Unemployment and Economic Policy

– in the House of Commons at 12:00 am on 4th February 1963.

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3.49 p.m.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I beg to move, That this House expresses its deep concern at the rise in the unemployment figures to 814,000; deplores those features of the Government economic policy which have condemned hundreds of thousands of British workers to unemployment and their families to hardship; and calls upon the Government immediately to initiate measures directed to a steady expansion in national production and to the promotion of industrial development in areas of heavy unemployment. It is both a tragedy and a scandal that this House, in 1963, should again have to debate heavy unemployment. The total number of unemployed for January, 814,000, must have come as a grievous shock even to the most pessimistic of us. Not merely is it the highest January total since the war, but the percentages in the under-employed areas are also much the worse since the war.

In the North-East Coast area the percentage is now 6·5 compared with a peak of 3·9 in the high unemployment of January, 1959. The Scottish figure is now 5·9 per cent. compared with 5·4 per cent.; and even in Wales, which is supposed to be doing better, the total is now 5·7 per cent. compared with 4·6 per cent. in 1959. In the worst-hit smaller areas, the figures are even higher—6·8 per cent. on Merseyside, 15 per cent. for men in The Hartlepools, and 9·5 per cent. for the whole of Northern Ireland.

It is instructive to compare these figures with the situation in 1951. In June of that year—as long ago as that—unemployment on the North-East Coast was down to 1·8 per cent. compared with 6·5 per cent. today in Scotland, it was 2 per cent. compared with 5·9 per cent. now. These latest figures are really positively disastrous and a shattering condemnation of a Government who have been in power for eleven years.

We are told, of course, that the total of 814,000 is partly due to the weather, which, apparently, was under Government control in 1947, but is not under Government control now. It is certainly no great compliment to those who have been in office all this time that we are no more able to face a cold spell eighteen years after the war than we were eighteen months after the war.

Photo of Mr Roger Cooke Mr Roger Cooke , Twickenham

Mr. R. Gresham Cooke (Twickenham) rose

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I will give way later.

Meantime, I submit these figures to the Committee, in any case, the figures of temporarily stopped enable us to estimate roughly how far this huge total last month is, in fact, due to the weather. The number of wholly unemployed now —that excludes both those temporarily stopped and school leavers—is 605,000, compared with 461,000 in February, 1947, and 530,000 in January, 1959. So, even if we allow for the weather, we are faced with much the worst unemployment figures since 1940.

Of course, it is true that the total of 814,000 will drop seasonally as we move into the spring and summer months. But it would be a fatal error complacently to assume that in a few months the whole problem will thereby be solved, particularly in the more vulnerable areas. Indeed, it is precisely because the Government have tended to make such easy assumptions in the past that the plight of these areas is as lamentable as we find it today. Whether the figure is 600,000 or 700.000 or 800,000, quite apart from all the human tragedy involved—which, I think, we all understand now—what a fantastic economic waste this is, at a time when, we are all agreed, lack of production is weakening our whole political and military position all over the world.

This year we are holding National Productivity Year, to try to raise output per worker. Yet 800.000 workers are excluded from having any output at all. We are told by hon. Members opposite that West Germany's economic advance is due to the great immigration of workers from the East, but we not merely exclude immigrants from the West Indies but even prevent 800.000 workers in this country from working. When urgent work of all kinds needs to be done in these areas, we are paying these 800,000 people public money to do nothing.

Unemployment benefit, even at its present miserably low level, averages about £4 a week for each unemployed worker. This winter, therefore, the Government are paying out more than £3 million a week of public money—over £500,000, incidentally, in Scotland alone —to workers to do nothing while simultaneously holding up urgent road, housing and school building programmes in order to save public money. That is the economics of a madhouse.

What is the real cause of this folly and the lamentable economic paralysis into which the country is plunged? The Prime Minister insulted the intelligence of the people in the stricken areas by telling a Liverpool audience that the present unemployment was due to the prospect of a General Election and to uncertainty about the Common Market. Did it not occur to him, however, when he was blaming the next General Election, that unemployment actually reached its lowest points since the war in 1951, 1955 and autumn, 1959? As for the Common Market, on the day the count was taken I listened to about 20 leading industrialists in Glasgow giving their views on the present situation. Not one of them mentioned the Common Market once during that evening. This is not surprising, since 95 per cent. of the output of our economy goes to markets other than the Six.

Ask almost any industrialist today what is really restraining him from expanding and investing at present and he will say that it is the simple fact that he cannot sell the goods he is producing at the moment. That is why private investment is falling and why the Government have been compelled to rely on the investment programmes of the nationalised industries this winter to save us from complete disaster. Indeed, without the nationalised industries' development plans we would almost certainly have had more than 1 million unemployed this winter.

In turn, the simple reason why industry cannot sell its goods now is that the pre- sent Government launched a new and savage deflation in July, 1961, and intensified it in the last Budget. That, in turn, drastically cut back public spending power. The Budget of April, 1962, was over £100 million more deflationary than that of the year before and it is obvious that the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd)—who is not facing up to it here today—completely miscalculated in preparing his Budget. He budgeted for far too low a level of net Government spending and that was the main cause of the economic situation this winter. The right hon. and learned Member for Wirral is the man mainly responsible. The evil that Chancellors do lives after them.

We on this side of the House, in saying these things, are not being wise after the event. We said it all in the Budget debate last April. On 11th April I said: … the Chancellor is now giving a new deflationary twist to the economy … which, I should have thought—unless there are really strong expansionary forces which nobody seems to be able to detect except the Government—can only result in another year of stagnation if not of decline."—[OFFICAL, REPORT, 11th April. 1962; Vol. 657, c. 1353.] Decline it has been, due to that deflation and to the present Chancellor's failure to reverse it in time. That is why unemployment is at a record level and why the steel industry is producing at about 60 per cent. of capacity. Indeed, in Scotland it is producing at not much more than 50 per cent. of capacity in plant recently erected.

The second cause of the tragic peak of unemployment in Scotland, the North-East and on Merseyside, is the continued failure of the Government, due to their laissez-faire ideology, either to develop these areas or to check over expansion in the South-East and the Midlands. It is no good the Government claiming that they are using the I.D.Cs. really toughly to ensure that the needy areas get their fair share of new expansion, for the figures show that they are not. From 1945 to 1947—three years inclusive—the development districts got 45 per cent. of new factory space built in this country, while London and the South-East got 12·9 per cent. By 1958, the development area percentage had fallen to 18 and London's had risen to 21, which shows that in that period slackness in the use of this most essential power had allowed the drift to the South to set in again.

Now let us see what has happened in the last few years, and let us first take London. Throughout 1960, 1961 and 1962, the share of new factory space going to London and the south-east region alone was larger than that going to all the development districts, and in 1962 was still 15·8 per cent. of the national total. The situation is much worse than that, both because these figures do not include office development and because they relate only to the strict London and south-east region and not to the whole of the south-east of England.

The second Report on the working of the Local Employment Act by the President of the Board of Trade shows this. Although the share of the London and the south-east region alone in new factory space was smaller than its share of population, both the eastern and the southern regions were getting a share nearly twice as large as their populations. That means that the south-east of England in the larger sense, from the Wash to Bournemouth, was getting a percentage of new factories almost equal to existing population. Scotland, at the same time, was getting a percentage hardly larger. Obviously, in that way one cannot correct the existing unbalance which is the cause of all the trouble.

In turn, let us consider what has happened in those years in the development districts. Compared with the 45 per cent. of new factory space which they got in the first three years after the war, the development districts, in 1961, got 15·5 per cent. and, in 1962, 15·4 per cent. That in itself explains what has happened. If the President of the Board of Trade—incidentally, it is astonishing to learn that he is not even to address us today—or whatever Minister is to address us on his behalf, says that that is because the development districts have been narrowed down to much smaller areas than prevailed under the Labour Government, I will say that that is just one of our main complaints.

Even allowing for that, this figure of 15 per cent. is deplorable and goes far to explain the present situation. Taken together, the London figures and development districts figures prove conclusively that failure to use the I.D.C.s properly has been one of the main causes of the resumed drift to the South.

The other main cause has been the Government's repeated failure, despite persistent requests from this side of the House, to do anything effective to control new office development. Yet we know that office employment in Central London alone—the narrow definition of Central London—is increasing by 15,000 people a year; and that, of all the new employment created in the Greater London area during the last ten years, as much as 80 per cent. has been outside of the control of the I.D.C.s altogether—that is to say, commercial rather than industrial employment.

It is not very surprising, if the I.D.C.s are not resolutely used and office development is not controlled from the national point of view, at all, that you get precisely the result which we now see fearful housing and other sorts of congestion in the South-East and unemployment and deflation in Scotland and the North.

The Government have committed another folly. The main change in the Local Employment Act, compared with the Distribution of Industry Act, 1945, was the substitution of small and ever-changing development districts for the large industrial development areas of pre-1960. Everybody now agrees that this has caused confusion and vacillation and that we ought now to go back to the scheduling of great industrial areas. How ironic it is that the one bright idea in the Local Employment Act, which we criticised at the time, is now generally admitted to have been a mistake!

All these muddles and blunders, as well as speeches like that of the Prime Minister at Liverpool, which was characteristically designed to obfuscate rather than enlighten, have rather obscured some of the simple basic facts of this problem. The simple truth is that in areas where old industries are declining one cannot achieve full employment unless one takes vigorous purposive action on a national scale to steer in new employment simultaneously with the decline. It is not essentially a different problem in Scotland, or Merseyside, or on the North-East Coast, or in Northern Ireland; it is very largely the same problem with some minor local difficulties.

I notice that Lord Hailsham addressed a gathering on the North-East Coast a month ago, with the words: I offer you faith and courage. What more do you want? Someone replied, in not very Parliamentary language, "A ruddy job." That can be said with precisely equal truth in Scotland and Merseyside and Northern Ireland as well as the North-East Coast.

Do not let anybody imagine either that we can solve this problem by migration from the areas, or, incidentally, that people migrate to the South willingly. They migrate because they cannot get a job otherwise. Migration does not reduce unemployment, as many people think. When years ago, under the Labour Government, new factories were being introduced into these areas, we worked on the calculation, which turned out to be pretty correct, that if we built a new factory to employ 100 people, the extra spending power of those workers would give employment to about a further 100.

Everybody agrees with that now; but it also works the other way round. When a pit in, Scotland closes and 1,000 people are thrown out, and perhaps 1,000 leave Scotland in search of a job, the probability is that a further 1,000 are thrown out of work by the loss of spending power in those local communities. I believe that, basically, that is what has been happening in Scotland in the last ten years, and it explains why the population falls, but unemployment remains the same or even grows. Migration does not represent a solution in these circumstances, but starts a vicious circle of local deflation.

For all these reasons, the aim of policy now must be to revive the older industries in these areas if we can, and in any case to steer new work rapidly into them. What the House and the country now want to know is by what practical methods that can be done. Therefore, for the rest of this fairly short speech, I shall devote myself to proposing six concrete major measures, and a number of minor ones if there is a little more time, which, I believe, could reduce unemployment in these areas to negligible figures, provided that these measures are continued and not foolishly relaxed as soon as they begin to succeed.

The first is to stop general deflation once and for all, and to release sufficient demand for full employment to be possible. Incidentally, that would revive the steel industry right away. Without an end to deflation, all else is useless in these areas, because there will be no development projects coming forward to steer into them. Naturally, when the general tide of demand is running out, it is the weaker areas which get left highest and dryest. The Government here have only to follow President Kennedy, who flatly said in his Budget message a fortnight ago that unutilised productive capacity remains too large and unemployment too high, and that he would, therefore, take steps to reduce taxation on a large scale. Given a vigorous expansionist policy, the development projects will come forward which can be steered into the areas which need them.

Secondly, we must place the responsibility for this job firmly on one Minister who is capable of doing it. He must be a Minister who has the power both to control expansions in the congested areas and to steer them to the development areas. In practice, that Minister must be the President of the Board of Trade—not necessarily the present one—because the President of the Board of Trade has the necessary nation-wide authority and, incidentally, because Parliament has already voted him the necessary powers. It then ought to be the regional controller of the Board of Trade in the area who co-ordinates and progresses the necessary regional planning.

All this was clearly, not merely recognised, but explained, as long ago as the Employment Policy White Paper of 1944. But even here the Government have introduced muddle and confusion. The nominally responsible Minister, the present Parliamentary Secretary to the Board of Trade—and he is supposed to be the responsible Minister—at Question Time, on 27th November, when asked by one of my hon. Friends who was responsible, said that he would require notice of that Question.

I therefore asked the Prime Minister who was responsible, and he answered on 13th December: Co-ordination of the many aspects of national policy involved is best secured by consultation between the Ministers concerned in different aspects of the problem."—[OFFICAL REPORT, 13th December, 1962; Vol. 669, c. 578.] Then he appointed Lord Hailsham, with no powers, to do the job of the President of the Board of Trade, who has the power, but to do it in one area only.

Today, we are not even to be addressed by the President of the Board of Trade, who is the Minister responsible. We also find this situation. Merseyside is scheduled as a development district, but has no Minister to look after it. The North-East Coast has a Minister to look after it, but it is not scheduled as a development district. The only thing they have in common is a 6 per cent. unemployment rate. This surely must be the highest point of sheer administrative muddle and incompetence reached by even this Government yet.

Thirdly, having got general expansion going, use the I.D.C.s resolutely and effectively in the congested areas, and this means not granting an I.D.C. simply because a London firm describes its factory building scheme as an extension. Once you swallow that argument, you are lost because the great majority of new factory building schemes are extensions, anyway. Here, also, do not let us delude ourselves into thinking that any new or elaborate fancy inducements can be a substitute for restraint through I.D.C.s. If anyone believes that, he should read the report of the Special Areas Commissioners between 1934 and 1939, who tried to work with inducements without controls and repeatedly reported to the central Government that it could not be done. The essential elements of this campaign must be restraint in the congested areas and the building of Government-financed factories, including advance factories, in the development districts. Without those two things alt other measures will fail, as experience has shown.

Fourthly, tackle the office problem. Here, I must confess to having previously misled the House, because I believed what the Government told me, that there were at present inadequate powers under the Town and Country Planning Act, 1947, to control the location of new office development. But I am now advised—and I put this to the Ministers responsible now, whoever they are—by persons far more expert than I on the 1947 Act, that though the I.D.C.s do not apply to office development, the planning powers under the 1947 Act, if resolutely used, are adequate to deal with this problem, too.

I doubt whether we shall get a clear answer from the Minister of Labour, but I ask the Chancellor of the Exchequer specifically to tell us whether what I am saying is correct or not. The short point —and I will not weary the House with it at length—is that unless an area is zoned for office development, then planning permission for new office building can be refused without any compensation being payable. Since the power of zoning is in public hands, and the Minister of Housing & Local Government has a great deal of authority, this means that very far-reaching powers are in our hands, that could have checked the London office boom of the last seven years which has been so largely responsible for the disastrous drift of population from North to South.

Here again, substantial powers exist, but the Government, in the face of the property development interests have been too cowardly to use them effectively. I ask the Minister to tell us whether this is so or not. If it is, I challenge him to use these powers, and if not, will he come to the House and ask us to give him the new powers which he ought to have?

Fifthly, let us stop all this nonsense about small and ever-changing development districts, "stop lists", and all the rest of it. The whole idea of temporary ambulance work applied to small areas by the Local Employment Act is all wrong and exceedingly foolish. The right course—and I am sure that experience has shown this—is to schedule large industrial areas which are threatened by these long-term forces, and go all out to develop them as modernised, well-equipped, and expanding industrial centres.

Schedule right away the whole North-East Coast, industrial Scotland, Merseyside and neighbouring areas, West Cumberland, and industrial South Wales. Then let the Board of Trade exercise its powers with discretion, and let industrialists have a good deal of free choice, within those broad areas. Next, keep the areas scheduled, because if we relax the pressure as soon as we are beginning to succeed, the long-term forces will regain the upper hand and the whole trouble break out once more.

Incidentally, when we have got rid of these fiddling development districts, do not let us start a new dogma about "growth points". Growth points were fashionable, I remember, as long ago as 1944. People used to say that we could get industry to go to Cardiff, Newport and Swansea, but not to Merthyr, Tredegar and Pontypool. If we had accepted that doctrine, which is an appallingly defeatist one, we should never have had Smiths Clocks at Ystradgynlais, Kayser Bondor at Merthyr, or British Nylon Spinners at Pontypool. We must, of course, have the main centres like Treforest and Team Valley: but do not let us make this a dogma.

Sixthly—and I am coming to the end—give back to the publicly-owned industrial estate companies in these areas the active promotional and development functions for which they were designed and are still equipped. It was another crass folly at the time of the 1960 Act to turn these companies which had done much of the executive work since 1945 into passive property-owning concerns. Consider the Team Valley Company. It has all the equipment, experience, staff, and enthusiasm. But the Government forbid it to get on with the job, with the result that private bodies without the necessary powers spring up instead, and, finally, the Government appoint Lord Hailsham, who has not the knowledge, the power, or the staff, to investigate the muddle which the Government's policy has created.

Those are the main practical steps which, in my view, ought to be taken now. For the sake of brevity I shall not enumerate all the minor ones, but will summarily mention a few.

First, give permission to local authorities now in these areas to employ idle men immediately on urgent road, housing, and other plans. Such plans are already prepared and ready to go in almost all these areas, as I found out for myself. Also, provide finance at reasonably low rates of interest for them. Perhaps I might tell the Chancellor of the Exchequer that his £15,000 concession of last December is regarded by local authorities in these areas as absolutely derisory. One county council in Scotland told me that it would enable it to widen —not build—two bridges over a canal during the course of the next year.

Secondly, speed up some major schemes such as the proposed coal-fired power stations in Scotland and the North-East Coast, which would each guarantee the permanent employment of 10,000 miners. I am not at all convinced by the Minister of Power, who in an Answer last week, turned down the proposal for a coal-fired station in Durham. The demand for electricity depends on whether the Government really mean to develop the area.

Thirdly, push on with existing schemes which have been prepared for new crossings over the Clyde, Mersey and Tyne. Examine again the urgent request of the shipbuilding industry for easier credit terms for exports, in competition with other countries.

Incidentally, why cannot we have further major schemes for the location of central Government work, employing large amounts of clerical labour, and also more Government research and other establishments, in under-employed areas? If the Labour Government successfully established the Ministry of National Insurance in Newcastle and the Inland Revenue in Cardiff during their period of office, why have this Government failed to get any similar establishments going either on Merseyside or on Clydeside in twice as many years?

The Government must also do something to speed up the present B.O.T.A.C. procedure, of which most hon. Members know. The complaint which comes from industrialists is much too general to be negligible. It conies not only from disappointed and dubious firms who have had their requests turned down. I am satisfied that B.O.T.A.C. needs more full-time staff, a far quicker procedure, and more responsible representatives in the main areas and not just in London.

I have no doubt that if all these things were done with real decision and energy the unemployment percentage in these areas could be reduced, within two or three years, at least to the figures at which they stood in June, 1951.

But one thing more is necessary. We must inspire in each region sufficient faith and confidence in the Government's sincere intention to get on with the job to persuade all the other partners in the enterprise to push on with theirs. Otherwise, depression breeds depression. Hon. Members may know that there is a plan to electrify the railway from Glasgow to Gourock. Dr. Beeching understandably hangs back, because he does not know whether the Government really intend to stop the depopulation of Greenock, Port Glasgow and Gourock. How, again, can we blame the Central Electricity Generating Board for hesitating to build a power station in Durham, when it does not know whether the Government mean to bring full employment to the North-East Coast? If everyone had confidence that the whole regional plan was going ahead, they would each go ahead on their own. The area would really then be developed and, before long, fully employed.

One of the tragedies of these areas today is that very few people—industrialists, trade union leaders, or local authority representatives—have any confidence left that the present Government have the will, the intelligence or the moral courage to carry out any plan. Anybody who has ever attempted this job knows that it requires energy and enthusiasm as well as skill and knowledge. If, despite his December speech, the Minister of Labour really claims that this decrepit Government can measure up to this task, let him now give some evidence of these qualities, which have been so tragically and miserably lacking for the last ten years.

4.24 p.m.

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: whilst expressing its deep concern at the rise in recorded unemployment, commends the measures already taken by the Government to stimulate expansion in national production and to promote sound long term industrial developments in areas of heavy unemployment and emphasises the importance of the adoption by the nation as a whole of the objectives of more rapid economic growth and greater industrial efficiency and competitiveness". We have listened to a speech in which, I think, the right hon. Member for Battersea, North (Mr. Jay) genuinely wished to be constructive, but in which he said little new, as I shall hope to show. Much of what he recommends is already being done. It will, I believe, serve the House best if I try to set out the facts and deal with them as objectively as possible. I shall seek neither to exaggerate nor to minimise.

