§ Order for Second Reading read.
§ 4.0 p.m.
§ The Minister of State, Ministry of Technology (Mr. Eric Varley)
I beg to move, That the Bill be now read a Second time.
This Bill is designed to carry one stage further the policies of regional development to which the Government attach so much importance. I believe that there is no better subject with which to open the legislative programme of the present Session.
The Bill was foreshadowed in the announcement made on 25th June by my right hon. Friend the former Secretary of State for Economic Affairs when outlining the Government's final proposals following its consideration of the report by Sir Joseph Hunt's Committee on Intermediate Areas.
The Bill has since been prepared by my right hon. Friend the Secretary of State for Local Government and Regional Planning when President of the Board of Trade. It falls to me, following the Government reorganisation and the assumption by my right hon. Friend the Minister of Technology of responsibility for the regional distribution of industry, to present the Bill.
Regional policy, to be successful, must reflect the changing economic and industrial structure both of the regions and of the country as a whole. It must also respond to its own successes. The success of regional policies in recent years is one main reason for the present Bill. It is partly because present policies are doing so much to revitalise the industrial structure of the development areas that there has been growing pressure to provide assistance to certain areas which, although their problems may not be as severe as those of the development areas, nevertheless face real economic difficulties.
The Industrial Development Act 1966, which introduced investment grants in place of the former investment allowances, provided for the creation of broad development areas in place of the former 1025 relatively narrow development districts. Development districts were designated solely on the basis of unemployment levels. In designating development areas, we can take account of other factors as well, such as migration, depopulation, levels and rate of growth of incomes, and activity rates.
A further step in the development of regional policy was the introduction of the regional employment premium in September, 1967. This provided a weekly payment to firms in manufacturing industry only in the development areas of 30s. a week for each male employee, with lower rates for women, boys and girls. Thus R.E.P. is labour-related, and counterbalances those other measures of assistance to development areas which are linked to capital investment, such as the 40 per cent. development area rate of investment grant and the assistance given to the provision of buildings under the Local Employment Acts.
In November, 1967, an additional decision was taken to introduce special development areas. These are areas which, in the absence of special measures, were expected to face high and persistent unemployment as a result of colliery closures. And these areas qualified for certain additional measures of assistance over and above development area benefits. Therefore, the introduction of the Bill and of intermediate areas is the latest step forward in developing a more flexible policy, tailored to the differing needs of individual areas.
Although the development area package remains, and must remain, the main instrument for promoting a better distribution of industry throughout the country, the creation of special development areas and intermediate areas reflects the view that, for certain areas whose troubles are different in degree from those of the main body of development areas, a greater or lesser degree of flexibility now exists and is appropriate. Of course, we need to beware of creating too complex a structure. If industry is to respond to the various benefits available they need to be comprehensible. The structure of intermediate areas, development areas and special development areas, with the differing scales of assistance, will be readily understood by industry.
1026 I have no doubt that the impact of the present measures and the new ones proposed in the Bill will prove to be flexible and effective. If we examine the figures, the margin of preferential assistance to the development areas rose from over £40 million in 1964–65 to nearly £155 million in 1967–68 and to over £265 million in 1968–69.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
Will the hon. Gentleman confirm that those figures include the free depreciation allowance, and also the investment allowance, as opposed to the investment grant, which, of course, was a charge on taxation?
§ Mr. Varley
On the first point, the answer is yes, but I should appreciate it if the hon. Gentleman could wait for a more detailed reply until the winding-up speech. Free depreciation is included, although these figures are substantially larger than the figures going to development districts, as they were then, when free depreciation was in operation.
Of course, here are many indicators which show the contribution which these measures are making to the growing prosperity of the development areas. Taking factory building, for example, between 1967 and 1968, the amount of factory space approved through the I.D.C. control for the development areas rose from nearly 29 million sq. ft. to nearly 38 million sq. ft., and we shall do our best to maintain this high level in 1969. The rate of approvals this year has been very substantial, and considerably higher than in 1967.
Jobs expected by the applicants to arise from all projects covered by I.D.C. approvals since the beginning of 1967 exceed 175,000, including about 115,000 jobs for men. Some of these jobs will have arisen already. Unemployment is still too high in the development areas, and I want to make this absolutely plain. But an improvement in relation to the rest of the country has been achieved. In 1966, unemployment in the development areas was more or less double the national rate: over the past year or two there has been some narrowing of the gap, and in September, 1969, the development area rate for wholly unemployed was 4.1 per cent. as compared with 2.3 per cent. for the country as a whole. Although this improvement may not seem 1027 large, it must be set against major job losses which have occurred during the period in question in certain traditional industries such as coal mining and shipbuilding which are heavily concentrated in the development areas.
Unemployment is not, however, the only criterion by which to judge distribution of industry policies. They have other important objectives. There is the need to diversify the industrial structure of areas over-dependent on a narrow range of industry. There is the need to reduce heavy net outward migration from certain parts of the country, to improve the productivity and competitiveness of development area firms, to restrain the growth of congestion in the more prosperous parts of the country and to achieve a more balanced use of resources throughout the nation.
§ Mr. Derek Page (King's Lynn)
Does my hon. Friend accept that another criterion should be the low earnings for the same job in some parts of the country compared with other parts?
§ Mr. Varley
I take my hon. Friend's point. There are acute problems concerning low earnings in North Norfolk. That goes for many other old agricultural areas.
§ Mr. George Jeger (Goole)
My hon. Friend has given the local unemployment percentages in the special development areas, but would not he agree that percentages are misleading because they relate only to the people registered at the local employment exchanges? With a shift of population, the percentages can vary. Do not the figures tell a totally different story? On 24th June we were told—and this appears in column 254 of HANSARD for that date—that in April, 1966, there were 6,847 unemployed males and in April, 1969, there were 15,576 unemployed males in the special development areas.
§ Mr. Varley
All the factors must be taken into account. I understand my hon. Friend's point. I should like to give one particular example concerning the development, restructuring and revitalising of the older industrial areas. In 1959, nearly 25 per cent. of all the 1028 male employees in Durham were engaged in the coalmining industry. Today, the figure is only about 13½ per cent. The development areas are now stronger than ever before and are more able to withstand changes in the national economic climate. When one considers the changes which have taken place in Durham, one can readily appreciate this.
I turn to the need to assist the intermediate areas.
§ Mr. Varley
I turn to the need to assist the intermediate areas. Any system of discrimination between one part of the country and another in respect of assistance for industrial development leads to criticism from those areas which just fail to qualify—and the greater the differential between the development areas and the rest of the country, the greater the criticism tends to be. The criticism is sharpest in those parts of the country bordering the development areas, who claim that they have difficulty in attracting new industry and retaining their existing industry against, in some cases, the drawing power of the development areas.
In addition, changes in industrial structure, notably the closure or the impending closure of a number of collieries in South Yorkshire and the Notts/Derby coalfield and the continuing run-down of the cotton textile industry in North-East Lancashire, have led to a loss of job opportunities concentrated in certain areas outside the development areas which could not readily have been foreseen in 1966.
At the same time, the Government have had to ensure that, at a time when the supply of mobile industry is limited, help to the intermediate areas is not provided at the cost of a serious setback to the development areas. I appreciate that, 1029 understandably, there is concern in the development areas about the loss of the selective employment additional premium and about the competition from intermediate areas. But, as the Government have already made clear, we are convinced that it is necessary to retain for the development areas and special development areas a large margin of preference in assistance to industry, and that as a result of the Bill the right degree of balance between the various parts of the country, in particular, need of new industrial investment will be achieved.
The Hunt Committee made four main recommendations which I shall summarise briefly. First, it said that the whole of the Yorkshire and Humberside and the North-West Regions should qualify for a 25 per cent. building grant not linked to the creation of new jobs. Secondly, that in these two regions and in the Notts/Derby and North Staffordshire planning sub-divisions there should be an 85 per cent. grant for derelict land clearance, as in the development areas. Thirdly, that the cost of these proposals should be met by descheduling Merseyside as a development area and treating it on the same basis as the rest of the North-West. Probably the most controversial proposal which the committee made was that there should be a relaxation of the I.D.C. control.
The Government appreciate the very careful analysis which went into the Hunt Committee's Report. When we have dissented from Hunt's recommendations, we have done so only after very careful study and thought. The main aspects on which the Government's proposals differ from Hunt are as follows.
First, we do not propose to give direct financial assistance to industry throughout the North-West and Yorkshire and Humberside regions, which include a number of relatively prosperous places. I think of places like Leeds and Manchester. I know that they have their problems, but compared with some of the coal-mining areas of Yorkshire and some of the textile areas in Lancashire they are relatively prosperous. We thought that it would be better to concentrate assistance on special areas, both within the two regions and outside them, and in those which are most in need of help.
§ Mr. Charles Mapp (Oldham, East)
My hon. Friend referred to the Manchester area. Is he aware that from 1961 to 1966 the Salford area had a greater migration rate, namely, 9 per cent., than anywhere else in the North?
§ Mr. Varley
My hon. Friend is emphasising the difficulty and complexities of this problem. What I am getting at is this. If blanket assistance were to be made available throughout the two regions, as proposed by the Hunt Committee, it would be spread very thinly indeed if it were not to draw substantial amounts of industry away from the congested areas. If it were spread thickly there would be the possibility of its drawing industry away from the development areas, which still must have top priority.
The intermediate areas have been determined on the basis of strict criteria of need, notably the level and character of unemployment and numbers of unemployed, the incidence of high net outward migration and the real scope for economic growth.
Secondly, our assistance for factory building in the intermediate areas will be linked to the provision of jobs. We cannot overlook the fact that a lack of job opportunities in modern industries—whether reflected in high unemployment or heavy net outward migration—is at the core of many of the most pressing economic problems of Lancashire and Yorkshire. Nor could we easily abandon the employment link in the intermediate areas while retaining it in the development areas.
Thirdly, the Government do not accept the Hunt Committee's proposals that new factory buildings or extensions below 10,000 sq. ft. throughout the country should be exempted from the industrial development certificate control. We believe—and Professor A. J. Brown, who served on the Hunt Committee also took this view—that there are many schemes below this level which could well be undertaken in development areas and in intermediate areas.
Again, the Government could not accept the proposal that Merseyside should be descheduled. It is our aim, and it must be our aim, to encourage sufficient industrial growth on Merseyside that in due course, as elsewhere, development area benefits are no longer needed; 1031 but there is still a shortage of jobs on Merseyside and we feel that it is not yet ripe for descheduling.
The Government agree with the emphasis laid by the Hunt Committee on the clearance of derelict land, and we intend to provide for new derelict land clearance grants, not just in the intermediate areas but also in those other areas recommended by Hunt for this form of assistance.
It is, then, against this background that we have prepared the Local Employment Bill which we are debating today. I think that it is a Measure which hon. Members will find to be a logical extension of earlier legislation in this field. I can briefly and quickly go through the Bill.
Clause 1 gives the Minister of Technology the power to specify intermediate areas by order, the same procedure which is adopted in relation to development areas. The criterion for specification as an intermediate area is that while the economic problems of a locality may not be as acute as those of a development area, nevertheless, in the opinion of the Minister of Technology, special measures are necessary to encourage the growth and proper distribution of industry.
If Parliament gives its approval to the Bill the Government will, as announced by my right hon. Friend on 25th June, specify 54 employment exchange areas in seven intermediate areas: broadly. North-East Lancashire, the Yorkshire coalfield, north Humberside, the Notts-Derby coalfield, South-East Wales, Plymouth, and Leith. It may help if I tell the House that copies of maps of these areas showing both the development areas and the proposed intermediate areas have been placed in the Library of the House for the information of hon. Members.
The selection of areas was based on an assessment of both present and future economic prospects of the areas in question, and we have discussed them with the regional economic planning councils. Although the Government will keep the circumstances of all areas under the most careful review, it is our intention to avoid at this stage the uncertainty which frequent modification of the coverage of intermediate areas would bring.
1032 In addition, Clause 1 allows the Minister of Technology and his colleagues to exercise in intermediate areas certain functions which at present he is able to exercise in relation to development areas. Briefly, these functions are the payment of building grants, the provision of Government-built factories, both custom-built and advance factories, and, on the same basis as the development areas, payments for the resettlement of key workers and their families, financial assistance for the improvement of basic services, and the payment of grants to local authorities towards the cost of clearing derelict land.
Hon. Members will notice that, because of the importance which the Government attach to maintaining a significant margin of preference for the development areas, it is not proposed to seek powers such as exist under Section 4 of the Local Employment Act, 1960, to make loans and grants for the general purposes of an undertaking, nor will the intermediate areas enjoy the higher rate of investment grant provided in development areas, or the regional employment premium.
Clauses 2 and 4 of the Bill would give the Minister of Technology the power to designate by order derelict land clearance areas in which the powers available in Section 20 of the Industrial Development Act would be exercisable. As the House will recall, these powers allow the Minister of Housing and the Secretarys of State for Scotland and Wales to make grants to local authorities towards the cost of acquiring and improving derelict land where this would be appropriate, with a view to contributing to the development of industry within a locality. They also allow the Minister of Technology to acquire derelict land and carry out works on it for the same purpose.
This is, of course, a sector in which the Minister of Technology and I will be working in particularly close co-operation with the Secretary of State for Local Government and Regional Planning, the Minister of Housing and Local Government, and the Secretarys of State for Scotland and Wales, and we shall interpret "contributing to the development of industry" in the same broad sense in relation to the intermediate areas as has been done in the development areas.
1033 The areas which it is intended to designate as derelict land clearance areas are those which were identified by the Hunt Committee as needing special assistance in speeding the clearance of dereliction. As announced by my right hon. Friend on 24th April, again these are the areas I have already mentioned, the North-West and the Yorkshire and Humberside Regions, and the north Staffs and Notts-Derby planning sub-divisions.
It is also our intention to apply the same level of assistance for derelict land clearance schemes in both the clearance areas and in the intermediate areas. Again, although we intend to give a capital grant at the very substantial level of 75 per cent. we have thought it right to maintain a margin of preference for the development areas.
The House will remember that in his statement of 25th June my right hon. Friend, when Secretary of State for Economic Affairs, explained that the cost of the various measures of assistance to the intermediate areas would be met out of the very substantial and growing sums being spent on assistance to industry in the development areas and that the savings required would be obtained by the withdrawal of the selective employment additional payment of 7s. 6d. a week presently payable in the development areas. The Hunt Committee suggested that this sort of aid to intermediate areas might be paid for by descheduling Merseyside.
Clause 7 provides for the withdrawal of this part of the selective employment premium as from 6th April, 1970, but here I must emphasise, as my right hon. Friend did in his statement last June, when saying that there would be this withdrawal of additional payment, that it would in no way affect the payment in the development areas of the regional employment premium of 30s. a week. This remains part of the very substantial margin of preference which the development areas enjoy over all other parts of the country and I think that it is right.
The Bill is not a long one, but I think that it can be seen as a significant Measure to promote a better economic balance throughout the country. Development area priority, if it is to be maintained, must also recognise that other areas have their problems, too, and this is what we 1034 are trying to do. The important recent changes in Government structure male for the operation of a sound distribution of industry policy. The Ministry of Technology's close links with all sectors of industry throughout Britain will introduce a new dimension into the operation of this policy and will help us to continue to give encouragement to the growth of industry away from congested areas to those with unused resources.
My right hon. Friend the Minister of Technology is absolutely determined, along with his Department, along with other members of the Government who have regional responsibilities to direct our energies towards achieving the twin objectives of overall national industrial proficiency and the opportunity for all the people in all regions to participate fully in this.
§ Mr. Speaker
When the general debate begins after the Front Bench interventions, there will be many hon. Members with good local reasons for wanting to take part in the debate, and I hope that those who are called will be brief.
§ Mr. W. A. Wilkins (Bristol, South)
I rarely, if ever, submit my name. because I do not believe in it. Does that mean, Mr. Speaker, that unless hon. Members have advised you that they wish to speak because of a local interest—
§ Mr. Speaker
There is no necessity whatever for an hon. Member to advise Mr. Speaker in writing that he wishes to speak. Mr. Speaker can see when hon. Members try to catch his eye. It does help, though.
§ 4.30 p.m.
§ Sir Keith Joseph (Leeds, North-East)
May I start with three short personal points. First, we on this side of the House would like to congratulate the Minister of State. This is, I believe, after some service in the Government, his first performance from the Dispatch Box. We found it lucid and courteous, although I shall have some omissions and problems to point out to him. We are glad to welcome him to this area of government.
May I, at the same time, welcome the co-operation with me of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who has played such an active part in so many debates, and 1035 whom I am now lucky enough to have as an immediate colleague.
The last of my personal points is that I shall from time to time during my speech refer to the importance of road building. It so happens that the firm with which I am associated merged with a road building firm about a year ago, but I have argued for road building acceleration since long before that.
The problem with which the Bill deals is a difficult one for any Government, particularly in the light of the accelerated rate of change in some of our basic industries, the even more rapid decline of coal and of employment in steel, textiles and shipbuilding, and in agriculture over the last few years. The Minister of State was absolutely right to admit that, against this background, the problems of the Government have been made worse by the lack of supply of mobile industry during the last few years.
It is difficult for any Government to find the right balance in dealing with these changes in industrial movement between enabling areas to survive, particularly those areas which have been associated predominantly with one particular industry and, on the other hand, freezing the pattern of employment, which makes no sense for the future of the country.
We think that the creation of special development areas for the run-down of the coal industry was a sensible step. We wish the Government well in handling this problem, and we share with them the desire to increase the prosperity of the development areas. Our interest throughout is to see these objectives achieved with minimum damage to the prospering parts of the country. It is the small supply of mobile industry resulting from the Government's general economic policies that has exacerbated the problem of the grey areas with which the Bill is intended to deal.
The figures, which I have not chosen particularly selectively, are startling. During the last six years of the Tory Administrations the industrial production of the country grew by an average of 4.2 per cent. a year. During the last four years until the end of 1968 the industrial production in the country grew by just over half that amount, by 2.5 per cent. a year. That is a measure of 1036 the reduction in the growth in industry, that growth on which grey, development, special development and all other areas depend to cope with the rising population.
Not only has mobile industry dwindled over the last few years, but, because of the general policies of the Government, employment has fallen sharply and, since the Prime Minister's assurance in July, 1966, that he saw no reason to expect any rise in unemployment, employment all over the country has sunk. In the development areas it has dwindled, despite in Scotland a sharp net outward migration, and it has dwindled in the grey areas. One can translate this into another form by saying that all over the country, and particularly in the development and grey areas, the activity rates have fallen, unemployment has risen and employment has dwindled. It is true that for a while it looked as though the ratio between unemployment in the development areas and in the nation as a whole was sharply improving, but even that improvement has now been cut back. We accept that the Government have a difficult task to deal with the accelerated run-down in the basic industries, and we have that in mind in all the comments which we make.
The grey areas do not need to be defined at length by us. It is common ground what makes an area grey, and the Hunt Committee encapsulates a vivid description of the different combinations of factors relating to each individual grey area. What stands out from the Hunt Committee's Report is not just the present position in the grey areas, but that Sir Joseph Hunt and his colleagues have warned the country and the Government that the problem in the grey areas is likely to get definitely worse over the next few years, because there is a latent trend to falling activity in the grey areas which will, unless something is done by the Government, make them far nearer the development areas in their employment position than they are now.
What led the Government two years ago to set up the Hunt Committee? Was it, as the Minister of State told the House, that the development area policies were being so successful that other areas wanted a share? It may be that the presentation of Government policy did stimulate demands for similar treatment 1037 from elsewhere. The right hon. Member for Battersea, North (Mr. Jay), who was President of the Board of Trade at the time, although the committee was set up by the First Secretary of State, said in an article in the Financial Times in June of last year that it was the increase of outright subsidies to the development areas that provoked the grey areas to demand similar subsidies. We think that it was the deterioration in the grey areas and the rising crescendo of complaints from the grey areas that led the Government at last to act by setting up a committee.
Had the Government not, by the Industrial Development Act 1966, removed the powers that we gave Government in the 1960 Local Employment Act to take just such steps, or most of them, as the Hunt Committee recommends outside the development areas, they would have been able to act, either in 1967, had they so wished, or as soon as the Hunt Committee had reported, without taking this legislation through the House. The Government disarmed themselves by the 1966 Industrial Development Act from doing anything outside the development areas, and they now have to add to the delay of two years in dealing with the grey areas a further delay while they legislate. That shows that they were wrong to reduce the flexibility of the instrument of government which they inherited from us.
We admire the hard work of the distinguished committee under Sir Joseph Hunt; we think that it provides a valuable analysis. We accept the underlying thesis that there should be no freezing of the economic pattern, but that areas of vitality and of potential vitality should be opened up for growth, mainly by improved communications, better environment, better infrastructure and more training. We echo the Hunt Committee's emphasis on the importance of the Government reviewing the effectiveness and coherence of all their policies in this area, but there are certain points in the Hunt proposals which we do not accept.
There is no doubt that the Hunt Committee disappointed some areas in the country. The hon. Member for King's Lynn (Mr. Derek Page) has already intervened, and I know that many of my hon. Friends who represent other parts of the country were disappointed by the 1038 Hunt Committee's recommendations; but that was nothing like the disappointment that greeted the Government's almost instantaneous rejection of the main part of the Hunt Report and most of its recommendations. There was a general feeling on both sides of the House and in the Press that, with some exceptions, the Government had given very cavalier treatment to the Hunt Committee.
We want to know—and I hope that the Minister will tell us in winding up the debate—whether the Government disagree with the bulk of the Hunt thesis—I am not asking for agreement on every part of it—or whether they have not the scope, because of lack of cash, to do other than reject most of the Hunt recommendations. The Government seem to have shown no interest in the analysis by the Hunt Committee. I feel that the Hunt Committee was treated rather like the committee chaired by the late much-regretted Sir Milner Holland, who died last week, who chaired the powerful Committee on Housing in Greater London which produced a remarkable report only to find that the present Government ignored its main recommendations.
As far as it goes, in general we welcome the Bill. It switches some money from what we regard as a wasteful use, the selective employment premium, to the grey areas. We do not mourn the passing of the selective employment premium. We understand very well that those who received it, enjoyed receiving it, and that it is always painful to lose that which one has been given. But our message to the Government—and I am sure that it is also the message of the grey areas—is that they will not be enabled to improve their prospects by the short-term tinkering embodied in the Bill.
