I agree that there are many ways in which Governments can and should help and I am coming to that side of it in a moment.
I am saying this: do not imagine that we can solve a basic shortage of risk capital by inviting Government to take over the roles which should normally be played by enterprising investors. The relaxations announced in the Budget on company taxation and Income Tax will help substantially in this direction. A start on that road was a prerequisite to any solid hope of increasing industrial development in Scotland.
If that should be the role of Government, as the hon. Gentleman said in a pertinent passage at the end of his speech, industry, and particularly Scottish industry, has a big responsibility upon its shoulders. If we are asked to ask men to establish new industries or branch factories in the remoter parts of Scotland, surely the people we should ask are the Scots themselves. And if they will not do it, one can hardly expect the industry to arrive from, say, Surrey. I think that is the common view expressed.
Now I turn from the question of what industry can start to where it should go. The powers of the Board of Trade in this matter are limited. We can urge, we can encourage, in some cases we actually give practical help in the establishment of a factory, but we cannot direct. I am glad that we cannot direct. I think all Governments have been wise not to take powers to direct. In practice, the method throughout the United Kingdom has been to establish Development Areas within which special help, including the building of factories, can be given.
Now I want to say a word about how Scotland has been treated. About half the population of Scotland lives in one or other of the various parts of the Development Area—2,600,000 people live inside that Development Area. In those circumstances it is not easy to argue that the Development Area is not big enough, though pressure has from time to time been put not only on me but on previous Governments to extend it in one direction or another. That pressure has been resisted both on the ground that in the individual cases the prerequisites laid down by the Act have not been fulfilled and, more particularly, on the general ground that the wider the area is spread in which special assistance can be given, the more meaningless must the assistance inevitably become.
There is one point of principle raised in this debate. It centres round what might be called the Cairncross approach to this matter. That report suggested that the first objective of assisting development should be to accelerate the growth of new industrial communities in promising locations. Industrial growth should come first, ahead even of the need to reduce unemployment in other areas. That was the gist of the Cairncross approach—help the developing area at least ahead of the Development Areas.
Obviously, powerful arguments can be made out in support of an approach of that kind It has many attractions, but I ask the Committee to face the implications of that approach if it were accepted. There is, after all, only a limited amount of free industry, and if we were to weaken or abandon our approach from the Development Area policy we should at the same time, abandon one of the principal weapons which all Governments have had in their hands for dealing with the unemployment problem.
I put this issue to the House on 25th February last in a debate on the wider issues of distribution of industry policy. At that time I noticed little support from Scottish Members in the House for abandoning the approach hitherto made. Let us consider how it would affect localities, for example, Lanarkshire. The hon. Lady the Member for Lanarkshire, North (Miss Herbison), in an extremely eloquent and persuasive speech yesterday evening, on the problems of her area, spoke of the declining coalfield. Under the Cairncross approach Lanarkshire would not do so well as under the existing policy. Lanarkshire is a declining, not a developing, area; and in those circumstances and under Cairncross the weight of effort by Government would be transferred to other parts of Scotland.
The problem raised by the hon. Lady was also referred to by the hon. Members for Midlothian and Peebles (Mr. Pryde) and Dumfries (Mr. N. Macpherson). It is a real and difficult one. Where new coalfields are being developed and to the extent, which is not yet known precisely, that new coal miners are required in these new fields, the transfer of those workers is obviously the right course. We should have no hesitation about that. Coal is necessary, the work is there, and if the coal is there then the workers in that industry at any rate have to go where the work is.
As the hon. Lady said, however, with new developments in the coalfields it may well be that not all the cases would be covered. Where that is so, the policy which must be pursued by all Governments is the policy we have pursued hitherto. Do not let us abandon it. In spite of all the difficulties, which we all know, let us try to influence or assist new industries to set up in those areas in order to take up any unemployment which might develop. In any event, we cannot have it both ways. A new factory can either be in a developing area or a Development Area. It cannot be in both, and for the moment we should do better to stick to the policy we are now pursuing.
Having said that, let me emphasise that the Development Areas have not an exclusive claim to industry. Areas where there are pockets of unemployment and which are perhaps of too narrowly circumscribed a character to form part of a larger Development Area are given special consideration. We try to steer industry to them, and we give them certain preferences in the case of raw materials, Government contracts and matters of that sort. There has to be a flexibility in approach; I fully accept that.
