Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 12th February 1957.

Alert me about debates like this

Photo of Mr Iorwerth Thomas Mr Iorwerth Thomas , Rhondda West 12:00 am, 12th February 1957

I have no desire to follow the argument advanced by the hon. Member for Darwen (Mr. Fletcher-Cooke), but I should like to make this comment. He seemed to enumerate the difficulties and the very serious consequences which would result from any effort made by the Government to bring about limitations of capital development and investment in industry. I do not see how he can advance that argument, particularly in the light of the experience which we have had in analysing the operation of very large monopolies in this country which are exercising their freedom and their right to determine the size of their industry both for the purposes of internal trade and particularly in regard to exports. The difficulties are not, therefore, insurmountable. We could learn a great deal from the past practices of the monopolies.

My first point concerns the Development Areas. We are all well aware of the very great achievements that have resulted from the planned economy flowing from the operation of the Distribution of Industry Act, which transformed depressed areas and special areas into Development Areas, and planned their industries in a way which has been very much welcomed by their communities.

I realise that there is a desire in all parts of the House to remedy the present economic position. We have today heard lengthy arguments by those best qualified to speak. They have adopted quite a tutorial and professorial approach to these matters. When discussing deflation or inflation, I think that everyone will agree that those parts of the economy likely to be most affected by stresses and strains are the industries located in the Development Areas. What steps are the Government prepared to take to mitigate and minimise the effects of their policy of deflation?

The name of the Rhondda is, of course, synonymous with depressed areas, special areas and the rest and, in the main, what applies to the Rhondda would apply to all our Development Areas. In the Rhondda there are fears of the possibility of a retrogression to what we call the bad old days. For example, one very large factory in the Rhondda had at one time 1,000 employees. As a result of the operation of the credit squeeze and of the Government's present financial policy it has now only 300 personnel.

In that factory there is floor space available for all the original trained labour, but that trained labour has now been scattered. Some of the men have found employment in factories ten and twelve miles away, but the situation now is that the neighbouring factories and trading estates cannot absorb any more men. That has occurred in the very heart of a Development Area. What steps are the Government taking to see that that available floor space and trained labour are used to the best advantage of our economy?

I have a second example of the effect upon the Development Areas of the monetary policy of the Government. Some industries and industrialists in the Development Areas who have their own financial resources are able to proceed with a policy of capital investment by drawing upon their own private resources and thus have freedom to build and to extend their factories. At the same time, a substantial number of industrialists in the Development Areas who are housed in Government-financed factories are prevented from expanding by the monetary policy of the Government. They have to apply to the Board of Trade before they can expand their industries, but because of the credit squeeze the Board of Trade has rejected applications.

The industrialists in Government-financed factories therefore suffer an injustice in comparison with those who have been able to establish their factories from their own financial resources. That is an aspect to which the Government should give serious consideration. In my constituency, application has been made for the extension of an existing Government-financed factory, which would mean the employment of more than 400 additional people, 90 of whom would be men, but again we have seen the effect of the unfair, unbalanced and unjust operation of the Government's restrictive policy in the financing of factories.

There is another serious difficulty, which applies not only in the Development Area, but throughout the Principality. We all boast and are proud that the contribution of Wales to the nation's steel production is of the magnitude of 28 or 29 per cent., and a further expansion of the steel industry in Wales is envisaged at a capital cost involving hundreds of millions of pounds. The irony of the situation is that although Wales is producing such great quantities of steel, there are industries, both in South Wales and in the Principality as a whole, the expansion of which has been curbed by the lack of steel. This matter has been receiving the attention of many varied organisations in the Principality for many years. The Welsh Board of Industry, an organisation representing all the industrialists in Wales, has from time to time made representations imploring the Government to bring their influence to bear upon the steel makers in Wales to provide a section rolling mill in South Wales.

I have in my possession a document which shows that there are twelve well-established steel users in Wales who have not been able to accept contracts and to expand, and who have had to create redundancy and have lost their skilled operatives because they have been unable to obtain the proper quality and quantity of steel. Why should that state of affairs have existed for so many years? If the President of the Board of Trade made inquiries and took their opinion and advice, those industrialists would impress upon his mind the necessity for the establishment of a section rolling mill in South Wales.

It is true that at present the shortage of this steel has been considerably eased by the crisis in the motor car industry. The quantities of steel which are now available in the market are due not to any foresight on the part of the Government or even on the part of the steel makers but simply to the economic accident that the motor car industry has been experiencing a recession for quite a time now.

There are in my constituency steel users who recently had to dismiss 150 men because they could not obtain steel. There were plenty of contracts available but they would not accept them because they had not the steel. They have had to complete their existing contracts by purchasing the necessary quality and quantities of steel from the Continent and paying for it as much as £20 to £30 in excess of the home market price. It is a very serious state of affairs, when one considers the steel potential in the country, that steel users have to go to the Continent and increase the importation of steel at that increased cost in order to carry out their existing contracts.

Whilst the Government are wrestling with inflation, I urge them to bear in mind that the Development Areas of the country are vulnerable to the slightest change in the economy. They are the first to feel the cold breeze of any economic storm that comes along. They are so sensitive to the stresses and strains on our economy that there is a possibility of a great deal of unemployment being created.

I trust, therefore, that the Minister will give the three points which I have dealt with his serious consideration. I hope that he will be able to reassure the Development Areas in particular that they will receive the Government's constant care, and that they shall not suffer the indignities of the past but even in this slight economic recession can look to the strong arm of the Government to protect their interests.