The first key to a successful treatment of this complex inter-related set of problems is the growth of jobs. I am sure that the Government will agree academically with that. We maintain that their economic policies over the years have gravely reduced the supply of jobs and that the trouble in the grey areas has been much increased by that general failure. Let me try to explain why we think that the Government could not have accepted more of the Hunt Committee's views, even if they had wanted to accept them. We believe that they have 1039 tied up so much money in their development policy that they can spare no more, and they are obstinate in defending each part of their development policy even where there is a manifest waste of money.
We do not think that the regional employment premium was a good idea. We acknowledge that the Government have committed themselves to seven years of the premium, but we think it a great shame that they have so shackled their hands. There was much talk, when the premium was introduced, of its magic quality. Here, it was said, was money which could be spent, but which need not be raised ih taxation because, the argument was, it would be used almost entirely in areas where there was relatively high unemployment and there would be no increase of pressure on the resources of the country. We hear less of that argument now. The Minister of State did not mention it.
If that argument were true of the regional employment premium, presumably it was also true of the selective employment premium. Yet here we have the Government changing the fairy gold of selective employment premium, which, they argued, made no demand on resources when it was in the development areas, into real gold in the grey areas, where it is certainly intended to make a demand on resources. May we take it—and we shall so take it unless the Minister wishes to argue otherwise—that the theory that S.E.P. and R.E.P. could be spent with no consequent burden on the taxpayer has been buried?
In any case, we welcome the disappearance of S.E.P. but we maintain that the finest instrument which the Government have to help grey areas and development areas alike is the Local Employment Act. We accept that this is a discretionary weapon and we do not normally like discretionary weapons. On the other hand, we hate waste, and with indiscriminate subsidies one is apt to have waste. We would rather have some discretion and less waste.
We share with the Government their disagreement with the Hunt Committee's recommendations that there should be building grants not linked with jobs. We tend to agree although we are open to argument, and many of my hon. Friends may argue otherwise—with the minority report of Sir Sadler Forster and Mr. 1040 Hutton-Wilson. But our main thesis about the Government and their redeployment of resources is this: had they been free to re-examine R.E.P. and were they to look seriously at the waste inherent in the automatic investment grant to capital intensive industry in the development areas, they would have more resources either in the taxpayer's pocket or to improve the infrastructure, communications and training in the development areas and the grey areas alike.
This is no longer a thesis heard only from the Conservative benches. The hon. Member for Middlesbrough, West (Dr. Bray) made a very powerful speech in the same sense on Monday. It is true that his conclusion was different. He wants more nationalised industry. But his diagnosis is the same as ours, and the diagnosis is that very articulately put by Professor A. J. Brown, who is certainly not a passionate supporter of these benches, in the minority report. It was put by the same author in an issue last year of the National Institute of Economic and Social Research in which they discussed regional policy.
Is it too late for the Government to look again at the waste in the capital-intensive automatic grants in the development areas? These are grants which go with the minimum of benefit in jobs. Many of the grants, to the tune of scores of millions of pounds, go to projects which would have gone to the development areas in any case, for logistic reasons. Is it too much to ask the Government, in the interests of development areas and grey areas alike, to look at this sector of their policy? I hope that the Minister will make some comments on that possibility.
I thought that the Minister of State repeated his colleagues' distortion of the comparison of the performance of the two Governments in the development areas. He under-stated the help which we gave to the development areas, and he did so by omitting the investment allowances. If I were to dismiss from the Government's credit an allowance which they had made simply because it did not appear in the tax tables, the hon. Member who chairs the Finance Committee of the Labour Party would be on me like a ton of bricks. Yet Ministers fail to take account of an investment allowance which in 1964 added tens of millions 1041 of pounds to the help which went to the development areas.
In addition, the Minister of State overstated the help which the Government are providing for development areas because he took full credit for the full investment grant when one-third of the grant merely offsets the loss of depreciation allowance to a business when it takes an investment grant. I fear that we have got used to this kind of general distortion.
Mr. Leslie Hockfield (Nuneaton)
What are the figures?
§ Sir K. Joseph
They are still in favour of the present Government—about £60 million against £200 million, instead of about £30 million against £300 million. It is a difference, although I agree that it does not remove the general argument. But if the general thesis is good enough, why should the Government exaggerate it?
The Bill multiplies the problems. The introduction of a new type of area increases the borders at which industry complains of distortion. The Hunt Committee is strong in analysing the effects of distortion. No doubt there are some. There is a movement of industry across borders for no other reason than to qualify for subsidy. This cannot make good economic sense. The number of areas which fall between the stools has been increased. There are now special development areas, development areas, intermediate areas and all those unnamed areas which are inter-intermediate areas. At each border there is another complex set of pulls and pushes.
There are a number of omissions which are not dealt with by the Bill. Hon. Members on both sides of the House will want to ask the Government why nothing is proposed for the rest of the North-West. Why has the wool textile area been totally omitted? Why cannot the spine road in the South-West be accelerated? Why has East Anglia received no attention from the Government?
I want to put several questions to the Government. First, is there or is there not to be a review by the Government, with the results published? The Minister without Portfolio first dismissed a review but later, under questioning on 25th June, accepted that there should be a serious 1042 appraisal as soon as possible of the Government's policy. Does this mean that there will be a serious appraisal soon, and, if so, will it be published?
Secondly, why do the Government refuse to give an explanation of the criteria on which their I.D.C. policy is conducted? We do not agree with the Hunt recommendation that I.D.C.s should be automatic up to 10,000 ft. because we think that there is a lot of valuable industry, expanding or built below that level, which should at least be told about opportunities in development areas. But it is the essence of our case that industrialists should know as far as possible where they stand and what their prospects are so that they should not be deterred from making application when there might be a good case for the granting of I.D.C.s.
We believe that there are many expansions and building operations, small and large, which can take place elsewhere, on the one hand, or which could sensibly take place on existing sites, on the other. We believe that the next sensible step for the Government is to set out the criteria lying behind I.D.C. policy and we ask them to tell us whether they have any intention of doing so. Again, the Minister without Portfolio, under questioning, said that he and one of his right hon. Friends were discussing this with the C.B.I. Have they reached any conclusion?
Do the I.D.C. changes mean anything? The Minister without Portfolio announced that the grey areas will be treated in future for I.D.C.s as development areas are treated. The Minister of State today used the odd phrase that the Government were satisfied that the change in policy would avoid severe damage to the development areas. Is he implying by that that there will be damage to development areas, but no severe damage? What will the change in I.D.C. policy mean both for grey areas and development areas?
We welcome the Government's proposal on dereliction. We hope that real progress will be made. But we want to be told whether, at the same time as the clearing up of the derelict legacies of the past is taking place, coal mines will be allowed to continue creating derelict land. That would be absurd. I 1043 hope I am wrong, but it is a suspicion that I have.
We welcome the Government's willingness to put extra resources into training and want to know whether, in the North-West, in particular, dilutees are now being accepted more into the work force when they have been trained.
Why have the Government not taken up the Hunt recommendation that they should try to encourage innovators in grey areas? The Hunt Committee remarked that, compared with the Midlands and the South-East, and, by implication, some of the development areas, some of the grey areas tend to lack entrepreneurs running small research-oriented businesses. The Hunt Committee recommended that some small business centres be set up and it picked out for special praise, which I echo, the Small Business Centre at Aston. Here is an activity which the universities should well be able to carry out on a fee basis with no expense to the taxpayer. Have the Government discarded this altogether or are they still willing to consider it?
How will the House be told about the degree and timing and location of the acceleration of housing and communications and other infrastructure improvements? We gather from a Parliamentary Answer that some of the money saved by cancelling the selective employment premium will be available for infrastructure acceleration. How will the House be told? Where will the acceleration be and when will it occur?
My last question arises out of a suspicion. I cannot really believe that this suspicion is justified, because the Minister of State did not mention the subject. Is it right to interpret Clause 1(3) of the Bill as really removing from private enterprise any grant for industrial building? In a development area, if a business wishes to rent or commission a factory built either by itself or by a private enterprise estate developer, the grant is available. It appears from the wording of Clause 1(3) as if the special grant proposed for the grey areas will not be available if the building work is undertaken by or on behalf of the applicant. I do not fully understand what is proposed here. This is too big a matter to be left to a Committee discussion.
§ Mr. Ted Leadbitter (The Hartlepools)
I hope that the right hon. Gentleman will press this aspect, because the provision has given most of us some considerable concern. There are two interpretations—the one which the right hon. Gentleman is pursuing and the other, on the full reading of the context, that the qualification is determined by the date alone. Perhaps the Government can give an early indication of the true meaning.
§ Sir K. Joseph
I am grateful for that alliance and I hope that the Government will clarify the situation.
I hope that I have not asked too many questions. I do not think that the reply need be a philosophical review of the subject, but we need more light on the Bill. Our policy, by phasing out the regional employment premium, with account taken of the Government statements, and by cutting downwards indiscriminate grants to capital intensive projects, will shift resources to improve communications, infrastructure and training in development and grey areas. We shall seek power to use the Local Employment Act in areas needed. Finally, in our view, the Government would be freer to act more as they should act in the grey areas if only they had not adopted such a wasteful set of policies in the development areas themselves.
§ 4.58 p.m.
§ Mr. George Brown (Belper)
I hope that the right hon. Member for Leeds, North-East (Sir K. Joseph) will be pleased if I say that he and I have clashed many times in the past and that he always has the grace to look as though he is more pained than anyone else by the speeches he is making. I always think, when watching him, that he has every reason to be. In the same avuncular mood, I would say to my hon. Friend the Minister of State, as the first Derbyshire Member to speak in the debate, how delighted we are at his promotion. Not only did he do well today, but we are encouraged to know that he is there and wish him well.
Just before you came into the Chair, Mr. Deputy Speaker, Mr. Speaker asked us to be brief because many hon. Members wish to speak and he thought that many of us want to speak about local issues. I shall be very brief, I hope that I shall be practical and I assure you that I shall be wholly parochial.
1045 I like the Bill because I think that it carries on the philosophy, which the Opposition opposed when we changed their approach in the 1966 Act, whereby we moved from very small to broad areas in which we could develop a new kind of society. We decided that there should not just be growth points for factories, but broad areas to which people would be encouraged to move and where they could live a happy and prosperous life. That was a great break through.
One of the things that the right hon. Gentleman and his hon. Friends will not get hold of is that it is not just a matter of moving factory workers into factories out of London, or Edinburgh, or where-ever it may be, but of encouraging women and children to go to live in new areas where things have to happen more vital than mere factories. That is what they do not understand.
I am sorry that the right hon. Gentleman has already gone—he has not stayed very long. He did not want a philosophical wind-up, but apparently he does not even want a philosophical follow-up, either. The right hon. Gentleman cannot get hold of the difference in philosophy between trying to change the pattern of life in Britain and just trying to move a few factories around.
We took up that policy, and I am glad to see on the Front Bench my right hon. Friend the Member for Stepney (Mr. Shore), who is now the Secretary of State for—
§ Mr. Brown
And if I may say so, if I were giving him a title I could not give him a better.
My right hon. Friend is, of course, the Minister without Portfolio. He was active with me in the early days when we brought out this policy. It was one of the things that led us to decide that there was a great difference between setting off allowances against tax, and making grants and actual cash payments. The Opposition have never yet grasped that setting off allowances against tax gives no new job opportunities. The only thing that brings new people and new things is actual grant and actual cash.
That was the big change, and that is why we did so very much more, and it 1046 is no good their saying, "Oh, yes, there is a sharp improvement". There is more than a sharp improvement. The look of the North-East, of Scotland and of Merseyside is totally different in 1969 from what it was in 1966, so do not let anyone be silly about that. That is why we did it.
But it was always my view that, having acted in this rather powerful and heavy way, we would move as soon as we sensibly could from the black and white to the grey, and to the greyer. This the Bill gives the Government the power to do, and I am happy about the Bill as it stands so long as—and I do not want to join in the suspicions of the right hon. Gentleman—the Government stay with the Bill.
Sir Joseph Hunt is a long-time friend of mine. I bear the responsibility of appointing him chairman of the Midland Regional Economic Planning Council. But I think that he has produced just about the most disappointing report that anyone could have produced if he had tried very hard. It is a very miserable lost opportunity. I have never so far had the temerity to tell Sir Joseph this to his face, but I have certainly told some of the members to their faces. A more lost opportunity I cannot think of. They failed, I think, to get hold of the issues on which which one should depart from the black and white to the grey and the greyer. They failed, I suppose, because they were afraid of offending interests. They failed to advise the Government of the issues that the Government should now take into account.
As the Bill stands the Government can make up their own minds as they go along. They have already moved. This is where I shall get into trouble, I am sure, and the right hon. Gentleman forecast it. I have no doubt that there were some civil servants in the Department of Economic Affairs—which I trust one day an enlightened Government will resuscitate, and thereby frustrate the knavish activities of the Treasury—who said to my right hon. Friend, now the Minister without Portfolio, whom I am delighted to congratulate on being the Deputy leader of the House, "If you move at all, someone like Brown will try to push you a little further, so please do not move." In fact, my right hon. Friend said, "To hell 1047 with that. I shall now establish the Erewash Valley". This is where I get into trouble, because it happens to be true that in delineating the Erewash Valley my right hon. Friend has not created new problems but has highlighted existing problems.
What I want my right hon. Friend to do is not just to send a note to the chairmen of the economic councils asking them to have a meeting, but to consult them effectively on the kind of areas which we recognise are grey, where there are real problems, and discuss what should be done about them.
I can relate this only to my own experience in Derbyshire. I am not really trying to be parochial, but it is better to talk of what one really knows. In Derbyshire, we have dying collieries. When I was elected to the House in 1945 there were, perhaps, 20 collieries in the whole of my constituency. There is now only one. I have slag heaps by the hundred. I have clay holes by the hundred. It is ugly.
So the previous President of the Board of Trade generously said, "I will make I.D.C.s freely available in your area." He has done so. But an industrialist, shown that area, knows that if he goes 20 or 30 miles or just a little further north he gets into nice green level country where he can have a custom-built shed and get a 40 per cent. grant of the cost. The same offer in my country is not all that attractive. It was impossible to attract him without the offer, but it is not all that attractive even with the offer.
George Deering, who was so good as chairman of the East Midlands Board, is dead. I do not know the new chairman so well, but he knows the area extremely well. He would say that this area is something more than the Erewash Valley, and that what we now call the Notts-Derby coalfield, and a large slice of Eastern Derbyshire, is now living through all the miseries of the earlier Industrial Revolution. In the days when those in the party opposite did not care tuppence, my predecessor in the division milked it. He took the profits. He took the profits of the coal mines and he took the profits of the clay works, and he personally left me with the slag heaps and the clay holes. The chairman told us that this is an area which will die if we leave it as it is.
1048 It is all very well for Sir Joseph to say that the pull from Derby and the pull from Nottingham can take care of it. I grew up in London and I am quite used to travelling 15 or 20 miles to work every day, but people in Derbyshire and Nottinghamshire are not. Younger people are going away and I am being left with a miserable, ugly-looking part of the country which ought to be beautiful, and with an ageing population. Let us draw the areas differently. This Bill gives power to do so. The Government can take some money away from the black areas. There are parts of the North-East which are now better off and above the national average. The intention was to take away from them some assistance which they no longer require and use it for areas such as mine which now require it.
We have derelict areas which are losing our young people. I pray, therefore, that the Government will be neither handcuffed by Hunt nor shackled by Shore. If I receive that promise, I shall be content.
§ 5.12 p.m.
§ Mr. Charles Fletcher-Cooke (Darwen)
The right hon. Member for Belper (Mr. George Brown) had at the Department of Economic Affairs a Minister of State in the person of the hon. Member for Edmonton (Mr. Albu). When he left that office, which was very concerned with regional development, the hon. Member for Edmonton delivered a speech attacking the regional policy of the Government. In his view the positive planning steps taken were wasteful and ineffective. The only method of industrial regional planning which he advocated was the old negative method of I.D.C.s. Now history has repeated itself. The hon. Member for Middlesbrough, West (Dr. Bray) has left the Government and, within a few days or weeks of his leaving the Government and the very centre, the powerhouse, of regional planning, he has delivered a slashing attack on the policy which previously he supported.
We had expected this afternoon that the Minister of State, who introduced the Bill so agreeably, would have allowed himself the opportunity to reply to the damaging attacks of his two hon. Friends, particularly that of the hon. Member for Middlesbrough, West, who delivered a bitter attack 48 hours ago.
§ Mr. John Mendelson (Penistone)
In view of the fact that the hon. and learned Member is now quoting at length the views of two ex-Ministers of State who have criticised the policy they previously supported, will he not pay some small tribute to my right hon. Friend the Member for Belper (Mr. George Brown), who has just made a brilliant speech in defence of the policy?
§ Mr. Fletcher-Cooke
It is unusal to find am ex-Minister defending the policy of the Government. If I thought it was an unqualified defence I would pay the tribute which the hon. Member for Penistone (Mr. John Mendelson) suggests, but I am not quite sure that it is as unqualified as that. It struck me that the right hon. Gentleman was regretting—to put it no higher—that the area either north or south of the Erewash Valley had not been given quite the same good treatment as some parts of the North-East were receiving.
§ Mr. George Brown
I had better defend myself; usually it is better that way. One goes east and west of the Erewash Valley; if one went north or south one would get into an enormous amount of trouble. I was defending the Bill and defending the Government on the Bill. I was rather less enthusiastic about Sir Joseph Hunt. That is all.
§ Mr. Fletcher-Cooke
I think I understand what the right hon. Gentleman was saying and I would support a great deal of what he said, particularly on the importance of cleaning up the derelict areas and improving the quality of life, because his constituency suffers in much the same way as mine.
What I was saying before I was diverted by the rather clever diversionary operation of the hon. Member for Penistone was that the Government have not answered in any way the attack made by the hon. Member for Middlesbrough, West, who gave it as his opinion—coming straight from the seat of this policy—that to create jobs in these areas has cost something like £20,000 per job. If that is wrong, surely it should be answered straight away. This is the ideal opportunity to do so.
The hon. Member said:
The most expensive component of development area assistance is the investment grant 1050 differential which accounts for over 40 per cent. of the total development area assistance. In many cases the effect of this indiscriminate hand-out, given without any test of the number of jobs created, is actually to reduce employment in the development areas.So far, in his view, from it being a help and a good weapon, it is positively a boomerang. He gave some examples of reduction which I should have thought the Government were more qualified than anyone to rebut. He said:The Government development area subsidy to create one job at one particular plant often runs at well over £20,000 per job created. And even then this often calls for the closure of other plants, actually destroying jobs. It would be cheaper to invest the money and pension off the workers to live in the South of France, taking into account foreign exchange costs."—[OFFICIAL REPORT, 3rd November, 1969; Vol. 790, c. 720–21.]I should have thought that exaggerated language, but when it is said with the authority of an ex-Minister so recently on the Government Front Bench, at least the House and the country, which is spending the money, demands a rebuttal at the earliest possible moment.
§ Mr. J. Bruce-Gardyne (South Angus)
Is my hon. and learned Friend aware that the £20,000 to which he has referred is in prospect of being vastly exceeded and that there are projects in prospect in Scotland now which might involve job subsidies up to £70,000 for each created?
§ Mr. Fletcher-Cooke
That makes it all the worse and all the more necessary, if it be true, that before we part with this Bill—which in other ways is estimable—to have some, shall I say, philosophic defence of this vast expenditure.
§ Mr. Varley
It had not escaped our attention that my hon. Friend the Member for Middlesbrough, West (Dr. Bray) had made these claims. We do not accept them nor do we accept the statement of the hon. Member for South Angus (Mr. Bruce-Gardyne). We all thought that it should be rebutted in this debate. I agreed with my hon. Friend the Minister of State. That in winding up he should refer to this point. I assure the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) that it will be rebutted.
§ Mr. Fletcher-Cooke
I am glad to hear that because we would be labouring under a certain unreality if we thought the 1051 statement would not be rebutted in some detail today.
This Bill, which benefits my constituency considerably, is, I suppose, an improvement on the old black-and-white division of the country, but, as the Minister of State so rightly indicated, it complicates the administration. We must face this fact now.
We now have four different categories of areas. There are the development areas, the special development areas, the intermediate areas, and the other areas where I.D.C.s are granted more freely than in the remainder of the country. There is almost a spectrum of advantage or disadvantage dotted about the country in what appears on a map to disadvantage such Lancashire towns as Oldham, Rochdale, Bolton and other places on the edge of my constituency but, I am glad to say, not the boroughs of Darwen or Blackburn.
I suggest that it will accentuate the danger of the magnetic pull of the areas which are advantaged. They are dotted about to such an extent that anyone who has fixed on any county, certainly in the industrial areas outside London and the Midlands, almost inevitably will come into an intermediate area or a development area, and those which are not so designated will get less of what is going than ever before. I suppose that I should not complain about that as the hon. Member for Darwen, but it is a matter which the Government will have to consider carefully very soon.
It was because of the magnetic quality of the development areas that the Hunt Committee was set up and we now have this Bill. However, in attempting to get rid of the greater magnetism of the development area and level out the degree of attraction in the development area, the Government are creating new little magnets all over the place. Whether that can receive a philosophic answer from the Minister who is to wind up the debate, I do not know, but it should be attempted. Does he foresee the danger of creating these little magnets, often in isolated parts of the country, with none of the old broad sweep of the development area, about which the right hon. Member for Belper was so lyrical in his opening remarks? I think that these little magnets in many ways will be more dangerous.
1052 The real advantage of the Bill lies in the fact that the derelict land grant is to be made not merely to the intermediate areas but to a much wider area all over the country. That strikes me as being a tremendous step forward. But I do not understand why it has to be put down 10 per cent. underneath the development areas and why it could not be the full 85 per cent. It looks as if there was an almost theological insistence upon preference for the development areas in a sphere where such preferences are out of place.
Many parts of the intermediate and non-intermediate areas look far worse than Wales, the north-east or the southwest of England and where the problems of urban renewal are greater. Development areas are so designated not on account of their appearance or their need for urban renewal but because of their unemployment ratio, which is quite different. It is in places such as Belper and Darwen, which do not look as good as they should and which repel new industries because of it, that the higher rate for the removal of dereliction and tips is most wanted. I do not understand why development areas should still retain this 10 per cent. advantage in the matter of grant.