I want to take, first, the unemployment figures. The total of 815,000 for January, which was 248,000 more than the December figure, was the largest since the fuel crisis of 1947, when the number of unemployed rose to 1,800,000. The House should also remember that there are now about 2½ million more people in jobs than was the case in 1947.

When I spoke to the House in December, I said that unemployment would get worse before it got better. I said this because the number of unemployed in January is normally higher than it is in December. I tell the House frankly that when I said this I was not thinking of a figure as high as 800,000 because at the time I had not foreseen that we would have the biggest freeze-up for sixteen years—and, in many parts of the country, the worst January for more than 100 years. The part that the weather has played in all this can be seen from the figures for the construction industry alone. They show 164,000 more laid-off in January than in December. That, by itself, accounts for about two-thirds of the total increase in unemployment.

Apart from the temporarily stopped, and excluding school leavers, the number wholly unemployed rose by 85,000. What proportion of this is due to seasonal influences? It is difficult to interpret the figures precisely. The House should know that the normal seasonal increase of wholly unemployed would have been about 41,000. This year, because of the abnormal conditions, it may well have been at least 65,000. It is clear, therefore, that so far there has been no improvement in the underlying trend. This is what is really important, and this is what the Government are determined to remedy.

There is one real grain of comfort in all this. Hon. Members on both sides of the House have been particularly concerned about the placing of school leavers. Last summer, 365,000 boys and girls—a record number; it was the peak of the bulge—left school to take up jobs, and by December all but 2,800 had found work. At Christmas, about 150,000 more left school. By mid-January the number of these still registered for unemployment was 21,000. The Youth Employment Service is doing all it can to help these young people to find jobs, and I have every hope that the mid-February count will show a further drop in these figures.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

Even taking the figure of 65,000, there is an increase of 20,000 in the permanently unemployed. This is far from being merely a failure to improve the situation; there has been a continuing decline in the situation.

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I have already said that. I would not have given way, but I thought that the hon. Member had something new to say.

If the present arctic conditions continue, I must also warn the House that we must expect higher figures this month. More people could well be laid off, especially in the construction industry, despite the pile-up of work which is waiting for them, but once the weather improves unemployment will start to fall.

But a seasonal fall—and here there can be nothing between us—is not enough. That is why the Chancellor has taken extensive measures to remedy the position. He has done exactly what the hon Gentleman has just asked for. He has started a vigorous expansion policy—[HON. MEMBERS: Where?"] I will tell the House. Many hon. Members do not seem to realise—obviously, those hon. Gentlemen who have interrupted do not —how much has been done during the last four months to release purchasing power and to stimulate industry. I should like to enumerate the things which have been done.

We have released a further £80 million of special deposits, bringing the total released to £160 million. We have also released an additional £42 million of postwar credits. We have reduced the Bank Rate to 4 per cent. and cut Purchase Tax on ears from 45 per cent. to 25 per cent. This was followed by a further cut in the Purchase Tax on the remaining items which were at 45 per cent. to 25 per cent. The cost of these cuts is between £80 million and £90 million in a full year. We have announced in addition—

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

Assuming that all this is to be effective during the course of the next few months, is the Minister proposing to tell us why the Government delayed putting these measures into effect for so long when they were warned about it twelve months ago?

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

My right hon. Friend the Chancellor of the Exchequer is absolutely determined to do nothing which he would have to reverse later. I do not suppose that the hon. Gentleman is recommending a return to a process of "stop and go" policies. I am sure that that is not his intention.

In addition to Purchase Tax reductions we have announced an increase of £70 million in public investment. We have also increased investment and capital allowances. A few days ago we announced changes in the National Insurance schemes, providing for an all-round increase in benefits.

All this will lead to a very substantial increase in purchasing power and I expect a considerable upturn in the coming months in the consumption industries and retail trades as well as, of course, in the construction industry.

In answer, again, to what was said by the hon. Member for Cardiff, South-East (Mr. Callaghan), my right bon. Friend the Chancellor of the Exchequer is determined to get expansion going. But he is determined to do this only by measures which will not have to be reversed later. My right hon. Friend will be dealing with this later in the debate.

I wish now to refer to the particular problems affecting certain areas. I want to say something about Northern Ireland, about Scotland, the North-East and Merseyside. We recognise that in Northern Ireland there is an exceptional problem, requiring exceptional treatment. During the last five financial years Northern Ireland spent over £46 million one way and another, under its Industrial Development programme, in assistance to industry.

This is a very high rate of expenditure, and rightly so, and I am sure that my hon. Friends from Ulster will agree that the Government can claim some of the credit for it. For out of its share of the revenue of the United Kingdom, Northern Ireland could not meet expenditure of this order and, at the same time, give agricultural subsidies to its farmers and offer the other special services which we take for granted in Great Britain, unless Her Majesty's Government gave very substantial help. This we have been very glad to do.

The House will also recall that recently we agreed that the fuel subsidy should be extended to cover oil, and that an increased housing programme should be supported. Studies are now being made into the effects on Northern Ireland industry of the cost of air transport, and into the possibilities of developing air freight services. In December, contrary to the general trend in Great Britain, there was a slight improvement in the unemployment figure over the previous December. But, as was pointed out by the right hon. Member for Battersea, North, the January figure has risen steeply.

The Government will continue to assist the Northern Ireland Government in their tireless efforts to secure more employment. I am keeping in close touch with my opposite number in Northern Ireland, to give him all the help I can in training and in other matters.

Now I come to the North-East, Scotland and the Merseyside, which has been restored by my right hon. Friend the President of the Board of Trade to the active list of development districts.

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

Did I understand the Minister to say, by his reference to the last three places, that they have been restored to the industrial development certificate stage?

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I am sorry. I think that I did make clear that I wanted to talk about the North-East, Scotland and about Merseyside, which has been restored. That is correct.

Photo of Mr Stanley McMaster Mr Stanley McMaster , Belfast East

May I make it clear that if my right hon. Friend takes account of the amount of money earned by English firms with branches in Northern Ireland, where tax is paid in England, I do not think that he will find that Northern Ireland is indebted to the rest of the United Kingdom.

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I am saying—and I am sure that my hon. Friend would be the first to agree—that we have done a great deal to help to solve the problems in the North of Ireland.

Photo of Mr Walter Monslow Mr Walter Monslow , Barrow-in-Furness

There is an area which the right hon. Gentleman has not mentioned, but which is equally badly affected. I refer to the Furness area, where, within the next two weeks, the unemployment figure will rise to 8 per cent. This will result from the pending closure of the Barrow Iron Works. Representations have been made that the area should be scheduled as a development district. Will the right hon. Gentleman please comment on that?

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I will note what the hon. Gentleman has said. I have a lot to say. I hope he will allow me to get on with my speech.

Public authorities in these regions have been authorised to get on with additional works which can be carried out quickly and for which room has not been found up to now in their investment programme. The right hon. Member for Battersea, North described the programme as derisory. That is not fair. A programme which amounts to £6 million is not derisory. It includes £2 million for road works; about £1 million for minor education works; about £750,000 for minor hospital work; about £650,000 for clearance and development on Board of Trade industrial estates; and £650,000 for strengthening the electricity system in Scotland.

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I am sorry. I cannot give way to the hon. Gentleman.

Longer-term projects where the necessary planning work is efficiently advanced are also being brought forward. In the North-East, capital expenditure on roads will be doubled this year and an extra £6 million will be spent. During the year local authorities have been authorised to build as many houses as they can.

As the Minister of Power announced the other day the outlet for the Durham electricity coal should steadily increase and, by 1970 should be nearly double what it was last year as a result of his discussions with the Central Electricity Generating Board and the National Coal Board. This greatly improves the prospects for a large number of jobs in the coal mines which hitherto were in jeopardy. In addition, the construction of a new power station in County Durham may be brought forward, if demand justifies it, when the Generating Board reconsiders the power requirements of this region, as it is pledged to do within the next two years.

I can also tell the House that today the Admiralty has placed orders for the building of three fleet replenishment tankers in the North-East. These orders, which have been placed as the result of competitive tenders, have gone to Hawthorn, Leslie Ltd., of Hebburn-on-Tyne, for two ships, and Swan Hunter and Wig-ham Richardson Ltd., of Wallsend, for one ship. The orders are worth about £10 million.

For Scotland, the Government have now authorised the acceptance of the successful tender for the Tay Bridge and work will start in the spring. The total cost will be £4½ million. Work under the existing road programme in Scotland is to be accelerated. This year the estimated expenditure was £12 million and that figure will be exceeded. Next year it will be over £14½ million. Further projects of this sort will be announced as decisions are reached.

All this is being done to strengthen and modernise the infra-structure of Scotland and the North-East and to make them more attractive to new industry. The problem of stimulating economic growth will, of course, be the primary concern of the groups which have been established under the auspices of the Secretary of State for Scotland and the Lord President of the Council.

The House knows that there has been a great deal of discussion recently about "growth areas". The right hon. Member called them "growth points". I am not in complete agreement with what he said about them. I think it natural that firms prefer to go to places which they find both suitable and attractive and, if such places are available, firms which might not otherwise move at all may well go into them. Clearly, the general idea to which the Toothill Committee devoted much thought—that of paying particular attention to growth areas—has many attractions. For instance, as Mr. George Chetwynd put it recently, "It is better to travel twelve miles to work than two hundred and fifty".

Here I agree with the right hon. Member that we must be realistic about this. Any such policy must have obvious economic and social implications. The older-established industries will continue to be of importance; and they must be made as efficient as possible. Whatever part new industrial growth in new localities can play in stimulating economic growth, we have to remember that there will be many towns which cannot be centres of growth but which have a life and tradition which it is important to preserve. Therefore we must strike the right balance between these conflicting needs.

We all recognise that the basic problem of both Scotland and the North-East is that the provision of new jobs in new industries has not kept pace with the loss of jobs in the contracting traditional industries on which both areas have largely depended. The answer must be more diversification with less reliance on the old industries as new and expanding industries are introduced. We must accelerate the pace to get the diversification we need.

It will be clear from what I have said that we are not relying on the Local Employment Act alone to achieve this. This is not in the slightest to decry what the Act has achieved. Whatever the right hon. Member says in his opening remarks, it has given, and is giving, immense help to the development districts. We should not think only in terms of the spectacular projects. We all know of the strip mill at Ravenscraig and the motor plants at Bathgate and Linwood. But I am thinking of firms for which Board of Trade factories have been approved or completed within the past two years, firms such as Morganite Resistors at Jarrow, Fisher & Ludlow at Kirkby and Phillips at Hamilton. These are substantial factories with expectations of further expansion.

Then there are the medium-sized firms, such as the Canda Manufacturing Co. at Parkhead, which are expanding in Government-financed factories. There are also firms such as Perdio making radio and television sets at Sunderland, which are now quite small but which will build up to a substantial size. It is firms like these, as well as the very large projects which are popularly talked about, which go to make up the 83,000 jobs which the £78 million offered so far under the Act are providing in 376 projects.

I should also mention the further advance factories which my right hon. Friend the President of the Board of Trade is providing, eleven in Scotland and seven in the North-East.

So do not let us minimise the real and substantial successes which have been achieved under the Local Employment Act. I do not agree with what the right hon. Member said about failure to use a tough and realistic policy in issuing Industrial Development Certificates. I remember telling the House in the later part of last year that my right hon. Friend had examined all the projects over 50,000 sq. ft., and was satisfied that the right action had been taken.

On retraining, as I have already announced to the House, I am opening two new training centres in Scotland and one in Durham. I am increasing the amount of training in some of our existing training centres. I am prepared to enlarge the role of the Government in this field as new industries—

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I am sorry, I cannot give way at this point.

Photo of Mr John Ainsley Mr John Ainsley , North West Durham

What about North-East training?

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

I am prepared to enlarge the rôle of the Government in this field as new industries start up in the areas of high unemployment. These industries themselves will wish to retrain many of the people they take on, but the Government should provide a safety net to ensure that all those who need and can benefit from retraining get their opportunity.

As I said during Question Time, I have met some opposition to the steps I have taken from the unions concerned. Their opposition has been to detail rather than in principle. I hope to overcome this as it is quite essential to have available an adequate supply of skilled labour to take advantage of expansion when it comes. I shall say something more before I end my speech about the need to revolutionise the whole of our industrial training methods.

These, then, are the measures we have taken so far to increase the general level of employment, and, in particular, to bring more work to the areas of heavy unemployment. But if we are to achieve the objective of maintaining a consistently high level of employment without running into inflation, we must plan for a much higher rate of growth. We can expand more rapidly only if we achieve a greatly improved performance in our exports. This in turn means that industry—I am talking of both sides—must be more efficient, in order to be more competitive, and it means the universal acceptance of the need for a national incomes policy.

There is to be a full debate on Monday next on the consequences of the breakdown of the negotiations on the European Common Market. I shall confine myself therefore to mentioning some of the things which we must ourselves do at home and which in any case we would have had to do, Common Market or no Common Market.

The Government have accepted wholeheartedly the 4 per cent. growth target which has been the basis of the studies by the National Economic Development Council, for the creation of which my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) has in my opinion been given far too little credit. The representatives of both managements and workers have also accepted this target.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Does acceptance of the target mean that it will actually be reached?

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

That is what I am talking about. I was about to say that we must be under no illusion as to how difficult it will be to achieve it. But achieve it we can if all three partners are prepared to work together, each one making a full contribution. This is not—as the right hon. Member knows—just a Government target, but it is a national target.

The first essential is to make full use of our skill and our resources at all levels in industry. An increasing amount of our national wealth will be devoted to improving our facilities for education and research. There is great scope for improvement in management education at all levels, not only in industry but in every type of organisation. We must have managements which respond quickly to change and are determined to keep the initiative.

We need a complete overhaul of our industrial training arrangements. During most periods since the war there have been shortages of skilled labour. These will become more acute as the economy expands. I have published a White Paper outlining our proposals. They are designed to establish a far closer partnership involving industry, the Government and education authorities. The proposals build on what is best in our present system. They are revolutionary, however, in that they introduce an element of compulsion and spread the cost of training fairly through all firms in industry. They will also give stronger recognition to the interest and responsibility which the central Government have in this field.

Next, we must adjust ourselves to more rapid industrial and technical advance and the consequent changes this must have on employment. We should not and cannot allow this to take place at the expense of the individual. The fear of change and what it can mean is a powerful incentive to resist change and to slow it down by all possible means. We have to ensure that the need for change is accepted and that there is co-operation in creating an efficient and more flexible economy. The problem of security—of helping the worker to face change with confidence—is basic to our industrial efficiency.

These are problems which we shall have to examine on the National Economic Development Council as a major aspect of our policies to achieve growth. I have already asked employers and trade unions on my National Joint Advisory Council to study with me what more can be done to hasten progress in this field. This is in addition to our proposals for legislation on minimum periods of notice which we shall shortly be discussing in the House.

Next, far more dynamism must come from management. New markets and new techniques will constantly have to be sought after. A new lead to improve human relations on the shop floor is equally essential, and better salesmanship, in my opinion, is an absolute "must".

The trade unions must modernise their structure. We all warmly welcome the fact that the T.U.C. have recognised the need for this. They must find rapid and constructive answers to the inquiries which they have set themselves into the purpose and organisation of trade unions in the 1960's and afterwards. Demarcation squabbles and unofficial strikes are an appalling drain on the economy, as are restrictive practices on both sides of industry.

These, then, are some of the problems which we must tackle. They all have this in common—that they depend on our own actions. We must use our rebuff at Brussels not as an excuse for apathy and self-pity, but as a spur to vigorous and effective action. I am confident that, with good will and determination in partnership we shall find the answers. It is for that reason that I ask hon. Members to support the Government's Amendment and to reject the counsels of desperation of the Opposition.

4.53 p.m.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

This debate is probably one of the most important that we have had in many months. The Minister of Labour finished his speech with a number of quite unexceptionable platitudes with which we all agree. We can all hope for all the things that he enumerated in the course of his speech. He dealt with a large number of possibilities of helping to cure the crisis. The only trouble about these is that they are eleven years too late. This is a death-bed repentance on the part of the Government, and the Government today stand condemned. Never has a vote of censure been more deserved than it is today.

Many things arise in the course of a Government's life about which they can plead that they did not know, but in respect of this increase in unemployment they stand guilty of culpable negligence, for they have known for the last eleven years what they have been doing—and if they had not known, they have been told time and again from this side of the House.

My right hon. Friend the Member for Battersea, North (Mr. Jay) surveyed the whole field very carefully and very skilfully and put the main points of the case, and I have no desire to repeat them, but if I make one or two points about the speech of the Minister of Labour, I hope that the Chancellor of the Exchequer will pay attention, too. I appreciate what the Chancellor is trying to do in the release of spending power in many different ways —additional spending power by giving people post-war credits, additional spending power by granting investment allowances. But spending power is of use in these circumstances only if people spend it, and what the Minister of Labour forgot to tell us is that, while the spending power is being put out in great quantities, savings are increasing at an enormous rate. When there is a loss of confidence in a country, when people have a fear of unemployment, savings immediately increase. Unless people are prepared to spend, it does not matter what the Chancellor does; he will not be able to cure the situation. This depends on confidence in the future.

Why is there no confidence in the future under the Government? They have the instruments, which the Chancellor is attempting to use, but until now these instruments have not been used to cure unemployment or to develop the country's economy; they have been used alternately to create booms and slumps for purely electioneering purposes. It is not until we are approaching another election that the Chancellor is starting the same process. How can he expect the industrialists or the workers of the country to have any confidence in believing that this is not just another election trick'? People must have confidence that there will be a continued policy and that they can depend on it, not for the next few months until the election is over, but for several years. No firm will expand factories if it is only an election boom, and no company can be expected to invest money in developing its industry if it is to be subject to the possibility of a credit squeeze in the next few months.

The Government are also guilty of giving with one hand and taking away with another. They are seeking to promote employment through the Tay Bridge. They aim through the Forth Bridge to promote employment. But what do the Government do when they put the Forth Bridge or Tay Bridge schemes into operation? They immediately cut down the rest of the Scottish building programme and the Scottish roads programme. What is given to the Forth and Tay Bridge projects is taken from the Scottish road programme. The Scottish road programme was curtailed in order to provide for the Forth Bridge, and the council are charging tolls so that people pay for the curtailment of their own programme. The whole thing is stupid. If the Forth Bridge is a special project it must be paid for specially, and this also applies to the Tay Bridge; they must be paid for by tolls which do not interfere with the usual road programme, which ought to have gone ahead.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

The hon. Member said that it should not interfere with the general road programme. It will not.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I am glad that the Government have learned that. Let their wisdom be retrospective and let them stop charging Scotland and stop hindering transport on the Forth Road Bridge. Let them make up for the loss in the road programme which has already occurred.

The Government are also failing to deal with fundamental problems of curtailing development in England, and especially in London. London is the fat boy of this country. If there is any extra milk or cream it goes to London. People build bridges or roads or overhead transport in London to make up for the Government's mistake of building more and more offices in London. In other words, they create a problem in London and then spend millions of £s to cure it, instead of diverting those offices and activities to places where there is population, where there is room and where there is fresh air—which is not always available in the Metropolis.

One thing which has come out of the debate—and I hope that hon. Members opposite are duly ashamed of it—is the situation in which my right hon. Friend the Member for Easington (Mr. Shinwell) was placed in 1947. In retrospect, hon. Members opposite must feel ashamed that they made him responsible for the freeze-up and the fuel crisis of that time. Now they are hoist with their own petard. They now find that they can do nothing more to control the snow and ice than my right hon. Friend the Member for Easington was able to do in 1947. The facts all along condemn the Government. After eleven years they have not yet put into operation any constructive long-term policy which will provide a cure.

Nobody can say that this has taken the Government by surprise. The whole problem was investigated by a Royal Commission in 1939. The Commission reported in 1940, I think. The coal industry has not just started to shrink. Between 1923 and 1937 employment in the coal industry fell by 34 per cent. The railways were shrinking before the war because of the onslaught of the roads programme. These were the very problems the Royal Commission was set up to examine. Nobody can be surprised that the mines and the railways are shrinking today. All this was planned by the Government. They appointed Dr. Beeching to cut down the railways. Plans were made after the war to recreate the mining industry with efficient and modern mines and allow old mines to die out. Everybody knew thirty or forty years ago that the mines would die out, become unproductive and have to be closed. Therefore, this has not come upon the Government by surprise.

