Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 5th November 1962.

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Photo of Mr Edward Short Mr Edward Short , Newcastle upon Tyne Central 12:00 am, 5th November 1962

I shall not comment on the speech of the hon. Member for Rutland and Stamford (Mr. K. Lewis), although a number of things he said call for comment, except to say that some of the points he made come oddly from the mouth of one who was brought up, as he told us, in pre-war Jarrow. Not quite like the Bourbons, he seems to have forgotten everything and learned nothing.

I wish to speak about the North-East and to confine myself to that because time is getting on. I wish to do two things: first, to explain quite clearly, at the risk of boring the House, what the position in the north-east of England is now; and, secondly, to say what I would do about it. We have approximately 50,000 unemployed in the North-East. That is the highest figure since the war, except for a short period during the fuel crisis. Of that total there are more than 8,000 young people under the age of 18. That gives us in the North-East a percentage which is exceeded only slightly by the percentage in Scotland and, of course, by Northern Ireland. We have areas with more than 8 per cent. unemployed. My city, which is regarded as a very prosperous town, has 1 per cent. higher unemployment than the national average.

What are the prospects for the people who are unemployed? When we talk about unemployed we ought to forget about statistics and remember that each one is a man or woman, very often with children who have to go hungry so that the rent can be paid at the end of the week. That is what unemployment means. What are the prospects for employment in the North-East? The placings for the last four-week period I can find, up to 5th September, were the second lowest in the whole of Great Britain. Over 3,360 people got jobs and there was only one region with a lower total than that.

What about the prospects for those who have not got jobs? What is the position about vacancies? There are seven boys unemployed for every vacancy for boys. There are three and a half girls unemployed for every vacancy for a girl. There are ten men for every vacancy for a man. There are two women unemployed for every vacancy for a women. This gives a deficit, that is, people for whom there are no jobs if we take into account all the vacancies in the Northern Region, of 40,000 men, women and young people.

I wish to say a word about young people. At the end of the summer term, 21,800 left school. The Government knew fifteen years ago that 21,800 would leave school in the summer term of 1962. Yet there are still 8,600 young people unemployed. That is a deficit taking into account the vacancies, of 7,000 young people in the North-East for whom there are no jobs and no prospect of jobs.

As a number of hon. Members have mentioned, we have had some very serious closures. The hon. Member for Sunderland, South (Mr. P. Williams) mentioned this and I agreed with almost all that he said tonight. One of the closures he mentioned, I learned through the Press, will put nearly 900 out of work in Sunderland. There have been others, I.C.I. at Prudhoe, and Hawthorn Stephenson, in my constituency. I have appealed to the Government over and over again to find a tenant for that factory Three years ago it employed 400 men. Today, only six warehousemen are employed there. The closure of Grays, at Hartlepool, will raise the unemployment percentage to well over 10 per cent. Those closures are known to the Government. Basically the trouble in the North-East is due to conditions in the coal industry, in steel, shipbuilding and the construction industry. I shall say a word or two about each of those.

In the coal industry there was a drop of 9,000 men in the labour force in the first half of this year. It has been estimated— I take the figure from the quarterly report of the Director of the North-East Development Council— that there will be 20 more pit closures in the next five years. It is forecast that the present labour force of 116,000 in the mining industry will drop to 65,000 by 1965 and to 50,000 by 1967. What planning are the Government doing now about this? I believe, and I think that my mining colleagues will agree, that apart from natural wastage we have almost reached saturation point in the absorption in the redundant pit workers. What steps are the Government taking to absorb probably 10,000 pit workers each year made redundant over the next five years in the North-East?

The steel industry in the North-East is working to about 7 per cent. of capacity. Like the shipbuilding industry, mentioned by the hon. Member for Sunderland, South, it has modernised itself and the steel firms there are now probably as modern and efficient as any in the world. They are awaiting an expansionist national policy. I welcome the reduction of Purchase Tax on motorcars, but that will make very little difference to the North-East. Indeed most of the other proposals which the Chancellor announced today will make no difference whatever to the North-East.

In shipbuilding, the labour force in the North-East between 1961–62, dropped by 2,000. Here, also, as in the steel industry, -there has been extensive modernisation. I should think that the shipyard of Swan and Hunter is now probably one of the most modern in the world, but yards in the North-East have less than 'two years' work in hand. Their output now is twice the new orders they are getting

At the end of June this year, 49 ships were under construction in the North-East, but the shipyards had only 38 orders which were not started—.approximately two-thirds of the present out-put. Here again, I support those hon. Members who protested about the action of the British Transport Commission in inviting tenders from 20 foreign shipyards in eight different countries for the B.T.C. ferry. If a body like the Transport Commission will not co-operate with the Government in a matter of this kind to help us in this difficult region, then it is a poor outlook for the future.