It may come as no surprise to the Government to know that the North-West Industrial Development Association thinks that the building grants ought to be given not linked directly to job opportunities, as the Bill insists, but in the way that the Hunt Committee suggested, for the purposes of urban renewal. I have always thought that the grey areas are rightly so called. What is wrong with them as much as anything is their appearance. That is their fundamental problem, although there is an unemployment problem as well. In my view they should be given building grant irrespective of the creation of job opportunities. It is their appearance which needs attention, and that is what the Hunt Committee recommended.
I would like to ask one question which has not been touched on by the Minister of State but which fits in with the importance of enhancing the quality of life in the intermediate areas, and I believe that that is the chief object of the exercise upon which we are engaged.
1053 The Hunt Committee's Report lays immense emphasis on air pollution. It considers that under recent legislation the Government now have immense powers. It recommends in paragraph 41:As in the case of derelict land, we think the Government should take a stronger line with local authorities in the 'black areas' who have been slow in tackling air pollution. The recent Clean Air Act, 1968, enables the Minister of Housing and Local Government, where he thinks fit, to direct a local authority to draw up and carry out a clean air programme for their area. We recommend that the Minister should be ready to use these powers in appropriate cases.I have no doubt that we are on very sensitive ground when we talk about directions to local authorities. I will not pile upon the Treasury Bench any more dangers of being considered dictators to local authorities, because it is in grave trouble on other matters already. However, we would like to know whether the Government accept that paragraph unreservedly, and whether they propose to implement it. We have not yet been told.
I have always held the view that the importance of clean air cannot be overestimated. Everyone who has to take a decision as to the location of industry is affected by it as much as by financial inducements. He has to decide whether it is a good place to bring up a family and whether senior executives, foremen and those upon whose shoulders the responsibility for running a new plant or mill will fall can be induced to move to that part of the country. If they come there and find it smoky and begrimed, all the financial inducement in the world is not enough. Such places must be cleaned up. I support that paragraph of the Hunt Committee's recommendations to the utmost.
In terms of the regional policy that we are discussing, do the Government propose to extend development status to the new towns? I am not thinking of existing new towns, although it would be interesting to know what the Government have to say about Corby, which the right hon. Member for Kettering (Sir G. de Freitas) raised so sharply in the debate on the Gracious Speech. I am greatly concerned, however, with Chorley-Leyland new town in Lancashire. Into which category is that to be slotted? I do not think that it will be given special develop- 1054 ment status. Possibly it will get development area status. I think that inevitably it will get intermediate area status, though the Government may be considering non-intermediate status for it. We must know this in North-East Lancashire. It is only seven miles from the borders of my constituency, and, until we know that, we cannot assess the value of the advantage that we have been given under this Bill because all that advantage will be taken away or most of it except for the derelict land advantage, if something with a more magnetic quality—that is to say, a new town with development area status—is to be placed on our doorstep.
Therefore, although I welcome the Bill, because particularly in the matters that I have mentioned it will give the opportunity enormously to improve the face of my constituency, nevertheless I do not think this advantage will be worth very much in terms of finance or grants or anything else unless we know whether or not the new town of Chorley-Leyland is to get even better treatment. If it is to get better treatment, all this improvement in my constituency is worth much less. But, of course, if Chorley-Leyland does not get development area status, it is difficult to see how it can get off the ground or be built at all. The Government are in a dilemma there.
This brings me back to where I started. There are limits to this business of the country being dotted with little magnets because those little magnets will draw the blood and iron filings from the deserving areas and the result in the end will be worse than when we began. I hope we shall get answers to the philosophic problem but, more important, I hope we shall get answers to the very serious criticisms from the hon. Member for Middlesbrough, West. I shall look forward to 9.30 this evening to hear whether a satisfactory reply is given.
§ 5.32 p.m.
§ Mr. John Golding (Newcastle-under-Lyme)
I am pleased and proud to succeed Stephen Swingler as the Member for Newcastle-under-Lyme. Stephen was very much-loved and respected, a very fine Minister and a very hard worker, and his name will always be associated with the Transport Bill. In Newcastle-under-Lyme he is remembered not only as a Minister, but primarily as a good 1055 constituency Member of Parliament. He always took very great pains indeed over individual cases and was a very great friend of the under-privileged.
Like his illustrious predecessor, Josiah Wedgwood, Stephen Swingler always spoke for Newcastle-under-Lyme and for North Staffordshire in general. It is for this reason that I think he would have wanted to speak in this debate this afternoon. He would have wanted to congratulate the Government and to have expressed some feeling of disappointment, because Newcastle-under-Lyme is one of those areas which face the problem of derelict land. It is also an area which is characterised by low pay rather than by unemployment. This low pay has arisen partly from a dependence on the traditional industries of pottery, coal mining and agriculture.
We are very pleased in Newcastle-under-Lyme that grants will be given to clear derelict land. Our countryside has been devastated in the past by industrialisation and it really is time that improvements were made to clear up that land. I have found during the last few months that young people in particular are very concerned to live in an attractive environment rather than an ugly one. For them this clearance of derelict land is very important indeed.
I agree with the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) that the problem of air pollution is one that the Government should tackle. We are disappointed that North Staffordshire has not been designated an intermediate area. To remove the evil of low pay in North Staffordshire, as in other areas, we need either to have a national minimum wage or to introduce modern technical industries into the area. But employers will not modernise and pay higher wages without being faced with competition, and in areas such as North Staffordshire, where there is a great reliance on traditional industries—industries not responsive to change—it is most important that they have new technical industries.
There are other reasons for the need for modern technical industry in the intermediate areas and those areas which we believe ought to be designated as intermediate. Year by year young people are receiving better education. 1056 They are becoming more and more independent. They have better career prospects, and they will not be satisfied with low pay or with jobs in industries which they find unexciting. There is a great need to attract exciting as well as better paid industries. Without the influx of new industry we are likely to see in areas like North Staffordshire the migration of the young and then we shall have to face the problem of an ageing population.
Our area should become either an intermediate or a special area. For these reasons I want the Minister of State to reconsider the principles on which intermediate areas have been designated. I hope that the Government will think again and that they will take account not only of the level of unemployment, but also the low pay in particular areas. This would certainly bring great relief to my constituents in Newcastle-under-Lyme.
§ 5.36 p.m.
§ Dame Joan Vickers (Plymouth, Devon-port)
It is a great honour to congratulate the hon. Member for Newcastle-under-Lyme (Mr. Golding) on his excellent speech. He showed great courage in speaking to the House so soon after coming here, on a question which obviously moves him deeply. With him, I am sure we all regret that Mr. Swingler had such an early decease. He was one of the best Ministers in the present Government. He was energetic and always courteous and helpful. The hon. Member for Newcastle-under-Lyme and I have one thing in common at least—we are both very interested in the lower-paid worker. I hope that the hon. Member will have as much success as Mr. Swingler did in his future career in this House.
This Bill is of great importance to my constituency. Plymouth was included in the Local Employment Act, 1960, and benefited enormously during that period I must be grateful to the Government. The Hunt Report "killed" Plymouth. It was a mistake of the Hunt Committee not to consider the many reports which were produced by local authorities in the area, of which I have copies and which were submitted but which the committee does not seem to have considered.
1057 I wish to refer particularly to Clause 1 of the Bill:…special measures are necessary for the purpose of encouraging the growth and proper distribution of industry therein …Our great difficulty in Plymouth arises from the actions of the Ministry of Defence. I hope that in future the Government will see that the new Ministry of Technology and the Ministry of Defence work hand in hand.
As will be seen from paragraph 499 of the Hunt Report:We consider that Plymouth's main problem is essentially one of remoteness …It goes on to say:… with, thanks to the Dockyard, a supply of labour with a wide range of engineering skills. Provided that there is not a sudden sharp contraction in the Dockyard's activities…".That is what we are always frightened of, that there will be a contraction I do not say that it will be sudden, but there will be a reduction of 2,500 in the number of work-places available for men in the future, and this will make a tremendous difference to us. If the Ministry of Defence could work out a long-term policy, it would be of great advantage to us. We should not have such troublesome ups and downs in the economy of the City of Plymouth.
On his recent visit to the dockyard, the Minister of Defence for Equipment said that Devonport had a secure future I must point out, however, that since 1964 there has been a loss of jobs for men in Plymouth totalling 4,941, although, admittedly the number of jobs for women has risen slightly, by 1,330.
In a statement on 21st August, 1969, unemployment in Plymouth was shown as having risen by 13 per cent. and in the West Country as a whole by 15 per cent. Plymouth now has a total of 3,395 unemployed, whereas last year the figure was 2,240.
I shall be grateful, too, if we can have a definite answer to one question which worries some firms in my area. I gather that the date of operation of the Bill when it becomes law is to be 1st February, 1970—[Interruption.] Do we not know the date?
§ Mr. Varley
Subject to passage of the Bill, Orders can be laid in seven days after the Royal Assent.
§ Dame Joan Vickers
Perhaps I am anticipating, but that is what we have understood.
It was announced that building grant would be payable in respect of work started after 25th June, 1969, but not finished or occupied before the legislation was passed. In expectation of the legislation being passed before Christmas—I am not sure why, but many people had that expectation—some firms have taken action. One firm I know has added to its buildings to the extent of £150,000 and it is expecting to receive a grant of about £40,000. It will employ an additional 150 workers.
I want to know whether that grant will be made or whether that firm—and others in a similar position—will now have to stop completion of the building and not have it opened until after February. Perhaps we could be told at the end of the debate whether one can complete the building and still receive the grant, or whether one will have to wait until the Bill becomes an Act before obtaining the grant.
I want to know, also—this was referred to by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)—what the effect is of Clause 1(3)(a) with reference to the withholding of grant from firms which prefer to build their own factories. Several firms in my area have built their own factories, and some industrial estates do the same. We should be told what the situation will be in that respect.
In his original statement, the Minister said thatThere would be some additional expenditure on roads in selected areas, and proposals for the provision of new housing associated with industrialised growth will be encouraged.In paragraph 499 of its report, the Hunt Committee points out that Plymouth's main difficulty lies in its remoteness. Will the proposals in the Bill go hand in hand with the proposals made in the Hunt Report?
The right hon. Gentleman the Member for Belper (Mr. G. Brown) spoke of migration and the difficulty of inducing families to leave certain areas. Regrettably, migration is all too common in the South-West. Plymouth alone has had heavy migration, particularly in the age group between 15 to 44. Between mid-1963 and 1967, the number of males in 1059 employment fell by over 6,000—that is, 8 per cent.—while the unemployment register showed an increase of less than 750. Thus, there were 5,250 unaccounted for. They had left the district. According to the 1966 census, the net outflow of males aged between 15 and 44 was 780 and of females 730 between 1965 and 1966.
One of the central reasons for including Plymouth in an intermediate area—I do not like the term "grey area", because Plymouth is certainly not grey to look at—is its high level of migration.
§ Dame Joan Vickers
Yes, and that is what we are out to stop. Other parts of the country are becoming congested—
§ Dame Joan Vickers
We did something about it. Our Local Employment Act reduced Plymouth's unemployment from 3.9 per cent. to below the national average, but then we were taken out and did not come into one of the new development areas.
A glance at the map shows that we now are virtually surrounded by a development area—we are right on the edge—and this has been detrimental to us. Industry has been drawn into Cornwall and Wales and away from the city. It was agreed both in the Hunt Report and in previous reports that Plymouth should be a growth point for the South-West. That is one of the reasons why I stress that there must be co-operation in future between the Ministry of Defence and the Ministry of Technology.
Plymouth itself has been successful in bringing firms to the area. Ten engineering firms have come, and it is estimated that they have brought in £¼ million by their spending in the 38 small towns and villages round about. This has been of great benefit, and it has been done by Plymouth itself.
1060 We now need to have better co-operation and greater help, and also increased spending on the spine road which is essential because of the remoteness of the area. In that way, we could be completely self-supporting in the not too distant future. At the same time, it is vital to bear in mind that young people are leaving the area, and that we are coming to have an ageing population.
Now, the question of the Services. We shall always, I hope, have the Services in Plymouth. They are particularly good for the city. They bring a great deal of money to our various retail traders. But they do not bring further employment. This is one of the factors which must be realised: they bring money to the city, though they do not employ a great number of civilians. If they are moved away, the loss of the money which they spend and of the employment which they do offer will be highly detrimental to Plymouth.
I remind the Government that the Ministry of Public Building and Works has moved a great many of its people out of the city. We hope that the various Ministries will co-operate. It is no good one Ministry making Plymouth an intermediate area if, at the same time, other Ministries take their people away, the Ministry of Defence pulls out troops, and runs the dockyard down, the Ministry of Public Building and Works moves its headquarters, and so on. That does not help. One Ministry is playing against the other. Co-operation between Departments would be of great benefit to the future of the town.
§ 5.48 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
I hope that the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) will forgive me if I do not comment on the problems of Plymouth which she has put to us. I, too, wish to be parochial, and brief. At the outset, however, I have two pleasant things to say. First, I congratulate my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) on an excellent constructive contribution to our debate. If I may say so, it was the kind of contribution which his predecessor would have made. We all remember Stephen Swingler with great affection. He had no enemies in the House, only 1061 friends. We were sorry when we heard about his death.
I congratulate my hon. Friend the Minister of State on his well-earned promotion, and on his good fortune in beginning his Ministerial legislative career with a Bill that aims at dealing with matters that he thoroughly understands from personal experience. I shall have a few suggestions to make in a moment which I hope will endear him to hon. Members who are somewhat critical of the Bill.
I want to begin by making a few remarks about the Hunt Report. I agree with my right hon. Friend the Member for Belper (Mr. George Brown) that the Hunt Report was a great disappointment. The Hunt Committee was set up to try to define for us, if we needed any definition, the so-called grew areas that require special help to get over their problems of unemployment, loss of jobs, declining industries, low earnings, and so on, and to make practical suggestions.
I had the regrettable task from time to time of telling some of my hon. Friends who wanted to see something done in their so-called grey areas that they must wait for Hunt. As the months went by, it seemed clear to me that the Hunt Committee was going over facts and figures which were already available in the then Ministry of Labour and the Board of Trade, and on which decisions could have been taken and constructive proposals made.
The committee was dealing with matters in such a way that it would clearly not lead to the constructive proposals that we wanted. Not only was all the information needed to take decisions already in the Government Departments concerned, but officials and Ministers were taking decisions on that information almost daily. How were applications for industrial development certificates decided except on that kind of information?
As it turned out, the recommendations in the Hunt Report contained nothing new. Every proposal had been examined in the appropriate Government Departments and freely discussed here in the House and in deputations to the appropriate Ministers. If we ever become involved in this kind of exercise again, if it is believed necessary to have matters such as were presented to the Hunt Com- 1062 mittee widely examined so that constructive and practical proposals emerge, it will be far better to set up a Select Committee of right hon. and hon. Members, who, I think, are better informed than the Hunt Committee were even at the end of the exercise, and who would have discharged their job with a proper sense of urgency, which seemed to be lacking in the Hunt Committee. I am sorry to be so critical, but two years have been wasted during which action could and should have been taken to deal with many of the problems in the grey areas.
I am very glad that the Minister of State gave us a lucid explanation of the Bill, because when I read it I thought it one of the most complicated and tortuous pieces of work I had seen for some time. As I understand, Clause 1 gives the Minister power to make grants for industrial buildings in locations outside development areas which he may specify, provided the work started after 25th June this year. I agree with one of my hon. Friends that this is what the whole of that tortuous Clause means, and that in specifying the areas the Minister should take account of the level, or prospective level, of unemployment and other factors. Why not put that in the Clause just like that?
Clauses 2 and 4, taken together, say, I believe, that the Minister may also provide financial assistance to local authorities in specified areas for the clearance of derelict, neglected, or unsightly land for industrial development. If that is what they mean, why do they not say so? Why do we have all the cross-references to previous Acts? When I had finished reading the Bill, I wondered whether the Minister had any powers to do anything at all, because he seemed so hedged in with all these cross-references. I am not volunteering for the Standing Committee, but I wonder whether it would be possible to move in Committee that all the relevant Clauses I have mentioned should be withdrawn and replaced by clear, precise Clauses which explain what they mean.
I am not blaming either of the Ministers of State. To a certain extent they have inherited this nonsense—certainly, my hon. Friend who opened the debate has. We will do all we can—I should say that I think those hon. Members who serve on the Standing Committee will do 1063 all they can—to help my hon. Friend put things right.
I welcome the Bill as far as it goes, but after two years of waiting it is quite inadequate and should be strengthened. I do not want to detail too much how it should be strengthened, but I want to draw attention to some of the weaknesses of its application. This is where I shall be completely parochial, because we must take the Bill in relation to the areas which my right hon. Friend the present Minister without Portfolio gave the House some months ago.
In considering what the proposals mean, taking the building grants first, we must consider the kind of firms that may be attracted to a grey area, firms that I should think want to expand more or less in the industrial area where they are now, or close to it, and which have very good, cogent and compelling reasons for not wanting to go to a development area, and which should not go.
My parochial interest is in South Yorkshire, North Derbyshire and North Nottinghamshire, in the coalfield area and the steel and engineering works in that part of the country. I and other hon. Members know from experience that many firms in the more prosperous areas of the North Midlands and Yorkshire are eager to move into the grey areas because the labour they want and the opportunities for expansion are there, provided they can have some assistance in clearing areas for industrial estates and assistance with factory building. Therefore, I welcome the proposals in the Bill for building grants, which I agree should be tied to jobs rather than spread widely, as was suggested by the Hunt Committee, and I also welcome the proposals for clearing derelict areas.
But I, too, question whether it is quite right for the Government to make a distinction in the rate of the grant between the intermediate areas and the development areas. The problem is just as acute in the intermediate areas, and the 85 per cent. grant should be given in both cases.
The firms I am talking about are often prevented or dissuaded—and sometimes frustrated—from going into the places they would like to be in because there are no industrial sites available. The 1064 local authorities must take a certain amount of the blame. They have not been as aggressive and enterprising as they should be in dealing with the problems of unemployment that have arisen, or were likely to arise, and in getting some land cleared. They did have some Government assistance—noth enough, I agree—to clear sites and have industrial estates laid out.
But they can be greatly encouraged now, and I hope that, in the area I am talking about, the local authorities will wish to work together so that they can agree on the sites of industrial estates on land that is being cleared from dereliction, and that the firms which wish to move a short distance and expand in that area will be encouraged to do so and provide new job opportunities for the people there.
What worries me, and a number of other hon. Members, is the boundaries of the intermediate areas. I can sympathise with the Government on this. I had for a while the unenviable task of defending in the House and elsewhere certain development area boundaries which I knew made no sense. I am afraid that my right hon. and hon. Friends will have the same sort of regrettable experience if they do not take the advice which is to be offered to them about the boundaries announced by my right hon. Friend the Minister without Portfolio.
For instance, my right hon. Friend decided, quite rightly, to include Rotherham in the South Yorkshire-North Derbyshire intermediate area, but, wrongly, to leave Sheffield out, which, when one comes to think of how the boundary runs and of what is now going to happen, is plain daft. We now have a Minister who knows all about it. He knows that the boundary runs straight through a steel works, which will not be helpful to that part which is on the wrong side if anyone wants to take a bit of derelict land lying behind the steelworks, clear it and go in for industrial building.
We have quite a few areas like that, where the boundary runs right across what we consider now to be derelict land. It is quite possible that the clearance area will not be the same or precisely the same as the intermediate area. I pose this as a question. It is quite likely, therefore, that on both sides 1065 of the boundary the land will be cleared, but that on one side of the line there will be industrial development, because it is, say, in the Borough of Rotherham, while the rest will be left idle because it happens to be in Sheffield. That would be nonsense. I am not blaming the Minister of State for it. I am relying on his local knowledge and his great common sense to ensure that the nonsense is cleared up.
I come now to what my hon. Friend will know as the Mosborough problem. It highlights the kind of difficulties we shall be in unless these boundaries are put right. A few years ago, the then Minister of Housing and Local Government agreed to the City of Sheffield taking within its boundary a slice of North Derbyshire to allow room that was desperately needed for residential expansion and also for a measure of industrial development, particularly for firms in Sheffield which, because of the congestion in the centre, were being planned out, as it was called, and other firms which happened to be located in or near slum clearance areas and which had to go when those areas were cleared of slums. Here was the opportunity presented to get them established in good conditions in the area of Derbyshire taken within the city limits.
Strict conditions were laid down by the Minister and eagerly accepted. There had to be a green belt between the city proper and the new communities which were to be built. The residential and industrial areas were clearly defined. All that wise and careful planning is now destroyed by the decision to exclude this part of what should be the intermediate area from the intermediate area itself, even though it is clearly part of the North Derbyshire coalfield and itself has suffered from mining closures.
The balanced development of residential estates and neighbouring industries which the Minister of Housing and Local Government rightly insisted on is now no longer possible. It may be argued, although I hope it will not, that the people who are to be housed in this new area—over 50,000 eventually—can easily travel eight or 10 miles into Sheffield to work, but that would defeat the purpose of the well-planned schemes which are designed in part to ease firms and work-people out of the congested parts of 1066 Sheffield and out of the slum areas into better surroundings—a process which must go on.
The slum areas, for pressing social reasons, must quickly be cleared and the firms located there must be cleared as well. But we have to have somewhere for them to go. One might say that they should stay in Sheffield, but what is the point of going to this new area where the industrial estates can be laid out when, if these firms go a few miles further on, they reach the Erewash Valley area and get the whole of the benefits now being considered in the Bill?
Nonsense is made of the wise and careful planning, on which the city council and other local authorities concerned have agreed under the auspices of one Department, by a decision taken in another. I repeat my tribute to the common sense of my hon. Friends on the Front Bench and I hope that they will do all they can to see that the boundaries about which I have been speaking are redrawn.
§ Mr. George Jeger
My right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) has talked about a travel-to-work area as being considered to be eight or 10 miles from Sheffield. I have had correspondence with the Board of Trade recently in which it refers to a travel-to-work area as being 30 miles.
§ Mr. Darling
I was not in any way suggesting what a travel-to-work area should be. I was pointing out that Moss-borough is eight or 10 miles from the centre of Sheffield. I was not arguing about how far people should travel to work in the circumstances to which my hon. Friend the Member for Goole (Mr. George Jeger) refers.
I welcome the Bill as far as it goes. Those who have the good fortune to serve on the Standing Committee will, I know, do all they can to improve it, and I will play my part in providing them with the suggestions that I know they should be putting forward.
§ 6.9 p.m.