Yet whole areas in Scotland, the North-East and elsewhere are being rendered derelict because the Government did nothing to put industry into places where old industries were declining. The Government knew that the shipbuilding industry would decline. More people come into this country by aircraft than come in by ship. The Government cannot have failed to notice that in the last eleven years. What have they been doing? They have noticed that shipbuilding is declining. They have noticed that it has not been keeping itself up to date. They have done nothing to help the industry. Yet we build new steel works and expand existing steel works to help the shipbuilding industry, although the industry which is to consume the steel is declining. This is folly of the worst type and boils down to the Government's complete lack of planning.

I therefore hope that the Government will at least learn from the development of unemployment today and that, if they have any more time, will try to plan a permanent solution to these permanent problems. There are temporary problems—the booms and slumps and the ups and downs. The draining of population from the North to the South is not a new problem. It has been going on for fifty years. After the war we were able to stop the drift from the Highlands. At least, we were able to arrest it. We were hoping that we would be able to reverse the process.

Making an area a development district does not cure it. When I was a member of the Labour Government, the then President of the Board of Trade and I made the area north of Inverness a development area, but in consequence we did not get one industry to go there. This was because no industry will go where it cannot make a profit and survive. In other words, something more than that must be done if we are to take industry to the Highlands. A hot house or a hot bed must be created where industries can take root.

There are various methods. The Government had one for Malta. They were going to give relief from Income Tax and special benefits if firms went to Malta. I suggest that the same should be done in connection with the north of Scotland and in those areas of Scotland to which no industry is going. We should at least try the schemes that the Government were prepared to put into effect for Malta. There might be a possibility of giving ten years relief from Income Tax or some such benefit.

We welcome the Government's proposals, so far as they go, to stimulate industry. They suffer from being too late and too unselective. I will give another example. One of the Chancellor of the Exchequer's predecessors thought that it would be a good idea to allow the Scottish banks to break free from the credit squeeze and make loans. This seemed a queer financial arrangement to help Scotland, because who says that Scottish banks lend only to Scotland and that English banks do not lend to Scotland? The point is not that they should have been free from the credit squeeze but that English and Scottish banks should be set free to give special credit terms to Scotland, the North-East Coast and places where these problems are likely to arise. This is the way to expand, because both in Scotland and in Northern Ireland a good deal of the investment goes not to Scotland but south of the Border. This may be to our shame, but it is what happens.

I want to make one or two suggestions about what could be done. One of the most important and effective solutions, though I do not say that it is easy to persuade people to do this, is to direct Government orders to existing firms in Scotland and on the North-East Coast. The Minister of Labour has taken credit today for giving orders to the Tyne for three ships. He recognises that this immediately creates employment in the Tees and Tyne area. Further, if he directs shipbuilding orders to the Tyne it creates employment on the Clyde.

This can go much further. When I was at the Ministry of Supply I did my best to get this policy adopted, but there is a good deal of resistance inside Ministries to sending orders any further than Oxford. Ministries like orders to go where they can easily control them. They like them to go to places within easy reach of London. The only exception to this has been the Admiralty, which I agree gave considerable preference to Glasgow in days gone by. If orders can be directed to existing firms in Scotland which will develop with such orders, it would save the immense trouble involved in persuading new firms to go there.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

The right hon. Gentleman has omitted to say that the orders for the Tyne were won on competitive tenders. I regret that the Clyde did not get these orders, but I am all for the Tyne and I am delighted that we have won the orders as a result of competitive tenders. We always were the best river in the world.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I am sorry that the hon. Lady has taken away whatever credit the Government could claim for this. The Government claimed that they had sent the orders to the Tyne to help the Tyne. According to the hon. Lady, this is not the case. The Tyne won them on its own merits.

Photo of Mr John Hare Mr John Hare , Sudbury and Woodbridge

My hon. Friend the Member for Tynemouth (Dame Irene Ward) is absolutely right. I used the words "competitive tender".

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

I am not saying that the Minister did not use those words, but I gathered that he had something to do with it. He claimed that this is one of the Government's methods of helping the Tyne. The Government should be prepared to go further with this policy and send orders to Scotland, for instance, even if not on competitive tender. The cost, both socially and economically, of not sending orders to such places and of maintaining people doing nothing will be far greater than any sum involved as a result of an order not being placed as a result of a competitive tender.

It is ridiculous to send great orders to the Midlands and to London, where industry is bursting at the seams, whilst allowing areas in the North and elsewhere to starve. At a time when the Halifax mills were competing for Government contracts, Sir Andrew Duncan discovered that they were putting in nice competitive tenders at the expense of the Government, because with Excess Profits Tax it cost them nothing to quote nothing for orders. Sir Andrew therefore took steps to ensure that the orders were distributed throughout the country. The Government should follow the same policy.

The Government could do something to induce local capitalists to be more active. We must admit that as long as we have private enterprise we must depend on private enterprise doing this work. The Government could do much more to stimulate local capital to get business and show some enterprise. Scotland especially suffers from this. The Government have induced or persuaded the B.M.C. to come to Bathgate. The Government have persuaded Rootes to go to Linwood. Even at this date there is no sign of the industries springing up round Bathgate which ought to be there.

I think that the Government are perfectly entitled to condemn those people who are not showing enterprise in developing the supplies for these great assembly industries. If the Government could do anything to induce them, or even to compel them in some way, morally or otherwise, to do this I should be very glad. Failing that, there is no way of getting firms to come to Scotland. It is a great pity that in 1951 the Government dropped this policy, because it was working quite well. I think that we created nearly 120,000 new jobs in Scotland by bringing factories there.

All the nonsense talked about distance is quite invalid. The Americans paid no attention to it. The American concerns in Scotland are delighted with the labour force they have there and with the efficiency of its work. As I say, they paid no attention to the question of distance. To Olivetti in Hamilton, and other firms like that, the question of transport is of no concern. But the Government have another possibility. They could transfer some of their own activities to these parts of the country. There is no reason why the Government should clutter everything around London, even if the civil servants like it. After all, as my right hon. Friend said, we have already successfully taken a Ministry to Blackpool, another to Cardiff and National Health Insurance to Newcastle. Why should not something else of that kind be done?

The Atomic Energy Establishment at Dounreay did not go there because the Government liked it, but look at the effect that it has had on the north of Scotland. We have 2,000 scientists there and the Establishment is introducing new life into the area. The Government are not averse to adopting our ideas when it suits them. Immediately after the former Secretary of Slate had denounced nationalisation at the election he introduced such a scheme to develop Orkney. We do not mind what the Government call it. We do not need to call it Socialism we will pretend that it is something else so long as the Government get on with the job.

Local authorities ought to be encouraged to build factories in their areas to a greater extent than they are doing at the present time. One of the problems of the Government, of course, is that there are some 630 Members in the House of Commons who all want industries of some kind to come to their areas. I can understand that it is difficult for the Government to adjudicate among them. But local authorities can help themselves in this respect. The Government should stimulate and encourage them to build factories in areas where new industries are needed.

The Government might also do away with deterrents. They could do away with those deterrents that prevent industries going to areas in which they are needed—they could do away with the handicaps in regard to obtaining the necessary properties and ground. With regard to I.D.Cs. the Government have a natural power, which, I understand, they are very reluctant to use. But is there any reason why handicaps should not be placed on people who want to build in London and other big cities? If the Government are going to be faced with great cost in the building of houses and new roads, why should not industry in London and the other big cities pay a contribution towards it? Why should they not be handicapped for being in London and thus be encouraged to go elsewhere—be given a little sugar at the one end and a little vinegar at the other?

As I have said, the economic hardship of unemployment is well known, and it is not only the loss of family income. What happened between the wars was the destruction of the self-respect of decent men and women. That is something much more serious than any loss of family income. Between the wars we had children leaving school and growing up on the dole. Indeed, many married without ever being employed at all. This human tragedy must be avoided at all costs in the future. Therefore, areas must never be allowed to decline as they did between the wars.

It is not only a question of the unemployment involved. Those still in employment fear the prospect of unemployment, and that fear is once more spreading throughout the country and causing great distress. If unemployment grows it will result in the Government being thrown out of office, but that will not cure the problem. Even if the Government go out of office, it will, as the Minister said, take two or three years for the measures he is taking to come into effect. Therefore, something must be done at once, even in an improvised fashion, along the lines of the schemes mentioned by my right hon. Friend today.

I am very doubtful whether the necessary confidence can be restored in the Government before this Parliament ends. Nevertheless, I hope that even at this late stage the Government will think about introducing some constructive planning. After all, it is not just a party question. This is a matter of the nation's livelihood, of its very existence being at stake, and a matter of the well-being of the people of this country. That being so, we do not want to wait till we come to power in order to get on with the job. We are urging the Government to start now so that the matter will be well ahead before they leave office.

5 12 p.m.

Photo of Mr Daniel Awdry Mr Daniel Awdry , Chippenham

As I rise to speak in the House for the first time, I ask for the indulgence which, I am assured, is always given to hon. Members at their first attempt. I feel very honoured to follow Lord Eccles, who represented Chippenham for nineteen years with such distinction, and I will do my best to be a worthy successor.

I know that I am a very lucky man, because I represent a glorious stretch of Wiltshire countryside where my family have lived for many generations. I was born in Chippenham and have lived there ever since, and any person would feel happy—and indeed proud—to represent in the House of Commons the people among whom he lives and works in his daily life.

The oldest and largest industry in my constituency is, of course, agriculture, with the emphasis on dairy farming, and agriculture is very much part of the Wiltshire way of life. I must say that the small dairy farmers have not been having an easy time of late, and attention will have to be given to their problems. Some of the loveliest villages in England lie in my constituency, and we are anxious to do all we can to preserve this beauty for future generations. But agriculture is not, of course, our only industry. Many hon. Members will know and will have enjoyed the Wiltshire bacon that comes from Calne.

During the by-election I visited engineering factories, a large electronic company, paper mills and a variety of small industries. In the town of Chippenham itself we have, and we are proud to have, a large engineering factory, Westinghouse Brake and Signal Company, which now covers over 30 acres and where nearly 5,000 people are employed. I must say in passing that those of us who live in Chippenham feel strongly that it would be desirable for the balance of the economy of the town for another major industry to be brought there, and recent events, which I will mention in a moment, have strengthened our views in this respect.

The reason why I feel that it is particularly appropriate to speak in a debate on unemployment in my maiden speech is because the recent by-election at Chippenham was fought in the shadow of a redundancy problem. After many years' experience of full employment it came as a considerable shock to Chippenham to find that a fairly large reduction was being made in the labour force in the one large industry in the town. The management were carrying through the necessary reorganisation to meet future competition, and the factory is also affected by the plans which are under consideration for the modernisation of the railways. Chippenham was thus being sharply reminded how the pattern of industry is affected by change.

I am sure we all realise that this process of change must take place if the country is to keep up to date. Nevertheless, it causes very real human problems, as hon. Members know only too well. I say, therefore, to hon. Members who represent constituencies in the north of England and in Scotland that I can sympathise with them in their problems and I know equally well that they will understand that it is not only in the north of the country that these problems arise as trading and industrial circumstances change.

I would therefore ask the Government to examine urgently the whole question of providing better and more comprehensive unemployment benefits to help those who have served their employers loyally for many years and who, through no fault of their own, or, indeed, of their employers, must change their jobs. I have made a short study of the benefits which are provided by the countries of the European Economic Community and I am sure that we can learn a lot from them in this respect.

The countries with the lowest unemployment figures, as one might expect—Germany, Luxembourg and the Netherlands—are those which operate the most generous schemes because there are a greater number of contributors per unemployed. In France and Luxembourg the benefits are somewhat similar to our National Assistance in that they are not derived from insurance but are guaranteed by law. In the other countries there are insurance schemes which are financed by employer and employee, except in Italy where the worker does not contribute. In four countries the redundant worker receives a benefit based on a percentage of his former wage, and in certain cases it is as high as 90 per cent.

Another side of the redundancy problem concerns retraining, and I know that the Government are considering legislation to improve industrial training. I also know from my personal experience, during and since the by-election, that a high proportion of these who either wrote to me or came to see me were people aged over 45. A difficult and special problem arises here. I realise that employers may be reluctant to retrain people who are approaching retirement age because, from a purely economic point of view, it may not seem attractive to them. There are, however, many really active men who have worked hard all their lives, in many cases doing skilled jobs, who still have a great contribution to make provided they can receive suitable retraining. I am certain that we owe a duty to help these people and the Government must assist industry financially in their retraining. Although we must do a great deal for the training of young people, we must never forget the problems which industrial changes bring to the older people.

I could not end this speech without adding a few words on the subject about which I feel deeply and which, I believe, to be near the heart of the matter in our society today. I refer to industrial relations. One may have in one's industry the most modern plant and machinery and the finest equipment in the world, but if one's industrial relations are bad, that industry will fail. Good industrial relations demand a high standard of enlightened leadership, from the managing director downwards, and a belief in the importance of the individual. It must be realised, however, that good leadership implies reasonable discipline on the part of everyone concerned. Recent events have brought home to us all how much damage and misery can be caused by a small minority who have no real understanding of industrial discipline. This creates a problem which the country must solve as a matter of national urgency.

5.25 p.m.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

I rise to support the Motion, which was so ably moved by my right hon. Friend the Member for Battersea, North (Mr. Jay), but I would first like to congratulate the hon. Member for Chippenham (Mr. Awdry) on his clear and concise speech. It might be said that now that he has got his maiden speech over with he can be thrown into the swim, and I am sure, having heard his speech, that he will be all the better able to so swim. The hon. Member for Chippenham made an important point when he spoke about industrial relations. I agree with his remarks, having been concerned with industrial relations for over twenty years. I hope that he, too, will appreciate that this subject depends very much on a good and just social climate, for one goes with the other.

It has been stated that 815,000 people in this country are now unemployed. That figure should be put in its proper perspective because, frankly, when one takes the number of people working part-time, the number who are not comprehensively insured, the number who have left school but who have returned to school, the number who have not left school because they have been unable to find jobs and the number who are affected by those who are unemployed, I would say that the best part of 2 million people are living a substandard and bleak existence owing to unemployment.

I can speak with some authority on this subject because I have been in the position of the unemployed. I can assure hon. Members that to see week after week, month after month, year after year —because I experienced four years of it —go by without being in employment is something painfully salutary. I have spoken at meetings with a great number of those who are now unemployed and I know that the hard and punishing experiences I had in the thirties are being experienced by them. If it were possible for the Prime Minister and the Cabinet to be made unemployed for just one month and compelled to live on employment exchange rates, the unemployment problems of this country would be at an end within six months.

It is all very well to talk about the economic niceties of the occasion and flood us with statistics of what the Government have done to date. They cannot alter the fact, however, that at this moment almost 2 million of our citizens are leading a bleak, miserable, depressed existence because of the failure of their policies to cope with the situation. That is the stark reality of the matter, and I assure hon. Members opposite—many of whom I noticed smiling when the right hon. Member for Battersea, North was making his case—that if they had to live on Ministry of Labour rates for not very long those smiles would quickly disappear from their faces.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

They would be leading a revolution.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

It is all very well for them to allow a section of the community to lead this kind of life, and, for this reason, I would like to pass on to them some of the comments made to me by the unemployed. They refer to the number of houses in the North which are nothing but slums. One could take an area from Manchester south to Liverpool, including the north-east Lancashire bolt, and find ¼million houses which have been condemned for some time. The Prime Minister told us in the North-East—rightly, of course—that we want modern ideas, modern factories and modem tools. Do we not also want modern homes? Are people in this area to remain living in homes which were condemned years ago and which are sub-standard in the worst sense of the word?

Do the Government really believe that people living in these conditions can become good economic units? How could hon. Members opposite do their jobs if that were the portion that Providence held out to them? Or am I unfair to ask these questions? [HON. MEMBERS: "No."] I do not think so. This is why I pose the questions in this manner. It is because I have visited these homes and know what some of them are like. It is most unfair for hon. Members opposite to "Hear, hear" the Minister when he asks us to believe with these diplomatic niceties that the Government are dealing with these matters. You are not. You are going through the motions, and the motions do not impress me one bit. I tell you—

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I hope the hon. Member will remember that his remarks should be addressed through the Chair.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

I beg your pardon, Mr. Deputy-Speaker. I will try to see that my zeal is not greater than my discretion though I may again fail. I believe these things, and I say that the Minister would not deal with them with a shake of his head if he were affected by them as these people are. These unemployed people have told me of substandard schools and of the need for hospitals. In my own constituency there is need for a maternity hospital. There is also great need for roads. The Minister himself said today how in north-east Lancashire, in Padiham, Burnley and Nelson and Colne, there is 0·6 per cent. unemployment of disabled people. I have asked that rehabilitation units should be established there. These would help considerably. When there is 0·6 per cent. unemployed disabled compared with the national figure of 0·2 per cent. it is manifestly unfair. Something ought to be done about it.

Something could be done about the cotton situation to help this area. I urge these matters which affect us locally because I know that all parts of the country are being represented outside the offices of the President of the Board of Trade. They are all there with begging bowls in their hands. I do not want the people I represent to join the queue if we can avoid it, as I think we can. They feel with every justification that the importation of cotton textile goods should be brought back as near as possible to the 1959 level and that they should be given the opportunity to make use of the modernisation scheme to which they contributed so handsomely with the Government in bringing about.

When I was in Lagos recently I spoke about our cotton textile industry to a number of people from the Commonwealth, brown, black, yellow and white. Those people told me that they found it difficult to believe that we were crippling our industry for the sake of their products. They said that they would thoroughly understand if we cut imports at least to the point where our own industry could survive. The Minister said today, quite properly, that we must export our products in order to live, but I want to tell the House about certain very painful experiences I had in Ghana and Nigeria last November.

I went first to the Volta High Dam just outside Accra. I found there a tremendous enterprise without a ruddy British spanner on the job. Yet I was told that Londoners had done the diving operations for the project which was being built by the Kaiser company, America and the Italians. This is a big project which will mean not only a power house for Accra but a symbol in the country in the days to come. I took issue with our trade men in Accra as to why the British were not there participating, and I was not satisfied with the replies.

I admit that seeking this information was not within my terms of reference. I may be considered impertinent for having sought it, but I do not apologise meant to find out these things. In Lagos I found hundreds of cars on the road and less than 1 per cent. of them were British. I went to a fine engineering shop on the borders of Lagos. I can recognise good engineering after having spent 20 years in the industry. The place was excellently run and every one of the supervisors had been trained in this country. They were doing a good job of work. I asked the manager to what extent he was using supplies from the United Kingdom and he told me that it was pitfully small. The Germans and the Italians are interested, and now the Japanese are becoming interested, but apparently we are not interested. I was very disappointed when I left there.

In Onitsha, in Western Nigeria, a remarkable bridge is being built which will join East and West Nigeria for the first time. I was there at 6 o'clock in the morning to find out who was building it. I discovered that it was a consortium of the Dutch and the French. I again asked why the British were not there. The reply was, "We do not know, but you are not here". I asked for certain figures and was given them. It is true to say that within 12 months the cost of that bridge had increased from £5⅓ million to £6½ million because the firm had not made an assessment to allow for the high tide. I could not help thinking, "Bless my soul, Dorman Long would have been thoroughly ashamed of themselves if they had not taken that sensible precaution". If it were not for taking up the time of the House I could pursue this mater of our non-participation at greater length.

I asked British officials who were running foreign cars why they were not using a British car. I felt that that was the least they could do. The answer was., "It is of no point. We cannot get any spares from the United Kingdom". At Ibadan I met one of the trade Ministers. He asked me what were my impressions of the country. I said, "Not particularly pleasant" and he asked why. I then made the observation, From what I have seen in your very delightful country we are good enough to teach your children the Christian religion, we are good enough to teach them the three Rs. We are good enough to nurse the sick in your hospitals. We are good enough to do all kinds of research work to make your country more habitable, but we are not good enough to participate in your economic development and I register my disappointment with you". Far from taking umbrage, as I thought he would, my friend agreed with me.

Who is to blame for all this? This Minister said to me in a quiet and courteous manner "You are to blame". When I asked him why, he answered "You have no faith in us". I spent five weeks in the country and I cannot help asking myself what I would have established if I had been there five months pursuing the same inquiries. When the Minister comes to the Dispatch Box and says, truthfully, that we live on our ability to produce and export, I join with him; but, in terms of exporting, I suggest that all markets in the world must be carefully looked at and equally carefully developed.

I indict this Government that for not so doing. Indeed, if it be assumed that these words, because they are uttered by someone who is a hostile critic of Her Majesty's Government, are suspect, let me inform the House that when I was in Lagos I told Lord Head, a man well known to this respected Chamber, what my feelings were and how disappointed I was at what I had found. I expected Lord Head to make some kind of an apology for the situation. He did nothing of the sort. He added to the indictment, and when I said to him "That, I take it, is confidential", he replied "No, it is not. If you wish to make use of it, you have my permission to do so". In those circumstances, I am doing so now.

