Unemployed Persons (Hansard, 16 June 1981)

§ Mr. Alexander Fletcher

[Pursuant to his reply, 8 June 1981, c. 5]: I can now confirm that my right hon. Friend has written to the chief executive of Strathclyde regional council in the following terms:

Robert Calderwood Esq LLB
Chief Executive
Strathclyde Regional Council
Strathclyde House
20 India Street
Charing Cross
GLASGOW
G2 4PF	16 June 1981

The Secretary of State has asked me to thank you for your letter of 28 May in which you expressed your Council's concern at the levels of unemployment and redundancies in Strathclyde and drew attention to the Council's loss of income resulting from factory closures. The Secretary of State is of course well aware of the problems facing Strathclyde and he shares your Council's concern about the high levels of unemployment and redundancies which reflect not only the effects of the present world-wide recession but the longer-term structural changes which the economy of the Region is undergoing. The Government's broad strategy is aimed at achieving the conditions for economic recovery and the creation of secure, viable jobs, by the control of inflation and a firm approach to monetary and fiscal policies. Inflation hits at the weakest sections of the community and also leads to lost jobs through reducing industrial competitiveness and discouraging investment and consumption. The Government have made progress in this regard and the year on year rate of increase in retail prices has been en a downward trend since May 1980, while the forecasts published with the Budget are for further falls in the coming months. There has also been welcome evidence of more moderate wage settlements in the current wages round. The Government recognise that industries in Strathclyde and throughout the country have had to face a particularly difficult period. It was for this reason that, in securing the necessary increase in revenue, the Budget looked mainly to the personal rather than the industrial sector. Indeed, the Budget gave considerable help to industry including a 2 percentage point reduction in the minimum lending rate and major concessions on stock relief: it also included a wide range of further incentives to the setting up of new businesses. 317W There is now evidence that the economy in the United Kingdom is close to the bottom of the recession and the indicators suggest that this applies in Scotland also. To change the broad direction of policy at this stage would in the Government's view jeopardise the progress already made on inflation, wasting the sacrifices of the recent past and delaying the prospect of an upturn in activity. However, there will inevitably be a time lag before increased economic activity results in increased demand for labour. The Government are of course concerned about the social and economic costs of unemployment, particularly amongst the young, and this is why, as you will be aware, they are mounting a major expansion of the programmes of special measures aimed at safeguarding the skills of the workforce and alleviating the worst effects of unemployment, particularly amongst young people and those who have been out of work for some time. Turning to Strathclyde in particular, the Region, as you know, benefits substantially under the Government's regional industrial policy. Following the review of regional policy in 1977, the Special Development Area of West Central Scotland was enlarged and as a result almost all of Strathclyde Region now benefits from the full range of industrial investment incentives, including Regional Development Grant at the higher rate of 22%. The reduction in the extent of assisted areas and the abolition of Regional Development Grants in Intermediate Areas constitutes a considerable advantage for areas such as Strathclyde in efforts to attract new industrial investment. Selective financial assistance under the Industry Act 1972 continues to be available where needed to potential investors in the assisted areas of Scotland undertaking manufacturing and mobile service projects which will have the effect of creating or safeguarding long term employment. Since May 1979 the Government have made substantial sums available for investment projects in Strathclyde Region, involving the creation of some 15,000 new jobs. Total investment associated with these projects amounted to more than £500 million and the many companies helped to expand and create new employment in Strathclyde have included IBM, Motorola, British Aerospace, Sunbeam Electric, Digital and National Semi-Conductor—many of them in the high technology sectors of industry which are so essential to future growth. In addition, the Scottish Development Agency has been very actively involved on the industrial front in helping companies to set up or expand in Strathclyde and in improving the environment of the area. In your letter, you drew particular attention to the rate income which the Regional Council has lost as a result of factory closures. Compensation for loss of rating resources is already provided for within the resources element of rate support grant. All other things being equal, if local rating resources in an authority's area are reduced and the authority qualifies for resources element (as Strathclyde Regional Council does), the additional resources element payable will largely compensate for the reduction in rate income. Finally, you raised the loss of metered income from industrial water usage. The Secretary of State is aware that reduction in water consumption can lead to a reduction in metered income for which it will not be easy to find a proportionate reduction in expenses. Your Council will, however, no doubt be looking carefully at any economies in operating costs that can be made by rationalising supplies, possibly leading to the closure of some smaller water sources and treatment works. You will also wish to keep under close review the need for new capital works for water supply augmentation and improvement, balancing the water that is already available in excess of demand either in Strathclyde or from the Central Scotland Water Development Board against the prospect of increased demand arising from a general economic upturn and the development potential of major industrial sites.

GODFREY ROBSON Private Secretary