§ Mr. John H. Osborn (Sheffield, Hallam)
So far this has been a discouraging debate to me. Indeed, it has been a debate of despair. The Bill is an anticlimax. Possibly this is a monument to the confusion amongst the planners of the last five years. The right hon. 1067 Member for Sheffield, Hillsborough (Mr. Darling) has outlined his difficulties when he had the responsibility and he also summarised some of the present difficulties of the Government. We have had reference to the hon. Member for Middlesbrough, West (Dr. Bray) who has criticised the Government and Government policy yet who was in the Ministry which is proposing this Bill.
The right hon. Member for Belper (Mr. George Brown) spoke about the regions being in the wrong place. Yet he surely has not forgotten that those from the Sheffield and immediate area of South Yorkshire, North Derbyshire and North Nottinghamshire beseeched him to form a sub-region embracing that area. When he was the Minister responsible he failed to listen to these overtures. I well remember our defeat on the matter.
The right hon. Member for Belper said that Sir Joseph Hunt was a great friend of his. Presumably, he was a man whom he trusted. But both the right hon. Gentleman and the right hon. Member for Hillsborough criticised Sir Joseph Hunt Report, which I regard as a monumental work by busy people who faced up to and were aware of the problems of encouraging those with money available for investment in industry to invest it in the areas which are causing hon. Members opposite so much concern. This Committee knew what steps would be necessary to bring wealth and prosperity to the development and intermediate areas.
I should not like to go further without congratulating the Prime Minister on appointing a Member from Derbyshire, the North, as a Minister of State. I refer to the hon. Member for Chesterfield (Mr. Varley). I am aware of the problems that must be facing him. At least he knows what we have to face in Derbyshire, Nottinghamshire and South Yorkshire, and at least he is sensitive to the difficulties. I do not want to make his problems any greater. Some years ago, he was in the privileged position of being a poacher, as we are who are in Opposition, but now, after a time in the Private Office at No. 10, he has turned gamekeeper and he will learn how difficult are the tasks facing people in his position.
I do not want to refer to the Bill until the end of my speech. I have been in 1068 despair about industrial growth in intermediate areas while I have been preparing my notes for this debate. I have asked myself the question, what is the Bill all about? For decades we have been concerned in the House of Commons at times of recession or rising unemployment about the hardship, uncertainty and poverty of certain areas in the provinces—the South-West, the North-West, the North and the North-East. This concern is shared by many in the provinces. Sir Joseph Hunt referred to business centres and our lack of ability to attract entrepreneurs into the so-called intermediate, or development, or provincial, areas. I well understand the despair which must have confronted his Committee.
I have discussed this matter with a number of people throughout the country, but I find it difficult to put my finger on exactly what is happening. It is my impression that at present the South and the South-East are strong. There are many advanced industries and there may be activities which benefit from the boom in invisible trade with other countries. Devaluation may have brought a boom to the retail trades of the South and South-East. Devaluation has brought people from the Continent with their shopping bags and if there have been boom conditions in the shops and commercial premises, in the South and South-East, they are conditions which have been denied to people in the North.
My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) tried to quantify this impression. It is puzzling many people. We have seen other changes. Changes have been occurring over the centuries, but they seem to have been more important in the last five years. Admittedly, the traditional woollen trade of Yorkshire and to a certain extent the textile trade in Lancashire have been altered because our wool comes from overseas now and we can make synthetic fibres in this country. But industries based on coal and iron now have to face vast and newer sources of energy and newer sources of raw materials—iron ore coming to the country from outside. For many decades the power source has been coal, but that is being replaced by nuclear energy and other sources. This wealth has emanated from our own resources at home, but other areas, such as Bristol and other 1069 ports, have been affected because our merchant venturers used to trade in materials brought from outside. All this seems to have been changed.
Another trend is the growth of national and even international trading and manufacturing companies. The process of rationalisation, which both sides of the House have advocated and which hon. Members who support the Government have endeavoured to encourage, has meant that the provincial company, the small company, has been mopped up and has become a subsidiary in a large conglomerate. Admittedly, this may have meant more employment in development and intermediate areas as a result, but no longer do the funds come from local bank managers. The large companies have their headquarters in London and if managers want finance, they go to the joint stock banks in London, or to the merchant banks in the City. There is even discussion of the possibility of provincial stock exchanges becoming part of the London Stock Exchange.
I suggest to hon. Members opposite that never has industrial and commercial power drained so quickly and so much from the provinces, the intermediate and development areas, to London as in the last five years, and it is now being concentrated in London.
§ Mr. Osborn
Hon. Members may dispute this and they will have the chance to make their contributions. I am advancing this as my view of the background of the debate.
§ Mr. Leadbitter
If the hon. Member is to make statements of that kind, he ought to quantify them and give us the facts.
§ Mr. Osborn
They are hard to quantify. This is an impression, but it is the impression of many people who are concerned with stagnation in the Provinces. Hon. Members may dispute it and may have factual evidence to support their arguments, but these are certainly the implications of certain sections of the Hunt Committee's Report.
I am not blaming the Socialist Party, although if the process had happened under a Conservative Government, hon. Members opposite would have heavily criticised the Conservatives. There is an 1070 inevitability about the growth of power, and the creation of wealth that goes with it, in capital cities. It is happening in the United States of America and throughout Europe where the trends are comparable. The strength of commercial and industrial organisations residing in or near London is increasing particularly it these organisations have an international flavour.
There is a tendency as a result of direct Socialist policy—and I blame hon. Members opposite for this—for more power over the future of industry to concentrate in Whitehall, for instance, with the distribution of investment grants. The drastic extension of nationalisation has meant that the headquarters of the nationalised companies, where the power resides, have moved from individual steelworks, for instance, in the provinces to London—we debated this when we discussed the Steel Bill. Organisations such as the I.R.C. are naturally based in London and the know-how and the consultancy associated with their work must emanate from London.
Hon. Members may dispute this, but some of the symptoms cannot be denied. Overtime, and therefore take-home pay, in the North is down. I have asked Questions of the Board of Trade and I have questioned chambers of trade and other sources, and I am told that retail sales are down in the provinces because of the diminution of the purchasing power of wages. Numbers in employment are undoubtedly down. The percentage of the employed male population aged 15 and over fell by .2 per cent. for the country as a whole between 1964 and 1968, but by 2.6 per cent. in the North-West and by 3.6 per cent. in Yorkshire and Humberside. The fall in employment was mentioned by my right hon. Friend the Leader of the Opposition in his Brighton speech. In the Northern Region there are 66,000 fewer jobs, while in the Yorkshire and Humberside Region there are 106,000 fewer jobs.
The figures for unemployment show that something is happening. In the Yorkshire coalfield area, in October, 1964, the unemployment rate was 1.6 per cent. On 11th August, it was 4.8 per cent. In Castleford, Knottingley, Normanton and Pontefract, it has risen to 4.2 per cent. In the Mexborough-Goldthorpe area it was 2.9 per cent. in 1964 and is 6.5 per cent. now. In 1071 Dinnington and Hemsworth, it was 1 per cent. in 1964 and is 5.3 per cent. now.
Therefore, it is necessary to inquire a stage further. In these areas, where the credit squeeze has been felt most, I asked the President of the Board of Trade what has been the rate of windings up, bankruptcies and liquidations, and his Answer will be in HANSARD tomorrow. We should like to know where it is that those in small business are finding it most difficult to stay. This information is not readily available, so far as I know.
All this confirms the view of Sir Joseph Hunt that the outlook for the grey and intermediate areas is indeed grim. We must face this. The right hon. Member for Sheffield, Hillsborough referred to Sheffield and Yorkshire. He outlined the Sheffield problem, but what is remarkable are the delegations that the Secretary of State for Economic Affairs received. There is a delegation from the Socialist controlled Council in Sheffield coming to point out to whichever Minister meets it the difficulties of setting up this new residential and industrial area in Mosborough if it remains outside the intermediate areas. They will ask for intermediate area status.
Sheffield has labour-intensive industries, but they are now becoming capital-intensive. In the last few years, employment has dropped from 39,800 to 34,800 in the metal and engineering industries. There is under-employment, which is eliminating effective overtime. There is the additional problem in Sheffield that many working in the city live outside, in the intermediate areas.
To be positive, I welcome the fact that, in the Yorkshire region, the second Drax station is to be coal-fired, and I have raised with the Minister of Power and with the Electricity Board the virtues and the opportunities arising from this. I hope that the new Minister of State will make certain, now that the Minister of Technology is responsible for power, that those industries with large special requirements near these power stations may have the benefits which have been offered to the aluminium, chemical and other industries. I have recently been shown some statistics which suggest that the price of electricity to many industries in this area is well above that available to 1072 the aluminium smelting industry. What more can be done in an area like this?
As for communications, Sheffield still has no airport. Possibly this is just as well, but how can people travel in and out of that area? The city still has the slowest major inter-city service between London and any provincial centre. It still has the worst rolling stock. I hope that the Minister can do something about this. Many of the east-west road links are unsatisfactory. There has been pressure for a motorway across the Pennines to Manchester and Liverpool. This is the type of infrastructure improvement which will help this area.
If I may be negative, one of the difficulties facing the Minister of State is the very existence of the Maud Report and the confusion which it is causing in local government in the industrial regions. I hope that the Minister will comment on this.
There is another point in which I am interested, and on which I have asked a Parliamentary Question. Many industrialists have asked me to explain simply the advantages and disadvantages of what the Government can offer for development in special development areas, intermediate areas, development areas and the ordinary white areas. What are the differences? I wrote to the Board of Trade a few weeks ago and was given the standard document on development areas and the standard document on investment grants. This is not good enough. I hope that, after the passage of the Bill, the Ministers of State will make available to industrialists a simple ABC of what they have done, in this and previous Bills, so that those wanting this information can obtain it easily.
One last drafting point. On pages 1 and 2 of the Bill the phrase occurs,the Minister is of opinion".Is this not an unduly arbitrary power to put in a Minister's hands? Is it not possible to be more definite? Either something is or is not granted to areas in a Bill. In the case of dereliction grants for derelict land and clearance areas, either one is entitled to them or one is not. Could the Minister be more specific in the Bill's drafting in Committee?
§ 6.27 p.m.
§ Mr. Robert Howarth (Bolton, East):
I welcome the Bill, which has been long-awaited, as another development in this Government's proposals to help to rejuvenate the older industrial areas, but I am also extremely disappointed that the County Borough of Bolton, of which my constituency is part, has been excluded from what I regard as the first instalment, as outlined in the explanatory notes issued by the Ministry to show the areas which were to be included. Bolton had high hopes of being included, following the Hunt Committee's Report, because this Report at least brought together conveniently, although they were already known, the available facts, and illustrated the special problems of the older areas. I am talking now of the North-West and Lancashire, which has the problem of the declining cotton textile industry, and of coal mining.
As the Report said, the North-West Region has, in certain important respects, been falling behind many other regions since the war, and, I suspect, probably since the First World War. It has been falling behind in terms of the rise in employment. In fact, there has been a fall in employment in the North-West outside development areas. The growth of incomes has been slower in the North-West than in most other regions. The introduction of new industries, shops and offices has been slower in the North-West, and the level of unemployment has been higher than in the more prosperous regions of the Midlands and the South.
We have other similar problems of large areas of dereliction, certainly in the south of Lancashire, where, in the coal mining areas, great slag heaps disfigure the landscape for many square miles.
The Hunt Report makes a point about which we are only too well aware, namely, the lack of suitable vacancies for young people who gain higher educational awards. This is a serious matter because it means that the best educated young people of the North-West tend to look for job opportunities away from the area. This has contributed to the migration from many parts of the North-West.
That is the general problem of the North-West. I now wish to mention the specific problems of the County Borough of Bolton, part of which I represent. I 1074 compare it with the problems of Blackburn and Burnley, because the first instalment in implementing the Hunt Report as proposed by the Government includes the County Boroughs of Blackburn and Burnley. It is probably rough justice that the new East Lancashire intermediate area includes the constituencies of two Conservative Members and two Labour Members. In that sense, the balance has been fairly kept. But, as someone who represents a constituency unsuccessfully adjoining the boundaries of the area, I feel aggrieved.
The percentage of unemployed in the two major towns in the new intermediate area of East Lancashire, Blackburn and Burnley, is considerably better than it is in the County Borough of Bolton. The decline in the percentage of population in these towns has been greater than in Bolton. The problems of emigration from these towns and of replacing the jobs lost in the cotton textile industry are as severe in Bolton as they are in Blackburn and Burnley. All three towns share the special problem of the textile belt in Lancashire of which old industrial buildings are a feature. We have been able to attract to some extent replacement industries for the declining cotton textile industry, but many of them have gone into very old buildings.
It is a startling fact that in the County Borough of Bolton about 80 per cent. of existing buildings were constructed before 1914 and about 38 per cent. were constructed before 1875. It is reckoned that nearly 15 million sq. ft. of industrial premises are over 90 years old. This is one of the problems in an area such as mine. It is also estimated that about 15,000 people are employed in pre-1875 buildings. These are probably staggering figures for anyone who represents a constituency in the salubrious South of England or the Home Counties, but they are not unusual in the older industrial areas.
I have detailed the problems and expressed the disappointment of my constituents at not being included in the first instalment of implementation of the Hunt Report. But there is another side of the picture. In the last five years, the Government have given massive help to the older industrial regions. It is certainly massive compared with that given by the Tories in the 1950s and 1960s. 1075 The right hon. Member for Leeds, North-East (Sir K. Joseph) admitted that, taking 1964 and 1969, Tory aid to the development areas amounted to about £60 million and that the aid given by this Government amounted to over £200 million. An increase of that magnitude is of considerable importance and only goes to show the wasted opportunities of the last decade.
Members of the Opposition Front Bench take every opportunity to tell us that we should cut public expenditure but usually decline to say where the cuts should be made. I am afraid that if they were to regain power we should have a repetition of their attitude in the 1950s when they developed the South and the Midlands to the detriment of the older industrial North.
Lancashire in general and Bolton in particular are changing very rapidly. There are signs everywhere of the great road building programme. One cannot drive on a main road in my constituency without seeing signs of the big new road programme. I suppose that this is because we are fortunately placed in relation to the building of the M61 and the M62.
The same is true of housing. The clearance of slums has been going on apace in my constituency. Great areas have been cleared and people rehoused in new housing. It is remarkable how this Government's new housing Act was ignored by the Opposition spokesmen both yesterday and today. That Act is particularly important to industrial towns like Bolton. It will enable large areas to be dealt with without pulling down the houses and rebuilding them.
Many new schools, particularly primary schools, are in evidence in Lancashire and certainly in my constituency. Education is vital and the basis for it has been laid. We look forward to further progress. A fine new institute of technology costing many millions of pounds was recently opened in my area, there is a further development in the pipeline, a college offering degree courses. This is a further example of the changes being made in Lancashire, much to the credit of the present Government.
The Government have been helping the older industrial areas in many other ways—for example, with rate support and rent 1076 relief schemes. We even had talk last week in my constituency for the first time of the prospect of having a large indoor sports centre. It is significant that the Tory-controlled council said that it would have to go to the Sports Council to see what its opinion was, obviously hoping that support for the project would be forthcoming.
The picture is the same on the cultural side in my constituency. We now have a brand new theatre, the Octagon Theatre, which is a great acquisition to the town. It was built not only from the proceeds of private donations but is supported by a grant from the Arts Council.
This is the sort of thing which is happening in Lancashire and which makes the prospect for our young people so much better as a result of the Government's programme.
Despite the absence of assistance as given to the development areas, we have been able, in the main, to make good the losses of jobs in the cotton textile industry. This is due to a combination of self-help by the local council and Government assistance by means of industrial development certificates and in other ways. Only two months ago the Ministry of Technology placed with a local machine tool concern an order worth over £1 million which will assist that company in developing an advanced machine which has great potential domestically and in the export market.
I could go on listing other ways in which Lancashire has been assisted. To add to this long catalogue of help I would mention that we shall have the pleasure next week of the opening of a new general post office in the centre of the town. There really is no limit to the help which has already been given. One has details here of the proposals of Lancashire County Council to take advantage of the new derelict land grants which will enable thousands of acres of the most detestable legacy from the Industrial Revolution to be cleared within the foreseeable future. I would suggest, in criticising the Government for not including my constituency in the first instalment of the implementation of Hunt, recognition should be given, both in this House and locally, to the great assistance which has come the way of Lancashire and my constituency in the last five years.
1077 I should like to conclude with a number of questions to the Minister who will be replying. We know, of course, already that the liberal policy of the issuing of I.D.C.s is to be continued. My constituency would like an assurance that existing industries will not be encouraged to move. This would be a savage blow to the progress which we have been making. It would not make economic sense to lift industry from, say, Bolton and move it either to a development area or to an intermediate area, and one would hope that the Board of Trade would in no way try to help such an unfortunate development. We had a problem earlier this year, which was not as a result of prodding by the Board of Trade, and we overcame it, but it is one which, as long as we are outside areas of special assistance is, I suppose, a potential menace, and I hope that the Board of Trade will look at this most carefully.
§ Mr. Speaker
Order. I again point out that interventions prolong speeches, and that many Members wish to speak.
§ Mr. Howarth
Yes, in the old sense.
Two final questions. Would the Minister ask his right hon. Friend to look again at the timing of the proposed central Lancashire new town? The point has already been made by a previous speaker, but those of us who are very close to the area of the proposed new town are concerned about its effects on the existing, older industrial towns. I do not think we question having the new town or argue exactly where it should be, but we are certainly concerned about the time scale, and one would hope that, till the problems of the older industrial towns are well on the way to solution, the actual start on this new town would be postponed. I would like to hear the Minister's assurance on this point.
Finally, could we have an assurance that, on the basis that this is a piecemeal approach by the Government to the implementation of many of the proposals of Hunt, the position will be reviewed, say, 12 months after the start of the operation of the measures in the Bill, and that those of us who were not fortunate in the first instalment may come out on the second occasion?
1078 We do have problems, but we are confident that the changes which have already been made in Lancashire and in my own constituency are certainly in the right direction, and the quality of life is already beginning to improve. We look forward to assistance from the Government in the future on the basis of the proposals in this Bill.
§ 6.44 p.m.
§ Sir Frank Pearson (Clitheroe)
I am delighted to follow the hon. Member for Bolton, East (Mr. Robert Howarth), and not only because he is another Member from Lancashire and, therefore, quite clearly, thoroughly understands the problems of Lancashire and also his own area. In the earlier part of his speech I was developing a very great deal of sympathy with him, because I have always felt that the delineation of the somewhat artificial intermediate areas must necessarily mean that probably serious injustice would be done to the neighbouring areas, and I had always believed that the hon. Member's area at Bolton, and Rossendale, were probably two areas where injustice had been done, but by the time I had listened to the rest of his speech I began to have serious doubts whether that sympathy altogether was well placed.
This Bill has, in general terms, been welcomed on both sides of the House, and I would certainly welcome it, but I must say that I can give it only a very limited welcome. Anybody who has been in touch with this problem of the grey areas from the very start of the debate at the end of 1966 and the beginning of 1967 must feel a certain amount of disappointment at what is actually in the Bill as it is now before the House I remember, and we all knew, in those years what the problems of the grey areas were. One of the main problems of the grey areas was that, having unemployment, and also population drift and dereliction, their position was becoming almost intolerable as, year by year, the assistance given to the development areas got larger and larger.
It is all very well for the right hon. Gentleman the Member for Belper (Mr. George Brown) to argue that this Bill is the mere extension of the Government's development districts policy. Of course it is nothing of the sort. The 1079 Government have been forced to produce this Bill because of the campaign which has been waged over the last two and a half years by Members representing grey areas and in particular Members representing North-East Lancashire, and if the hon. Member for Bolton, East wants to know the reason why his area is excluded and my area is not, let him look at the number of Cabinet Ministers who have constituencies in the area. But that is a minor point. But that was the basis of the whole of this argument and why we have the Bill before us today. Quite apart from the question of grey area status, North-East Lancashire, and Bolton, faced the possibility of Preston new town, with the effects it was likely to produce for us, and we had a very serious position.
It was for this reason that we argued the case for special measures. We were delighted when the Government accepted our arguments and set up Sir Joseph Hunt's Committee with a number of very distinguished members. Sir Joseph did a magnificent job, and I was very sorry to hear the right hon. Gentleman the Member for Belper criticising the Report in the way he did. Sir Joseph produced a brillant report and he produced it very rapidly, and I was terribly disappointed when, literally within hours of the report being published, the Minister came to that Box and more or less turned it down out of hand. I think it would have been only fair to the gentlemen of that Committee first to have given full consideration to these problems; the Committee had written an excellent report and the Government ought to have given more consideration to it than they did.
The central proposals of Hunt were really two, and relatively simple ones. One of the most important recommendations was the conclusion which the Committee came to, after considering the question of the development areas, that there was a real case for a cost-effective study as to how assistance to development districts was operating. When one recognises that today it may cost up to £20,000 to produce one new job in a development area one must say that, prima facie, there is at any rate a case for Sir Joseph Hunt's recommendation that there should be a cost-effective study. I am perfectly pre- 1080 pared to accept that we cannot deal with the problem of the grey areas unless somehow or another we find the resources, and with the pressure which there is today on our national resources I believe that the only way to find the resources to tackle the grey areas is to make our assistance to the development districts a great deal more efficient than it is today. That could be done. I therefore welcome the proposal for a cost-effective study.
The second important point in the Hunt Committee's Report is the concept that the old industrial areas of the North, primarily of Lancashire and Yorkshire, have to be dealt with as a whole. If assistance were to be concentrated on communications and urban renewal I doubt whether much additional help would be needed. I believe that there is a vital spark for expansion and prosperity, but what is lacking is the physical condition in which industry can operate.
The Government were unfortunately unable to accept either of those two main concepts, and that is why I can give the Bill only a lukewarm welcome. It will ultimately do some good, but not immediately. It is early days, and I am the first to admit that the provisions of the Bill will not have full effect until the economy as a whole surges forward in a more expansive atmosphere. Already in North-East Lancashire there have been some results. We have had 47 inquiries about building grants. A significant fact is that practically none of the inquiries has come from outside the area. One of the main objects of the Bill is to draw new industry in. Local industry has said that it wishes to expand, but that will not perform the function that those of us who argued the case for the grey areas hoped would be performed.
A matter of particular importance to us in North-East Lancashire, affecting Oldham, Bolton and the old cotton belt, is the tariff protection award to the textile industry based on the recommendations of the Textile Council. In the old Lancashire cotton belt alone, probably 300 small firms will be closing down in the next year or two as a result of the new tariff protection measures. The hon. Member for Bolton, East may say that that is not so, but that is the assessment which has been made by the Lancashire and Merseyside Industrial Commission. I think that this will happen, and may 1081 well happen earlier than 1975 when it is expected. This will undoubtedly place a serious burden on the old textile areas which will not be assisted by the terms of the Bill.