Have the Government any policy to help the shipbuilding industry? Why not some sort of "-scrap and build" policy? I am very much in favour of a "scrap and build" policy. It is far better to have that than to allow the very highly skilled labour force to be dissipated. I should have thought that, for strategic reasons alone, if not for social reasons, it was absolutely essential to keep the shipbuilding labour force intact.

The constructional industries, the men engaged in building and civil engineering, account for 10 per cent. of our population in the northern region. Unemployment among them is four times the national average, and the reason for this is obvious. It is because of conditions in the other basic industries, which effect the amount of capital work being done generally, and there is not nearly sufficient capital work being done in the North-East. This, in its turn, affects the attractiveness of the area, and that reduces again the capital work being done. The weary business goes on. We need more schools, more and better roads, and so on, not only to absorb the unemployed, but to rehabilitate the North-East and make it more attractive to industry.

I have said a word briefly about each of these basic industries, and all this has amounted to the rising unemployment which at present is almost twice the national average. The present Chancellor of the Exchequer, when President of the Board of Trade, came to the North-East and advised local authorities to get together and to engage in extensive and expensive self-help to try to attract industries to the area. They have done this. They have set up their own organisation, which is well staffed and well financed, to try to attract industries, but we cannot pull ourselves up by our stocking tops, and this is what we are trying to do in the North-East.

The latest Minister to come to the North-East— the Minister of Pensions and National Insurance— suggested migration as a way out. That is all that he could suggest, and, as one of my hon. Friends says, this is as great now as it was when the hon. Member for Rutland and Stamford was a boy at Jarrow. Migration from the area is as great as it was then. To advocate a policy of migration is to make absolute nonsense of all the social planning that has been done. What about the schools, the houses, the roads, the hospitals, and so on, which have been provided at great expense by local authorities in the North-East for the population?

Not only does it make nonsense of all that, but it creates problems at the other end as well. It creates physical problems in London and the South. I hope that the Minister will bear in mind that this sort of policy also accentuates the problem of inflation in the Midlands and elsewhere. When we have an inflation crisis in this country, it does not occur in the North-East, but in the Midlands and London. By a policy of migration, the Government are accentuating the problem with which they have had to deal for years. When inflation comes, it brings down on all our heads, rich and poor, the North-East, the Midlands and everywhere, the same kind of trouble, and we all have to take the medicine. As I said in the debate on the North-East Coast, one child in a family gets "tummy ache ", and all have to take the medicine. Is this the Government's policy? Will they tell us whether the speech of the Minister of Pensions and National Insurance represents Government policy?

What have the Government done? In 1962, they issued industrial development certificates for 4,000 jobs. We have heard a lot about the pipeline, and I should like to know exactly what the pipeline is. I am "fed up" with Ministers coming to the North-East. The Prime Minister sends one Minister after another to keep up the morale in the North-East, and all they talk about is the pipeline. What degree of certainty is there about this figure? Does it include only jobs "in the bag ", or does it include tentative inquiries from industry? How long is the period envisaged — one, two, three or five years? Will the Government tell us with more certainty what is meant by the pipeline?

There is some dispute between two Government Departments as to what is in the pipeline, but, anyhow, whatever it is, at the very most, it seems to amount to 4,000 or 5,000 jobs for the next four or five years. Perhaps the Minister can confirm whether this is the correct figure. I have been kind to the Government, because that is the top figure, but it is less than half the expected redundancy in the coal mining industry alone. The figure of jobs in the pipeline is half the redundancy figure in one industry, let alone men who will become redundant in the shipbuilding industry— the order books of that industry contain only two-thirds of its output— and let alone the increasing number of school leavers on account of the "bulge"; and the Government knew about that fifteen years ago.

Secondly, there is the question of the Local Employment Act. This was to be the Government's weapon. Let me tell the House what this has done for the North-East. According to the latest figures which I can get, and they come from the answer to a Parliamentary Question in July, it has provided 700 jobs against the sort of problem which I have been describing. In cash, it has provided less than £ 500,000 for the northern region, against £18½ million for the country as a whole. Twelve projects have been approved and 18 rejected. The cost of each job provided in the North-East has been £ 450, while it has been £ 810 nationally and over £1,000 in Scotland, though there is a special explanation for that. Actual building grants—and this is the most amazing figure of all—provided 160 jobs in the North-East, against a need of about 20,000 a year.