Lord Head went on to tell me, adding to my sense of dismay, that in the expansion of some of our own British buildings in Lagos at a cost of £76,000, the work had been done by an Italian cartel because apparently we were not interested. What a criterion for a country that lives by its ability to manufacture and export.

The Prime Minister said in 1959, when seeking a mandate from the nation, "If you have faith in Conservative economic policies there will always be full employment". I do not claim that that is an accurate quotation, but it is near enough to be reasonably accurate. Since then we have had three different Chancellors of the Exchequer with three different policies. I say to the Chancellor now: "Unless you are prepared to take advantage of the logical and imaginative measures advanced by my right hon. Friend the Member for Battersea, North, I suggest that you should go to the country. You will receive our verdict at 10 o'clock tonight. I shall be very interested to know what will be the verdict of the country following that."

5.43 p.m.

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

May I at the outset congratulate my hon. Friend the Member for Chippenham (Mr. Awdry) on a very effective maiden speech. I am sure that we were all impressed by his humanitarian approach, by the concern that he obviously has for the welfare of his own constituents and by the effective way in which he delivered his speech. We hope to hear from him very often, and we look forward to it with great pleasure.

My constituents have enjoyed full employment since the end of the war. Therefore, I hope that the House will bear with me if, at least in the beginning of my remarks, I confine myself to a few generalisations about the state of the economy. After all, it is on the state of the economy that full employment depends. It is on the buoyancy or otherwise of the economy that we shall or shall not be able to solve the problems which exhibit themselves in the development districts. This was a point which I thought was omitted by the right hon. Member for Battersea, North (Mr. Jay) when he talked about people being able to produce goods but not being able to sell them. It may be that our costs are not sufficiently competitive.

In the course of my remarks I may say one or two things about the shortcomings of trade unions. I may say one or two things about the shortcomings of management and, who knows, even about the Government. I hope that the House will acquit me of any partisanship in any of the remarks that I shall make on the general economic situation.

There is one thing that the right hon. Member for Battersea, North said with which I disagree. He said that the Brussels talks had nothing to do with the lag in investment in the private sector in the last year or two. My experience is entirely to the contrary. I am sure that a good deal of investment in this sector has been held up, awaiting the outcome of our negotiations with the Six and our attempts to enter E.E.C. While I appreciate the desire of the Lord Privy Seal to continue discussions at least with the five nations of the Six who seem still disposed to associate with us in some way in Europe, and while I agree most fervently that Britain must not turn her back on Europe and must not abandon for all time hope of entering E.E.C., or a European community of some sort, nevertheless I personally believe that it is in the economic interests of this country that we should for the moment—at least, until after the next General Election—treat the Brussels breakdown as final. Nothing could be worse for industry and for our employment prospects than a further long period of indecision.

Therefore, I urge on the Government that we must recognise that the breakdown of the talks in Brussels in some ways gives yet another reflection of our economic strength in the world. I believe that it is absolutely true, as the Prime Minister said in his broadcast the other night, that we must make a fresh start now and without delay. But while it is a rebuff, as my right hon. Friend the Minister of Labour said, that we are not going to be partners at the moment in E.E.C., nevertheless it is true that it presents us all with a challenge and an opportunity, and it is a challenge not only to the Government but also to the trade unions, and a great challenge indeed to management at all its levels.

I am getting rather tired of being told that the spiritual home of the Englishman is the last ditch. I do not want that at all. I want the British to advance commercially on all fronts, on the home front and in all the various export markets of the world. If we are to advance on all fronts, both at home and abroad, we must have greater co-operation between all sections of the community than has been the case to date.

I think some of the responsibility for our present problems rests at the door of the trade unions with their internecine strife over demarcation and the like, their refusal to adapt themselves to present conditions and their refusal to make possible the full and efficient working of modern machinery through their maintenance of restrictive practices, which in turn hinder the purchase of even newer machines which would create more and more jobs.

Above all, the unions must get rid of the outdated idea, particularly since a quarter of our economy is now nationalised and controlled by the nation, that they are committed for ever and a day to a perpetual battle with the employers. This is outdated. The only people who suffer from that attitude are the workers themselves.

I now want to say something about management. It is by no means blameless. It is just as much to blame for a good many of our economic ills as are the trade unions. Management should strive to be far more up to date. It should be more progressive in its outlook. It certainly should be more aggressive in its attack on overseas markets. We must encourage an outlook among management which will get rid of monopolies and other artificial shelters and see that we really stimulate a competitive economy. It is only by competition that we can have an efficient economy, and it will be only by efficiency that we shall be able to do the things necessary in the development districts.

Above all—here I go back to something said in his maiden speech by my hon. Friend the Member for Chippenham—management must do more to have a real understanding of and sympathy with the legitimate demands, hopes and aspirations of the workers. There is fair too great a gulf between management and labour today, and a good deal of the blame, I believe, lies on the side of management. It is urgent that both sides should learn to cooperate together in raising the standard of living of the British people and securing the maintenance of full employment, to which we are all committed in the House.

If we are to keep full employment and to be able to steer work to the development districts, we must raise our overall productivity and reduce our costs. We can do this only if we make ourselves more efficient. Each American worker has many times more horsepower behind his elbow than the British worker has. Hence, in the United States, there can be more than double our output per worker. We can reduce the cost per unit of output only if we employ all the resources of machinery and men both in the factory and at managerial level in the most efficient and paying way. We can play a bigger part in the international game only if we start by strengthening ourselves economically. This means increasing efficiency at home and a greater effort to sell overseas.

We must try to sell our goods to all the world, particularly since the breakdown of the Brussels talks. We must not turn our back on Europe. We must try to sell to the E.E.C. countries, to the E.F.T.A. countries, to the Commonwealth and to North and South America. Also, we must try to secure more trade with the Soviet Union and the countries in its orbit. We must be prepared to make the necessary changes in our system of trading and payment to ensure the maximum two-way increase in our trade between East and West. If our export trade flourishes, almost inevitably our invisible exports also will increase.

I had intended to say quite a bit about the need to revise our entire tax system since I had the Chancellor of the Exchequer here as a captive audience, but I think that I will spare him that and move on to something a little more appropriate to the subject under discussion and more closely allied to the problem of employment and the development districts.

I urge two specific points upon my right hon. Friend. First, I urge on him the absolute necessity of spending more money on education. I was particularly delighted today to hear my right hon. Friend the Minister of Labour refer to the need for more management education Far more money should be spent by the Government on management education, particularly at university level. For too long, we have borrowed from other countries, primarily from the United States. This not only starves our own genius but robs us in this country of the necessary teachers of the various management studies. Anyone who has studied the problem knows that we lag behind not only the United States of America in management education but behind France, Germany and Switzerland.

It is true that the Ministry of Education is doing a very good job in the colleges of advanced technology and the technical colleges, but, if we are to advance, the field of study must be based on the university where research can be conducted and where teaching methods in accordance with our own background and needs can be developed. A year or two ago, a small group of us—we call ourselves the Council for Management Education—made a humble start by underwriting experiments in this field at half a dozen universities. We know of 10 or 12 more universities which now have plans for experiments which are held up for lack of finance. I hope that my right hon. Friend, in collaboration with industry, will see how these and other experiments could be financed.

We must bring together in ever closer partnership the worlds of business and scholarship. In Germany, university professors and industrialists have met to consider a five-year plan for management education at university level. Similar contacts between business and academic leaders have developed in France and in the United States. I urge my right hon. Friend to start now—perhaps a little late—to implement the promise made at the last election, that the Government would do more to encourage management education. We do not want a slavish copy of the Harvard Business School. We want something here based on our own business needs and the basic necessity for a changed attitude which, I am sure we all agree, is required in practically all sections of the community.

I congratulate my right hon. Friend the Chancellor of the Exchequer on the measures which he has already taken to reflate the economy and on his stated determination, which, so far, he has lived up to, to try to achieve expansion steadily and consistently but only at such a pace as can be sustained. We shall need far more investment in productive projects than we have now if we are to achieve the dynamic society which we seek.

This leads me to my second point which relates specifically to local unemployment. I believe sincerely that the reflationary measures which the Chancellor has taken, with other plans which may yet be announced in the coming weeks, will provide the stimulus to our economy which we all desire, but I must say, after my experience at the Board of Trade, that the Local Employment Act is not, to my mind, sufficient to deal with the regional problems. I have in mind particularly the regional problems of Scotland, north-east England and Northern Ireland.

As the Minister of Labour has said, it is a most useful Act. It will enable a great deal of useful work to be done, such as improving the appearance of some of these places, improving their amenities, acting in anticipation of unemployment by building advance factories and the like. Obviously, if the economy continues to expand under the reflationary measures taken by the Government, by the skilful use of industrial development certificates it will be possible to steer footloose firms to the development districts. All this will be very valuable, but I do not think that it will cure the problem. It will help, but not cure. Something more is required.

I agree with what was said in another place the other day by Lord Eccles, my old colleague, who also was at one time President of the Board of Trade. I believe, with him, that the time has come for a more radical and more positive approach to the problem in the difficult areas. The Local Employment Act will be useful in encouraging some developments. Indeed, it has already had some very great successes which we must not minimise. My right hon. Friend the Chancellor played a notable part, for instance, in the resiting of the motor industry and the establishment of the steel strip mill in Scotland. But the Act is not enough by itself. What is needed now is a large capital investment programme in selected areas.

I should like some such body as the National Economic Development Council to study how much capital investment could be allocated over a period of years and what industries and what areas offered the greatest promise of growth and expansion.

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

If, say, £200 million were available over 10 years we could plan what new industries could be encouraged and in which areas they should be located.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

I find myself in almost complete agreement with the point that the hon. Gentleman is making. He says that the Local Employment Act is not adequate and that projects should be started to encourage industrial development in certain areas. In view of the failure of the Local Employment Act to encourage such projects, will the hon. Gentleman say how that can be done?

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

The purpose of the Act is not so much to encourage new projects as by inducements to steer to certain areas firms that have made up their minds to expand because of the state of their industry. The concept that I am now trying to explain is quite different.

The alternative, perhaps, to joining the European Economic Community, and the one thing which can bring dynamism back into our economy and into the spirit of our people, is if we can act with imagination and drive and embark now on a great co-operative drive between Government and industry for a place in the space race and in the ever-changing field of telecommunication. I mention that as only one example. Could not we embark on a speeded-up programme of space research and space satellite communication?

When we started making overtures to Europe over the Common Market we took the initiative to start the European Launcher Development Organisation, or E,L.D.O. as it is called. This was a project designed to develop a joint rocket programme capable of putting into orbit a world-wide satellite communications organisation. It was to be based, first, on Blue Streak and then on a French rocket called Veronique and there was to be a third stage with a German-produced rocket. The cost then was estimated to be £70 million, of which we promised to subscribe one-third.

Should not we now consider whether it would be wise to go ahead ourselves with a purely British project as distinct from a European one? I suggest that the first stage could still be based on Blue Streak and the second on Black Knight, and, although I admit we have not a rocket of our own capable of advancing to the third stage, I am sure that our scientists could produce one. Going it alone, although it will be a bit more expensive, will in the end allow us to make progress faster.

I believe that for an industrial nation such as we are, if we want to hold our place in the world it is vital that we should keep our place in the space race. I do not suggest that firms should be subsidised to go to areas where they would operate less efficiently than where they are based at present, but I believe that great new industries could be found if the Government would only introduce sufficiently large and imaginative specific measures to set in train work which will, over a period of years, solve the basic problems of those areas through the decline of their basic and essential industries.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

Could not the capital resources required for an ambitious programme of space research be better employed in the civil reconstruction of the country in houses, schools, universities, roads and in all the things which would produce much quicker dividends, in the opinion of some practical men in this House, than any high-falutin attempt to reach the outer recesses of the universe?

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

I am sorry that the hon. Gentleman sets his sights so low. I was about to say that, meanwhile, we must push ahead with special area plans for improving the appearance of these areas and their roads and communications with the rest of the country, and we must invest much more in docks and harbours and port equipment in order to make them better links with overseas and ensure that the public utilities, such as gas, electricity and the Post Office, are not short of capital. I do not believe that these two things conflict.

Photo of Mr Paul Williams Mr Paul Williams , Sunderland South

Is it not desperately important that the language of commerce of the future should be English? Does not this mean that the basic equipment must be British and that we need to get into space communications?

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

I think that already English is becoming the lingua franca for a variety of causes. I have sympathy with my hon. Friend's point.

I agree with the right hon. Member for Battersea, North that the Government might give a greater lead by decentralising the Civil Service. Was it necessary for the Ministry of Transport to be transferred to another huge office south of the river? Could it not have gone somewhere outside London, perhaps to one of the development districts? I know the difficulties about this and I realise that civil servants do not like to be moved around, but I think that the Government should give a lead and that it would be very good for everyone's morale.

If we can combine short-term pump-priming operations with a bold and well-based plan for real economic growth, then the problems of these areas can, I believe, be solved over the next 10 years or so. To solve them far all time would require a long-term project. It is no good thinking that we can solve this problem without a lang4erm policy. The drift from the North to the South has not arisen over the last few years; it goes back long before the war. I do not know what my noble Friend the Lord President of the Council will do when he has finished his investigations, but I sincerely hope that he will propose something along the lines of this development project.

6.7 p.m.

Photo of Mr Donald Wade Mr Donald Wade , Huddersfield West

It is not necessary far me to take up time proving that unemployment has reached serious proportions. That is admitted. It is not necessary for me to show that regional unemployment is a major factor in the situation. That, also, is admitted. I do not think that anyone seriously suggests that the bad winter is the main cause of our present troubles, although, no doubt, it had added to our difficulties. Unemployment has been gradually building up. That is certainly true of regional unemployment.

If a sudden disaster, such as a hurricane or an earthquake, were to hit this country, resulting in 800,000 people being 'thrown out of work, with the effects that that would have on their dependants, everyone in this House knows what would happen. All the resources of the nation, backed by public opinion, would be devoted to setting things right and to restoring the fortunes of those affected. But, just because unemployment has built up, not dramatically, but gradually, there is not the resolve to tackle it. That resolve has been lacking in recent years. None the less, this is a human problem.

It is true that, in many respects, post-war unemployment differs from unemployment in the dreadful inter-war years. There is, however, similarity in one respect. There is a tendency to accept it as inevitable. There is a certain degree of fatalism. It is like the common cold—because so many people have it, and because it is so common, it is assumed that we must put up with it. I do not believe that we need put up with it. I do not propose to press the analogies between pre-war days and the present day. Certainly, there are many respects in which circumstances differ, and the problem is how to apply Keynesian theories to post-war conditions. If we continue to prime the pump and to put more purchasing power into the pockets of the people, there is a danger that we may find the symptoms of inflation in the South-East before we have cured unemployment in the North.

One suggestion for dealing with the problem is that we should cut Britain in half, with Northern Ireland, Scotland and the North of England as one half and the South as the other, the South a prosperous area, the North a depressed area. That is far too great an oversimplification. As a Northerner, I get rather tired of this talk about North and South and of being regarded as the poor relation of the prosperous Southerner.

Broadly, there are four categories. There are the areas where there is great concentration of population and comparatively high employment, as in the southeast of England. There are what I would call the grey areas, neither very black nor very white but which are potentially depressed areas because of the decline of some of the major industries. There are the areas which are regarded as agricultural—for example, the West Country and a large part of Wales—where, nevertheless, there is serious unemployment. Then there are certain industrial areas with a very high level of unemployment.

I do not quite know into which category I could put the Borough of Huddersfield, part of which I have the honour to represent. When I look at the figures given by the Minister of Labour on Monday last, with unemployment ranging from 6 per cent. to 24 per cent., I realise that Huddersfield is comparatively fortunate. I say "comparatively". We all have our troubles and our problems. Only the other day, I read of a textile manufacturing firm which has been in business for over 100 years but is likely to go out of business in a couple of months' time. I am very sorry to hear that news.

I am not, however, making special pleading today for my constituency. I am thankful that we are in as flourishing a position as we are. That adds evidence to the fact that it is impossible to divide the country neatly into North and South or into any very clearly-defined areas.

Sometimes, the degree of unemployment is concealed. Let me give an example from the West Riding of Yorkshire, of which I have knowledge, where, it would seem to me that there has not been sufficient encouragement from the Board of Trade for new industries. I have a letter from an acquaintance of mine in Leeds referring to the situation in Batley and Morley. I am sorry that I have not had an opportunity of mentioning this to the hon. Member for Batley and Morley (Dr. Broughton), but I have no doubt that he is well aware of it. I refer to it only by way of illustration.

My correspondent: writes: I know that you aware of the problems of the heavy woollen industry in Yorkshire …In Batley, mill closures are becoming more and more frequent and the only factor preventing a great rise in unemployment is that increasing numbers are going to work in the nearby cities of Leeds, and Bradford. Since Batley is by no means an ideal dormitory town, this must exacerbate the already severe housing problems in these cities, not to mention the unemployment problem in Bradford, and the travel involved cannot help but have an adverse effect: on the cost of living of the people involved. Later in his letter my correspondent states: Whilst appreciating the necessity for encouraging movement of industry from the South-East to the North-East, it seems quite quite ridiculous that pressure should be brought to bear in areas having possibly older, dying industries in an attempt to denude those areas of such industries as remain. Another example is the West Country, where there is unemployment but there is no nearby employment to which to travel. There is no Bradford or Leeds to which people can travel to work. In the West Country, I understand, it is the provision of services that is most needed —transport, road, rail, electricity, housing and schools.

That unpleasant word that is used in military jargon is now coming to be used in discussion of our social problems —infrastructure. Unfortunately, no one Ministry is responsible. That is part of the trouble. These matters concern the Board of Trade, the Ministry of Transport and the Ministries of Housing and Local Government, Education and even Aviation and, behind them all, the Treasury. I believe that one of the main causes of failure has been the lack of co-ordination.

I was talking only the other day about West Cumberland. What will happen there? It is not a scheduled area. Is it to become one? It has serious unemployment. What will be done to encourage industry to go there? Is the railway service to be stopped at the very same time as we try to encourage industries to go there? That is the kind of lack of co-ordination that has occurred.

The transport problem must be solved. The other day, I was speaking to a businessman who has a business in the London area. When I asked whether he would be willing to go, for example, to the North-East, he replied that he would not. When I asked why, he gave the reason of freight costs and the added time that would be involved in keeping business appointments in London and on the Continent. Somehow, we have to overcome difficulties of that kind.

I want to be as constructive and positive as I can. There are long-term and short-term aspects of the problem. There is need to attract both population and industry to areas such as the North-East. A lot of money can be frittered away in tinkering with the problem. We have to be bold if we are to succeed. I support the idea of creating what are now known as magnet areas. This idea was incorporated in a useful proposal that was put forward at the last Liberal conference.

We do not often get praise from the Economist, but after that resolution had been passed I was glad to see the comment by the Economist that The Liberals, with their policy of encouraging new magnet areas for regional development, are now speaking with more attractive economic expertise than either of the other parties. Shortly afterwards, Lord Eccles came out with a somewhat similar idea. He said: What I am asking of the Government is that they should adopt a courageous, longterm policy by developing only a few large areas of diversified employment, and that they should make a massive and concentrated drive on the basic services in those areas"—[OFFICIAL REPORT, House of Lords, 28th November, 1962; Vol. 244, c. 1242.] That sounds very good, but, unfortunately, Ministers say these things after they cease to be Ministers.

In opening the debate for the Government this afternoon, the Minister of Labour referred to retraining. Obviously, more must be done in that direction. I shall not take up time in developing it except to say that much mare could, and should, have been done.

After the breakdown of the Brussels negotiations, we must now embark on an expansionist policy. There is risk in whatever course we adopt. There is risk in muddling along as we have been doing and waiting for something to turn up. There is risk in an expansionist policy. My view is that the lesser risk is in the policy of expansion.

At the same time, there must be a more realistic appreciation of the timing of economic measures. So often the timing has been wrong. Whether it has been a boost or a squeeze, it has come too late. We are suffering now from the salary and credit squeeze of a year ago, which, if it should have been introduced, was introduced too late.

As to the short-term, I have given a good deal of thought to tax inducements. At first sight, there is attraction in the idea of a reduction in Income Tax and Profits Tax in respect of the production of goods in certain areas. Such an idea is, however, open to many practical difficulties and I am not sure that it would be equitable in its consequences.

