§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
§ 10 pm
§ Mr. Tom McNally (Stockport, South)
May I say, as you take the Chair, Mr. Deputy Speaker, this being the first time that I have had the honour of speaking in your presence, that I for one, like many other hon. Members, am pleased to see a canny lad in the Chair?
My own memory of the debate that has just ended will be of the hon. Member for Chippenham (Mr. Needham) saying, quite rightly—and it will probably be the epitaph of this Government—that the figures are probably wrong. The Minister of State, in his concluding remarks, gave a very good lead-in to the issues that I want to raise this evening when he said that we need new factories as well as new plants to prepare for the upturn.
On Tuesday afternoon I sat pondering whether my speech tonight might be rendered superfluous by an imaginative Budget designed to get the economy moving and show a clear Government strategy for industrial expansion. By 5 o'clock on Tuesday I had realised that there was no Government strategy for industrial expansion.
Greater Manchester, like other major industrial areas, can look forward only to a further period of industrial decline, which will cripple many of our industries and destroy others completely. I hope that in his reply the Minister will explain exactly what the Government's industrial strategy is, because in Greater Manchester it is beginning to look very much like a scorched-earth policy. Let me remind the Minister that we are talking not about an area of home industries and light technology, but about an area where telecommunications, microelectronics, aerospace, Pharmaceuticals, nuclear power and high-technology defence equipment play a major part in our regional economy.
We have also, of course, the textile industry, and it is an aspect of that industry's decline on which I want to concentrate most of my remarks. High interest rates, a strong pound, high energy costs and cuts in regional aid have hit all sections of our industry. It is ironic that when the Secretary of State for Industry withdrew intermediate area status from the whole of the county council area except Wigan he excluded Wigan because of its high unemployment levels. Today, every one of the districts of Greater Manchester would qualify under the criteria that the Secretary of State set himself, yet further regional aid is to be denied.
It is an indication of the difference in approach even between Conservative Governments that when intermediate area status was first conferred upon Stockport in March 1972 unemployment stood at 4.7 per cent. Now, unemployment stands at twice that figure, yet aid is to be withdrawn. We are indeed dealing with a harsher breed of Tories, and the Greater Manchester economic development corporation is right to describe the decisions taken on regional policy as a body blow to Greater Manchester's economy.
It is against that grim background that I want to urge Ministers yet again to try to comprehend the seriousness of the crisis that we face in our region; the seriousness of the crisis that faces Greater Manchester's industry.
1100 Two weeks ago I was astonished by the complacency of Ministers in the face of the problems facing the textile industry: 180 mill closures and 100,000 jobs lost in one year alone. Yet—I say this with no great pleasure, but in all seriousness—I predict that unless there is urgent Government action the worst is yet to come for the textile industry in the North-West. I urge on the Minister the necessity for action to help the region and the textile industry.
The Government have underestimated how difficult it will be to negotiate a recession clause in any future multi-fibre arrangement. Ministers in Committee and answering Questions in the House suggest to me that a recession clause is the answer to the problems of the industry. But Ministers will not get that unless they fight much harder in the House and in Committee. They do not seem to appreciate how isolated we shall be within the Common Market in dealing with the problems of the Mediterranean associates.
There are two major threats—the developing countries and the Mediterranean associates—yet there is no Government strategy to combat those two threats. The third threat is the prospect of an American textile industry newly invested and tooled up to become a major exporter. The Government have no strategy for the textile industry, and the problems in Greater Manchester continue to grow apace, but greater problems are yet to come.
My hon. Friend the Member for Walsall, North (Mr. Winnick) earlier described the problems in his constituency. Greater Manchester, like the West Midlands, faces catastrophic problems. In a recent letter to me the director of the Greater Manchester development corporation stated:It would not be unduly pessimistic, especially if present trends continue, to anticipate that by the late 1980s only one-third of the employment in the area will be associated with manufacturing. In real terms this could represent a loss of 250,000 jobs in the manufacturing sector over a decade.Is it any wonder that the latest jobcentre in Greater Manchester is known as"Maggie's joke shop"? For the workers in Greater Manchester that is a pretty sick joke. If Mr. Boardman, the director of the development corporation, is only half right in his estimate of the loss of jobs, words like"catastrophe" and"tragedy" are too weak adequately to describe the problem.
If de-industrialisation is not to become a fact in Greater Manchester the disastrous non-strategy announced in Tuesday's Budget will have to be reversed quickly. There will have to be a plan for textiles that allows the industry hope for the future. The decline that has already occurred has left major problems for the area. The closure of coal mines prompted the Government of the day to offer assistance in the form of derelict land grants. The closure of mills left a problem just as serious as that caused by earlier dereliction. Yet the Government refuse to offer positive assistance.