If a firm wishes to extend its works and to put in new machinery to make it viable under present conditions, to get assistance under the Bill it must show that it will provide more employment. Textile firms are up against keener competition than ever before, and are having to install new machinery and adopt new techniques. This does not mean that they will employ more people. The money will be spent on equipment, and the expanded factories will be run with fewer people. If firms do not provide any new employment they will not receive grants under the Bill. If the Bill is to be of assistance to the old textile areas of Lancashire, an assurance must be given that where extensions are made to make a textile mill viable, the grant will not be conditional upon the employment of more people.
Will the Goverment say when it is proposed to start on the Calder Valley motorway? This is one of the most important factors for East Lancashire, and I know that I have the support of the hon. Member for Accrington (Mr. Arthur Davidson) on this. I hope that the motorway will link up with the Yorkshire network of roads. Unless there is a free-running artery road through East Lancashire to the Yorkshire network and into Hull, we shall not be able to compete with the Preston new town and North-East Lancashire will die.
I give the Bill a critical and rather lukewarm welcome. I hope that it will do good to North-East Lancashire, but I am doubtful that it will until the economy of the country as a whole shows a more energetic expansion than we see today.
§ 6.58 p.m.
§ Mr. Derek Page (King's Lynn)
Our attitude to the Bill should be determined by two considerations; how it fits into the general pattern of regional policy, whether it advances it or retards it, and how it will be administered. The Bill looks innocuous, but it empowers the Minister to decide which areas shall and which areas shall not get help, and that decision will be the subject of bitter debate for some time to come.
1082 I was very interested, as were most other hon. Members, in the recent speech of my hon. Friend the Member for Middlesbrough, West (Dr. Bray), and I look forward to hearing the Government reply to the allegations made. The wisdom of over £200 million going into development areas was criticised in that speech. Although I realise that taxes are not raised specifically from one area or another, this has meant an increase in taxation of £20 per family per year, including those families in my own area. This is a matter of extreme concern to me, because our main problem is miserably low earnings. After the five years of pressure that I have constantly exerted, particularly on the late lamented Department of Economic Affairs, I am appalled that it still does not appear to be accepted that low earnings can be every bit as great a burden as unemployment. It is imperative that this criterion be accepted.
I wish to bring a few figures to the attention of my hon. Friend the Minister of State. In the East Anglian Study comparison is made in Table 36 of earnings in the regions. These are broken down and the table gives the key figures for hourly earnings of males. The average for United Kingdom is 111d. per hour. In the Northern area, which is largely a development area, it is 108d. In Yorkshire and Humberside area, which is getting help under the new proposals, it is 104d. In the East Midlands it is 108d., in the South-East 114d. and in the South-West, which again is largely a development area, it is 103d. In Wales, which is entirely a development area, it is 112d., in Scotland 108d., and in East Anglia 101d. In other words, it is 10 per cent. below the national average and Norfolk is 5 per cent. below the East Anglian average, making it 15 per cent. below that for the country as a whole. This is the burden under which the area suffers. The burden on families is every bit as great as a substantial level of unemployment and it should be recognised as a criterion for regional aid.
Apart from the raw figures I have given, the trend in earnings has not been favourable. My hon. Friend the Member for Bolton, East (Mr. Robert Haworth) said that the position in Lancashire with regard to earnings was getting worse. This is not substantiated by figures in the 1083 Hunt Report, for in Appendix D earnings for the North-West in 1964 are given as 96 per cent. of the national average at that time and in 1966–67 that had gone up to 97.4 per cent. That does not substantiate the idea that the North-West is getting worse. In East Anglia the position is getting worse. It started at 91.7 per cent. and has been going down steadily every year, to 91.5 per cent. and then 91 per cent.
Apart from starting at a miserably low level, it is getting worse. Is this a matter of structure, the fact that it is a rural area and that everyone works in agriculture? Of course that is not so. Only 9.9 per cent. of the workers in East Anglia are employed in agriculture. In the East Anglia Report, in Table 37 there is a very interesting comparison of pay rates in job groups. The earnings in East Anglia are compared with earnings in the rest of the country for doing the same jobs. In 18 of 27 groups the earnings were substantially lower than those which men would get for doing the same jobs in other parts of the country. This is intolerable. If we take Mr. Average, Norfolk, a lad starting work at 15 and looking forward to 50 years' earning and compare his average earnings with what the same lad could expect in the rest of Britain, we find that he would be £9,000 worse off. That is his expectation in lower earnings with the regional differential. This poverty penalty of the region has every bit as much claim to assistance as a 5 per cent. level of unemployment.
Our criticisms are particularly hard when we realise that substantial payments are made to development areas which not only have vastly higher earnings but low unemployment levels. Over the whole area the average is 5 per cent. Some areas are much worse and our sympathy goes out to them, but in other areas there is not substantially low unemployment yet there are high earnings. It is not justice that poor people in East Anglia should be expected to contribute to the massive help for those who have higher earnings. This is Robin Hood in reverse, taking from the comparatively poor to help the comparatively better off. This will not do.
I had a continuing argument with the first Secretary of State of the D.E.A. over several years. It ended with a letter 1084 I had from him two days before he moved to a different job. In the letter he said:Differences in earnings between one area and another result mainly from differences in the industrial structure …He was referring to a question I had raised about lower earnings. Yet his own Department set up the East Anglian Regional Council, whose report he should have known stated categorically that one-third of the differential was due to different industrial structure and two-thirds was due to lower earnings for the same jobs. In spite of five years' pressure, that point has apparently not got across. It is not with regret that I see the responsibility coming under a new Department because this might give the chance of a fresh look at the matter. I have spoken moderately today because I want to give the new Minister the chance to look at this question afresh. The discussion I had with him a few days ago gave me some ground for hope that this factor had at last got across.
I believe the Hunt Report was a disgrace for East Anglia. I was terribly shocked when I saw it. It recommended considerable public expenditure to help areas where employment in coal-mining has declined. It pointed out that in the Yorkshire and Humberside area the drop in coal-mining jobs resulted in a 4 per cent. deficit in employment from that cause alone. In East Anglia the drop in jobs in agriculture over the same period worked out at precisely the same figure. Yet for the coalfields of Yorkshire and Humberside help was recommended and for East Anglia this shallow report said that it is good for the overall economy of the country that this drift should take place. What is good for the industrial goose is good for the rural gander. We absolutely demand that we should have equality of opportunity and equality of recognition of our problems.
My attitude to this Bill will depend very largely on the summing-up speech tonight. I ask my hon. Friend who will reply to the debate to state categorically whether or not it is now accepted that earnings which are substantially below the national average should now count as a criterion for regional assistance. If he accepts this, as he indicated in answer to an intervention by me might be possible, what is he to do about it?
§ 8.8 p.m.
§ Mr. Michael Shaw (Scarborough and Whitby)
I have a great deal of sympathy for the case put forward by the hon. Member for King's Lynn (Mr. Derek Page).
I wish to deal with the argument that the Minister of State put forward in his opening speech. He claimed that it was the very success of the Government's regional policies that had created the special problems at the solution of which this Bill is aimed. In a way he was right because the Government's policies changed the policies of the previous Government in that they gave benefits over a large area giving help to blanket areas. Therefore, the pull of those very large regions became greater, pulling industry away from the grey areas.
But in another sense he is wrong, because the real problem facing not only the development areas but the grey areas is the continued lack of expansion in the country's economy. It is significant, certainly in the North-East where my constituency is, that what the Government have done is to produce benefits which have often resulted, certainly in my constituency, in the position being only held rather than improved. In areas where mining is coming to an end or is being drastically reduced the position would have been very much worse, of course, without this help, but the danger has been that over the last few years, because the economy has not been expanding fast, the economically weaker parts of the country have been only able to hold their positions, even with help, and not improve it.
The Minister of State said that criticism of the present position seemed to be strongest on the boundaries of development areas. I think that he is right. The attraction must be greatest on the boundaries. When a person has to choose between going to a development area or a grey area with only a few miles in it, he will clearly always take the area that gives him the most financial advantage. What was significant was that the Minister said that the suggested new boundaries would leave a wide band which was neither in a development area nor in an area which would benefit from the Bill. Such an area will stretch across Yorkshire right through Lancashire.
1086 I accept that some parts of that area are very prosperous, but that is certainly not true of the whole area. If a development area of this blanket size has proved an attraction, to the disadvantage of areas just outside development areas, how much greater will be that disadvantage for an area between the development area in the north and the new areas for assistance in the south? The attraction will be both the north and south and this will make the situation for many parts of Yorkshire which will not be helped even more difficult.
Some areas do not need particular help for new jobs and particular help for dealing with dereliction, and I welcome the approach which will give more selectivity in the help to be given. In some areas it will be sufficient to get rid of the dereliction, of the very old early textile mills and some of the old slums surrounding them, in certain parts of the heavy woollen district, for example. On the other hand, in Bridlington, which is outside a development area and which will not be assisted under the Bill, help with communications and trading estates would help to attract industry to that isolated part of the coast. At present, there is no doubt that the attraction is either to the north or the south, leaving Bridlington isolated.
What must be our objective in considering legislation of this sort? If the areas to which special help is to be given begin to regard it as a permanent feature, we shall be saddling ourselves with a heavy encumbrance and, what is worse, endangering those areas themselves. The object of our assistance must be to give help in such a way that eventually these areas are able to stand on their own feet and compete on equal terms with the rest of the country in standard of living, job opportunity and the normally expected social amenities.
The form of the help must be such that those attracted to set up industries in these areas are given help to start but not to carry on once established, except in exceptional circumstances. If once it has been set up and is on its feet a firm cannot compete successfully, sooner or later it will go to the wall, and that is not the sort of firm we want to encourage. We want firms which, once they have set up their organisation and have fully trained men working, will be 1087 able to compete successfully and so become a viable and valuable unit in the economy of the region. Of course there are exceptions, and shipbuilding is one. It had to have special help in special circumstances.
I have often wondered what was the true purpose and the true benefit of R.E.P. I am glad that the Bill does not suggest that R.E.P. should be extended to the grey areas, but I wonder why. I think that the answer is that experience has shown that R.E.P. does not attract new industry to an area. Every industrialist knows that it is only temporary and any industrialist moving into a new area wants to be sure that once he has set up his plant, it will not become less profitable in the years ahead.
R.E.P. often has a bad effect, because it merely slows down the inevitable for those firms which cannot compete and which have little chance of competing on equal terms. However, it also has a good effect. In previous slumps or difficult periods of trade, it has been the habit of some firms with more than one branch to withdraw their activities from development areas and to concentrate work in their main establishments in the South or in the Midlands. R.E.P. has had the effect of making firms consider whether they might not be better advised to maintain their works in the development areas.
But the overall cost of R.E.P. has been out of all proportion to its benefits and I am glad that the S.E.P., on which no commitment had been given, is being withdrawn. The money can be more effectively used in the grey areas. The kind of help we are discussing is usually applicable to both the grey areas and the development areas, and it always seems to me to be a pity that we cannot give that help in such a way that we are, in effect, assisting companies to stand on their own feet. We give help by cash or by tax allowances, as the case may be: what we have never tried to do is to give firms in this type of area assistance in times of credit squeeze.
We seem to have been living through nothing else but credit squeeze in the last few years, and it is in this sort of area that trade becomes more difficult. That is why we have a Bill of this kind. We have some people going out of busi 1088 ness, and others in difficulties because of other firms going out of business, so that the credit position is there at its most difficult.
But although special arrangements are made on export grounds for firms to get special exemptions from the credit squeeze, there are no special arrangements to give easement from the credit squeeze to firms in the development areas and in the grey areas. That could be done at no cost to the economy. It would only require the banks to be assured of the soundness of the firms concerned. Risks would still have to be undertaken by those firms, but it would encourage them to go on with their work, and they would not be under such pressure to restrict their activities in order to keep within bank limits, and so on. If such a scheme could be devised, it would be of real benefit to such firms and a very real advantage to the areas.
I welcome the fact that the Bill indicates a return to the greater flexibility that we showed when in office in our approach to helping industry in these areas. I hope that with this new approach we may have before very long a return of confidence and an expansion in our economy. At the end of the day, whatever help we give it will be largely unavailing unless there is confidence, and unless there is continued expansion. Without those, no industrialist will ever make any effort to expand his business.
§ 7.24 p.m.
§ Mr. John Forrester (Stoke-on-Trent, North)
I hope that the House will allow me just a moment or two to associate myself with the kind word spoken from both sides of our late friend and colleague, Stephen Swingler. I know that his ability and integrity were admired in all parts of the House and by all sections of the community in his constituency. His death was a severe blow to us all who knew him for a number of years.
At the same time, I welcome my new neighbour the Member for Newcastle-under-Lyme (Mr. Golding), and I congratulate him on his maiden speech. From what we have heard this afternoon, and from what I have heard and seen in his constituency recently, I am sure that he will be a worthy successor to Stephen Swingler.
I am tempted to temper my congratulations somewhat when I look at the list 1089 of North Staffordshire topics with which he dealt. I find that he put his finger on nearly all the problems common to both his constituency and Stoke-on-Trent, and has left me with a number of items with which I need not take up a great deal of the time of the House.
At one stage I was tempted to apologise for being parochial, but as so many distinguished right hon. and hon. Members have been parochial I feel that I am in rather good company, and will, therefore, dispense with the apology.
Many of our problems are shared by other areas, but the problems of dereliction and rejuvenation that we face in Stoke-on-Trent are worrying us particularly at the moment. We have the somewhat doubtful privilege of having the highest acreage of dereliction of any of our towns and cities. This problem seemed insoluble for many years. In 1945, we had about 2,400 acres of derelict land. By 1950, we had reduced it to 2,000 acres; by 1961, to 1,606 acres and today the figure is 1,760 acres. In the next few years, as a result of further factory rationalisations and colliery closures, we expect the dereliction area to go beyond the 2,000 acres again. In other words, we shall be back to 1950, and beyond.
I gather that this problem is not peculiar to us, but we feel it particularly. It seemed that wherever the city turned, whether to the Government to encourage overspill or to new industry, the answers were always discouraging. We seemed to get nowhere. We despaired of a solution in the reasonably near future. We could not even start the jigsaw, let alone put it together. It is against that background that I welcome the Bill, because at least it attempts to deal with the first part of the problem.
I am tempted to go along with my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) and the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) in asking why we cannot have 85 per cent. for clearance of dereliction, as in a development area, as Hunt recommended. One could make out an exceedingly good case for doing just that. But I remember that in 1948 a report to Parliament named nine areas which had special needs, and when it came to it all three of the areas were 1090 omitted—and one of them was North Staffordshire.
I therefore feel that after waiting for 21 years for something to happen, it would be a little inappropriate for me to emulate Oliver Twist now and ask for more. With due respect, and without wishing to be ungenerous to previous legislation, this is the first Bill that has recognised that a sustained drive must be made to clear up the decay and neglect of former years.
It has been said by the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph), and repeated by others in the past, that the grey areas of today are very much in danger of becoming the development areas of tomorrow. The Bill, which deals with dereliction, should be a first step towards avoiding this in some of the older industrial areas. It lays the foundations of progress, but it must not rest there. The Government have to be more positive in their approach as the results of the reclamation of land begin to show.
For a 10-year programme to clear up dereliction in Stoke-on-Trent alone, the city estimates an expenditure of £3½ million or £4 million. That is a lot of money. It means that annual charges of £1 million have to be met by the ratepayers. This is a continuing burden which this generation and future generations must bear to repair the neglect, decay and greed of bygone years. They have to bear this burden unless the reclaimed land can be put to some good use in the future. I am sure that my hon. Friend does not wish to see all the reclaimed sites used for amenity purposes, much as some of them are needed for those purposes. I am sure that he wishes to see them used for housing and industry.
But if we move people from one housing estate to another, and move industry to new estates, we are creating even more dereliction, and are not solving the problem. I hope that alongside the reclamation scheme the Government will adopt a positive policy towards directing overspill population and new industries into the older cities which are capable of accommodating them. For a long time it has struck me as the height of folly to propose to build a new town on the outskirts of a conurbation and, at the 1091 same time, to leave the centre derelict, short of population and with inadequate industry.
The Maud Report proposes that we should have wider city regions. This may mean a different allocation approach for industrial development certificates. It may mean greater flexibility within such a wide city region. But if the present arrangements are continued, we shall have a poor inner borough being the main administration centre of a prosperous outer area, and that would not be in the best interests of the community. The dynamism should come from the centre and should radiate outwards, and not the reverse. Our cities can provide this kind of dynamism provided they have the right encouragement from the Government.
People leave our cities for a variety of reasons. They may leave them because the job prospects in the old industries have declined, because the surroundings have deteriorated, because the amenities are non-existent, or because there is a lack of suitable new employment in the area. In this age of increasing educational prospects, with the acquisition of new skills and knowledge, often the old industries are unable to offer the necessary opportunities for this new-found ability in our cities. If the new science-based industries are not attracted to these areas or are discouraged by the Board of Trade from going to these areas, population will drift away and seek opportunities elsewhere. This creates a problem of overcrowding in the areas to which the people are attracted which is as great as the problem of depopulation of the areas which they have left.
We are not proud of our inheritance in Stoke-on-Trent of having the highest acreage of derelict land. With the assistance of the Bill we hope to remedy that quickly. But it would be a waste of the economic potential of the city if in a decade or two we were known as the city which had the highest acreage of public open space. The Bill gives us great hopes for the future. It gives cities such as Stoke-on-Trent and others the chance of getting out of the maze into which they have been driven by circumstances beyond their control and from which for a long time they have thought there was no possible way out.
1092 I see the Bill as a first step—and I hope that for the Government it will be a first step—to ending the economic and social stagnation which has slowly been strangling the life and growth of our old cities. For that reason, I welcome the Bill.
§ 7.35 p.m.
§ Mr. David Waddington (Nelson and Colne)
I listened with great attention to the hon. Member for Stoke-on-Trent, North (Mr. Forrester) and, in particular, to what he said about the problem of dereliction. Like him, I attach the greatest importance to that problem and to the need to improve the environment in grey areas. Although the problem in Nelson and Colne is not as great as it appears to be in such places as Stoke-on-Trent, it remains a problem which has to be tackled.
May I revert to a point made by the right hon. Member for Sheffield, Hillsborough (Mr. Darling). I echo his strictures on the way in which the Bill is drafted. I do not put this forward as a criticism of the Government, except that the Government have undoubtedly put great pressure on the parliamentary draftsmen, but it seems to me that it is a great pity if a Bill which is presented to the House is quite incomprehensible unless one goes to the Library and looks up another Act of Parliament to see what is intended by the Bill. Presumably it will not be easy to do much about it now, but it is right that hon. Members should make their protest against legislation by reference to other Statutes in every case where that can be avoided.
Although coming from one of the intermediate areas, I can give only a muted welcome to the Bill. I am certainly not in the habit of looking gift horses in the mouth and, like my constituents, I was relieved when the Minister made his announcement in April. But there are three points which should be made at the outset. First, it must be made plain to people that what the Government propose for North-East Lancashire is rather less than that which the Hunt Committee proposed ought to be done for Lancashire as a whole. Hunt suggested 85 per cent. dereliction grants for Lancashire as a whole. The Government propose a 75 per cent. dereliction grant. Hunt suggested that there should be factory building grants not linked to 1093 new employment. The Government propose factory building grants tied to new employment.
Secondly, I ought to point out that these proposals fall far short of the recommendations made by the North-West Industrial Development Association, who wanted, among other things, development area status for North-East Lancashire, because of its very special problems, and something akin to the new intermediate status for the rest of the county.
§ Mr. Arthur Davidson (Accrington)
Does the hon. Member agree that if the Government had accepted the Hunt Committee's proposals, as apparently he wishes, his constituency and mine would have got far less than they are now to get?
§ Mr. Waddington
I do not agree. The Hunt Committee proposed 85 per cent. dereliction grants for the whole county, including North-East Lancashire. The Hunt Committee proposed for the whole of Lancashire, including North-East Lancashire, factory building grants which should not be tied to new employment. The Hunt Committee's proposals are better than the present proposals for North-East Lancashire. I know that the hon. Member is relieved by the Government's proposals, because I remember how disconsolate he was in the days following the Minister's announcement in April in case Accrington did not get in on the act at all. I am sure he is relieved by what the Government have done. But it is right to point out that the Hunt proposals in certain aspects at least, would have resulted in greater help for North-East Lancashire.
Thirdly, I very much agree with the right hon. Member for Hillsborough in pointing out that two years have been lost, in that for two years we waited for the Hunt Committee's proposals to be brought forward. They were then brought forward and promptly rejected by the Government. The proposals which the Government now invite the House to accept could well have been brought before the House in October, 1967, before the Government set up the Hunt Committee.
It hardly needs saying that North-East Lancashire faces many problems. 1094 Anyone coming from the area is bound to wonder whether the present proposals are enough. The Hunt Committee pointed out that time is not on our side, and certain replies to Questions recently show the drift of population away from North-East Lancashire in recent years, evidenced by the marked decline in the number of people employed in the area as distinct from the number who are unemployed. In June, 1966. there were 213,000 people employed in the North-East Lancashire sub-region. By June, 1967, the figure had sunk to 201,000, and by June, 1968, to 197,000. I hope that the figures for the last year will not prove as dismal. They are not yet available. There are hopeful signs in that more I.D.C.s were granted last year. There are further hopeful signs in the shape of inquiries from people in the area about factory premises.
§ Mr. George Lawson (Motherwell)
Is the hon. Gentleman aware that in the last three years over the whole country there has been a severe contraction in the number of working people? The labour force has been contracting, due to a dip in the birth rate in the early 1950s.
§ Mr. Waddington
I can assure the hon. Gentleman that that is not the explanation for the figures that I have just quoted. The drift of population from North-East Lancashire is well documented, and I can quote many figures to substantiate what I say. However, the figures which I have produced sufficiently prove the point. I do not think that it is seriously disputed that there has been a significant drift of population from the area. It was one of the matters mentioned by the Secretary of State in his statement in April of this year.
As I say, there are some hopeful signs in that new inquiries for factory premises have been made in the last month or two, and more I.D.C.s have been granted. However, against that position, one must set the likely consequences of the setting up of the new town in the Chorley-Leyland-Preston area and the number of people employed in the textile industry in North-East Lancashire, taking into account also the number likely to be employed in that industry by the year 1975, judging by the Textile Council's report.