There is more to be said for differential investment allowances—that is to say, once-for-all investment allowances. I think that measures of this kind would work. Thought might also be given to differential National Insurance contributions. I suggest that we should also consider the subject of rates. We have to find something which is simple and which has a real effect on the minds of industrialists. To my mind, large rate liability does. I think that that is taken into account in deciding whether to start up a new factory. I am not proposing the reintroduction of industrial derating, for rates are com- plicated enough already, but I do suggest that it might be worth while making a direct Treasury grant to local authorities in areas of high unemployment. If it were done it should be done for a full five-year period. That might possibly have a more beneficial effect than a more complicated tax differential.

I think, again, that there should be expansion of the public service industries, such as electricity. I do not see why that new power station should not be built in Durham. If we have any faith in the future I think that we must accept the view that all the power which can be produced will be needed. I do not see why the electricity industry should not borrow capital from the City.

Last week, I had Question about the increased electricity charges in Yorkshire where, in some houses, one up, one down, and bungalows, where old people are living, they are having to pay greatly increased electricity charges. It is not much consolation to tell them this answer, that the charges are necessary for the future capital investment of the industry. I think that these industries should be expanded, and that it may well be necessary for them to raise their capital in the market.

I see no reason why there should be so many offices in and around London. I find myself in some disagreement with the right hon. Gentleman the Member for Battersea, North (Mr. Jay) on the subject of offices. As for Government Departments, legislation is not required for the Government to move some of their Departments to other parts of the country if they wish. I am thinking of private businesses. I do not agree with the right hon. Gentleman that the Town and Country Planning Act, 1947, has been entirely adequate. The right hon. Gentleman said that the existing planning powers are adequate to prevent office buildings above a desired level. I just want to get this on the record. He said that it could be done by means of the development plan which schedules certain areas for office development and that planning permission could be refused for such development in areas not so scheduled.

The fallacy of this is that under the Third Schedule to the 1947 Act it is permissible for a developer to pull down an existing building and replace it by one with 10 per cent. larger cubic capacity. If a local authority refuses permission for this it has to pay compensation. In practice, this means that a building with high ceilings can be replaced by one with low ceilings and provide double the amount of floor space and thus double the employment.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I would assure the hon. Member that that is not correct, but I would refer him to the rather technical drill which will give him the right one.

Photo of Mr Donald Wade Mr Donald Wade , Huddersfield West

I think that I had better discuss this with the right hon. Gentleman later.

Finally, we must have an ambitious programme of public works. That would be better than having thousands of people idle. If I may be forgiven for mentioning the Liberal Party again, I would say that it had a policy to conquer unemployment in the days before the war. But these ideas must be designed now to deal with the present problems of the regions with a high level of unemployment. There is need for drive and coordination, and as then this problem of unemployment is not insoluble.

I, fortunately, before the war, was not unemployed. When I left school and college I had a job, although it was a modest one. Every day I had to pass the local employment exchange on my way to work. It was a wooden building, which is still there, though it was supposed to be a temporary building. I saw a long dole queue, but also, because I lived in a settlement in the slums of Leeds, I knew something of the problems of people in whose families there were unemployed, and the deep impression created then is still very much on my mind. I can never forget it. In the end, that problem was solved by war and preparing for war.

The question we have now to answer is: can this evil be removed in time of peace? I believe that it can.

6.24 p.m.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

In following the hon. Gentleman the Member for Huddersfield, West (Mr. Wade) I join with him in his concluding sentiments about his early experiences on the edge of Leeds. There are not many Members left who, as elected Members of the House, passed through those ter- rible years of mass unemployment in the 1930s.

Perhaps one of the saddest things through those years for many Members was to leave this House at weekends for their constituencies and to see, as the hon. Gentleman saw as a boy, constantly outside the transport depots and the employment exchanges queues and queues of men not able to work, not only for a week or a month, but who had been permanently unemployed for years.

Let me echo the sentiment of the right hon. Gentleman the Member for Battersea, North (Mr. Jay), that the tragedy of this debate is that it is sad that we should have to go back to discussing the subject of mass unemployment with its potential threat, as here now, of approaching the 1 million mark, casting its shadow. If we fail in national planning in economic policies we know what the sequel may be.

Let me also agree with the hon. Gentleman the Member for Huddersfield, West in that I think the most disastrous service has been rendered to the north of England by the coining of that most silly expression "two nations" and the drawing of that unsuitable man of the north of England, dark and dismal, in drenching rain, and with the South presented as a paradise of sunshine and amenities—not the United Kingdom but a disunited kingdom; and the psychological harm of this presentation will take some time to overcome, and it will need many attempts on the part of my right hon. Friend the Chancellor of the Exchequer and his colleagues to correct that impression in the minds of some of our industrialists.

The drift from the North to the South is, of course, an old social matter which has existed the whole of my life. One has always been aware of it. Often the South has been converted—for the want of a better expression—to a mass suburbia, on the edge of towns such as Torquay, Bournemouth, Eastbourne, Broadstairs. Many of their inhabitants went there in the latter period of their lives having come from the North of England.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

After they had made their money.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

Yes. I will come back to that point, because one of the most distressing things is the immense amount of money, in generations gone by, made in the north of England but removed to beautify the South. I should like to see that process reversed.

But to set out to the world at large that there are two nations is such a misrepresentation of our country that I hope that those who put it that way will drop it.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Disraeli coined the phrase.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

In another context, the one population. But to use it in the sense in which it has been refurbished and re-enlivened recently has done serious harm. "Dizzy" did only good by what he said.

Perhaps the most ridiculous of these ridiculous suggestions was that made on television, which was that what we needed was the removal of the administrative capital of London to somewhere on the Yorkshire moors. That is an old story which has been floating about these Lobbies for years. I remember that when I came here, thirty years ago, someone almost persuaded me to make a speech on removing the administrative capital and Parliament from London to —of all places—Stratford-on-Avon.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

Or 200 miles away north, and I and many of my colleagues would have had to spend hours travelling to or from the North. I think that on that occasion one novelty was added: the Court should go with the administrative machine; that is, to a virgin site on the Yorkshire moors, in imitation of Washington and Canberra.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

Yes, that is the most recent example.

I come back to the point of the debate, which is how we can elaborate and further perfect the measures which are being taken in regard to the special areas. While, for some time, I have listened to hon. Members from Scotland and Northern Ireland talking about unemployment problems, it is regrettable to me that already the shadow has moved into the north-western area. I would tell the Chancellor that some of the figures in patches of Merseyside, for instance, are extremely bad—9 to 10 per cent. Unless this matter is dealt with immediately, the unemployment figures may become even worse.

I would make two suggestions to my right hon. Friend about the use of the industrial development certificates, about which there is some quarrel and some difference of view between my right hon. Friend the President of the Board of Trade and some of the local associations which use this instrument. These certificates are too inflexible, centrally used and decided by the Board of Trade. I will not give chapter and verse for that; it would take too much time to give the illustrations which are available. There is, nevertheless, a certain inflexibility about the use of the certificates, for which a cure must be found. As unemployment is patchy in areas, it must be dealt with not centrally but on a regional basis.

Further advance could be made by further elaborations of direction, rather than placing everything at the feet of the Chancellor of the Exchequer or the President of the Board of Trade. In special areas such as parts of Scotland, the North-East and the North-West I should like to see appointed industrial commissioners taking areas as a whole and deciding on their own authority whether industrial development certificates should be used.

During the war—this was under the pressure of war-time circumstances, and now, not by law but by intention and will, we are moving towards a time when we shall need almost the speed that we had in war-time—we had a most excellent system, under the Select Committee on National Expenditure, whereby some of us made many visits to certain areas, such as the North-East, and every month following the visits we put through the Vote Office a short report to our colleagues in the House as to exactly what the circumstances were in various industries in different parts of the country.

I recommend my right hon. Friend to consider the setting up of what might be called a Select Committee on National Employment, not dissimilar in its work to the Select Committee that I have just mentioned. In that manner during the war we brought the detailed operations, including the concentration of industry that was going on, directly to the attention of hon. Members through our reports, and by that means hon. Members had some measure of whether the work being done by the Government in, say, the North-East or the North-West was effective. We had to some extent our own documents to debate.

I turn now to what was referred to by my hon. Friend the Member for Seven-oaks (Mr. J. Rodgers) and the hon. Member for Huddersfield, West—the need to stimulate completely new growth. If the distress and unemployment in the north-western area is to continue, what is the point of the complete electrification of the railway line from Euston to Manchester? What is the point of building one of our greatest trunk roads from Carlisle, near the border, down to Crewe and onwards? If one is to do that, one should make, for instance, Crewe, which has a population of 50,000 to 55,000, a potential industrial centre of about 150.000 people, which would require the greatest transport facilities in the years to come.

Talking of new towns such as that, I would stress that one is urgently required in the Leyland area, in the North-West. Hon. Members who are familiar with that area will know where the need lies. It is not to be solved as Donald Stokes, the managing director of Leyland Motors, said during a television cross-examination about the collapse of the Common Market. He said, "We are already in the Common Market. We have built a large factory in Brussels, and we are going to build another in Milan." But we want that work and those wages here in Leyland. The firm gets profitability and dividend from development abroad; but we want that Brussels factory and that potential Milan factory to come to the Leyland and Crewe area and there make Leyland chassis to be sold to customers abroad.

Perhaps I might just refer to one or two problems which are rather wider than this debate. I would draw the attention of the House to the following. What is happening with regard to automation? What is the impact? An hon. Member opposite interrupted my right hon. Friend when he was speaking about the Barrow-in-Furness area. The situation is serious there because 700 people become redundant as the ironworks are to close on 31st March.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

In my constituency a plant has reduced its labour force during the last three years by 4,000 as a result of technological change, which is automation.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

This is a problem, but when one says that something adverse is happening in Barrow-in-Furness, one should not underestimate what is coming from another quarter. I understand that three of the nuclear submarines will be built by Vickers, at Barrow-in-Furness, and that will represent employment from another quarter. If that is so, it is obvious that Barrow-in-Furness will perhaps also get orders for the construction of two or three of the Polaris submarines, when they come. Therefore, as employment contracts from one direction, employment may come to an area like Barrow-in-Furness from another.

This is what worries me about automation. Here is a fact which I picked up from the United States the other day. A steel mill in the United States which required 800 men to operate it pre-war can now be run with 70 men. The United States now faces the problem of 5½ million people unemployed. According to the State Department, unless the problem of automation is faced, by 1970 one in ten of the United States employed population will be unemployed. I take it that that will victimise most other countries as well.

In terms of automation, perhaps our problem of the future is not work but how to organise leisure. If the machine is to work for us, then all of us, whether we like it or not, will begin to live partially unemployed. How are we to use all this new leisure? Obviously, not only to beautify ourselves but to beautify our country as well.

When the right hon. Member for Clackmannan and East Stirlingshire (Mar. Woodburn) and I served on that Select Committee during the war we were very busy. We were able to cross-examine only one shipowner—Sir Arthur Sutherland. We dined with him one night at his house in Jesmond. I asked him whether any contemporaries of his still lived locally. He replied that most of the second and third generations had uprooted themselves and had taken their fortunes to the South. He added that some of the second generation had set themselves up as sham squires in Berkshire.

That is the point. The drift from the North to the South has not been merely of persons. Much of the wealth of this country has been made in the great North and used to help beautify the South. I only hope that the measures which my right hon. Friends propose for the future will do something to reverse the trend so that there shall no longer be a North and a South but a United Kingdom in balance, a united and prosperous country.

6.41 p.m.

Photo of Mr Simon Mahon Mr Simon Mahon , Bootle

I agree with a great deal of what the hon. Member for Manchester, Withington (Sir R. Cary) has said. I deplore as much as he or any other hon. Member does the fact that people are referring to this great country as "two nations". But he surely should have addressed his remarks more potently to his own Front Bench. I wish that we had not two nations in any sense at all. I come from the North and represent the constitutency in which I was born and bred, and in which I still live. While we are talking of the North and the South it may be of interest—the people of Merseyside already know it but perhaps some others need reminding—to recall that when the ports of this country were scaled by enemy action during the war, one remained open and carried the whole of the war effort and the economy. I am sure that the Minister of Labour remembers it.

We on Merseyside sincerely believe now that people in other parts of the country are forgetting what the North has done for the country as a whole. I am addressing my remarks to the House in no partisan spirit. Many hon. Members from Merseyside are present, but I believe that I am the first of them to be called in this debate. I therefore feel that my speech about Merseyside, which has been so maligned over recent months, may be of some importance. I want to leave the rather disappointing speech of the Minister of Labour to my hon. Friend the Member for Cardiff, South East (Mr. Callaghan).

The Minister's speech was disappointing. I wanted to hear him say something more dynamic about what was to happen in the North-West, but unfortunately he did not find himself able to be dynamic. Usually I am very fond of Ministers of Labour. They are the only Ministers with whom I have a great deal of sympathy. As someone who has tried to settle, with some success, national disputes, I hope that the House will listen to me with some attention.

The figures are important. The present unemployment figure is 815,000–3·6 of the national working population, an increase of about 148,000 over the previous figure. This is the highest since the war. My constituency has 3,565 unemployed, an increase in one month of 534, representing a 17 per cent. increase on December.

If hon. Members think that this rise in my constituency is due to building trade workers being out of work, I must tell them that unfortunately this is not so. I have checked. I should like to think that with the coming of spring our difficulties on Merseyside could be easily resolved, but that is not so. The position is growing rapidly worse and the graph of unemployment is going higher. Only 230 of the 3,500 workless in my constituency are building trade workers, and the disastrous fact for the whole of the Merseyside development district is that we have 6·6 per cent. unemployed.

But in parts of Merseyside, including my own division and those of my hon. Friends the Members for Liverpool, Scotland (Mr. Logan) and Liverpool, Exchange (Mrs. Braddock) and parts of the constituencies of the hon. and learned Member for Liverpool, Garston (Mr. Bingham) and the hon. Member for Liverpool, Walton (Sir K. Thompson), the unemployment rate, I believe, is almost 9 or 10 per cent. We are becoming extremely worried. If any of the hon. Members I have mentioned would like to contradict my statement, I should be glad to give way. I repeat that in industrial districts on Merseyside we are reaching a level of 9 to 10 per cent. unemployment. I am no stranger to the position.

Photo of Mr Richard Bingham Mr Richard Bingham , Liverpool, Garston

I do not think it is right to postulate that in the industrial area of Garston, or that in Liverpool in general, the rate is as high as 10 per cent. The figures are extremely difficult to break down. They are quoted for different employment exchanges throughout Liverpool. The fact that a certain exchange may have 70 unemployed on its books does not mean that it is representative of the district. All one can say with certainty is that the unemployment rate is 6·6 per cent. as a whole, but unfortunately higher in some districts, although lower in others. One can say no more than that.

Photo of Mr Simon Mahon Mr Simon Mahon , Bootle

I agree with the hon. and learned Member, but if he knew a little more about the locations of the exchanges he would be more conversant with the position. I am not trying to mislead the House in any way when I say that in parts the figure is much higher than 6·6 per cent. I say that it is at least 2 per cent. higher. I have to make what I feel is rather an alarming point—that we had only 121 vacancies on the day I quoted. Of these, 98 were in the ship-repairing industry, and they were taken up almost immediately. At this time of the year we rely on the overhaul of shipping. At the moment, five of the big lay-off ships on Merseyside have already been finished. The last one is finishing on 9th February, and we have no further work to offer the men. I ask the hon. and learned Member for Garston to study the Ministry of Labour figures for the Regent Road, Liverpool, Employment Exchange—which is a 100 per cent. ship-repairing area exchange. Already over 1,000 ship repairers are out of work. That causes tremendous difficulty on Merseyside.

I do not want to overplay the position of youth employment, but we have virtually no vacancies for our school-leavers. In my area, out of a population of 84,000, no fewer than 21,000 are under 15 years of age. It is well known that Merseyside is a very virile place, with a very high birthrate. I am one of 10 children. I was once told by my mother than the only time that her family were really required by the country was in war time. Regrettably, this proved to be true. This is no transient problem, and I draw special attention to the promise made by the Minister of Labour that he will provide training facilities for these young people when employment cannot be provided. The best advice we can give these people is to go back to school, but not many will do so. That is the advice I give them.

Recently, a deputation came to see me not from the Communist Party but from the united churches in my constituency, in order to protest against the high unemployment level and the lack of opportunity for young people in the area. I hope that the Minister can assure me that this problem will be given careful consideration. I am grateful for the rescheduling of the area. We were all glad to see the Parliamentary Secretary in the town, and we appreciate the way that he received our deputations. I thank him for the notice he has taken of all that we have had to say to him. We feel that if we had had a Minister for the area it would have been better, but that argument has already been made and I will not go into it any further.

I appeal to all hon. Members representing Lancashire constituencies to tell me where a factory can be provided on the north of Merseyside. If the authorities directed a great new project to the Merseyside it would undoubtedly be required most of all on the north of Merseyside, but where would it go? I have made a survey of the area, and find that only 50 acres of industrial land is available. In the past we have made great sacrifices for industrial development, and we now have no land for this purpose.

The people who work in the industrial area of Liverpool—Bootle—are now going out to the suburban cocoons, and are taking no notice of the plight of the industrial area. The previous position is reversing itself. At one time, the people of suburbia came to work in the industrial areas, but now the position in those areas is so grave that it is necessary for land in the surrounding areas to be zoned for industry. At the moment, this is being resisted. I appeal to the Lancashire County Council immediately to zone the land surrounding the north of Liverpool for industrial development. Without this there is no hope. We should forget all about boundary commissions as long as we have 50,000 unemployed people who are living below the standards that hon. Members hope we shall all attain one day.

These people give themselves a social and industrial absolution. They should be saying, mea culpa, mea culpa, mea maxima culpa. That would be more to the point. The great social difficulties of Merseyside are confined to the industrial areas. The hon. Member for Sevenoaks (Mr. J. Rodgers) appealed for better industrial relations. I have not been behind the 8-ball when there has been industrial trouble on Merseyside. I am concerned at the fact that no less than 250,000 Merseyside people are living in houses condemned by the medical officers of health. This tremendously colours the question of industrial relations.

To put it in potent language, and to tell the story briefly, when a man puts his foot over the hatch coaming in the docks he is probably thinking of his wife in a back room and suffering from tuberculosis. I do not want to overplay this, but when people talk about good industrial relations as though they can be easily created they can never have lived in an industrial area, or seen a strike, or tried to stop one. If they had, they would not make this grievous problem sound so simple of solution.

Of course we want better industrial relations. But the Government must remember that the problem must be viewed against the present background of bad social conditions. As those conditions improve we shall have a better chance of improving relations. As people become more responsible for their homes they will automatically become more responsible in their jobs. When a man begins to buy his own home and acquires decent furniture, and his child passes the 11-plus examination, he becomes a better and a more responsible worker. This is a truism, and anybody who thinks to the contrary is a child in the industrial game.

I am going to cut out a lot of what I wanted to say. There is a danger in people paying brief visits to Liverpool and then making judgments on the situation. They come to Liverpool on one train, make a speech, and go back on the next, leaving us to put up with the consequences. Difficulties have arisen in Liverpool over the Halewood factory. We need it badly but we could have done without Sir Patrick Hennessy's visit. That fact is agreed by every industrialist, and every responsible alderman and businessman. They all feel that Sir Patrick's intervention was ill-timed and unnecessary.

The Minister of Labour knows that certain people have a vested interest in industrial unrest. To reinforce the point I am making I will refer to an outside and a neutral source, the Archbishop of Liverpool, John Carmel Heenan. In this morning's paper there is quoted an article from the Catholic Pictorial, which is performing very useful work in the North, stating that he urged the union leaders to fight to displace the enemies of the people from positions which enabled them to spread disruption, unemployment and distress over Britain. Of course we are cognisant of the fact that there are such people. Some hon. Members opposite cannot give themselves absolution simply because they call themselves by a particular political name. Such people must be fought. It sometimes strikes me as paradoxical that we should spend millions of the nation's money endeavouring to contain Communism internationally and still be under the impression that it is easy to contain it within our own society. That is not the case and it is hard to put up with in a democracy. We must fight hard against Communism. The Archbishop further criticised employers who declare dividends running into millions and then seem surprised when their workers demand a share of the profits. I remember the first speech which I heard made from the Government Dispatch Box by a leading statesman. It was in 1955 and the speaker was the present Lord Avon. What he said impressed me. I was not brought up on Marxist doctrines. I became what I may be now because of the encyclicals of the Popes which I studied. When I heard Lord Avon stating that he believed in profit sharing and that that would be in the programme of the then Government, I felt good. But little progress has been made. The workers are chagrined, annoyed and disappointed. The workers at Fords are annoyed because vast profits are declared by that organisation of which they do not feel that they are a part as they should be. They are becoming cyphers—units of production. That is what is wrong.