The statistics give an idea of the problem in areas such as Greater Manchester, faced with the decline of the textile industry. In the second half of 1980 the amount of available property in Greater Manchester increased by 5.9 million square feet to 14.4 million square feet, an increase of 65.8 per cent. I know that it is difficult to take statistics on board, but perhaps the Minister will take on board the fact that that reflects a deterioration greater even than that on Merseyside.
1101 Factory space becoming available to rent means factory space closing down. Most significantly, there has been a 123 per cent. increase in older, single-storey buildings and, in general, it is the older industrial properties that are becoming vacant. However—this is the point that I want to emphasise to the Minister—they are just the properties that are the most difficult to refurbish. The result is that they become a barrier to reindustrialisation and a blight on the environment, and they are often semi-derelict. They are an eyesore. They cause problems for district councils and the Greater Manchester council because the properties are on land which, if made available, would provide excellent sites for redevelopment with small industrial units, as they are close to town centres. The initial cost of refurbishment makes those sites non-economic propositions for small industry to move into or for a developer to redevelop.
I understand that the Government have refused to take positive action on the ground of the old comment that we have heard from the Treasury Benches for the past two years—I quote from a departmental letter—"public-expenditure restraints".
Those are the economics of the madhouse. The middle of a recession is the time to build for the future. For a relatively small public investment construction workers and others could be removed from the dole queue and set to work on the worthwhile task of preparing industrial premises to attract new enterprises, which, in their turn, would provide new jobs. I understand that a number of suggestions have been put to the Department, so far without success.
I have one positive suggestion. Let us refurbish the old mills and give positive assistance. But it must be part of a wider programme. Greater Manchester needs the sort of assistance associated with a major steel or coal closure because that is what is happening with the closure of the textile industry. Yes, they are smaller units, but the impact on the region as a whole is catastrophic. The Government do not seem to comprehend that the work of refurbishment, re-equipping and preparing the area for a new economic take-off cannot be done by private enterprise alone. That has been shown by what has happened already. The older plants are being left to go derelict. I ask the Minister to show some imagination.
Tuesday's disastrous Budget offers no help. A positive and constructive response from the Minister will offer a few battered parts of the North-West a glimmer of hope that somewhere in the Government there is understanding for what damage Government policies have done to Greater Manchester and the scale of the problems facing us.
I am asking the Minister not to abandon the Government's policies or even to rebel, but to think positively. Within Greater Manchester there are hundreds of derelict factory buildings. With a little Government help they could be part of a regeneration of the whole area. If the Minister will take his courage in both hands and give some encouragement to the region he will have a positive response from those who want to be put to work.
§ The Under-Secretary of State for Industry (Mr. John MacGregor)
I am grateful for the opportunity to discuss this important subject—which, it is as well to recall, is Government assistance towards old industrial 1102 buildings, about which the hon. Member for Stockport, South (Mr. McNally) spoke only in the latter part of his speech.
Listening to the first part of the hon. Gentleman's speech I was tempted to tear up some of the notes that I had prepared for the debate I shall resist that temptation, because I want to concentrate, in the bulk of what I have to say, on the subject on the Order Paper. It is an important subject, which is of interest to other hon. Members. I know that my hon. Friend the Member for Nelson and Colne (Mr. Lee) has frequently discussed the subject with hon. Members in other textile areas and those from other parts of the country. I am anxious to deal with it and to spell out some of the key factors. If I have time, I shall try to deal with what the hon. Member for Stockport, South said about textiles—although there was a full debate on that subject recently—and with what he said about regional policy.
The unemployment level in the Greater Manchester area is 10 per cent., which is below the levels of the assisted areas. An important aspect of the regional policy is that it concentrates on the areas of highest need. As an Opposition Front Bench spokesman said in Question Time on Monday, it should not be shifted and changed too frequently, because that would leave industrialists in uncertainty. It is essential—and it helps areas like Greater Manchester—not constantly to shift assisted area status with the shifting changes in unemployment. If we did that we might find that other areas would get assisted area status and Greater Manchester would not benefit. If I have time, I shall come back to that subject later.
I was tempted to ask the hon. Gentleman what happened, when the Labour Government were in power, to all the run-down industrial buildings that he has referred to. I cannot believe that the buildings have become inappropriate only in the past 18 months and I hope that I shall be able to demonstrate to the hon. Gentleman that a great deal is being done and that Government incentives are available.