It was with that in mind that I have been trying to do something in the case of Buckie—Peterhead. I do not pretend at this moment that I have been successful, but I have not stopped trying yet. This is a small area, largely rural and probably unsuited to the full Development Area technique. In fact, two or three small factories might do the trick. To some extent it illustrates the problems of Scotland to reflect that the energies of the Board of Trade, the Scottish Council and everyone else so far have not yet succeeded in solving that problem, I am hopeful that we shall do so before we finish.
My hon. Friend the Member for Govan (Mr. J. N. Browne) suggested that we ought not only to build the factories, but put in the machinery as well. There is a limit to the extent to which the economics of the situation can be distorted. A lot can be done to help an industry to start. Facilities can be given for cheaper rent while it is getting going, but if the person establishing it cannot pay for the machinery, even by raising a loan from the bank, it does not augur well for the success of the industry later. The chances of success in this area, as in so many others, depends, I think, not a little on how far Scottish industry is prepared to help itself.
Then there is the question of the new towns. Clearly, where there are new towns there is a need to balance the building of houses with the building of the industries. There are two new towns under construction—East Kilbride and Glenrothes. East Kilbride is in a Development Area, so the principles which I have just described would apply. Glenrothes is in a developing coalmining area. The present inhabitants are employed either in coal or in existing industries. So, in the case of Glenrothes, the new town corporation itself has power to build factories if required, and we can, as and when necessary—there is a good deal of employment in the existing industries there—influence industrialists to go there.
I do not wish to detain the Committee too long, and I have nearly finished, but I should like to say very briefly what the general picture of factory building in Scotland has been. It has been the constant desire of all parties to encourage factory building and industrial development in Scotland, and all parties have been faced with very similar difficulties.
The post-war history of factory building in Scotland follows clearly the history of post-war trade. In the early days just after the war, when there was a pent-up demand, a world starved of goods and factories which had lacked development and maintenance, the only problem was how to space out the demand, how to meet this upsurge of desire to catch up with the years that had been lost.
By 1951, however, the post-war demands had, by general admission, begun to slacken, and the demand for factories was easing off. The position which we found in the autumn of 1951 was that a large number of factories had been started. The steel situation was extremely tight, and the position was that unless something was done it would be very difficult to complete even the factories that had been started. I am not casting any aspersions about this; there were difficulties on all sides.
In those circumstances, the right course to adopt was that which we did adopt— to place an embargo on new starts and finish the factories on which a start had already been made. The situation was brought under control, partly by external forces, partly by actions of the Government. Inflation was checked and to some extent demand was checked because that is checked when inflation is checked. The balance of payments crisis was to that extent dealt with. Today, the problem is not one of raw materials. Factories can be licensed virtually freely in any part of the United Kingdom.
What, against that background, has been done for Scotland? Scotland has 10·4 per cent. of the population, but she has 12·3 per cent. of all the new factory building which has gone on since the war. The proportion of Government factories is higher in the Scottish Development Area than in any other Development Area. The total effort by Government, both in volume and in value, in the Scottish Development Area is greater than in any other comparable Development Area.
As for the actual buildings that have been completed there, more factory space was completed in 1952 than in either 1951 or 1950. It is true that there was during that period some falling off in the demands for new starts and the issue of industrial development certificates. It is also true that in recent months there has been an upward tendency in the latter.
The industrial future of Scotland depends, as I say, not on Development Area policy; it depends upon the trading outlook for the United Kingdom as a whole. Scotland's objective should be a freely trading world, with the removal of as many physical barriers to her exports as possible. I would say to those who have the interests of Scottish industry at heart that I think we should be wrong to put much faith in the physical control of foreign transactions. That would be to put a tourniquet on Scottish trade.
What the Scots want is a battering down of barriers which at present obstruct her export trade. What they want is a situation in which men all over the world are prepared to invest in Scotland, to do which they need to have some hope some time of being able to repatriate at least their profits and probably their capital if they wish to do so. What is needed is the establishment of the largest area of trade and payments which we can devise.
The outlook for the future is not one of lush, easy markets; it is one in which only competitive industries will be able to sell, an outlook peculiarly suited to the integrity and hard-working nature of the Scottish character. The type of things Scots produce—their skill in engineering, the sort of things they want to sell—are those appropriate to the kind of world which we are entering.
I have found this to be a useful and valuable debate. I have listened to all the points that have been made, and I hope to listen to many more during the course of the day. I have not been able to reply to all the points, but I will certainly promise to study in detail all the suggestions that have been made. When the House rises I intend to see some of these areas in Scotland for myself and to renew the co-operation and study which we have initiated in this two days' discussion.