People working in industry feel that they do not belong. If Sir Patrick Hennessy wants to know, I can tell him that that is what is wrong at Fords. We on Merseyside are afraid that the same feeling may permeate the new Ford factory and that would be deplorable. These things need to be said. In the last analysis, and after making allowance for the great responsibilities of the Government, management and trade union, the thing that matters is the sense of responsibility of each trade unionist and the feeling that he should do the right thing.

It is so easy for management and Government to criticise the workers. But if the workers are to be asked to think twice about going on strike, and particularly about indulging in unofficial strikes which have an effect upon the employment situation, surely it is not unreasonable that management should be asked to think thrice. The last thing a worker should do is to withdraw his labour. So often this happens in an attempt to resolve the most minute of problems. In so doing, they are not abiding by the dictates of great people in the Labour Party. In this respect I follow the Bevin line. The last thing a man should do is to withdraw his labour. All the industrial negotiating machinery must be fully used. Strikes are the last move and never the first. I have been a member of a trade union for 34 years, and in case anyone thinks that mine is not the real voice of the Labour Party—and never mind about listening to the minority—may I say that mine is one of the few voices to which the people on Merseyside will listen. I have consistently opposed Communism and intrigue which does damage to our economy.

If anyone has any doubt at all on this point, may I tell them something about the occasion when the seamen came out on strike, when the trade union movement failed and everyone else failed. I do not know whether my hon. Friends are interested, but I will give them a piece of news. It was the intention by that strike not only to bring British shipping to a standstill, but to impose a complete stoppage on transport in every port. That was why, as a politician, I participated in that strike and I paid the price for it. We go into these things in order to try to create the right atmosphere.

Some people have described Merseyside as a trouble spot. The difficulties at one of the trouble areas, at Came11 Laird, have been resolved. The unions between which there were many disputes have unified themselves. Now great progress should be made and more peace brought to industry on Merseyside. I appeal to the Minister of Labour to try to drive more industry to Merseyside and to ensure that more land is allocated on the northern part so that factories which may be built there will be erected on adequate sites. I ask the Government to put more dynamism into their effort to meet the great social need of Merseyside in relation to housing and education.

I leave this final impression with the House. An erroneous idea of the people of Merseyside has been conveyed to those living in other parts of the country. But we are a loyal, hard-working community. We do not like industrial unrest. We have fought the people who have caused it over and over again, and finally we have won. The docks have been remarkably free from intrigue and unrest. But that, may I tell the Minister, did not come about by accident. Some of us have had to work very hard. I hope that the new relationships will grow in Merseyside so that we may become a prosperous part of the country, as we deserve.

7.7 p.m.

Photo of Lord Robert Grosvenor Lord Robert Grosvenor , Fermanagh and South Tyrone

If I do not follow the hon. Member for Bootle (Mr. Mahon) in his remarks it is not because I have no sympathy for the people of Merseyside. It is because I wish to discuss the problems of Ulster. The latest unemployment figure there is 9½ per cent., which is nearly as high as it was the year before last. I wish to suggest to the Government how this figure may be reduced.

I am glad that no one has described Northern Ireland as a distressed area, and I hope that no one ever will. Despite the unemployment there, we have had a great deal of success in industry and while bearing in mind the unemployment figure of 9½ per cent. we must not forget the other 90 per cent. of men and women who are in profitable jobs and whose living conditions are ever improving.

I am glad that the Minister of Labour mentioned Northern Ireland as well as the north-east of England, of which we have heard so much. He spoke of the great financial benefits that we get from Her Majesty's Government in West-minister. [HON. MEMBERS: "Oh."] I can assure him, on behalf of the Northern Ireland hon. Members, that we are extremely grateful and appreciative of the financial benefits which accrue principally—[HON. MEMBERS: "Oh."] Perhaps I may be allowed to make myself heard—from the Minister of Agriculture, Fisheries and Food through the National Insurance Fund. One must also consider the attractions which the Northern Ireland Government have extended to industrialists in our country.

I name only three to show that the Government are doing what they can to make industry welcome to our country. The first concerns the question of industrial derating. In Ulster, it stands now at 75 per cent. as against England's derating of 50 per cent. On 1st April, 1963, derating in England will cease, but derating in Ulster will remain the same figure of 75 per cent.

In capital grants to manufacturing and processing industries 33 per cent. each year is available for plant and machinery and new buildings. In some exceptional cases where an industry is considered to be of extreme value to the Province, even more generous grants are provided. Factories are erected by the Government and leased to industrialists at, I believe, 1939 rentals on very favourable terms.

Those are a few of the inducements which the Northern Ireland Government have put forward so that industry might come to that country. There are others, such as subsidies on coal and oil consumed in the Province, yet still the unhappy rate of unemployment stands at 92 per cent. My right hon. Friend mentioned the rundown of traditional industries which affects a great number of areas in Great Britain, as it does Northern Ireland. I quote a few figures in relation to our three traditional industries. Since 1950, the textile industry has lost 25,000 workers. The agricultural industry has lost 10,000 workers and the shipbuilding and marine engineering industry has lost another 10.000. These are fairly rough figures, but they are accurate enough. They make a total loss of 45,000 since 1950.

The hon. Member for Bootle remarked on the virility of Merseyside. I am happy to remark on the virility of Ulster. The insured population has risen since 1950 by 20,000 and the population as a whole has risen by 56,000, the highest rise in the whole United Kingdom. That makes things even more difficult when we bear in mind that the total population of the Province is about 1,400,000. Against those figures the two Governments, assisting each other and private enterprise, have provided industry which since 1945 has created 46,000 more jobs. That is good, but it has only taken up the slack from traditional industries which for one reason or another had been running down.

Recently, some of our new industries have also lost a certain amount of labour. One which comes particularly to mind is an English firm, International Computers and Tabulators Ltd., from which we had hopes for great things. Latterly, in one way or another, we have been able to attract two very big companies to come to bolster our economy. One is Shell, which is building a big refinery at Belfast Lough.

The trouble about these huge, expensive, technical industries is that they employ so few people. A man in a white coat, earning I do not know how many pounds a week, is employed pressing buttons. This does not solve the hard core of the labour problem, which runs at about 10,000 unemployed unskilled manual workers. We also have the Michelin factory, which is to make tyres, again a highly skilled operation which does not touch the hard core of 10,000 unskilled unemployed manual workers. We had great hopes of American industry coming to the country as a result of Britain entering the Common Market. Already, a number of American firms are established. They are satisfied, profitable and doing extremely well, but we had hoped for more.

Nine point five sounds to me like a heavy calibre gun and I wish to point that gun at a number of Ministries over here in a rather offensive way. The head of the first I choose is not now present —the Chancellor of the Exchequer. He and his opposite number, the Minister of Finance in Northern Ireland, must be chosen first, because they control the money. So the Chancellor is my first target. The Minister of Transport is another target, because of freight charges. To us in Northern Ireland, freight charges are the upper and nether millstones of our economy. Many hon. Members do not realise what it is to have that expanse of sea between ourselves and our main markets.

The Minister of Defence is also extremely important to us, I remind him, through the Navy, the Army and the Air Force. We can build ships second to none. If any Polaris submarines are to be built we can build them. We can build aeroplanes, military and civil. We can build missiles. I am told that the Seacat built by Short and Harland, is one of the most effective weapons today. We could build lots more. We have clothing factories and can make shirts, underclothes, every sort of clothing except, I hope, battledress.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

Does Northern Ireland build houses?

Photo of Lord Robert Grosvenor Lord Robert Grosvenor , Fermanagh and South Tyrone

We build houses for our own people.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

They need all of them.

Lieut.-Colonel Grosvenor: We do not export houses, but we build them.

The Minister of Defence and the Service Ministers should remember that we can do all these things if we are given the opportunity. We have the machinery, the skill and the labour to do it. The President of the Board of Trade is concerned in the encouragement of new industry. Surely, if he has the opportunity to encourage industrialists to go to particular areas, the area which has the highest amount of unemployment should be considered first. I hope that he will keep that object before him when any industrialist comes to him. The Minister of Labour and his opposite number in Northern Ireland, the Minister of Labour and National Insurance, are important in training and educating labour so as to make our young people more useful in employment.

The Minister of Agriculture here, together with his opposite number—our Minister of Agriculture—can help by promoting further schemes to bring about higher production from agricultural land. Increased agricultural productivity could offset the drift from the land. Those hon. Members who are farmers know full well that the more that is taken from the land the more people must be used to handle it. If more cattle can be raised, a greater number of people are needed to look after them. If crops are greater, more people are needed to handle them. Any scheme that the Minister of Agriculture can devise to achieve greater productivity will help to stop the drift from the land and add to the hard core of agricultural labour.

The Postmaster-General can help us with building programmes for new telephone exchanges throughout the Province. Some of them are very old. Some of them were destroyed during the recent troubles. There is a great opportunity for the Minister to increase the numbers of these buildings and thus help the building trade. The Minister of Aviation might consider the civil versions of the aeroplanes we produce, namely, the Belfast and the Skyvan.

The Minister of Power can help by ensuring that we get the right coal at the right price. I do not think that enough hon. Members realise what coal is like when it has gone from the pit into a train, into a ship, out of a ship, and into another train or into a lorry. It has had an awful bashing by the time it reaches the housewife and the price is considerably increased. To quote an example, in my area, right over on the west of Ireland, coal is £1 a ton dearer than it is in Belfast.

Finally, I adjure and encourage my right hon. Friend the Home Secretary, the Minister in charge of Northern Ireland affairs, to keep an eye on those of his colleagues whom I have listed. I am very confident that with our interests at heart the Home Secretary will ensure that those gentlemen consider Northern Ireland before any other part of the United Kingdom, because we deserve it. Here I am not being unsympathetic. I am only being parochial.

7.23 p.m.

Photo of Reverend Llywelyn Williams Reverend Llywelyn Williams , Abertillery

The hon. and gallant. Member for Fermanagh and South Tyrone (Lieut.-Colonel Grosvenor) need in no way apologise for being parochial on such a vital and important issue. Full employment in a free democracy poses a vitally important question. It is one which bristles with difficulties. I should be the last person in the world to minimise the difficulties. In 1930, there were 6 million people unemployed in Germany. In 1938, to all intents and purposes there were no people unemployed in Nazi Germany. Adolf Hitler solved the unemployment problem by building up the largest war machine that the world had ever known.

There is no one on either side of the House who, at some stage or other, does not distinguish between means and ends.

I have visited some Communist countries. So far as I can gather, there is no unemployment in Russia, East Germany, of Czechoslovakia. In those countries there is obviously direction of industry, and I should imagine there must also be a large measure of direction of labour.

No one on either side of the House believes in the direction of industry or of labour by Statute or edict. There is direction of labour by the exigencies of economic circumstances. We know that only too well in my part of Wales. The problem is how, in a free democracy, the most desirable object of achieving the closest approximation possible to full employment can be accomplished. I presume that 100 per cent. full employment is unattainable in this imperfect world.

My condemnation of the Government is both on the ground of the magnitude of the present unemployment situation and of the geographical pattern of unemployment. We know the magnitude of the problem. There are 815,000 unemployed. I am prepared to make all the necessary allowances, because an hon. Member who does not make the necessary allowances for mitigating factors does no justice to his case. There are mitigating circumstances. The weather has made a tremendous difference in constructional work, as everyone knows. There has been the hesitancy on the part of many industrialists to get on with their schemes because of the big question mark of the Common Market.

However, these are peripheral factors. The basic blame for the unemployment situation must be laid fully at the door of the Government. Their financial policies, their restrictionist policy, then inability to know when to move on, and their unwillingness to be ambitious and imaginative in large public works schemes, have contributed in a major way to this problem.

Moving from the size of the problem to the geographical pattern of the problem, may I say that I do not accept that geographical patterns are divinely ordained. A study of the rates of unemployment in December, 1962, reveals that, commencing in London and the South-East with 1·5 per cent. and moving out from the centre to that periphery, with only one exception there is an increasing unemployment percentage until we reach the very harsh unemployment percentage which obtains in Northern Ireland.

These are the figures: East and South, 1·8 per cent.; South-West, 2·2 per cent. Midlands, 2·3 per cent.; North-West, 3 per cent.; Wales, 5·7 per cent.; North, 5 per cent.; Scotland, 4·7 per cent.; and Northern Ireland, 7·6 per cent. The pattern is perceptible from whichever angle one looks at it.

We must try to tackle the problem with the seriousness it deserves. It can no longer be tolerated that the periphery in the very nature of things, must always be very far behind the centre. This has been caused to a large degree by the terrible drift towards the South-East. The Labour Government's record is infinitely better than that of the Conservative Government. In the way in which they implemented the Distribution of Industry Act between 1945 and 1951 the Labour Government went a long way towards stopping the drift to the South-East although I admit that we did not completely solve it. Since then, what has happened has been a large measure of reversal of the orientation which we took in 1945.

We had the warnings even during the last war. The Barlow Committee warned us about this absurd concentration of population and industry in the South-East and around the Metropolis of London. Before them, Lord Beveridge, in his Report on full employment, published in 1944, emphasised the same dangers. Both these bodies, if I may so describe them, made suggestions to remedy the situation; the Barlow Committee suggested a National Industrial Board and Beveridge advocated a Ministry of National Development.

The point about the recommendations —which is of a vital importance which, I believe, we do not recognise in its full significance—was that these Ministries would include within their ambit powers which have been vested in the Ministry of Town and Country Planning—because surely that Ministry must be involved in the location of industry—the Ministry of Housing and the Ministry of Transport. After all, housing, transport and planning are indissolubly linked.

That is why we have fantastic traffic chaos in London and, at the same time as we have in London the smallest percentage of unemployment, we have 4,000 homeless people. That is why we have this fantastic situation., because Ministries seem to be working all on their own, with very little liaison and very little dovetailing of their activities. This is the direction in which we must move if we are to deal fully and satisfactorily with the unemployment problem.

I was very alarmed by a remark which was made last Monday in the television programme "Panorama". Reference has been made to the point, but I think that I was more alarmed than apparently was the hon. Member who has referred to it. A remark was thrown out almost by chance by Mr. Stokes, one of the representatives of Leyland Motors. When referring to the Government's failure in the negotiations on the Common Market he said, in effect, that Leyland Motors would not be put out very much by this failure, that the company was going ahead just the same, that it had a new factory in Brussels and had bought another plot of land in Belgium, all ready for development schemes. That was the gist of his statement.

That filled me with foreboding. Do our industrialists intend to speak in the terms of the American who said, "What is good for General Motors is good for the United States of America"? Is there no such thing as patriotism at this level of industry? Is our unemployment position to be worsened by the willingness of industrialists to pack up their enterprises in this country and to start new industrial enterprises on the Continent of Europe? If so, I can assure the Minister that there is a whirlwind about to overtake any Government who willingly agree to this policy, and, certainly, some harsh words will be spoken about industrialists who can speak in this day and age, when 815,000 of their fellow-countrymen are out of work, about setting up their large business enterprises on the Continent of Europe.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

Is my hon. Friend aware that many of these large businesses were prepared to set up industries and factories in the countries of the Six even if we joined the Common Market?

Photo of Reverend Llywelyn Williams Reverend Llywelyn Williams , Abertillery

This drift to the South-East must be checked. I should like to quote some wise words of an industrialist —not one of my political persuasion, I imagine—Captain Leighton Davies, writing in a commercial and industrial supplement in the Western Mail on 24th January: Figures show that between 1951 and 1961 the South gained five times as much population as the North, and it is calculated that, at the present rate of growth, in the next twenty years or so there will be another 2 million people in the South-Fast. Wales' concern must be that probably about half that increase will be due to migration from other parts of Grea Britain, including some, of course, from Wales. That is an intolerable situation, and I hope that even at this late stage, after their lackadaisical attitude towards these things, the Government will take positive action. I implore them to do everything within their power to stop this absurd drift, which is contrary to all sociological and enlightened opinion. I wish that I could hear Lewis Mumford speaking here on this subject, because in his book, The Culture of Cities, he suggests that this Metropolis will, in a short time, become a necropolis, a city of death, because it will choke itself to death. I ask the Minister to take cognisance of this point.

I move on to what can be done about the situation. My right hon. Friend the Member for Battersea, North (Mr. Jay), in an admirable opening speech, dealt very constructively with what can be done, and what should be done. I should like to refer to the question of the industrial development certificates. I think that the following words are probably better than any which I can choose, for I quote again from the article by Captain Leighton Davies, who refers to one major disadvantage in the Local Employment Act. He writes: A major disadvantage of the Local Employment Act, 1960, is that new production space of less than 5,000 sq. ft. and warehouse and office building do not require industrial development certificates, so that clearly a great deal of employment falls outside the scope of the Act. Many of the factories built in the new towns around London have less than 5,000 sq. ft. production space and have produced a substantial number of jobs. The Local Employment Act, therefore, is circumvented by this consideration He continues: I cannot help feeling that the size of development permitted without recourse to an industrial development certificate is excessive and that if a certificate were required for space of the order of 2,500 sq. ft. it would provide an instrument for steering growth to the areas where it is so badly needed. The Government should help those areas by providing them with small utility factories. I will not go into detail into other constructive proposals, because that would be repetition of what was said by my right hon. Friend the Member for Battersea, North. I believe that I shall be the only Welsh Member called in the debate, with the exception, of course, of my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), to whose winding-up speech we all look forward with anticipation. I therefore want to refer to the situation in Wales. The Minister suggested, by the omission of any reference to Wales, that everything in Wales is all right. I do not think that that is a true picture at all. The unemployment percentage in Wales at present is 5·7. We have two basic industries and, thanks largely to the Labour Administration, we have a diversification of industry which has been developed only fitfully by the Conservative Administration during the last eleven years.

We in Wales are not an ungrateful people. We are grateful for the wonderful prospects of the Llanwern Steelworks, the B.M.C., at Llanelly, Rovers', in Cardiff, and the new factory in Caernarvon. But my argument is that not enough is being done. Why is Wales lagging so far behind the rest of the country in apprenticeships? While, in 1961, the number of apprenticeships, at 28·2 per cent., compared unfavourably with that for the rest of the country—the rate for Britain as a whole was running at 37·9 per cent. —there was an overall drop in Wales of 8·5 per cent. between 1961 and 1962, so that, by 1962, the percentage had dropped to 25·8. We are extremely worried in Wales about this.

The future is also extremely worrying when one considers the position of school leavers in Wales, for the picture is certainly not as bright as the Minister suggested. School leavers in Wales have found themselves in this unfortunate combination of circumstances; the clash between the bulge and the recession. The result is that the percentage of school leavers not in full employment by mid-October was 5·7. I am glad to see that the Minister of Housing and Local Government and Minister for Welsh Affairs is in his place, for that percentage of 5·7—compared with 2·9 fox the rest of Britain—cannot be accepted with equanimity.

I am impelled to conclude my remarks by referring not just to my own constituency, but the homogeneous area of north-west Monmouthshire and north-east Glamorganshire. My hon. Friends who represent those areas will, I am sure, give me full sanction to refer to them as a whole, for the picture here is very serious indeed. Monmouthshire had a bad year in 1962. The percentage of unemployed changed between November, 1961, and November, 1962, by 61·5. That is very much worse than the Principality because the percentage change in unemployment figure for Wales as a whole is 29·9. In fact, Monmouthshire had the highest increase in unemployment, pro rata, of any region in Britain last year.

The Minister will understand, therefore, why I speak with some feeling about this problem. We have two types of area. These were described in the helpful memorandum submitted to the Minister for' Welsh Affairs, Lord Brecon, by Mr. Kegie the County Planning Officer. He referred to areas where there is a recurrent problem of unemployment which coincided with national unemployment; such areas as Blaenavon, Newbridge, Pontypool and Risca. I am particularly concerned with these areas where there has been continuous problem of high unemployment for the last ten years—and the area in general about which I am speaking includes Abertillery, Blackwood, Brynmawr, Pontlotyn, Tredegar and Bargoed. The unemployment percentages in these places is as high as many districts which are scheduled as development districts under the Local Employment Act.

The Minister chided my hon. Friend the Member for Pembroke (Mr. Donnelly) because he rather suggested that it did not make any difference whether or not one's area was scheduled. It is vitally important that a district with a high unemployment percentage should be so scheduled because then we can at least hope to attract help and assistance from the Board of Trade.

Photo of Mr Gwilym Davies Mr Gwilym Davies , Rhondda East

Would that not seem to be the case in Rhondda, where we have been scheduled since the Act came in; and where we now have a 9 per cent. unemployment rate?