1095 Dealing with the new town, I would remind the House that in their report on its impact on North-East Lancashire, the consultants said:Even without the New Town, North-East Lancashire will still tend to lose over half its natural growth of population by migration, and with the New Town there will be an additional migration movement of about 10,000–15,000 people out of the region over a 20-year period.The Textile Council's report forecasts for the industry as a whole that another 46,000 jobs will be lost by 1975, on top of the 200,000 jobs which have disappeared since 1953. It must be remembered that North-East Lancashire is still very much dependent on the textile industry.
I now wish to make one or two comments on the Government's specific proposals. In spite of what was said by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), I regret that building grants are to be linked to the provision of additional employment. Modernisation of the whole environment is essential if North-East Lancashire is to remain an area of industrial strength. But though modernisation is of the greatest value to an area, very often it does not bring new jobs with it. In North-East Lancashire. for instance, a great deal has been done in recent years to utilise old cotton mills for engineering purposes. One would think that no use could be made of some of the old weaving sheds, yet they have been turned to other useful industrial purposes. The fact remains, however, that if the idea is to improve the whole environment and attract into areas like North-East Lancashire new industry which pays good wages, it is essential to provide new factory premises. We will not get the new factory premises that we want in North-East Lancashire if the Government say that the grant will not be payable unless proof can be presented to the Board of Trade that new jobs will be provided as a result.
It is a great pity that the Government are not prepared to accept the Hunt recommendations to the extent of providing an 85 per cent. dereliction grant. Like other hon. Members, I find it difficult to understand why the Government are being so cheeseparing. I do not know the estimate of the saving in cost. 1096 If there are figures available on which to make such an estimate, I invite the Minister of State to say what it is.
I find quite incomprehensible the Government's rejection of one of the most fundamental proposals in the Hunt Report, namely, that there should be a complete review of development area policies… to determine the effectiveness of existing measures.I cannot understand how it can be argued that the taxpayer is getting value for money when he pays a subsidy of 30s. a week to Ford's at Halewood in respect of each of its workers. The company was not attracted to Halewood by the subsidy, since it was there already, and it would not leave even if it was in the power of the Government to withdraw the regional employment premium tomorrow.
It appears that money is being wasted in the development areas, and resources could be made available for what is really needed in the grey areas. I have in mind some real improvement in the environment and, while the pilot scheme for urban renewal in Nelson is a start, it is not enough. I have in mind more public investment in the area, there being a marked disparity in terms of public investment per head of the population between the North-West and other regions.
I have in mind better communications. I remember clearly that at the time of the Nelson and Colne by-election, a great song and dance was made about a new motorway link between North-East Lancashire and the M6. As the months have passed, that promise gradually has been watered down. The latest information is that the Government may have in mind only improvements in the existing roads between North-East Lancashire and the motorway. I do not know whether the hon. Gentleman can throw any light on that. It may be unfair to ask him, because it is not really his province. But there is the greatest anxiety in North-East Lancashire about the Government's plans for communications and, like other hon. Members, I feel that there is no better way of resuscitating a declining area than the provision of improved communications.
I hope that the Bill will do some good. If new life is to be brought to our part of the world, very much more will have 1097 to be done, and the Government will have to show rather more urgency than they have in recent years.
§ 7.50 p.m.
§ Mr. Charles Mapp (Oldham, East)
May I, first, sincerely compliment my hon. Friend the Minister of State, Ministry of Technology, on his maiden speech, as it were, at the Dispatch Box this afternoon. His delivery was excellent, although in a few moments I shall have to differ from him on some of the things he said. At least, I was delighted to see another North Countryman, the Minister of State, sitting alongside him. I should like to see more of this kind of provincial force in government, and less government of either party dominated by this great city.
That enables me to pick up a contribution from the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn), which met with some disagreement on this side of the House. He postulated that there was a considerable growth of movement of industry in its higher echelons from the provinces, from the point where goods are made, to this city. The only difference that I have with the hon. Member is that he implied that it had been taking place during the last four or five years. It would be wrong if we failed to notice that it has been taking place over a period of more than five years and that it is continuing.
I want to turn to the problem of the Hunt Report and the Government's recommendations. I belonged to the Lancashire Development Association long before the word "grey" had the connotation that it has today. I was then interested in trying to find out what was happening and why. Long before Hunt and long before other regions awoke to the problems of decay, we in the North-West felt that there was an obvious decline in our primary industries. Secondly, we could see that our social and industrial dereliction was acute because of historical reasons. Thirdly, there was clear evidence that even from 1960, when I made my maiden speech on the Local Employment Bill, what we now know as the development areas were sucking away what growth there might have been, not from the Midlands but from the adjacent areas.
1098 The Development Association, with the good will of its members drawn from local government, both sides of industry and both sides of this House, began to evolve certain attitudes of mind. The grey area was born in Lancashire. Some of us quickly realised that its implications were nearly as strong in Yorkshire. I remember the Prime Minister of the then Tory Government seeing the first deputation on this issue about 1962 or 1963. I admit that the answer was not very promising, but at least he recognised what was happening.
In 1964–65, it was clear that these tendencies in the North-West and in Yorkshire, although less acute, were being accentuated. Strong representations were made through this House and elsewhere for an inquiry. That inquiry was the Hunt Committee which made a very careful analysis and appraisement which, apart from one feature which I did not like, was generally fair, although some of its conclusions were not what I would have liked.
Let me say candidly why I think that some of its data was wrong. It lumped together—and the Government are so doing—such a place as the Manchester employment area or the Liverpool-Merseyside employment area. This is nearly as bad as talking about the London employment area. When one considers that the Manchester employment area extends from the westernmost part of the hills Saddleworth right across to Leigh, somewhere short of Rossendale, out to Alderley Edge, one appreciates how false such a picture can be when the types and nature of industry have changed throughout. To a great degree that applies equally in the Merseyside area.
It may be a useful description, but if one wants to understand economically the Manchester area or the Merseyside region, one should not use employment figures, in the Manchester case, relating to one and a quarter million metalworkers. That is "not on". The Hunt Committee did this, and for this reason I believe false conclusions were drawn.
On 24th April the Minister said that the Government were considering the selection of areas to be given assistance, 1099 and it is in this that I am particularly interested. He said:The Government consider that the selection of areas to be given assistance to industry must be governed strictly by criteria of need, especially the level and character of unemployment and numbers of unemployed, the incidence of high net outward migration and the real scope for industrial growth."—[OFFICIAL REPORT, 24th April 1969; Vol. 782, c. 669.]I have acted as a link between some 50 Labour Members and the North-West, and so I began to look at this statement with great care. I found that the criteria set out do not sustain the conclusions which the Government have reached. I asked a Question on 9th June and I found from the Answer that if I selected North-East Lancashire's net internal migration the position from 1961 to 1966 represented a loss of 2 per cent. If I looked at my own area of Oldham I found a loss of 5 per cent. The figure for Manchester and Salford gave a loss of 9 per cent.
If people cannot discern in the Manchester area certain seeds of the older engineering industry, and if they cannot recognise that we have got to regear ourselves to the future, they fail to see the real economic factors. The Government are conceding the case for North-East Lancashire that existed two years ago, but the rate of unemployment and migration and the rate of new industries coming into North Lancashire in the last two years is no worse, and indeed is somewhat better, than in that belt of Lancashire running across from Wigan and the hills. It is that area in which I am substantially interested.
The case for places like Oldham is made if I use the criterion that the Minister himself used. I noticed that he introduced a new criterion, namely, remoteness. If that is to be a criterion in order to justify some unusual conclusions, that is something that I cannot do. I took the view at the time, and I take it now—I believe it to be true of Hunt and of the Government—that the North-West should not be looked at in this context in terms of industrial help alone.
The problem in the North-West is decay—generally speaking, environmental, social and economic decay—in the industrial region as a whole. Not until the 1100 Government and Hunt are prepared to consider that kind of problem shall we find the right answers. I should have liked to have seen the highest possible figures for dereliction grants for the towns that I have been talking about, including my own.
But Oldham happens to be the third highest rated borough in the country, with a rate of 18s. in the £. It has helped to furnish itself with welfare services, and has new roads now under construction, that probably has relatively the most acute problem of clearing unfit houses of any borough or town. Our problem is not so much derelict land as environmental dereliction, with ugly old mills. We cannot house people without knocking down unfit property. In the main, we do not have land that has been scarred waiting to be brought into use. Our main problem is clearing away from our scenery old buildings that are now unused, are only partly used, or have only the basement in use.
Are we to assume that "land" includes buildings? I have a Ministry letter which tells me that in the Ministry's view it does, and I hope that this is the case, though the Bill does not say so. If we assume that it does, how does a local authority manage to get clearance in respect of dereliction? If it comes across an awkward landlord of either land or buildings—and there are awkward industrial landlords across the county; I shall not mention individuals, but one can think of half a dozen at a moment's notice—how does a local authority obtain compulsory powers to deal with ugly environmental decay? There are no powers, apart from those related to buildings which are dangerous by their nature, assuming that the danger is not to trespassers alone, or are unfit because of public health risks.
We have introduced legislation to deal with unfit residential property, legislation accepted on both sides and refined from time to time. But as far as I know there is no basic legislation giving a local authority, subject to acceptable criteria—even primary criteria, the ability to demonstrate professionally the essential facts about the building decaying, its lack of use and so on, so that they may compulsorily remove it and reclaim the site.
I may be right and I may be wrong, but I have had some correspondence about 1101 this that leaves me quite undecided on whether the legislation quoted in it is adequate. I would not like to vie with the Minister on knowledge of the Yorkshire towns, but I have some knowledge of many of the Lancashire towns. We had a valuable contribution a few minutes ago from my hon. Friend the hon. Member for Stoke-on-Trent, North (Mr. Forrester). I know Stoke fairly well. Is it a fact that our local authorities are paralysed when dealing with an unwilling landlord, when everyone in the area believes that it is both industrially and socially desirable that buildings or land should be reclaimed for the benefit of the town? If that is so, the Bill should be improved, though there must be fair criteria.
I hope that the area list that has been published so far is not the final one. I have wondered more and more in the past few months whether our existing machinery for channelling financial help to the development areas is the best that can be devised. I have grave doubt about it. In our debate last week I quoted two firms, and another has been mentioned today. No one will convince me that that great glass firm at St. Helen's and I.C.I. in the North-East are in any way influenced by the grants in respect of development areas. No one will convince me that in preserving the development area status of Merseyside there is any case for affording that concession to the Cheshire side of the river, where there is an area of oil growth and prosperity. We must be a little more discerning.
Therefore, the Government could well reappraise, without losing sight of the objectives, whether the very costly means now employed could be better and more profitably employed in another form of machinery. If that is done, I think that the problem of the areas between what are now development areas and the more healthy areas can more easily be recognised and helped.
I close on a note of criticism. Although I welcome the Bill, as it is capable of great improvement, the Government must make up their mind on this problem. For three or four years we have heard of the benefits of blanket development regions—all Scotland, all Wales, all the South-West. If any of us thought about restricting them to the 1102 existing industrial areas of those regions, it was alleged that the blanket treatment was better, more flexible, and so on.
It was not wholly convincing, but if it is considered a convincing argument for the development areas why is not the blanket treatment adopted for the intermediate areas? I do not think that one can sustain the argument on one and then, by criteria that some of us cannot understand, selectively pick out parts of Lancashire and Yorkshire to try to deal with this problem. The policy fails to deal with the position in the great Lancashire belt from Wigan up to the hills, it identifies certain proper areas in Yorkshire, rather than the whole.
The time is right for us to recognise that if we are to have blanket arguments we cannot at the same time argue selectivity for the intermediate areas. I think that generally the business world, with which I mix unpolitically on problems of this kind across the North West, does not like this selectivity.
I would like to close by quoting from a document I received in my post this morning from an industrial body, paragraph 6 of which says:The form of assistance proposed for North East Lancashire, whilst welcome in principle, is not particularly appropriate to the problems which that area faces.The hon. Member for Nelson and Colne (Mr. Waddington) may be interested. I should say that the association which sent this document is non-political, but covers local government, trade unions, the lot, working through a very able director. The document continues:Whilst it is too early to make a final judgment, enquiries received by the association"—which deals with thousands of inquiries every year, because it is a focal point for all sorts of industries to make every conceivable inquiry before going to the Ministry—indicate that building grants should not be tied to providing additional employment. Many companies in North East Lancashire are ready to modernise and extend their premises, and need to in order to survive, but only in a few cases will this lead to the extra employment required to qualify for a grant.Courtaulds, one of the major firms in the textile industry, argues that in the modernisation of firms in that industry there will be fewer but better-paid jobs, and that there is still a need for the 1103 modernisation of mills, and so on. It is an argument to which I and the unions subscribe.
If there are to be fewer jobs, what incentive is there, even for such firms? What about the 45,000 jobs which we fear will become redundant in the next four or five years? Perhaps the Minister will be able to confirm that the larger proportion of those jobs will not be in the weaving section—which has already suffered loss—but that the biggest danger will lie in the spinning section. That means precisely the area—Bolton, Rochdale, Bury and Oldham—where so far the Government have denied us the possibilities of retraining facilities to deal with the problem.
I welcome the Bill as a skeleton. The real issue will lie on the Orders-in-Council. I hope that the Government will think about the number of constructive suggestions made from both sides of the House in this debate and that progress will be made with the Bill in Committee.
§ 8.11 p.m.
§ Mr. R. W. Elliott (Newcastle-upon-Tyne, North)
I have listened with great respect, as always, to the hon. Member for Oldham, East (Mr. Mapp) and agree with a great deal of what he says. It is strange in a sense that, when I sat on the Government back benches, I sat where he sits now and stood where he has just been standing and made the sort of speech he has just made, particularly about the doubtful effect of blanket aid to the areas of high unemployment. It is salutary to have heard such a speech from the Government back benches at this time.
I agree that there are big firms in certain areas which are not influenced at all by development area policy as we have it. The hon. Gentleman mentioned I.C.I. This is the second time that I.C.I. has been mentioned on the benches opposite this week. The hon. Member for Middlesbrough, West (Dr. Bray) is not here, so I apologise to him in his absence for not being able to give him notice that I would refer to him. I had not intended to mention him. He suggested earlier this week that the great I.C.I. complex in the North-East—where we are glad to have such a big employer—was wasting a good deal of the money forced on it by the Government's policy.
1104 It is our contention, certainly mine, coming as I do from a development area, that a great deal of money—and, as the the hon. Gentleman has just said, it is a great deal of money—being poured into development areas might be poured into them to much greater employment effect than it is at present. That is one of our main criticisms of the Government's development area policy. We contend that it has been ineffective as far as the provision of employment is concerned.
The debates which have anything to do with local employment essentially become parochial. Many hon. Members on both sides have spoken about their own areas. We have just heard a strong and earnest appeal for Oldham. I have taken part in a number of debates over the years on the problems of local employment with particular reference to the North-East. I have said already that I believe Government policy for the development areas to be ineffective at present, and in support of my contention I will quote the present unemployment situation in the North-East.
In October, there were 61,727 people unemployed in the Northern Region—twice the national average. The North-East is still carrying 9.9 per cent. of our national unemployment although it has only 6 per cent. of the population. There can be no quicker or greater condemnation of the five years of Labour Government development area policy than these hard figures, which are of the greatest concern to all of us with responsibility in the North-East.
The right hon. Member for Belper (Mr. George Brown) has had to leave, but I told him that I would refer to his speech. It was, as usual, forceful. He referred to the North-East, as well he might. When I was sitting opposite, I remember how often we were told that our measures were ineffective and that we did not plan—which was the greatest criticism from the then Opposition.
The right hon. Member for Belper, on taking office, headed a new Department of State the recent demise of which is not mourned on this side of the House. And he was responsible for some time for development area policy. He mentioned the North-East, in his usual flowing style and said "that it looks different today." But, swinging round as 1105 he said that, his eye fell upon the hon. Member for The Hartlepools (Mr. Leadbitter), and he added, "in places", as indeed he might. The hon. Member for The Hartlepools, a conscientious Member, had been waiting to speak in the debate and no doubt, Mr. Deputy Speaker, he will catch your eye in due course and might well tell the right hon. Gentleman that there certainly are places in the North-East, including The Hartle-pools, which are considerably concerned at the high and persistent level of unemployment.
If one were to be ultra-parochial, coming from a development area where the level of unemployment remains at twice the national average, one would have misgivings about the Bill, but I suggest that those of us who do come from development areas with these persistent problems should try to see the picture as a national one and to find out and determine what it is that is causing our high level of unemployment.
First, I suggest that it is, of course, the failure of the Government to obtain economic growth. If any easing up of the I.D.C. policy is going to aid growth. then let us have it. I would add to what was sensibly stated by the hon. Member for Stoke-on-Trent, North (Mr. Forrester) that the grey areas of today may well become the development areas of tomorrow, and therefore I welcome the Bill, despite the problems which remain in my area.
There is an obvious great danger to the development areas in themselves by an over-emphasis on them, and if the economy of the country can be improved as a whole and strengthened by assistance to areas, especially those lying on the borders of development areas, then let us have liberalisation of I.D.C. policy.
I believe that blanket aid is wrong and always has been wrong. I agree with those who have bemoaned the fact that we have too much in the way of "areas". We have development areas, grey areas and intermediate areas. But whether we have grey or development or intermediate or any other sort of areas, let such aid as is available be given where it is most needed. That is no new policy. It is what we advocated when we were on the other side of the House. When we had high unemployment in the North-East 1106 it was our policy, based on the sensible suggestions of the Hailsham Report, to concentrate aid where it was most needed. The spreading of the jam thinly has not worked, and it is encouraging to realise that the Government are at last seeing the error of their ways and are gradually, all too slowly, moving towards the encouragement of industry where it is willing to be encouraged.
I will refer, as have others, to the Hunt Report. Why not have a complete review of development area policy? It has not worked for the past five years. Why should the Hunt recommendation that there should be a complete review not have been accepted? Why not deschedule Merseyside if its problems have been met and overcome? I like to think that I may stand in the House on a future occasion and ask why Tyneside should not be descheduled when its problems have been overcome. If the problems of Merseyside have been overcome, let us have it descheduled.
In other words, the appeal which I make with the utmost strength at my command is that from now on we should be more realistic, more intelligent and more sensible in our approach to development aid policy. Let us give such aid as is available where it is most needed.
§ 8.21 p.m.
§ Mr. Ted Leadbitter (The Hartle-pools)
I am glad to have the opportunity of following the hon. Member for Newcastle upon Tyne, North (Mr. R. W. Elliott). To substantiate a remark which he wanted to make, he referred to the Hunt Report. He did so having declared earlier that Government development area policy had not worked. Paragraph 102 of the report says:We were greatly impressed by the contribution that the government's building of factories has made to renewing the dynamism of the development areas. Many firms who had started in a small way have expanded considerably and there are now several on the estates in England, Wales and Scotland who are each employing many thousands of workpeople.That clearly refutes the hon. Gentleman's argument.
Paragraph 103 says:At the same time as new industry is being attracted to these areas, work is going ahead as rapidly as possible to improve the physical fabric, in particular houses and roads, and to remove dereliction.1107 That, too, supports my argument. These are not my words. They are the words of a carefully thought out and highly responsible report produced after much examination by a body not influenced by any political pressures.
Finally, to deal with the argument of the hon. Member, I refer to paragraph 104 which says:There are tangible signs of progress. On the basis of the criteria examined in Chapter experience in the development areas appears to have been improving relatively to the rest of the country. Whereas for most of the 1960s total unemployment in the development areas as a whole was at least double the national rate, by mid-December 1968 it stood at 4.1 per cent., compared with 2.3 per cent. for Great Britain. And the 1,000 i.d.c.s approved in 1968 for projects in the development areas were expected to provide 72,000 more jobs in the coming years.That makes the point quite clear.
The hon. Member will agree with me that a Bill of this kind should be examined without the use of the language of the hustings. We must ask ourselves objectively whether the Bill provides an adequate answer, or, if not adequate, the best answer possible within the terms of the country's resources. For decades in the North, in Scotland, on Merseyside, in the greater part of Wales and in the greater part of Cornwall—all now described as development areas—it has been the struggle of Government after Government to resolve the problem of the decay in the basic industries and rising unemployment.
It has not been the problem just of the Labour Government; it has been the problem of every Government. In the latter 1920s, culminating in the early 1930s, the problem continued, and there is no finality in any kind of solution that may be humanly devised. All we can do is to apply our philosophies to the available material means. I regret that the hon. Member should have expected hon. Members like myself to forget that after many years of power the Conservative Government failed to deal with the problem to any extent.
§ Mr. Elliott
I have already quoted the unemployment figure in the Northern Region when we left office. I compared it with the present unemployment figure. How does the hon. Gentleman relate the two to what he has just said?
§ Mr. Leadbitter
The answer is simple. The hon. Gentleman referred to the October figure of 61,227. To apply some rationale to the problem, I remind the House that in the last three or four years 37,700 miners have lost their jobs because of pit closures. This is the problem.
It is the problem of keeping pace in the North-East, of injecting new industries at such a level as to match the decline in the basic industries and at some point to overtake it, to close the gap. It is dishonest to say to the people in the North-East, or in any other development area, "Here is an unemployment figure", and not go beyond that. The figure is what it is because during the last few years we have been dealing, more pertinently than before, with the basic problems of how best to inject new industries to mop up the slack, the unemployed labour, much of which has to be trained, which has resulted from the decline in the basic industries.
Everyone would agree that we have long since learned that it is not good economics to keep uneconomic pits open. It is good economics to contract the industry to a viable point, so that those left in it have better working conditions and wages structure.
What have the Government done? Having posed the problem and implied the rate of improvement since the Government took control, I merely have to say that, when we reflect on the rate of decline in the basic industries, which is the main concern in the development areas, we can see that we still have considerably fewer unfilled vacancies than unemployed. So the lesson is that we cannot risk reducing the level of aid. Indeed, if we had the resources, there is a need to increase it. So we should make clear what this aid means.
With this Bill before us there is the worry that some of our aid to development areas might be creamed off to help the intermediate areas. If we fell into that trap, obviously it would create divisions between development and intermediate areas. If we do not want to create that division, let us put the record straight. The number of advance factories which have been placed in the Northern Region is 75, 59 of which have been made available since the Government came in. The number of job prospects arising from the programme of total 1109 aid and advance factories is about 42,300 in the next four years. That is a substantial amount of employment.