The case for using old industrial buildings, particularly in an area of industrial restructuring—we all accept that in the highly competitive world economy industrial restructuring has to take place—attracts much sympathy and interest, including from me. I am not familiar with the textile mills or the area that the hon. Gentleman represents, but in my part of East Anglia there is a role for old agricultural buildings and buildings in our smaller towns and villages. It is one in which I have always taken a great interest.
I recently visited a not dissimilar area in Scotland, where I saw the important role being played by old steel buildings. For example, 500 jobs have been created in the past two years on the Clyde workshop experiment, where old buildings have been converted into small workshops for small businesses. As the Minister responsible for small firms I am particularly interested in that approach and I am sure that it is capable of adaptation in areas of industrial decline that we need to rejuvenate.
It is also important to realise that the mixture of old and new is attractive—using the old buildings that can be used to bring in small businesses that may not necessarily want modern factories and to have them mingling with new buildings provided by the English Industrial Estates Corporation and others. That often creates an attractive immediate environment for small businesses and adaptable premises that can be altered in size. It also provides the 1103 opportunity, which is important when starting businesses, not to be locked into long leases but to have licences. As small firms expand—some in the Clyde workshop are doing so—they can move the premises up to larger premises and later, perhaps, move out altogether. They are not locked into five-year leases. I am attracted by the approach. As the hon. Gentleman will recognise, it is not an issue confined to Greater Manchester or to old textile mills alone; it is common to every part of the country where old but respectable industrial buildings are found.
I should like to deal with the issue in three parts. I should like, first, to look briefly at what the English Industrial Estates Corporation has been doing not only in Greater Manchester but in other parts of the country. Its experience is relevant to the general principles about transforming old industrial buildings to modern use. It is relevant to note that the corporation is building in the Greater Manchester area at the moment, although not in the hon. Gentleman's constituency. Ninety-seven units are under construction, or are expected to be started later this year, in the Greater Manchester area by the English Industrial Estates Corporation, including 79 in a joint venture with a private sector pension fund. The hon. Gentleman, therefore, is right to say that private funds can enter into the matter.
I should then like to look at the inner urban area partnerships, particularly in Manchester, which, again, I recognise, is not the hon. Gentleman's constituency but is within his travel-to-work area. I am sure that many of his constituents would be able to benefit from that kind of development. I should like to look, thirdly, at the other measures of help.
I turn first to the English Industrial Estates Corporation. One question already asked of me since I have assumed my responsibilities in the Department—the EIEC is a subject in which I am particularly interested—and of the chairman of the corporation, is why the corporation does not buy up these fine old buildings and convert them into useful workplaces again. We are constantly told by small businesses that there is a shortage of small workshops and that here, surely, is a ready-made supply. We are, in fact, being effective at the present time in supplying these small workshops, but until now the shortage has been a real obstacle to the growth of small businesses. This is, therefore, a relevant question. The matter has much of my sympathy. Alas, however, as in many immediately attractive and seemingly simple propositions, there lies a maze of hidden complications sometimes beneath the surface.
As the hon. Gentleman knows, the corporation is fundamentally an instrument of regional industrial policy and also has to take into account the level of existing vacant stocks in an area, both its own and any private sector factories on the market, since, in its own way, over-supply is as bad as under-supply. These two factors determine the corporation's broad strategy, but the corporation has a duty to carry out its function in the most economical way possible—in other words, to provide the maximum industrial accommodation for the minimum cost. It means providing for the maximum number of jobs for the available cash. Jobs, after all, are the main concern.
1104 It should be clear that the corporation's duty does not and cannot extend to preserving desirable old buildings for environmental reasons irrespective of all other considerations.
Once a particular travel-to-work area has been found to justify the provision of further premises, the corporation has to set about deciding how to provide those premises. It may either build anew on cleared urban or newly designated green field sites or it convert secondhand stock. A variety of circumstances may dictate one course or another. If the corporation has old but unsuitable vacant stock of its own it will naturally want to convert or refurbish that in preference to buying someone else's or building anew, since to do otherwise would be a waste of public funds. Failing that, it will turn to other possibilities, which will include the conversion of existing unused buildings, provided that they can be purchased for a reasonable amount having regard to the cost of conversion and provided that total costs do not make it uneconomic in comparison with any other approach. This last is the real test and the one that is highly relevant to the subject before the House.