Photo of Reverend Llywelyn Williams Reverend Llywelyn Williams , Abertillery

The only reply I can give is that I am certain that no hon. Member who represents a district which has been scheduled would voluntarily be prepared to tell The Minister of Labour and the President of the Board of Trade, "Please take my district off the list," because I have heard hon. Members whose constituencies have not been scheduled make appeals for them to be scheduled. It is unfortunate, however, that the results in some cases have been so unsatisfactory.

Because of the lack of time I will not quote the unemployment percentages for the districts to which I have referred, but I can assure hon. Members that they have had high rates of unemployment for the last ten years. They are townships where there is not only increasing unemployment, but decreases in the insured number of people employed. They are townships from which people are leaving every day for other parts of the country to seek employment. They are townships where the population figures are going down at an enormous rate.

I am not referring to townships which do not have a tremendous amount to give to the nation in terms of skill and character, both of which have been tested and proved, especially in adversity. They deserve a better break and I urge the Minister to ask his right hon. Friend the President of the Board of Trade seriously to consider the erection of advanced factories. As I said, I am not pleading for my constituency alone, but for the area as a whole because it is a homogeneous one. I appeal to the Government to schedule it as a development district. I urge the Minister to understand the repercussions of this high rate of unemployment on communities which have so much to give, which have given so much, and which deserve so much more from the present Government.

7.49 p.m.

Photo of Mr Kenneth Thompson Mr Kenneth Thompson , Liverpool, Walton

I made my first maiden speech as a back bencher on the subject of unemployment and Schedule A. I now make my second maiden speech as a back bencher on the same subject. I should like to express to my right hon. Friend the President of the Board of Trade and his colleagues in the Government the thanks of Merseyside for their having rescheduled the area under the new Act, not because we believe that this is going to provide immediate and magical solutions to the problems facing us but because it will, at any rate, contribute to their solution.

Essentially the areas which suffer from heavy unemployment must themselves set about trying to deal with it. Rescheduling removes some of the handicaps in the way of their dealing with their own problems.

A strange thing which must be of considerable significance is that whenever the general level of unemployment rises it is always the same areas, the ones we are dealing with now, that throw up the first symptoms and the worst symptoms. Therefore, it seems to me that what any Government have to do is to make sure, first, that the general level of industrial activity and employment does not fall too low. This is a task involving both short-term and long-term planning. Secondly, the Government must have ready measures to deal with the consequential difficulties which appear first in these certain areas. This is a job which also calls for both short-term and long-term planning.

I want to avoid if possible the inevitable political controversies which arise when we discuss these great social problems, and to concentrate for a short time on the immediate steps that can be taken to deal with these difficulties and on the long-term measures which we ought to have in mind. There is also the significant similarity between the areas which suffer from unemployment first and worst in these conditions that they contain a large percentage of slum dwellings. They contain, as I know from my experience at the Ministry of Education, a large number of schools which are less good than they ought to be. [HON. MEMBERS: "Slum schools."] These areas contain as a rule real problems of communications within themselves and between themselves and other areas of the country.

The first thing that ought to be done by a Government facing this kind of situation is to turn the problems and handicaps and sadnesses of unemployment into an opportunity to put some of these things right. There is absolutely no reason why there should continue to be in an area like Merseyside approach roads of the kind we have in Birkenhead. One needs a tractor or a guided missile to get some of our exports into the docks on the Birkenhead side of the river, and to a lesser extent in some parts of Liverpool. These bad approach roads are congested and often quite difficult to find. On days when there is a large number of sailings from the dock the lines of lorries waiting to unload their cargoes often stretch into the centres of both towns and sometimes beyond. Occasionally lorries will turn back and return two days later when it is possible to get in. How can we run an efficient export industry when at the very point where everything should be smooth and efficient people run into that kind of difficulty?

At times when industrial activities are at their peak it may be argued that there are not the skilled labour, the capital and the materials to put things right. That argument cannot stand up when industrial activity is not as full as it ought to be. How can we possibly argue that we are helping the cause of Britain's efficiency as an instrument for producing wealth to sustain our standard of living when there is idle steel production capacity in the country and there is urgent need for a steel bridge across the Mersey? [Interruption.] This is not a party contest.

The point I am trying to make is that these seemingly simple problems get bogged down in the highly-developed intellects of people in the Treasury or in the planning Departments, or wherever they may be. This is true of both Front Benches. It seems to me that it would be of the greatest possible help to the whole country if the Prime Minister addressed a memorandum in Churchillian terms to whichever Ministry is responsible and said, "Report to me, why and when" and so on. Will my right hon. Friend take note of the fact that, politics apart, many of us want to know the answers to these problems?

I turn from these more practical issues to one that concerned me a little while ago. At present there are on Merseyside a large number of young people who have completed their schooling and have not yet been able to find employment. There can be no sadder thing in anyone's experi- ence than the lot of the young person who sets out to do the best in life for himself and the community and finds himself blocked and frustrated in this way.

I have always hesitated to relate education matters to problems which may seem to be unconnected with them. I do not want to relate, for example, the processes and periods of education to anything that may be thought to be offered as a solution to the unemployment problem. That is not my aim. But it is wrong that we should have young people leaving school at 15 with what no one by any stretch of imagination can claim to be as good an education as it ought to be and then finding themselves having nothing to do.

It may not be possible at once or either tomorrow or at an early date to raise the school-leaving age to 16. It may not be possible or desirable to say that it should be raised now. But we ought to put ourselves in the position as quickly as possible to be able to say that every child who has not been able to find employment should be able, and not necessarily compelled—because compulsion would rarely be necessary—to return to school not just to fill in time but to take a course of instruction. This instruction should be of value and should lead to some kind of qualification, and perhaps to the process which we all want to see representing the bridge between normal secondary school education and the technical schools and colleges which lie ready to hand if the children want to make use of them.

I referred earlier to the fact that, whenever they appear, these problems seem to throw themselves up in the same areas time after time. There are in these areas large plots of land which are ugly eyesores and unuseful in any sense. Local authorities cannot be expected to regard them as a responsibility which they can carry by themselves. I am sure that these plots of land act as a deterrent to businesses which might be transferred to these areas, and certainly to the wives of men who might be asked to come from more attractive areas to work there.

I should like to see arrangements made whereby groups of local authorities would get together and set out consciously to replan, remodel and beautify these blighted areas. It is no use Bootle trying to make Bootle beautiful, however farfetched that idea may be at present, if Liverpool allows Liverpool to have grey, derelict and abandoned areas. Both would have to come in on the plan. A joint effort could be made, provided that there was some inducement to local authorities to get together and act coherently and sensibly together. It might be done through the Public Works Loan Board or through the Ministry of Housing and Local Government acting as a co-ordinating body. I should like to see it done in the belief that this would add to the attractions of the arias and would help them to overcome the difficulties which they face at present.

I should like to say a word about the fact to which our attention was drawn by the hon. Member for Abertillery (Mr. LI. Williams), that the further one gets from the centre to the periphery the more pronounced the problems seem to become. I am a northern provincial and it is my lot to travel frequently between the northern provinces and the Metropolis. No greater burden can be inflicted upon man. I do not make any sweeping condemnation of British Railways or of the air services, but, however smoothly these journeys run, they are a burden, and they ought, therefore, to he run as smoothly and as efficiently as possible.

It is a great difficulty to have to find 10 or 12 hours or more every week to travel between the two places at which one does business. We in this House have no choice. Our responsibilities are fairly evenly divided. But I can well understand it if a business man decides not to play this thing at two points 200 or 500 miles apart. Therefore, I plead for better rail services between the outer periphery and the centre, and for better air services, too.

It was something of a scandal that Liverpool had the fight that she had to get an airport that was reasonably capable of carrying even the minimum passenger services between Liverpool and London. Fortunately, most of those difficulties are now out of the way and we can offer the best facilities to those who want to use them.

Within our immediate problems these are some things that we can do at once to provide some employment—the houses, the roads and the schools—that would help to take up the slack that exists at present. For the longer term, we can try to make sure that our training and educa- tion facilities are such that we can offer the best to any families who care to go there, and at the same time equip ourselves with the skills that we shall need as employment expands.

8.2 p.m.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

I am not sure that the House has really awakened to the gravity of the situation. On the human side the position is abundantly represented by the 815,000 unemployed. The only possible explanation why the Government have been so inadequate in their response to this terrible human situation is that they fear that we shall be overstraining the economy some time later this year or next.

The worries of the Government cannot have been in any way diminished by the breakdown in the Common Market negotiations. Is the Chancellor happy to see that exports have stagnated in the past nine months? Is he happy to sec that new orders for industrial building are now running at about one-third the level that they were in 1960? He must, indeed, be worried about the whole of investment by private industry. He must surely feel that it is not possible to provide adequate resources to tackle the local unemployment problem unless he has some new approach in the key fields of exports and investments.

It is, indeed, a measure of the lack of seriousness of the Government in their appreciation of the severity of the human problem in local unemployment that they have not offered any ideas at all for tackling the problems of the national economy. There is this week published in the Board of Trade Journal a most depressing report on the export houses. We have criticised credit arrangements for exports; we have criticised services provided by the Government for our trade commissioners overseas. We have tried to achieve better international monetary arrangements, and we have tried to reduce tariff barriers to our trade. In ail of these we have come to a dead stop.

Surely it is now up to the Government to introduce some new ideas which will open up the export field to the immense capacity which exists in our industry here at home. The Chancellor promised that he would spend, I believe, some £3 million on orders by underdeveloped countries overseas from areas of high unemployment. Why have we heard nothing more of this? Is the Chancellor not aware that instead of the heavy engineering firms in this country getting about 10 per cent. of their tenders accepted as firm orders, the ratio has now dropped to about 2 per cent., and 98 per cent. of the design effort consequently is being wasted? Does he not feel that this opens up the possibility for a tremendous step forward in investment such as would go on to an altogether different scale, the sort of scale of which the Government have been talking?

We have had reference to the power station in County Durham. Has the Chancellor had any assessment at all in real economic terms of the consequences of trying to build that power station in 1970, when the chances are that we shall be working at full industrial capacity because we shall have got rid of this Government, and doing so now when we have ample capacity in the North-East to build power stations? The Minister of Power asks what difference it makes to the miners in southwest Durham whether their coal is burnt in County Durham or in the South. The answer is that it makes a tremendous difference to the constructional workers in the North. No Government statistics are adequate to cope with this problem.

There is something rather odd about a country which publishes its census of production with a two-year lag. It indicates a strange lack of Ministerial interest when our statistical machine is so grossly inadequate by comparison even with that of the Japanese or the Dutch. The Chancellor must realise that he cannot operate the economy as he ought, with our present margin of reserves, unless he has much more sensitive control. He must recognise that the whole system has gone floppy on him. Many of the steps which he has tried to take to increase investment and consumer spending are multipliers of tendencies, and if those tendencies are not there, the multipliers will not have any effect. What is the good of giving investment allowances when people are not investing? What account has been taken of the fall in investments?

The Minister of Labour, I think mistakenly, and certainly not with the agree- ment of the Chancellor, said that the Chancellor would take no steps which he would subsequently wish to reverse. This is a most extraordinary approach to economic planning. Does it mean that he will never alter the Bank Rate upwards again? Perhaps the Chancellor would send some of his colleagues in the Cabinet to the schools of management which the Government so enthusiastically advocate before allowing them to continue with their Ministerial duties.

On these two questions of exports and investments, would the Chancellor please favour the House by giving his honest view on whether he does not think that they constitute a grave threat to the economy of this country in the autumn? If he were to be frank we would know what approach we ought to make to the problem of local unemployment. I speak for a constituency where there is a very grave human and personal problem, and we are prepared to face up to realities. But we feel that we are being fobbed off by a Government who have neither the courage nor the ability to sort out the bitter situation which we now face.

8.10 p.m.

Photo of Mr Fergus Montgomery Mr Fergus Montgomery , Newcastle upon Tyne East

The importance of this debate is shown by the great desire of so many hon. Members to take part in it. The more I sit through debates in the House, the more do I feel that it would be a very good idea if we had some sort of 10-minute rule for bank-bench Members. If we had such a rule, perhaps many of us would not have the frustration of having to sit through a whole debate without the opportunity to take part. I have regretfully concluded that there are some hon. Members who, once they stand up to speak, forget how to sit down again. I shall try to be very brief and give others of my hon. Friends and hon. Gentlemen opposite a chance to speak.

We must try to keep this whole matter in perspective. Although we have 815,000 unemployed today, and although this figure is far too high, we must never forget, I suggest, that there are at present about 24 million people in employment. I felt that the right hon. Member for Battersea, North (Mr. Jay) was not altogether fair when he quoted today's figures and compared them with the figures in June, 1951. [HON. MEMBERS: "Why?"] If he had compared the figures for January or February, 1947, with today's figures, the comparison would have given an impression very different from the one he was trying to give. Statistics can be used to prove anything. It is no good bandying statistics across the Floor of the House, because they are impersonal. We must direct our minds to the human suffering which goes with unemployment. The aim of every one of us and of any Government must be the resumption of full employment as quickly as possible.

I do not doubt that the atrocious weather we have had has made a substantial contribution to the unemployment level. I think that we have 186,000 people temporarily stopped. Unlike the right hon. Member for Battersea, North, I believe that the uncertainty about the Common Market also definitely has had an effect and led to hesitation on the part of industrialists in putting forward their plans for expansion. Having said that, however, I shall confine most of what I have to say to the situation in the North-East.

I welcome the announcement today of the contracts for three Fleet replenishment tankers to be built on the Tyne. The fact that these contracts were gained on competitive tender gives some idea of the keenness with which we are tendering on Tyneside, and I am certain that the contracts will be a great boon to the shipbuilding industry there.

There are prophets of doom and woe who keep pointing to the North-East and comparing our situation now with the situation in the 'thirties. I do not believe that they are doing any good at all to the image of the North-East. Painting the North-East as a depressed area is not likely to encourage anyone to want to expand there. Certain sections of the Press and television have not done much to dispel this gloomy picture.

During the Christmas Recess, I watched a television programme in which an interviewer spoke to people in the London area and asked them whether they knew where Newcastle was. Almost every person interviewed said that he did not. I am sure that there must have been many people spoken to by that interviewer who knew perfectly well where Newcastle was and knew a great deal about it, and I think that a much more balanced picture would have been presented if we had seen and heard from some of those other people. Those whose ignorance and jocularity was so appalling would have been much better advised to keep their mouths shut.

We must dispel the gloomy picture of the North-East. There are enormous assets there. We have some of the most beautiful countryside in the British Isles. We have excellent labour relations, and any potential employer coming to the area would find that he had gone to a place where strikes are few and far between. Also, the friendliness and industriousness of the people of the North-East make it a place where indunstry should be proud to expand.

Ways must be found to make the North-East even more attractive. Here the Government can do something to help us. There must be more differentiation in public expenditure, and areas of high unemployment should be given the lion's share. This would make a tremendous difference. Can we have an even more vigorous slum clearance programme in these areas? They were the areas mainly affected by the industrial revolution. Our older industrial towns were, largely, responsible for the wealth of our country and, like all the other industrial areas, they have more than their share of slums. If we had a tremendous slum clearance drive, there would be several beneficial results. Many people would have better living conditions. Our towns would be made far more attractive to employers contemplating opening factories there. Also, a shot in the arm would be given to the building trade, in which unemployment is running at too high a level.

We must do something about communications. Recently, the Minister of Transport announced new projects for the North-East, but I do not think that it is good enough to dole this effort out in bits and pieces. Although we are very grateful for small mercies, what we need is really dynamic action. Just before Christmas, I asked my right hon. Friend the Minister of Transport about the prospect of getting a motorway linking the North-East with the booming Midlands. I did not receive a very satisfactory reply. If we had such a motorway, it would be a godsend to the North-East, and I hope that my right hon. Friend will reconsider the matter.

I asked about the prospect of getting another bridge across the Tyne, because this, too, is desperately needed. My right hon. Friend told me that there was a promise of a new bridge west of the Tyne Bridge. There is greater need, I suggest, for a new bridge east of the Tyne Bridge because, although there has recently been an improvement in the roads from Sunderland and South Shields to Newcastle, if we had a bridge crossing the River Tyne near Heworth, this would do a great deal to relieve the congestion over the Tyne Bridge, which is quite unbearable at certain hours of the day.

I draw the attention of my right hon. Friend the Minister of Power—I am sorry he is not here—to his Answer about the new power station in County Durham. His reply was extremely disappointing, because the people of the North-East had high hopes that they would have this new power station in County Durham. I hope that my right hon. Friend has not closed his mind to the possibility and that he will reconsider the siting of this new power station. It would be an enormous help in the employment situation of miners in Durham if we had it.

Are my right hon. Friends the Chancellor of the Exchequer and the President of the Board of Trade satisfied that the Local Employment Act has been as successful as it might have been? I do not for a moment doubt that it has achieved a great deal, but we are entitled to ask whether it goes far enough. Recently, it was announced that Merseyside was to be considered a development district. I wondered why the North-East, also, could not be included in this category since the North-East has a higher unemployment rate than Merseyside.

Before Christmas, Lord Eccles made a very good speech in another place. He said that he had changed his mind about the Local Employment Act, and he went on to say that he felt that the Government should try to put aside £200 million a year for the next 10 years for public investment in the development areas. He believed that, if this could be done, the problem would be solved once and for all. I did not always see eye to eye with my noble Friend when he was Minister of Education, but I wish that Lord Eccles were still in the Cabinet now, because this is the sort of thing we need.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

He would not make the same speeches if he were.

Photo of Mr Fergus Montgomery Mr Fergus Montgomery , Newcastle upon Tyne East

We must be realistic and recognise that he is no longer in the Cabinet, but I hope that my right hon. Friends in the Cabinet have read his speech. He is a man who has had a great deal of experience in Government, and his words should not, I feel, be lightly dismissed.

There is the mystery of where Government contracts go and why. The Government could do something to help areas of high unemployment. Some preference could be shown by Government Departments in ordering, wherever possible, from areas with high unemployment. Recently, the Newcastle Journal had an excellent series of articles entitled "Jobs Crisis in the North". One of these articles quoted a letter written by the managing director of Westool Ltd., of St. Helen's, Auckland, in which he said: In our view what the depressed areas need is not more factories and more industries, but more orders for existing factories and industries…The steadily widening area of Government authority has led to a massive rise in purchasing power which rests, either directly or indirectly, on Ministry decisions. However, the major part of the purchasing power is applied over a very narrow field. Ministries tend…to place contracts…with a limited number of approved firms. In a great many cases tenders are never invited. This practice is leading to the concentration of Government contracts in a limited number of areas. Nobody can actually prove this for no records of the sizes and destinations of Government contracts are kept; but it is a belief strongly held by many industrialists. We are entitled to know whether this statement, which was quoted in the Financial Times, is true.

In furtherance of the article in the Newcastle Journal, the newspaper sent one of its men who, it said, knew his way round Whitehall, to make inquiries of Government Departments. He asked what happened to contracts put forward by the National Coal Board, and the startling reply was, "As a nationalised industry, the Board is not involved in this". I do not see why being a nationalised industry should absolve the Board from all responsibility with regard to these contracts. I ask my right hon. Friend the Minister of Power to look into this.

Alongside the problem of unemployment is the worry of school-leavers. This has been touched on already by other hon. Members. Just before Christmas, the Newcastle Youth Employment Bureau still had 400 school-leavers on its hocks, with the prospect of all the Christmas school-leavers to swell the ranks. I have always believed that it is soul destroying for a healthy person to want work, to seek work and to be unable to find it. I also believe that for young people to begin their adult lives standing in line for unemployment benefit is not only a great waste but a terrifying prospect.

I therefore feel that we have to do more to persuade industries to move into areas of high unemployment and that only in that way can this problem be solved. Apart from anything else, I feel that the Government cannot blissfully contemplate this drift from the old industrial areas to south-east England, because with the rapid population increase in south-east England will come many problems for any Government of the future. In the series in the Newcastle Journal which I have already quoted mention was made of a book by H. G. Wells entitled "The Sleeper Awakes". When that book was published the picture painted of the London of the next century seemed very farfetched, because Wells painted a picture of London with a population of about 33 million people and housing the greater part of this island's population. Unless the drift to south-east England is stopped, Wells' far-fetched story may be nearer the truth than anyone at that time envisaged.

This is why prosperity must be restored to the hard-hit areas. This is why areas like north-east England need many diversified industries. Over the years we have been far too dependent on our basic heavy industries of shipbuilding and coal mining. Whenever these industries were in decline the area as a whole suffered. Surely we have learned the lesson of the 1930s. My right hon. Friend the Prime Minister, who represented a constituency in the North-East during those days, was appalled by the human suffering. Now, as the head of this Government, I feel that he has a chance to do something about it.