§ Mr. Bruce-Gardyne
Could the hon. Gentleman tell us how many jobs have been produced to date in the advance factories to which he referred, since 1964?
§ Mr. Leadbitter
The number of jobs produced in my region from the Government's programme, so far as I can estimate—I am open to correction—is about 78,000 over the last five years.
The total outlay on industrial inducements in the North to help industry to come in has risen from £78 million in 1967–68 to £105 million in the financial year 1968–69. Here, I agree with the hon. Member for Newcastle-upon-Tyne, North and others. It is right that this kind of aid should be examined to see whether we are getting the best value for our money. I agree that there is no finality about the order of the aid. I dispute. however, any argument that aid is not necessary and that we should not rely on Government intervention to resuscitate the general economic life of these areas and, as a consequence, the social life.
In the Northern Region, I am glad to be able to say that, during the next financial year, the amount of aid for road works alone is about £50 million. Indeed, the present amount of aid for roads in the region is about 20 per cent. of the total public investment.
I have tried to pinpoint the problem and briefly indicate some of the levels of the aid. I have tried to point out that it is not a good philosophy to introduce arguments which might induce the people in the intermediate areas and those in the development areas to believe that their interests are in conflict. What is important is that we must think in terms of the national prosperity across the board. We have to be elastic in our thinking. We must be able to say that we can shift from one problem to another when we have settled a problem in one area.
In Hartlepool, we had 12½ per cent. unemployment in 1963–64. It is now about 5 to 5.4 per cent. In real terms, we had over 4,000 people out of work, which is one out of every eight of the working population. Now, that position is different. Indeed, Hartlepool is unique, 1110 because the aid and Government support which we have been able to get has placed us, as a town with 100,000 people, with the four sources of power in it, and, more recently, a nuclear power station with a total constructional employment capacity of 2,400 people.
That, briefly, shows that the Government's policy has been successful. It is a damned sight better than the record of the Conservative Party.
§ 8.35 p.m.
§ Mr. J. Bruce-Gardyne (South Angus)
Most of the speeches have naturally been made by hon. Members representing the grey areas. More recently we have heard from the hon. Member for The Hartle-pools (Mr. Leadbitter) and my hon. Friend the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) who, like me, come from development areas. It is right and proper that we should consider the Bill in the light of what it might do for the so-called grey areas and of its possible effect on the areas which have enjoyed the privileges of development area status.
I wish to raise three points and then to return to what the hon. Member for The Hartlepools said about the general philosophy of regional development. First, I wish to say a few words about something in the Bill, secondly about something which should be in the Bill and then deal briefly with the general philosophy behind the Bill.
As to what is in the Bill, like my right hon. Friend the Member for Leeds. North-East (Sir K. Joseph), I welcome the decision to abolish the selective employment premium in the development areas. I regard the selective employment tax as an abomination, and anything which is done to diminish it is to be welcomed. But there is one aspect of the application of the selective employment premium in an area which has benefited which is overlooked, and that is the appallingly distorting effect of the pyramid of subsidies which are given on a poll basis to those industries which happen to have attracted the blessing and favour of Kaldor and denied to those which did not receive that blessing and favour.
In an area like mine, the incidence of the regional employment premium, of the S.E.T. repayment and S.E.T. premium in one firm which happens to be just 1111 over the line and therefore for some obscure reason regarded as a manufacturing industry when compared with another firm which may be doing virtually the same thing—I think, for instance, of the baker's shop which bakes its own bread and the baker's shop which does not—one finds the most fantastic distortions which vitiate all good economic sense. Therefore, anything done to reduce these distortions is to be welcomed very much. As one who represents a development area, I entirely endorse what my right hon. Friend the Member for Leeds, North-East said on that aspect of the Bill.
Secondly, I wish to refer to the rejection of the Hunt Committee's recommendation that the bottom limit on industrial development certificates should go up to 10,000 sq. ft. This was justified by the Government on the ground that it was an essential safeguard for the development areas. I question that. When the right hon. Gentleman who is now Minister without Portfolio was approached by the chambers of commerce in July about the Government's decision to reject the Hunt Committee's recommendation, he wrote back on 8th July saying that the Governmentdid not 'summarily reject' the Hunt Committee's views on the industrial development certificate control. We gave very careful consideration to these views and we have made some changes in the arrangements".The Hunt Report was published on 24th April. On that day the Minister announced that the Committee's recommendation about lifting the ceiling on I.D.C.s had been rejected. The implication of the decision to reject the recommendation is defensible only on the ground that there are many small firms with factories of between 5,000 and 10,000 sq. ft. which could be expected to move to a development area if they were subjected to I.D.C. control but would stay put if they were not. I find this very hard to believe indeed. The scale of factory we are talking about is not, I would submit, of a type very likely to move from, say, the South of England or the Midlands to Scotland or the North of England at all. The factories which would be affected by I.D.C.s, to move to a development area, are the much bigger ones which would not be affected by the change in the system of 1112 control which the Hunt Committee recommended.
Furthermore, any of us who talk with businessmen up and down the country, in development areas and outside development areas, would not easily accept the Government's argument that the I.D.C. system of control is always applied in a flexible manner. I was talking to a businessman the other day who had to operate his enterprise and try to make a profit by running four small factories in a region of 10 square miles because he could not get I.D.C. permission to bring them together to make a viable unit of them. This is the sort of thing which brings the whole I.D.C. system into contempt, and I am very dubious about the basic proposition of the I.D.C. system, which is that, in the last analysis, the gentleman in Whitehall knows best.
Finally, I want to say a word about the whole philosophy of development area policy. The Hunt Committee recommended time and again that the Government should conduct a thorough-going review of the whole system of development area assistance, and it is high time that the Government agreed to do this, because there is accumulating evidence that we are misdirecting our efforts and wasting our funds. Hon. Gentlemen opposite have laid great stress on the progress which has been achieved in the development areas. I was seeking to intervene in the Minister of State's speech to point out—because I do not know whether he is really aware of it—that over the past four years of this system there has been a net loss of 60,000 male jobs in Scotland alone. A net loss, and this is the result of all the money which has been poured into development area assistance over these years.
Of course, it may be argued—it is argued, and it will be argued—that this loss would have been greater without these forms of assistance. I am not altogether convinced that even this is true, because the first thing which any incoming firm looks for, and one knows this because it comes out from one questionnaire after another, is the availability of labour. This is the fundamental point, and more important than the assistance which the firm is offered, or an advance factory. The first thing the firm wants to know is whether the labour is there. Fortunately, in my area we have not had a significant 1113 level of unemployment over the years, and the fact that we have been turned into a development area has not brought one single additional firm which was not there when we were outwith the former development district.
Furthermore, we ought to look very seriously at the extent to which the various systems of development assistance have been concentrated on the capital-intensive industries. The Minister of State knows quite well, of course, of Professor Brown's comment on this in the Hunt Report, and I think it deserves serious study. I am waiting with great interest to hear how he replies to the points made by his hon. Friend the Member for Middlesbrough, West (Dr. Bray) the other evening, because I think they are of great significance. I interrupted my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) to point out that we in Scotland are in prospect of an allocation of investment grants amounting, perhaps, to a sum in excess of £70,000 for every job created. This is in the instance of the petro-chemical plant which Grampian Chemicals apparently intend to build at Invergordon.
I have no doubt that the Minister of State will say that there will be ancillary industries coming in to improve the ratio between the jobs created and the investment grants involved. This is extremely doubtful in a petro-chemical plant, and the Minister is under an obligation to explain much more clearly to the House than has been done to date how the Government expect to justify expenditure on this scale which, if no less than three petro-chemical plants are established in Scotland in the next few years, as is now suggested, will involve investment grants of £50 million or more and create perhaps 1,000 jobs, if we are lucky. This is expenditure gone absolutely mad and it is vitally necessary to look once more at the whole system of development area incentives. My own preference, as I have said before, is for a simple system of a regionally differentiated payroll tax. If we had that, I would be in favour of the abolition of the entire system of investment grants, which is now becoming almost an abuse. We certainly need a thorough-going review and should not regard the Bill as a substitute for that.
§ 8.48 p.m.
§ Mr. George Lawson (Motherwell)
The hon. Member for South Angus (Mr. Bruce-Gardyne) always strikes me as a strange representative to come from that area. One would almost think that he had another idea of where the Invergordon development should take place. When representatives from that area came here urging such a development, did he then oppose it? One cannot talk about forms of development in terms of how much it costs to produce a job. One certainly cannot think about the development in Invergordon in terms of how much it takes to produce a job there. One has to think in terms of what the nation requires. The nation requires the product that will come from Ivergordon. It is a very expensive product to produce and the decision had to be taken where the development should go. This development would not have taken place without intervention by the Government, and it was therefore sensible for the Government to decide where it should be, not just in terms of how many jobs it produced but whether it was sensible in the interests of the nation.
It is a mistake to talk about development policy in the terms in which much of the argument has been conducted today. It is not a question, as my hon. Friend the Member for King's Lynn (Mr. Derek Page) said, of poor areas helping not so poor areas, but of making the best use of the nation's resources, and by doing so to see that too many people do not pack themselves into the overcrowded parts of the country.
The hon. Member for South Angus sneeringly spoke about the gentleman from Whitehall knowing best. What has led to the shaping of the location of industry? It certainly has not been the gentleman from Whitehall who pulled so much industry down to the South-East and the Midlands.
The problems with which we are dealing were not generated by the gentleman in Whitehall. It is the gentleman in Whitehall, acting for the House, who is trying to find an answer to problems which have been produced as a result of leaving industry to do as industry felt best. The derelict areas are products of industry being left to do as it pleased. This is the kind of difficulty which has confronted us all our lives. The area 1115 from which I came and the area which I represent would have been derelict if industry had been left to itself. The area depended almost wholly on coal and steel. The coal industry has virtually disappeared. Two or three pits are left. This was a great centre of the coal-producing industry in Scotland. Had it not been for Government intervention the steel industry in my area would have been in a very bad way.
Had it not been for industry coming into Lanarkshire—to a large extent American industry—attracted by the policies which for a long time we have been advocating from this side of the House, and which we have been carrying out from this side of the House, this would have been a dreary and desolate area. As it is, the area is alive. It has not solved all its problems, but it is on the way to becoming once again one of the most important industrial areas in the United Kingdom and of benefit to the United Kingdom as a whole.
But it could not and would not have happened had it been left to the private enterprise people of whom the hon. Member for South Angus has such a high opinion. It required and requires the gentleman from Whitehall. We should be very thankful indeed, and Scotland should be very thankful indeed, for the intervention by the Government from London, because if Scotland had been left to the Scots—and I am a Scot, although I doubt whether the hon. Member for South Angus is a Scot—it would have been a poor lookout indeed for us. We are benefiting from this type of intervention.
§ Mr. Lawson
The hon. Member does not talk like a Scot. I do not think he has spent much of his life in Scotland. But that is by the way.
May I ask him what would have been the position of Dundee if immediately after the war the first Labour Government had not actively pursued a policy of encouraging industry into the area? What would Dundee have done without the modern industries which are there now as a result of the action of the gentlemen from Whitehall or the Government from London? Where would the 1116 jute industry be today? Where would Dundee be if it had only the jute industry? Indeed, it would not have had the jute industry. Where would South Angus be with virtually a desolate Dundee?
The hon. Member for Scarborough and Whitby (Mr. Michael Shaw) was much more moderate in his approach. I remind him that we are engaged—not we alone, because this is true of most industrial countries, who all have the same kind of problem—in dealing with the difficulty which arises from the fact that certain areas are more attractive to private enterprise than are other areas and that if we left private enterprise to its own devices, it would move only to the attractive areas.
This is true of Italy, of the United States and of other countries to a greater or lesser degree. It is only within the last few years that Governments have begun to work out policies to meet this kind of problem and if we have not found the exact answer, if we have not the refinement of selectivity which perhaps we need, that is not to be wondered at, because these are new policies for Governments—and not just the British Government—which involve intervening in this way.
We are thankful that it has developed. No one except the hon. Member for South Angus challenges the conception that Governments have a responsibility for the location of industry. I do not argue that all these actions are right. I argue that the principle must be applied. I support the Bill, because I was afraid that there would be too much pressure, even from my hon. Friends, to give away too much.
An hon. Member who comes from the grey areas will naturally argue from the point of view of the grey areas, but the development has been such that peripheral areas have suffered most. Industry has been sucked into the centre. Bits and pieces near the centre need assistance. If assistance is taken too far, the same pattern can be seen over the whole scene and then areas nearer the centre will benefit most from a low- or medium-pitched policy. We must be discriminating. We must weigh the odds. Certain areas, not because of any deficiency in their people, but because of their distance from big population centres at this time, 1117 need something to be loaded in their favour, in the nation's interests.
The hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) said that the policy has not succeeded. I say that it is succeeding. I am critical of some aspects of my own Government's activities, but on this aspect I give them full support. They have done much that has transformed areas which otherwise would become increasingly derelict. There is now new life in such areas. If we were to let up now, the situation would quickly revert to that from which we wish to escape.
Job opportunities for boys was a yardstick which my colleagues and I applied when we were in Opposition to show how our areas were being treated less favourably than other areas. In 1959, for every 100 boys out of work in the South-East there were 205 registered unfilled vacancies. In the Midlands there were 250 unfilled vacancies for every 100 boys out of work. In Scotland there were 17 vacancies for every 100 boys out of work. The situation has changed since then, but Scotland is still not in the favourable position that applies in London and the South-East. In April of this year, for every 100 boys out of work in Scotland there were 95 unfilled vacancies. There is still a great gap between the areas. if we were to let up on this policy now, the real gains which have been made might be dissipated. The changes that are being wrought in those areas are quite outstanding, and they are being wrought because of Government action. Speaking as a Scot, born, bred and reared in the area, I say that we must be very grateful to a Government based on London for pursuing policies which are now so beneficial to those areas that I and many of my colleagues represent.
§ 9.0 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
I should like to add my humble congratulations to the Minister of State on finding himself for the first time dealing with these matters from the Treasury Bench, and on his speech this afternoon. It is an equally pleasant duty to congratulate the hon. Member for Newcastle-under-Lyme (Mr. Golding) on his maiden speech. It is immensely brave of him to venture into the fray in his first week, and I know that his constituents will appreciate that quality of cour- 1118 age he has shown. We were all impressed by what we heard, and it will be a pleasure to the House to hear him on future occasions.
To some extent I am a maiden, at least in relation to this present subject, although I must confess to being considerably tarnished in relation to speaking from this Front Bench. I hope that I will be forgiven for not having spent many years studying the background legislation and history of the subject.
My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) adjured us not to have a philosophical wind-up. I will do my best to avoid that, though I feel that one must be extremely careful about winding up anything on the 5th of November. It is a dangerous day in this place. So, if I stray into the philosophical, I hope that I may be forgiven.
The Bill has received a general if rather lukewarm welcome in most quarters of the House. It seems to have grown out of development area boundary policy in the past. It was because boundaries were drawn that boundaries problems arose which have had to be tackled, though belatedly. It has already been shown that drawing new boundaries for these new areas will cause more problems in the future, because as soon as we draw up one boundary we set up a further problem just over it. The hon. Members for Bolton, East (Mr. Robert Howarth) and for King's Lynn (Mr. Derek Page) have already expressed disappointment at not being included, and I believe that Sheffield and the south-west of England are also aggrieved at being left out of the Measure's benefits.
There is a danger, if we go on like this, of ending with a map so covered with shades varying from black to mid-grey and pale grey, and of such a complicated pattern, that no one will know to what they are entitled in which area, and which areas are getting whiter, and which darker. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) was right to draw attention to this aspect. We already have special development areas, development areas, intermediate areas and areas where grant can be claimed for derelict land. I wonder how many more there will be in 10 years' time?
1119 My hon. and learned Friend illustrated the point in what one might call a physical rather than a geographical way. He said that we already have a larger number of magnets pulling employment, factories and people in different directions, and that if we go on we will need to add more magnets in order to counteract the pull of those already existing. We are setting up such a complicated pattern of firms, employment and industry being pulled in all sorts of directions, that one wonders whether we shall not get into the position where we need to simplify the whole thing and make it more flexible.
It is a source of some small credit to my right hon. Friend's that the powers in this Bill are very much based on the sort of Local Employment Act, 1960, powers which they brought in and which have proved their worth anyway in terms of value for money. It is interesting that in the extension of the policy it is the sort of Tory measures of 1960 which have been brought forward and the measures which the Government tried themselves, such as the selective employment premium, which have been rescinded for the measures in this Bill. There is room for more progress on that promising road which we hope to encourage the Government to tread.
It is only fair to congratulate the Government on bringing in a Bill which ostensibly will save £10 million a year, according to the Financial Memorandum. That must be a unique event and one that we are glad about. I do not intend to talk about Committee points because we shall come to them in Committee on the Bill, but we should like to have an explanation from the Minister of State as to what Clause 1(3) means. Several hon. Members have asked about that. It would be useful if the hon. Gentleman could give his reasoning why the Government have not accepted the Hunt recommendation that grants should not be tied to jobs. It would be useful if the hon. Gentleman would spend a few minutes on that.
As to industrial development certificates, it is only fair to put the other side of the equation. There is growing concern in the Midlands and south of London as to the effect that the present system of using industrial development certificates is having there. Interesting work 1120 has been done of a reputable character pointing out the sort of anomalies where-by firms have to rebuild on their own site because their factories are worn out and out of date. They need to get industrial development certificates to do so, but in many cases they are not granted. Many firms feel that they have to stay in the Midlands conurbation, but they can do so only by purchasing another business and purchasing the plant arising therefrom.
There is also a growing problem because in many parts of the country there are ambitious development plans which are not being matched by the granting of industrial development certificates. To quote a parochial example, the town of Cirencester has grown since the war from a population of 8,000 to 13,000 and is expected to reach 20,000 by 1981. It has all its development plans approved at all levels and 3,600 new jobs will be needed, but we cannot get an industrial development certificate by hook or by crook. It does not make sense to plan to double large towns in the South and the Midlands if industrial development certificates are not forthcoming. One or other of those two policies must give if there is to be success.
It might be wrong to raise the ceiling for I.D.C. approvals from 5,000 to 10,000 sq. ft. and there are obviously many firms which can easily be detached from the Midlands conurbation and sent to other parts of the country, but the counterpart of accepting that is that the policy must be operated much more flexibly so that in those cases where it makes no industrial sense at all to detach an industry, that industry is not detached.
I return to my right hon. Friend's point that it is necessary for firms to have a better knowledge of the sort of considerations which govern the granting of I.D.C.s. It is very difficult for a firm to know whether to stay put and expand, to move to a development district, to go out of business altogether, or to move to a foreign country, unless it has a reasonable means of telling whether an I.D.C. will be granted. It would be of the greatest help to the Midlands and the South-East—which are the areas making the sacrifices in order to make the policy work—to have more carefully laid down criteria by which I.D.C.s are granted.
1121 So far as there is a charge against the Government, it rests on the proposition that in their development area policy they have been spending money wastefully in many directions while neglecting to expand some parts of their programme which would be highly beneficial. We have not been getting value for money. The fact came out in a number of speeches, some of them from the benches opposite, that there has been no analysis of what the policy is costing. It is all very well for the Government to say that it is difficult to estimate what is the cost per job and what expenditures are attributable to which jobs. We must have more analysis.
My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) asked some very pertinent questions about the capital account. What is the capital cost per job of some of these more expensive schemes? I have estimated that the total expenditure on investment grants, on average, runs at about £2,000 or £2,500 per job. The hon. Member for Middlesbrough, West (Dr. Bray) has been the eminence grise throughout the debate, and I was delighted to see him in the Chamber just now. He has been saying that in his area the figure of £20,000 is reached from time to time. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) spoke of a possible figure of £70,000 per job in Invergordon. Clearly such figures are uneconomic. Public money should not be spent on a scale like that. The argument of Professor Brown and many others that we are beginning to subsidise indiscriminately the highly capital-intensive industries without any knowledge of the effect that they will have on employment has to be taken to heart.
The hon. Member for Middlesbrough, West made the other point that many of these capital projects will take place, anyway. Quite often, they are unattractive to the environment in that they pollute the atmosphere and spoil the amenities. An oil refinery or a chemical works is extremely unpleasant to have to live near. Very often, a highly capital-intensive investment will replace previously existing jobs by causing other plants to close.
It should not be part of development area policy to seek to attract the most 1122 highly capital-intensive plants, for all the reasons that I have given plus the overwhelming one that it will provide the least number of jobs. We want modern growing industries which are not all that capital-intensive, which are expanding and which use a large labour force, concerned with commodities like motor cars, aero engines, electronics, computers and so on, and what I have said underlines the need for a more flexible approach, rather than using this blanket weapon of the 40 per cent. investment allowance right across the board.
If we take it further—and it was not I who first took it further—one goes beyond considering industry and cost per job. The right hon. Member for Belper (Mr. George Brown) talked about changing the philosophy of life. I thought he was trying to bring in the life and the soul, about which the Labour Party now boasts. He was trying to change the soul of Belper, and not just the life. All these things are relevant. The hon. Member for Middlesbrough, West has talked about bringing in universities in the North. Roads are also very vital. The most vital thing of all is communications. There are airports, cultural facilities—all sorts of things which go beyond industry per se.
I thought that perhaps the most important point of all was made by my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn). He said that what is really retarding the feeling of growth and independence is often the fact that no decisions of any importance are taken in the development areas and that more and more the decisions are taken in London, so that people who are ambitious, who want to get on and operate the levers of power gravitate to London because that is where the decisions speak. This argument is very powerful. The only answer to it is that we must devolve and cease to have a society where all the decisions are taken at the centre, and have such things as capital markets so that people can take capital decisions in relation to the market and not in relation to the Department of Economic Affairs and its successor. The only answer is to get away from Socialism, State planning and central control. It is a serious accusation that the movement towards Socialism has caused the centralisation of decision 1123 taking which in its turn has weakened the regions as a whole.
The Government made a fatal mistake. They found that the subsidy through Government grants was tending to encourage capital-intensive industry and so, instead of correcting that, they decided to subsidise wages as well. They set up the regional employment premium. It is really a case of throwing good money after bad. The effects of it have been discussed very much in the debate today.