In my view, there are three things wrong with the Local Employment Act. First, the areas are too small. The local employment exchange area is ridiculously small. Secondly, the 4 per cent. criterion is nonsense. It means that the whole of the machinery of the Board of Trade can be brought into operation in the case of a rural district council on the South Coast, with 160 people unemployed, but that in my own city, with 5,000 unemployed, it cannot be brought into operation. I feel that the 4 per cent. criterion for scheduling an area is unfair. Thirdly, I feel very strongly, as I have said before, that B.O.T.A.C. is far too cautious. The provision of employment should be the first criterion, and the financial return to the Government, while it should certainly be a consideration, should come second and not first.

For example, taking the whole country, up to this summer B.O.T.A.C. had made 111 offers of assistance, but had turned down 124. One north-east firm was kept waiting for eighteen months, and was then given a loan of £2,000, attached to which were 30 very onerous conditions. I myself went to the Board of Trade to plead with the present Minister of Pensions and National Insurance, when he was there, for a firm for whose directors I was willing to vouch, and whom I knew very well. This firm had been turned down, although it was in a development area in Durham. The Minister said that there was nothing that he would or could do to assist.

What should be done to help the North-East? First, I suggest that there should be a regional plan, worked out by the National Economic Development Council, taking into account the expected changes in the industrial pattern of the area—these are known and require no research—and equating the jobs to he provided with the expected need, based upon the premise that migration from the area to other areas is extremely undesirable.

Secondly, there should be an expansionist policy nationally, and I suggest that if there is to be any kind of credit restriction the Government should try to make it selective. Surely it is not beyond their wit and ingenuity to have some sort of credit restriction in the Midlands, but not in the North-East. Scotland or Northern Ireland. Next. there should be a much more effective machine to steer industry into such regions as this. I agree with my right hon. Friend the Member for Easington (Mr. Shinwell)— I have come to this conclusion reluctantly— that if this is not effective then there should be direction of industry, which would be a far lesser evil than unemployment and migration. It could be done intelligently and, of course, it would not be done where a project would not be a paying proposition. It seems to me that in this field freedom is not working. If freedom for the industrialist means servitude for the working population, as it does now, then it is high time for the Government to intervene.

Next, there should be a revision of the Local Employment Act, especially of the B.O.T.A.C. machinery, both with regard to the criteria which it uses in deciding to recommend grants and with regard to its personnel. I do not think that B.O.T.A.C. should consist entirely of businessmen. There should be some trade union representatives and local authority representatives, too.

Next, there should obviously be more co-ordination among Government Departments— this comes under planning— particularly with regard to capital projects. What is to prevent the President of the Board of Trade or the Minister of Labour from calling in the Minister of Education and the Minister of Transport, and saying to the former. "Authorise more schools for the North-East "— and, heaven knows, we need them—and to the Minister of Transport, "Authorise more roads for the North-East "— and, heaven knows, we need them too. To the Ministries which allocate Government contracts could be said, "You must give more to the North-East and to Scotland "—and so on. Why cannot there be more co-ordinating among Government Departments?

Next, I believe that there should be a reversal of the B.T.C. policy on closures. B.T.C. closures not only of branch lines but of workshops should bear some relation to the social and industrial conditions in the area. As I see it, it would be monstrous if a publicly-owned corporation, as a result of a Government directive, paid off thousands of men in Darlington and Shildon, in an area where there are already twenty or thirty men for every vacancy. It would be monstrous if the Government continued with this policy in the North-East in face of the position which I have described.

Next, there should be more training schemes, in particular— I agree with my right hon. Friend the Member for Easington— for men over 50. Present training facilities are not nearly adequate. Nobody wants a fixed, rigid pattern in the economy. What we want is jobs and the ability to retrain if necessary.

Finally, what we want from the Government in the north of England— and I am glad that at long last we have a Minister from the North— is not complacency and the sort of lip-service which we are getting from the long procession of Ministers who come traipsing up to the North-East at the behest of the Prime Minister. We want some effective action based upon sound economic planning. The present economic facts of the North-East are well known. The general lines of the development of the basic industries for some years ahead are fairly well known. On these known facts about the economy of the region, the plan for industrial development should be based, with the assistance of the National Economic Development Council. Only by so doing, I believe, can we arrest the decline of this very important industrial area of Great Britain.