It is a sad fact that it is often cheaper to build anew than to attempt to adapt an unsuitable old building. I can perhaps retail some of the corporation's experiences in its search for old mill premises suitable for conversion. Over the last few years it has examined many old mills in Yorkshire and Lancashire for this purpose. It has even examined dock warehouses. In several cases, it commissioned consultants to prepare full feasibility studies, including structural and cost surveys. Among the difficulties found was the fact that current legislation on means of escape made floors above the second impossible to use. Secondly, many had acute access problems, and floors above ground level could not in any case be served by the normal vehicle services provided for single-story buildings, while heavy goods lifts were expensive and difficult to install.
Thirdly, multi-storey buildings are often designed with cast-iron structural frames, which cannot cope with required modern floor loadings, and their columns are closer together than those of modern steel frames, making modifications difficult and restricting the use of floor space. Fourthly, maintenance costs of multi-storey, multi-windowed buildings are always much higher than those of conventional, modern labour saving buildings, as are heating costs.
The conclusion for the corporation—and it is a conclusion that one must examine often—is that in the majority of cases economical conversion is simply not practicable. The costs are high, and sometimes can be as high as, or higher than, new construction. Yet the owner is left with a building that is more costly to maintain, less flexible, and less marketable.
Nevertheless, the corporation continues to examine such buildings when they fit into its programme, and takes up those that in particular circumstances are found to be suitable. Looking at the experience of the corporation and others, while it is difficult to generalise it appears that most buildings worthy of refurbishment will be of one or two storeys and between 50,000 sq ft and 100,000 sq ft. The most difficult and expensive buildings to refurbish are large multi-storey warehouses and mills. Nevertheless, there have been some successful schemes involving that type of property.
§ Mr. Andrew F. Bennett (Stockport, North)
Everyone in the area accepts that some buildings cannot be preserved. What about providing money to pull them down, so that at least the developer has a green field site without the cost of demolition?
§ Mr. MacGregor
I shall come to that later.
I turn to the question of inner urban work. The hon. Member for Stockport, South will know that the Manchester inner city partnership has studied the problem of vacant and under-used buildings and found, like the corporation, that the majority are simply not suitable for refurbishment, or that it is not economic.
That is not the end of the story, because, as the hon. Gentleman said, the problem goes beyond the sheer building aspect. It is the psychological affect on an area that is important. Because of this, a number of local authorities having some of the most severe urban problems have been given specific powers under the Inner Urban Areas Act to help in the regeneration of the inner cities by encouraging private sector investment there. The Act gives these authorities the power to declare industrial improvement areas, a concept pioneered by Tyne and Wear and Rochdale. The available resources and efforts are concentrated in these areas, over a three- to five-year period in the first instance, with the aim of securing substantial improvements in the condition of the existing buildings, the number of jobs and in the environment generally. Well over 70 such areas have been declared to date, including six within the area covered by the Manchester-Salford partnership. More are under consideration.
Within these areas the local authorities are able to provide various loans and grants to private businesses for the improvement, rehabilitation and conversion of buildings for industrial and commercial use. It is becoming increasingly clear, although the concept has been in existence only for a comparatively short time, that this strategy is having a real impact on stimulating investment.
Grants are available towards the expenditure incurred by local authorities in providing assistance under the Act 1106 and my right hon. Friend's urban programme. Urban programme grant aid is also available towards rehabilitation costs incurred by inner city authorities that undertake such work, normally payable at the rate of 75 per cent. of the local authorities' expenditure.
What is important is that in Greater Manchester the total urban programme expenditure approved to date for the conversion and refurbishment of obsolete buildings is almost £l½ million and over a dozen projects have been undertaken of a kind that normally qualify for the grant.
The programme has been in existence for a comparatively short time, and that indicates that the Government are moving in the general direction that the hon. Gentleman seeks. I shall be happy to write to him about the projects that are under way. In addition, other small grants and loans are made available to industrialists in improvement areas. Greater Manchester is benefiting from that.
The hon. Gentleman has overlooked the matter of tax allowance against expenditure, not just on new buildings and plant but on the conversion of old industrial buildings. It is important to recognise that it is available. The tax relief in the Budget has been put up to 75 per cent., so that there will be a 75 per cent. write-off in the first year. For small workshops of under 2,500 sq.ft., the whole of the expenditure can be written off in the first year.
The hon. Gentleman talked about the need for imaginative fiscal measures. The measures for small workshop units introduced in the last Budget is available for conversion as well as new buildings. That was an imaginative act. There is a good deal of evidence that it is beginning to work. It is fairly new, but it is making things take off.
Derelict land clearance was mentioned. The Greater Manchester area will continue to be a derelict land clearance area, thus—
§ The Question having been proposed at Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at half-past Ten o'clock.