I should like to make one comment about the way in which this decision was handled. It was brought forward in a Green Paper which was discussed by all and sundry, debated at length and condemned almost universally. Very few bodies supported the regional employment premium. The condemnation in this House—I sat through the debate and was not able to catch your predecessor's eye, Mr. Deputy Speaker—was pretty severe and universal. Nevertheless, they went ahead and brought it in for seven years. So, they have only themselves to blame, and there really is no getting away from the fact that this has been one of the biggest wastes of money, as my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) said, that we have had for a long time.
If I may be excused for doing so, I have taken the average wage, which is now about £23 10s., and worked out what are the overheads or subsidies on labour at the present time. In a service industry they are working out at a 15 per cent. tax; that is, National Insurance, industrial training, redundancy and the selective employment contribution. In a manufacturing industry not in a development area the tax is about 7 per cent. on an average wage. In a manufacturing industry in a development area it is a subsidy of 1.5 per cent. After this Bill has become law and the 7s. 6d. disappears, it will go up to a tax of 1.6 per cent. because of the 7s. 6d. disappearing.
I say this to the hon. Member for King's Lynn (Mr. Derek Page) who complains that he gets no benefit from the Bill in East Anglia and that his is already a low-wage area: most of the employees in the South-West and East Anglia tend to be in service industries. There is not very much manufacturing capacity in 1124 these regions. So low-wage people are asked to pay a tax of 15 per cent. on wages in order to subsidise areas in which, very often, there is considerable manufacturing capacity. This is an added grievance which, I think, the hon. Gentleman could have expressed over and above his complaint that there are no measures of special assistance for him.
§ Mr. George Brown
The hon. Gentleman said that low-wage people have to pay an added tax of 15 per cent. That is not true. He is trying to prove that manufacturers have to pay. But low-wage people do not pay an added tax of 15 per cent., and it is stupid to say so.
§ Mr. Ridley
I accept the right hon. Gentleman's correction. I meant to refer to employers of low-wage people.
§ Mr. Ridley
I am grateful to the right hon. Gentleman for pointing out that I made a slip in words, though I think that the point was clear and not even he could believe that I thought that the tax was paid by the employee.
§ Mr. Ridley
It was not at all the impression which I wished to create, though it may have been the impression which some hon. Members hoped that I might be thought to wish to create.
It cannot be escaped that employers of labour in the low-wage areas are being taxed up to 15 per cent. on their wage bills in order to subsidise areas where wages are much better. [HON. MEMBERS: "Why not?"] The regional employment premium has several undesirable effects. It costs £100 million a year. It benefits a large number of industries and businesses which probably do not need it, and a lot of it probably finds its way into dividends and share prices as a result. It has as one effect the keeping of businesses and industries going which in many cases will probably never be viable again. There is, as it were, an industrial pension effect about it which is most unsatisfactory.
There is a problem here which the next Government, whoever it may be, will have to face. There are quite a number of businesses now which probably would not be in existence in their present form and doing what they are doing if it were 1125 not for the regional employment premium. As my hon. Friend the Member for Scarborough and Whitby said, these continuing blanket subsidies will only store up trouble for the future, and there is a great deal to be said for using the money in a more selective and flexible fashion.
Why do firms go to a particular development area or grey area? Apparently, not because of low wages. If it were so, they would flock to East Anglia, the South-West and other areas where low wages might be payable. It appears not to be due to the capital subsidies, the investment grants of 40 per cent. Many of these projects would take place anyway. We have, perhaps, created some bias whereby these firms are moving to development areas, but the help in employment terms is not great.
Clearly, the availability of labour is one of the main factors. As my hon. Friends have argued, and as the right hon. Member for Sheffield, Hillsborough (Mr. Darling) himself said, where labour becomes available it is easy to attract new industries. So one can discern that this may well be one of the major considerations in the mind of firms looking for somewhere to go or to expand.
Second, communications. The present Government have expanded communications. They could be expanded still further. They are vital for attracting new industry, and we shall push ahead with that work.
Third, environment. My hon. Friends, including my hon. Friend the Member for Clitheroe (Sir Frank Pearson), were explicit on the need to improve the appearance of the regions, to remove dereliction and old pit heaps, to tidy up the scars of the Industrial Revolution. This may well be as important as, if not more important than, the sort of blanket subsidies which we have been discussing.
§ Mr. Ridley
We believe that there should be a study of the effects of these big subsidies, to see what is causing improvements and what are the bottlenecks holding up improvements. We are not alone in thinking this. The Hunt Committee advocated without any doubt the need to do a cost-benefit study 1126 into the results of all the policies which are at work. The British Industry Week of 24th October had an article on the subject which was not very favourable to either side of the House, but it was absolutely adamant that it is necessary now to pause and discover the effect of the various subsidies and policies we are employing. The present Minister without Portfolio on 25th June seemed to go some way towards acknowledging the need for an investigation into the cost-benefit ratio of all these different elements of subsidy.
So again I press the Minister to tell us that he will agree to set up inquiries into the cost-benefit of each of the various forms of subsidy we have, and to make certain that we do not go on spreading the money thickly everywhere in the hope that some of it is in the right place, and that we find means of identifying more carefully what we need to do, what is the best value for money, and how we should proceed.
I have been studying Labour's "Economic Strategy". I wish I could give the document a great deal of publicity, because it would be the greatest possible help to my party. I find in the document a proposal for… new public enterprise as an instrument of regional development policy. This figured prominently in 'Signposts for Scotland', which stressed that if private concerns are not prepared to go where they are needed public undertakings will be established.
§ Mr. Ridley
Hon. Gentlemen opposite may well cheer, but it is not in the Queen's Speech, it is not in the Bill, and as far as I know it is not in the Government's programme. I want to ask the Minister an innocent question or two about it. When are we to have the proposals to set up a public corporation or State holding company to go into the development regions and set up factories for the sake of providing employment? How much are they expected to lose in the process? How will they find the capital to finance these operations? Can we be told how much taxes will rise to pay both for those losses and the capital investment to be made in them? Is it the proposal that the State should start manufacturing all sorts of things in the development regions, whether or not it pays to do so? Will it be done at a 1127 loss for the sake of providing employment, and is it the idea that these factories should be subsidised by the consumers or the taxpayer?
This element of the policy of the party opposite has always been hanging around in the background, but it never crystallises and comes into any firm form. We should be grateful if the Minister would tell us why not.
The Bill is generally to be welcomed, although there are many points which will need to be raised in debate. We have had a good, wide-ranging debate over the whole of the policy for employment in the regions, and the House has contributed in a thoughtful mood to improving the policy that the Government are pursuing.
§ 9.29 p.m.
§ The Minister of State (Mr. T. W. Urwin)
With my close personal involvement in regional affairs over the past 19 months, I can reasonably claim to know something about the less prosperous areas of this country. The problems of unemployment, slow growth, high outward migration and environmental decay and dereliction are not confined to the development areas, although their economic problems are still the more severe. This is why they will continue to enjoy a large margin of preference over other areas in the matter of assistance to industry.
These are questions of which I have had first-hand experience. I know that areas outside the development areas must face the consequences of older industries in decline and live with the physical legacies of the first Industrial Revolution I am delighted, therefore, to be replying to a debate on a Bill to provide assistance to such areas.
Hon. Members have ranged widely during the debate on such subjects as air pollution, new towns, housing, transport and defence establishments, all of which I accept are of keen regional interest. But I trust that the House will understand if I address myself to the issues which hon. Members have raised concerning this very important Bill.
Some hon. Members have questioned the basis on which the Government have selected the areas proposed for intermediate assistance. As my hon. Friend 1128 the Minister of State said earlier, the Government decided against spreading limited resources over the whole of the North-West and Yorkshire and Humberside Regions and decided, instead, that it would be right to concentrate assistance to industry on a strictly limited number of smaller areas.
The selection of these areas was governed strictly by criteria of need, especially the level and character of unemployment and of the numbers of unemployed, the incidence of high net outward migration and the real scope for industrial growth. There are, of course, other indicators of the economic circumstances of an area. One of these is low earnings, to which my hon. Friend the Member for King's Lynn (Mr. Derek Page) referred. But I must emphasise that the Government look at the prospects and needs of a locality as a whole. We are concerned with priorities.
§ Mr. George Brown
Is my hon. Friend saying that areas announced by my right hon. Friend the Minister without Portfolio when he was Secretary of State for Economic Affairs are enshrined—that they are not changeable?
§ Mr. Urwin
I hope that my right hon. Friend the Member for Belper (Mr. George Brown) will allow me to deal with that point later.
Hon. Members have asked whether we can give reassurance that the proposed coverage of intermediate areas will be reviewed in, say, a year's time. I do not think that it would be a good idea to give such an assurance since it would tend to lead firms to delay decisions as the review date was approaching. Nevertheless, I most certainly assure the House and my right hon. Friend the Member for Belper that we shall keep the list of areas already announced—indeed, all areas—under the closest scrutiny.
Many hon. Members, have drawn attention to the problems of those areas outside development and intermediate areas which have particular problems yet for which no additional direct assistance to industry is proposed. For example, my hon. Friend the Member for King's Lynn forcefully presented the problems of rural areas such as North Norfolk. There is, as the Hunt Committee noted, a real problem in the question of low earnings 1129 in that area, as in others. Here I would join in the tributes paid to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) on his very attractive maiden speech. He, too, referred to the problem of low earnings.
In the North Norfolk area, the root problem there, as in others, is the decline in the number of people employed in agriculture. I assure the House that the Government will keep a close watch on these problems, but we are bound to agree with the Hunt Committee that it would not be realistic to try to reverse population trends in these areas by a major diversion of industry there. Nevertheless, my right hon. Friend the Minister of Technology will continue to operate a liberal I.D.C. policy in those areas for projects which are not steerable to development areas, intermediate areas or overspill areas.
In relation to the future development of rural areas, the Government agree with the East Anglian Economic Planning Council and the Hunt Committee that their problems can best be overcome by the concentration of resources and opportunities in a few well-chosen locations.
Other hon. Members have drawn attention to the problems of areas which are near development or intermediate areas, but on the wrong side of the boundary. My right hon. Friend the Member for Belper was the first to do so. The Government fully recognise that there are problems and that some localities suffer from this shadow effect. But in any pattern of regionally differentiated assistance boundary problems will inevitably occur and it is our belief that the introduction of intermediate and derelict land clearance areas will achieve some mitigation of the problems which arose with a sharper distinction between assisted and non-assisted areas.
My hon. Friend the Member for Bolton, East (Mr. Robert Howarth) asked for an assurance that the Ministry of Technology would not seek to persuade firms in areas near to intermediate and development areas to move from their present locations. It will not be the Ministry of Technology's policy, and nor was it the policy of the Board of Trade before, to encourage such movement, but if firms wish to move in that way the Govern- 1130 ment will give them such advice and financial assistance as are appropriate. This we would be bound to do under the terms of the legislation.
§ Mr. Mapp
The Minister of State said that in the preliminary advice by the Department to industrialists seeking alternative areas and premises there will be no encouragement to go to intermediate areas. Are they not first encouraged to go to the development areas and, in the North-West, if they do not take the advice need they go? Will not the Department be encouraging firms in one part of Lancashire to go to other parts of Lancashire?
§ Mr. Darling
On a point of order. I am sorry to raise this, but the Minister of State has said that it has been the practice to do certain things in regard to the distribution of industrial development certificates, and so on. I know from my experience that this is not entirely true and I should be very glad if the Minister would explain just what he is doing.
§ Mr. Urwin
I have already referred to the policy which is being and will be pursued by the Ministry of Technology and which was pursued by the Board of Trade, and I do not retract one word of what I have said; it is absolutely true.
Hon. Members have mentioned the problems of individual localities within the more prosperous areas, localities which, for one reason or another, do not share in the prosperity of the surrounding locality. The Government recognise the variety of conditions even within regions 1131 which, overall, must be said to be highly buoyant, but in the last resort we are concerned with priorities. The supply of new employment is not unlimited, as the right hon. Member for Leeds, North-East (Sir K. Joseph) acknowledged. For the present, therefore, we have to give top priority to the development areas which, taken as a whole, have the most pressing need for new jobs.
Now we have recognised a variety of other areas which, while their problems are not as severe as those of the development areas, do nevertheless give some cause for concern. We now accord a degree of priority to these, but if we are to correct the regional imbalances which have so long existed in the country, we cannot spread the incentives too widely without loss of impact in areas of greatest need.
A number of hon. Members tonight have expressed concern about the effect of intermediate areas on the development areas and at the loss by development area firms of part of the selective employment premium. Let me say right away that I understand this concern: indeed, as Minister with special responsibilities for the Northern Region, I know all too well the problems which development areas face and the anxieties that there should be no slackening in the rate of progress which has already been achieved.
The Government have, however, made it clear that they intend to maintain a large margin of preference in assistance to industry in the development areas. The value of this preferential assistance is currently running at about £265 million a year. Equally, we are resolved to maintain pressure on firms in the congested areas to locate expansions where there are unused resources, and I am confident that this policy will ensure continuing progress in the development areas. But it has to be recognised that, since 1966, the decline of employment in traditional industries has hit areas outside the development areas and that problems, for instance, high net outward migration, have manifested themselves in those areas.
It was because we believed it right to avoid spreading limited resources too widely that we felt unable to accept the Hunt Committee's recommendation of automatic assistance over new broad 1132 areas. Instead, we felt it right to concentrate assistance on the places of greatest need and, although their problems might be different, to apply the same measures in all of them.
The Government believe that the availability in the intermediate areas of certain of the development area measures of assistance will maintain the right balance as between the development and intermediate areas, yet avoid a complex pattern of assistance that would be confusing to industry.
A good deal has been said today about the employment link and cost per job I must make it clear that it is only the assistance given under Local Employment Acts to firms in the development areas which is employment-related. Under these Acts, the Minister of Technology is required to have regard to the relation between the expenditure involved and the employment likely to be provided. The Bill applies this provision to the exercise of the Minister's powers in the new intermediate areas.
A ceiling is set on the value of the Local Employment Act assistance which may be given for each job expected to result. These limits on the maximum—
§ Mr. R. W. Elliott
Will the hon. Gentleman recognise that what he has just announced means that, so far as the amelioration of the situation in East Lancashire, consequent on the closure of many cotton mills, is concerned, the Bill will be practically valueless.
§ Mr. Urwin
I cannot possibly accept what the hon. Gentleman says.
These limits on the maximum cost per job of employment-linked assistance are confidential; to publish them might encourage applicants in borderline cases to inflate their estimates of the additional employment to be provided by a project and thus make the task of assessing the reliability of these estimates more difficult.
But I must emphasise that figures in the range of £20,000 a job are quite unrealistic. Assistance under the Local Employment Acts between 1st April, 1960, and 31st March, 1969, excluding offers declined, involved an average commitment of £637 for each job expected to be created. The corresponding average for 1968–69 alone was £731.
§ Mr. Urwin
When I have finished this. My hon. Friend has attempted to intervene, and understandably so.
I want to address myself to the references made to my hon. Friend's remarks in the debate on Monday night. He was then talking about investment grants. The figures which I have quoted relate to the Local Employment Act and are the only ones which are directly job related. But investment grants to development areas at the rate of 40 per cent. are not specifically linked to employment. That is not to say that they do not assist in the provision of new jobs. Quite clearly, they do; they must. But the industrialist is not required to undertake to provide a given number of jobs before he qualifies for grant in the same way as he is required to do in terms of the Local Employment Act assistance.
Investment grants are given at 40 per cent. in development areas to encourage new investment in those areas and to improve the productivity and competitiveness of development area firms. The development areas need new jobs; that is beyond dispute. Even the Opposition Front Bench spokesmen acknowledge this fact. But they need them quickly. They also need their share of modern science-based industry, much of whose investment is capital-intensive.
There is some inconsistency among hon. Members opposite who criticise the automatic nature of investment grants in development areas and yet, at the same time, want the Government to give automatic building grants in the intermediate areas regardless of the jobs which might or might not be created and might even be reduced.
I have been asked by the right hon. Member for Leeds, North-East—
§ Mr. Ridley
Before the hon. Gentleman leaves the question of the capital cost per job, he has not denied that it is possible that the hon. Member for Middlesbrough, West (Dr. Bray) is right when he says that some jobs have been provided at £20,000 apiece due to the automatic operation of investment grants. Does the hon. Gentleman accept that figure as likely to be right?
§ Mr. Urwin
I have already said that the asset is created and is held in perpetuity and continues to generate new jobs for long after the initial investment is made.
I have been asked about building grants. There has been a reference to Clause 1(3). There has been some misunderstanding of the purpose of the Clause. It provides that building grants shall not be payable to an applicant who has started work on the site of his building before the announcement of the Secretary of State of 25th June. It does not prevent the payment of grant to a firm buying a new factory from a developer after the legislation has come into force, even though the building was begun before 25th June or completed before the legislation was enacted. The need for this Clause is that an industrialist who started building after the proposed intermediate areas were named and has been able to bring the new building into use before the Bill is passed must be regarded as ineligible for grant.
This is simply because he will have provided the building in a locality which was at the time not designated by an Order laid before Parliament as an intermediate area, and, indeed, such an Order can only be laid after the Bill has come into force, and the Minister cannot anticipate his powers or apply them retrospectively unless Parliament specifically modifies the powers to that effect. It would be difficult, if we were to accept any degree of retrospection, to know where we could draw the line without treating some potential claimants inequitably.
It was also suggested by the right hon. Member for Leeds, North-East that 1135 Clause 1(3) might mean that private enterprise firms would not be eligible for building grants in intermediate areas. I can reassure him that this is not so. Private enterprise firms will be eligible for grants, as will nationalised industries in respect of activities in which they are in competition with the private sector.
I have also been asked what action the Government are taking to implement the Hunt Committee's recommendation that studies should be set in hand of the effects and implications of the existing measures of assistance to the development areas. I fully accept that it is desirable to have as exact an assessment as possible of the costs and benefits of development area policy. The technical and conceptual difficulties are quite formidable, however, and the Hunt Committee did not suggest how they might be overcome. We know the budgetary costs of measures of assistance, but we do not know what the outcome would have been if these measures had not been applied. We hope, however, to make progress in this field. The effects of investment grants continue to be examined by the Government, and although it is too early yet to make any useful assessment of the effects of the regional employment premium, ways in which this might be done are under consideration.
Among other relevant projects the research staff of the Ministry of Technology will shortly complete a major inquiry into location attitudes and experience. This inquiry, which has involved detailed consultation with several hundreds of firms over a period of 18 months, will throw valuable light on the reasons which have led firms to site new projects either within assisted areas or outside them, and their subsequent experience. We shall continue to study the scope for applying the most modern analytical techniques to straightforward, and it would not be right for me to lead the House to expect definitive answers within a short space of time.
I was asked also whether we proposed to undertake a major review of development areas as recommended by the Hunt Committee. The major policy changes introduced by the Government, the wider development areas, investment grants, regional employment premiums, have only been in force for a matter of two or three years, and it is still too soon 1136 to make a clear assessment of their impact. None the less, we are continuing to keep a very careful watch on progress in the development areas.
The right hon. Gentleman the Member for Leeds, North-East again asked about withdrawal of selective employment premium. Paying for assistance to intermediate areas by withdrawing additional selective employment premium payments in no way invalidates the resource-cost argument about R.E.P. The fact is that it does not. The fact remains that this assistance must be paid for, obviously, in money, and the Government are committed to an overall restraint on the growth of public expenditure, which is, of course, designed to achieve a broad balance between demand and resources in the economy as a whole.
I know that I am speaking here about industrial development certificates and that they are outside the scope of this debate, but several hon. Members have expressed concern about the operation of this control. Some have argued that the control frustrates the growth of go-ahead firms in the Midlands and in the South-East, while others have argued that, to provide jobs on the scale required in the development and the proposed intermediate areas, we must be even tougher in operating the control in the more prosperous areas of the country.
There are, if I may say so, some misconceptions also about this control, and I would like, therefore, to take this opportunity to remind the House of the aims of the control. These are to limit the demand on resources, especially labour, in the more congested parts of the country, and, at the same time, to influence firms to undertake projects in the development and intermediate areas where resources are available.
The right hon. Member for Leeds, North-East asked whether the Government proposed to publish the criteria for granting or refusing I.D.C's. The general principles on which we work are well known, but we are considering whether more can be said. Discussions are currently taking place with the C.B.I. and the Association of British Chambers of Commerce.
References have been made to derelict land clearance and to the work still to be done. Naturally, we all want to see faster progress, but when hearing some 1137 critics I had the feeling that they believe that dereliction is a new problem. It is not by any means new; it is a problem which stretches back to the Industrial Revolution. There is certainly no room for complacency, but the Government have tackled the problem of derelict land with great energy.
Under the Industrial Development Act 1966, local authorities can now get a grant of 85 per cent., and throughout the country a grant of 50 per cent. is payable under the Local Government Act, 1966. Clearance schemes obviously take time to prepare, and the full impact of these Measures has yet to be felt.
Under the powers sought in the Bill before the House, it is our intention that a 75 per cent. grant should be payable. References have been made to the differential of 10 per cent. in the development areas, but we have preserved this margin and, despite this, there should be a considerable amount of benefit accruing to the rest of the country.
The hon. Member for Clitheroe (Sir Frank Pearson) criticised the Government's rejection of the Hunt Report without proper consideration. This simply is not true. First, the Government did not reject the Hunt Report, although we do not accept all its recommendations. Secondly, although the Government announced their decisions on the day of public issue, we were aware of the general lines of Sir Joseph Hunt's thinking, and we made an early announcement to avoid the possibility of uncertainty in industry.
§ Mr. Urwin
I am sorry, I cannot give way.
My hon. Friend the Minister of State, Ministry of Technology, referred in his opening remarks to the hierarchy of intermediate areas, development areas and special development areas, with differing scales of assistance. With the introduction of intermediate areas—the third level of special assistance—we have added greatly to the flexibility of our regional policies. This is a very important step in the evolution of these policies.
We live in an age of rapid industrial change as older industries decline and new ones develop. The prosperity of particular areas is likely to fluctuate with the changing industrial pattern, and the aim 1138 of regional planning must be to anticipate these changes so that we can deal with the problems that arise before they become acute. This is what we are doing in the Bill.
In conclusion, the recent changes in Government structure, by placing under my right hon. Friend the Secretary of State for Local Government and Regional Planning responsibility for the Government's regional policy as a whole, and by bringing under my right hon. Friend the Minister of Technology responsibility for distribution of industry matters, has opened up better opportunities for bringing together economic and physical planning, and this, in turn, should help to ensure a better balance between the various parts of the country, both economically and in environmental terms.
The Bill will help us to exploit these opportunities and I strongly commend it to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).