5.2
United Kingdom relative	…	100	100	100	100	100	100	100	100	100

Notes:

(1) Averages of seasonally adjusted figures excluding school leavers and adult students.

(2) 1974 is an average of January to November. There are no December figures due to industrial action.

Employment Effects of Regional Policy in Scotland and Wales

According to estimates published by Messrs. Rhodes and Moore in their article in the 1974 "Scottish Journal of Political Economy", regional policy generated 70,000 to 80,000 jobs in Scotland between 1960 and 1971.

Nearly three-quarters of the employment gain is estimated to have arisen from the increased inflow of firms rather

NUMBER OF OPENINGS OF MANUFACTURING ESTABLISHMENTS
Region	Active Policy 1945–51	Passive Policy 1952–59	Active Policy 1960–71
Scotland	…	…	…	…	…	…	…	77	50	273
Other Development Areas	…	…	…	…	368	149	809
Total Development Area Openings	…	…	445	199	1,082

Note:

These figures exclude those openings which have subsequently closed down and thus are not directly comparable with the figures relating to Wales below.

Using the same method as in their paper in the "Scottish Journal of Political Economy" Messrs. Rhodes and Moore have estimated the effects of regional policy for Wales. Their results are published as a Welsh Office Occasional Paper 1975. They concluded that the strengthening of regional policy generated some 70,000 to 80,000 new jobs in Wales between 1960 and 1972 and that, in relation to its size, regional policy has generated more jobs in Wales than in any other assisted area.

NUMBER OF OPENINGS OF MANUFACTURING ESTABLISHMENTS
Region	Active Policy 1945–51	Passive Policy 1952–59	Active Policy 1960–71
Wales	…	…	…	…	…	…	…	277	73	310
Other Development Areas	…	…	…	…	486	237	990
Total	…	…	…	…	…	…	…	763	310	1,300

Since 1971–1972 in the case of Wales—it is provisionally estimated that a further 20,000 jobs have been generated

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than from additional employment in long-established firms.

Data on inter-regional movement of manufacturing industry collected by the Department of Trade and Industry over the period 1945 to 1971 confirm the view that the amount of industrial movement, not only to Scotland but to all development areas, is very much higher in periods of active regional policy than in the period of passive regional policy.

Just over 50 per cent. of the jobs were generated by an acceleration in the establishment of new plants after 1960 whilst just under half were created by induced expansion of firms which had already been operating in Wales prior to 1960.

The way in which the pattern of new openings of manufacturing plant has varied over time in Wales according to whether or not active regional policy has been pursued is shown in the table below:

in Scotland and a similar number in Wales.

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Employment Associated with North Sea oil

There has been a steady increase in the number of people employed in Scotland on North Sea oil-related work. The Department of Employment return for December 1975 shows that 23,700 people were employed by firms solely engaged on North Sea oil work. i.e., by companies wholly engaged in oil-related activities. In addition, it is estimated that a further 10–15,000 are employed by firms part only of whose output is devoted to North Sea oil work. When allowance is made for those employed in construction work and those indirectly employed—in service and other support industries—a substantially higher figure emerges. The best estimate of the total number of jobs in Scotland

SCOTLAND
£ million
					1961	1964	1966	1967	1968	1969	1970	1971
GDP	…	…	…	…	2,067	2,458	2,811	2,944	3,176	3,354	3,688	4,098
GDE	…	…	…	…	2,267	2,695	3,011	3,222	3,520	3,700	4,081	4,509
Balance of Trade	…	…	-200	-237	-200	-278	-344	-346	-393	-411
As a Percentage of GDP	…	9.7	9.6	7.1	9.4	10.8	10.3	10.7	10.0

Sources:

"Expenditure in Scotland 1961–71"—Begg, Lythe and Sorley.

Scottish Economic Bulletin, Nos. 5 and 8.

WALES
£ million
					1965	1966	1967	1968	1969	1970	1971	1972
GDP	…	…	…	…	1,332	1,399	1,452	1,572	1,634	1,808	2,014	2,289
GDE	…	…	…	…	1,439	1,531	1,637	1,763	1,801	2,068	2,260	2,555
Balance of Trade	…	…	-107	-132	-185	-191	-167	-260	-246	-266
As a percentage of GDP	…	8.0	9.4	12.7	12.2	10.2	14.4	12.2	11.6

Source:

Digest of Welsh Statistics 1971.

Welsh Economic Trends No. 2.

Estimates of the United Kingdom balance of trade are directly available from the uational accounts, on a comparable factor cost basis.

UNITED KINGDOM
£ million
			1961	1964	1966	1967	1968	1969	1970	1971	1972
Balance of Trade	…	-270	-778	-288	-565	-595	-200	-76	+238	-658
As a Percentage of GDP	…	…	1.1	2.7	0.7	1.6	1.6	0.5	0.2	(+)0.5	1.2

Sources: National Income and Expenditure 1972 and 1964–74

Scotland was in deficit throughout the period 1961–71 by amounts ranging from 7.1 per cent. to 10.8 per cent. of GDP while, over the shorter period 1965–1972, the corresponding figures for Wales show a deficit varying between 9.4 per cent. and 14.4 per cent. of GDP. During the period covered by the Scottish and Welsh data the largest deficit as a percentage of GDP recorded for the United Kingdom 716W resulting from North Sea oil at the end of December 1975 is 50–55,000. This compares with a figure of 35–40,000 at the end of 1974.

Balance of Trade: United Kingdom, Scotland and Wales

In their book "Expenditure in Scotland 1961–1971" Messrs. Begg, Lythe and Sorley of the University of Dundee have derived estimates of Scotland's balance of trade position by subtracting their own estimates of gross domestic expenditure from the gross domestic product figures—both at factor cost—published by the Scottish Office. According to this method and using the latest available published information, the balance of trade for Scotland and Wales respectively was as follows:

was 2.7 per cent. in 1964, less than one-third of the average figures for Scotland and Wales. Since 1972, the United Kingdom balance of trade deficit has risen as a percentage of GDP to 3.7 per cent. in 1973 and to 7.1 per cent. in 1974; there is no reason to believe that Scotland and Wales have not followed this deteriorating pattern.

Balance of trade estimates differ from balance of payments current account figures because they exclude both net pro- 717W perty income and net current transfers from abroad. As both Tomkins ("National Accounts for Wales ") and Messrs. Begg, Lythe and Sorley in their study of Scotland point out, balance of trade figures derived by subtracting estimates of gross domestic expenditure from gross domestic product must be treated with caution. There are several conceptual problems surrounding the estimation of the components that make up gross domestic expenditure which can only be resolved by sometimes arbitrary and often debatable assumptions; the figures for gross domestic product are also subject to a margin of error. Nevertheless, the pattern is sufficiently consistent to suggest that the balance of trade figures are significant.

The series of gross domestic expenditure estimates for Scotland for 1961–71 was prepared by Messrs. Begg, Lythe and Sorley as the major part of a project assisted by a Social Science Research Council grant. Although a further grant has been awarded by the Council it is intended to cover the cost of work on estimating gross domestic product measured from output data rather than for further updating of the estimates of gross domestic expenditure. However, as part of a commitment to the statistical office of the European Community, the Central Statistical Office is now preparing estimates of the major items of gross domestic expenditure for all regions of the United Kingdom. The data for Wales are published annually following original work carried out at University College, Bangor.

IDENTIFIABLE PUBLIC EXPENDITURE^*
(a) Total Identifiable Expenditure per head.
			1969–70	1970–71	1971–72	1972–73	1973–74	1974–75†
			£	£	£	£	£	£
England	…	…	246	276	308	349	431	582
Scotland	…	…	335	364	403	460	517	691
Wales	…	…	295	316	359	401	452	601
Great Britain	…	257	287	320	362	440	593
England = 100
England	…	…	100	100	100	100	100	100
Scotland	…	…	136	132	131	132	120	119
Wales	…	…	120	114	117	115	105	103
Great Britain	…	104	104	104	104	102	102

£ million
				Regional Development Grant	Selective Financial Assistance	Local Employment Acts	Regional Employment Premium	Other Schemes^*	Total	Percentage of total
England	…	…	119.0	23.8	15.4	76.2	11.2	245.6	52.0
Scotland	…	…	61.6	5.1	13.6	57.2	8.8	146.3	31.0
Wales	…	…	…	32.2	7.5	10.6	22.0	9.2	81.5	17.0
Great Britain	…	…	212.8	36.4	39.6	155.4	29.2	473.4	100.0
^* Regionally preferential element only included where scheme also applied nationally.

(b) Excluding Nationalised Industries.
England = 100
				1973–74	1973–75					1973–74	1974–75
				£	£					£	£
England	…	…	402	545	England	…	…	100	100
Scotland	…	…	481	636	Scotland	…	…	120	117
Wales	…	…	…	431	578	Wales	…	…	…	107	106
Great Britain	…	…	411	555	Great Britain	…	…	102	102
^* Identifiable public expenditure in each country is expenditure which can be identified from official records as having been incurred in that country excluding expenditures undertaken for the benefit of the United Kingdom as a whole, such as defence, overseas services and debt interest, for which it is not possible to apportion precisely the actual share of that benefit enjoyed by any particular part of the United Kingdom. Because the British Steel Corporation does not provide figures of capital expenditure by region "identifiable expenditure" as defined above excludes investment by the nationalised steel industry. This somewhat distorts the comparison in Table (a) because of the great relative importance of steel in the Welsh economy. Figures excluding capital expenditure by the nationalised industries are accordingly provided in Table (b) as an alternative basis of comparison. It is regretted that such figures are available only for 1973–74 and 1974–75.
Provisional.