I applaud the appointment by the Prime Minister of Lord Hailsham to look after the interests of the North-East. I believe that this appointment was very warmly welcomed by the people of north-east England. I know that certain hon. Members opposite have referred to this as a political gimmick. I think that they are wrong. It is the duty of those of us who represent the North-East, irrespective of party, to do all we can to help Lord Hailsham in his task of restoring prosperity in the North-East. I have tremendous confidence in Lord Hailsham. I am sure he is the right man for the job, and I hope that the Cabinet will act on his recommendations.

I abstained from voting after the debate on 17th December, because I felt that the North-East had been ignored. Since then we have had the appointment of Lord Hailsham, and I ask those who criticise his appointment to judge him by his results. It is wrong to judge him in advance. We must give him a chance to show what he can do. I have great confidence that, with his aid, we can achieve the impetus to get the North-East moving and that as a consequence the jobs crisis in the North-East will disappear.

8.25 p.m.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

I do not wish to follow the remarks of the hon. Member for Newcastle-upon-Tyne, East (Mr. Montgomery) about the intricacies of his constituency, but I thought that he overplayed the importance of the appointment of Lord Hailsham to deal with the problems of the North-East. He has no power to do anything. He will merely make recommendations which will have to filter back through the Departments. I therefore cannot understand the hon. Member's great faith in Lord Hailsham's appointment. Perhaps the hon. Gentleman will tell me in conversation about the hidden reserves of power which Lord Hailsham possesses.

Photo of Mr Robert Elliott Mr Robert Elliott , Newcastle upon Tyne North

Mr. R. W. Elliott (Newcastle-upon-Tyne) rose

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

No, I have no time to give way.

This has been a most amazing debate. Nothing has been said in favour of the Government at all. There has been hostile criticism of the Government's policy from both sides of the House. We have had the spectacle of two ex-Ministers who were "beheaded" in the Ministerial purge telling us how wrong were the policies which they had been operating over the last four or five years. What a spectacle! If these ex-Ministers had been genuine, they should have resigned long ago rather than wait for the Prime Minister's hatchet.

Another thing which is apparent from the debate is that, despite all the previous talk about the Local Employment Act and the various Ministerial statements throughout the country at specially staged conferences about what would emerge from that Act, the unemployment figures keep rising. Scotland has a total of 128,000 unemployed. I concede that the increase is slightly due to weather conditions over the last month or so, but even if two-thirds of the increase is due to the weather there is still an increase of a third in unemployment, from the previous return.

I wish to talk about my constituency, apart from Scotland generally, because this is the first opportunity that I have had for a long time of doing so. We see the effects of unemployment in my constituency. In the Kilwinning area, unemployment is running at nearly 10 per cent. In Dalry, Kilbirnie and Beith—these are three large townships—it is nearly 8 per cent. In a considerable part of my constituency it is over 6 per cent. This unemployment and short-time working is largely due to the Glengarnock Steelworks running, as I understand from workers employed there, at only about 60 per cent. capacity.

Another factor is the lack of recruitment to the I.C.I. factory at Stevenston. This used to be a large recruiting centre, especially for school-leavers. Recruitment today is practically nil, and the position in that area will become worse because we have entered the heavy run-down period at the Hunterston atomic energy plant which is reaching the completion stage.

The Government must admit that, without exception, local authorities throughout Ayrshire have exerted every influence and have been prepared to spend all they could to try to bring industry to that lovely county. They have issued brochures. Four towns have amalgamated in a joint committee. In spite of all this, the results have been practically nil.

The local authorities are specially interested in certain problems. While the local authorities have been working at the problem, the unemployment position has become steadily worse. I do not wish to go into detail over figures, so I will merely give two. The Ayrshire unemployment figure for January, 1962, was 5,745. For January, 1963, it is 9,963.

The Chancellor of the Exchequer, when President of the Board of Trade, told us about how the Local Employment Act would help. What will he say, in winding up the debate, when our unemployment figures are nearly double in a county with all the facilities, the attributes and the scenic beauty of Ayrshire, which was immortalised by our national poet but still cannot attract the necessary industry to keep its people employed?

The local authorities, particularly in my area and in the Burgh of Kilwinning, which has nearly 10 per cent. unemployment, ask for the development of the industrial estate belonging to the Government in Kilwinning. The estate has had one factory since 1948 and successive Presidents of the Board of Trade have not agreed to any further advance factory building.

Three miles away, the Burgh of Irvine went to great trouble and expense. Its town clerk and members of the council went to Sweden and America. They put a heavy burden on their rates by building up an industrial estate, on which there are over twenty firms employing more than 700 people. At Kilwinning, however, only three miles away, we still have all this unemployment. If an industrial estate could be successfully built up in Irvine, why does not the Chancellor agree that we should do something similar in Kilwinning?

The Government are failing dismally. They are hanging on and dithering. Their procrastination results in these areas having high and persistent unemployment. They are losing their skilled workers and getting a large residue of unskilled people. The result is that it is more and more difficult to attract industrialists. The Government simply will not listen and are content to allow this state of affairs to continue. I hope that tonight we may be given an indication that the area is to have its due with one advance factory for a start.

The Chancellor has had a formal submission from the Ayr County Council containing a plan for a duty-free estate at Prestwick Airport. This has terrific possibilities. It would benefit not only Ayrshire, but many light industries in Scotland. Shannon, in Ireland, shows how beneficial this kind of arrangement has been. I hope that the Chancellor's officials have passed to him the brochure issued by the county council, which is issuing another and much more ambitious edition to he sent all over the world. Every Scottish Member of Parliament has a copy.

The Prestwick proposal would provide the opportunity not merely of whisky duty-free, but of light engineering, plastics or the component parts of any product. These could be made up on the industrial estate. They would boost our exports tremendously and would relieve unemployment to a great degree both in Ayrshire and throughout Scotland.

I should like the Chancellor also to recognise the headache of the Ayr County Council, because of the tremendous strain on its social services following the closure of the Barony Pit, at Auchinleck, as a result of which thousands of miners have been thrown out of work. The National Coal Board has not yet decided whether to reopen the pit. It is a huge pit with long years of life and millions of tons of coal still in reserve. The main shaft has caved in, but the decision has not yet been taken to sink another main shaft. I hope that the Government will try to influence the Coal Board to make an early statement and to authorise the rebuilding of the shaft, and thereby dispel the despondency and sadness which is seeping through the whole area at the thought that it is to be condemned.

I also ask that the smaller shipbuilding yards at Troon and Ardrossan, in Ayrshire, with their great records of Admiralty work over the past years, should be considered by the Admiralty in the allocation of orders which are shortly to be announced. I understand that the orders are not placed on a strictly competitive basis, but that the degree of unemployment in various areas is to be taken into consideration when orders are placed. I hope that some of the smaller yards which have done such splendid work will be kept very much in mind. I hope there will be recognition that these small yards, which today are having to pay off employees and to work short time, still have a part to play.

I am pleased to see that the hon. Member for Kinross and West Perthshire (Mr. Leburn), one of the Under-Secretaries of State for Scotland, is present. I listened to him recently on television, when he was in a bad state. During the questioning—I noted his words—he said that it was the responsibility of the Government to set the base, as he termed it, in order to get Scotland out of the morass of unemployment and short-time working. The word "morass" is mine; the hon. Gentleman merely said "unemployment and short-time working".

I challenge the hon. Gentleman. What did he mean by "setting the base"? How does he apply this to the decaying areas in Scotland? In the same programme, he said that he did not agree with bringing in publicly-owned industry—that is, the direction of industry—to these areas, but what is the alternative? What is his policy for these areas in Scotland, which the hon. Gentleman knows full well and where every effort has been made to attract private enterprise, only to result in dismal failure?

Are these areas to be written off? Are the people willy-nilly to be driven away from them because of economic necessity? Is that the hon. Gentleman's policy? On the television programme, he had no alternative. Are they to be driven from these areas where they belong into great aggregations of population south of the Border, to create there further problems of congestion and housing shortage and shortage of educational opportunity? London and the South are suffering from these things today. There is complete chaos.

There is another aspect of this. I was reading the Sunday Citizen. I want the Chancellor of the Exchequer to note this quotation. I have very often blamed successive Secretaries and Under-Secretaries of State for Scotland for not pursuing their Ministerial responsibilities hard enough with their English colleagues. Especially I have blamed the Secretary of State.

Photo of Mr William Ross Mr William Ross , Kilmarnock

Where is he, by the way?

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

I am sorry that he is not here.

This is reported in yesterday's Sunday Citizen:A Cabinet clash on plans to boost Scottish employment is causing delays in the introduction of measures to help the workless north of the Border. Scottish Ministers complain that their Cabinet colleagues are holding back approval for ideas which would help to create more jobs. Most important scheme held up is one for a new coal-fired power station in Fife. It would provide work for 10.000 miners for many years. Cause of the hold up: demands in some quarters that it should be oil-fired. Then it goes on: The Secretary of Scotland is getting no answer from Cabinet colleagues either to his request that the decision to make the new Forth Road Bridge a toll bridge should be reversed. Manufacturers do not like the idea of paying tolls on roads going over the new bridge. They say it will add to their transport costs if they build new factories north of the Forth. Would the Chancellor of the Exchequer say whether this is a fabrication, that he is turning down in the Cabinet the claims of Scotland? Or is this criticism justified?

A further word about these decaying areas. I want the Under-Secretary of State, with the new responsibilities he has now taken on in connection with housing and many other things, to recognise the importance of what I am going to deal with now. I can think of one of these areas just now in Ayrshire, an extensive area. Virtually the only employment there has been in coal mining. That is going out. The pits are all being closed. We have thousands of municipal houses there; we have schools, we have clinics, we have libraries, a host of other local authority services; we have sewerage, gas, electricity.

Ayr County Council has had to borrow hundreds of thousands of pounds to put down these social services. That social wealth is in that area. Is it all to be lost because the Government will not place Government-sponsored and owned and operated factories there if private enterprise is not going there? Are the Government going to write it off completely? That is what the Under Secretary of State said in his television broadcast. He said that people talk about Government-owned factories, but, he said, "There is not much in it, you know"—in these Government-owned factories.

If private enterprise, with all the incentives we are offering it, is not prepared to go into that huge area, or any similar area in Scotland or elsewhere in the country, the Government ought deliberately, as an act of policy, to be placing there Government-sponsored factories, to operate themselves, and showing private enterprise what can be done. People talk glibly about not believing in this policy because it means direction of labour. I tell them that without it means suffering from the direction of labour, instead of retaining the people and the social services in the areas where they are already.

This is our programme for Scotland. It was so at the last General Election. Very soon we shall have a policy document coming out, brightly illustrated; a pamphlet which will put the fear of death into the remaining Tories in Scotland. Heaven help them if they do not heed it. I feel that it will be a sure winner. If the Government are not prepared to go into those areas, I for one am not prepared to allow those areas to die.

I hope that hon. Members recognise just what has been the attack which has been made on the Government today from both sides of the House. The Government stand indicted for lack of action. They have talked and talked and dithered; there has been no action. There have been clear indications for many years now of the economic collapse of these areas I have been talking about. The Government, instead of preparing plans and having a blueprint for replacement industries, have merely toyed with the problem. They have created in many areas in Scotland a problem of such magnitude that now redress will be very difficult.

We on this side of the House feel that the Government have neither the initiative nor the will to bring succour and new life to these areas. So far as Scotland is concerned, the Government stand condemned. The longer they cling to office the longer it will take to clear up the problems they are leaving behind. The best thing they could do would be to clear out and let someone else get on with the job.

8.46 p.m.

Photo of Sir John Gilmour Sir John Gilmour , Fife East

I do not go with the hon. Member for Central Ayrshire (Mr. Manuel) in thinking that it would be easy to solve our problems by directing and building factories. It is one thing to put up a factory, but it is quite another thing to sell the goods made there.

Nor do I go with the hon. Member in denigrating the work that has been done with the Local Employment Act. Without it, we should have been in a very serious state. It has brought to Scotland many jobs that we could ill do without. The time-lag between starting to build and coming into production can be seen from the fact that the new strip mill has only just been opened, and this indicates the difficulty which any Government of any party has in bringing in new industries.

On the other hand, I think that in the circumstances with which we are now faced the Government need to move towards some new measure. It is not enough to pill our hopes only on the Local Employment Act. During the last 10 years, Scotland had lost a quarter of a million people, some of whom have gone abroad and some of whom have gone to England. With that loss there has been a great loss of jobs to Scotland. I am certain that no setting up of a co-ordinating committee of civil servants will reverse the trend.

Our national background to this is that two-thirds of our population—nearly a quarter of our urban population—live in six major cities. If it were not for the fact that London and Birmingham are already full up, they would probably be growing at a greater rate and increasing the flow of population even more.

Various commissions, such as the Cairncross Committee in 1952 and the Toothill Committee in 1961, have confirmed the view that measures designed solely to solve local unemployment will not be enough to stop this population trend. The fact mentioned by the right hon. Member for Battersea, North (Mr. Jay), that 15,000 new office jobs are created in London every year, underlines the need to bring in some new measure. I know that the Scottish Council for the Development of Industry will meet the Prime Minister in the near future. I would merely like to underline the points which it is going to make to him. There is not time tonight to go into them, but the best figures available show that we need some new measure.

As a start, I am certain that we must take a political decision on the question of a coal-fired power station in Scotland, because we have to get the breathing space to bring in the new industries that we need. If we do not do this, we shall lose by emigration even more people and lose more jobs. Consequently, that should be placed on a political basis.

We have also to think of the long-term implications of what we can do. In Scotland agriculture has always been one of the staple industries. We know that mechanisation and improvement of methods will cut down the number of people employed there. What can we do in return? Then, I am sure, we should turn to forestry.

I would draw the attention of hon. Members to an article in The Times of 5th January written by the chairman of the Scottish Woodlands Owners' Association, in which he particularly stressed this point, that if we build up our forestry area: the creation of jobs in remoter areas (especially Scotland)…". will be of great advantage. He went on: in West Germany 1·16 men a 100 acres of forest are directly employed, and if ancillary woodworking industries and hauliers, etc., are included, the figure rises to four men a 100 acres. If the target of 5 million acres is achieved, there is the possibility of some 200,000 jobs being supported by forestry alone. In Scotland this would be a godsend. Then, during these last months, while we have been negotiating with the Common Market, another industry has been left in suspense about Government action. The fishing industry is of great importance to Scotland. We know that had we gone into the Common Market there would have been certain alterations, but it is time now that the Government took action to protect our inshore industry by the extension of our fishing limits. This has been discussed for a long time and is something which should be faced. Many people quote the case of Norway as an example of the provision of rural employment. I went to Norway two years ago and one of the basic factors there is that they have a thriving fishing industry along their very lengthy coastline, and this, in turn, gives support to other industries.

Between forestry, fishing and the coal-fired power station, much could be done not only for Scotland but for the economy of the country as a whole. I know that this is not a problem which can be dealt with only on a regional basis. Scotland cannot be prosperous if the United Kingdom is not. Unless we see to it that we reverse the flow of population to the South, it will become increasingly difficult to support industries in the outlying areas.

For that reason, I am certain that we need new measures. These would probably come best as investment allowances and help in some way by export incentives. These are things which could help a very great deal. It is easy to talk about "crash programmes" when one is asking for things for one's own constituency, but when we are not dealing with our constituencies specifically, most of us ask the Government to spend less money, not more. Only for our own constituencies do we ask for more to be spent.

I sympathise with the Government in the need to expand the economy while at the same time keeping a proper balance. I was, however, very disappointed that my right hon. Friend the Minister of Labour was only able to offer Scotland the Tay Bridge, which was announced in 1959 and is something which we have been counting on a lot, knowing that it would come eventually. It is nice to know that new tankers have been awarded to the North-East. We are glad that someone else is getting something, but it really was a paltry offer to put in the Tay Bridge when we knew years ago that it was coming. We need new measures in Scotland and we must have them if we are to overcome this urgent problem.

8.52 p.m.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

We are accustomed to clothe our sentiments in conventional phrases, but I think that even the fact that we do that cannot disguise from the Chancellor of the Exchequer, who has sat here all day, the deep dissatisfaction that is felt, in all quarters of the House and by hon. Members representing constituencies in all parts of the country, at the present policy of the Government.

The hon. Member for Chippenham (Mr. Awdry) made a most attractive maiden speech, but even he felt it necessary to refer in rather more stinging tones than are usual in a maiden speech to some of the problems which confronted him when he stood as a candidate. His predecessor, Lord Eccles, has been telling us that £200 million needs to be spent in some of these areas. Perhaps the new Member for Chippenham may reflect that if his predecessor had discovered that fact a few years ago, when he was in the Cabinet, he himself might not have been making his maiden speech today. That speech was attractive and we look forward to his making more contributions to our debates, not so innocuously couched but certainly as well-informed.

Let us get on the record quite clearly that the unemployment figure for this January is higher than at any time since before the war. Let us make it quite clear that if we leave out of account the temporarily jobless among the 1·8 million unemployed in February, 1947—discarding them, as the Government wish to do on this occasion, as being temporarily affected by the weather—the level of unemployment is still higher than it was in the spring of 1947.

There has never been such a bad month. As is always the case, unemployment has affected the areas where it is traditionally heavy—Northern Ireland, Scotland, Wales and the North. Let us get the percentages quite right. In the North, 6·5 per cent. are out of work. In Wales, the figure is 5·7 per cent.; in Scotland, it is 5·9 per cent., and in Northern Ireland it is 9·5 per cent. It has been well known in this House for thirty years that when our general prosperity suffers these areas suffer first, and worst.

These are the sensitive areas, and it was because they are the sensitive areas that the Labour Government devoted so much time, so much energy and so much Ministerial capacity to pouring new factories, new enterprises and new skills into these areas. The Labour Government can be proud of what they did between 1945 and 1951. They brought to Wales skills which had never before been known in the country. They brought factories such as my right hon. Friend the Member for Battersea, North (Mr. Jay) referred to this afternoon, factories like British Nylon Spinners, which has been built up into a £100 million concern, employing hundreds, or even thousands, of semi-trained and trained operatives, and several hundred graduates. This has brought a whole new complex to that area of Monmouthshire, to the very great benefit of the people living there, and we are grateful for that.

But the real complaint against the Government is that once the Labour Government left office the engines of policy were reversed. Hands were taken oil the location of industry. Between 1945 and 1951, the average percentage of new building devoted to the development areas was 30 per cent. per annum. There has never been a year since to touch it. Indeed, in the year after the Conservative Government took office the percentage was only about half the average of 1945–1951. It dropped to 15 per cent. There was a spurt in 1959, when the Chancellor was the President of the Board of Trade, because there was also a spurt in unemployment.

Frankly, the only argument we ever hear from right hon. Gentlemen opposite when we talk about the distribution of industry is the way that they dispersed the motor car industry. If I were to recite a list of all the new industries sent to South Wales and other areas between 1945 and 1951 I would go on making this speech until ten o'clock. Right hon. Gentlemen opposite can never find anything but motor cars.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

And Pressed Steel, in South Wales. Hon. Members opposite can find half a dozen named examples, but I ask the hon. Member for Sevenoaks (Mr. J. Rodgers)—who did a good job when he was at the Board of Trade—whether he knows that during the Labour Government over 550 new factories went to South Wales. That is the comparison of the records.

What the House must face—especially new Members, who do not know what happened in the past—is that what has caused the difficulty here is a defect of Government policy—a philosophy which expressed itself in talk about the market forces, the dash for freedom, and taking the pressure off. Between 1952 and 1959 the Board of Trade was shedding its responsibilities and trying to sell Government factories. There was a ban on the building of new Government factories in these areas. This was the policy.

I well remember a statement which has been used many times in this House, but which is still true, namely, that an industrialist only has to stand out against the Board of Trade long enough to know that he would be given permission to build where he wanted to build. It is this defect in Tory policy which is responsible for the position that the North-East, and particularly Scotland, finds itself in today. Let it be fully absorbed by people in those areas that it was the relaxation of grip in respect of the location of industry in those years which was responsible.

Since we passed the Local Employment Act, which is concerned only with smaller areas, a total of 138 million sq. ft. of factory space has been erected in this country, of which only 17 million sq. ft.—or l2·6 per cent.—has gone to development districts, that is, 12·6 per cent. by comparison with a steady average of 30 per cent. per annum during the years of the Labour Government.

With the grip of the Board of Trade relaxed, the traditional elements took charge. The constant drift to the South, against which the Labour Government fought during the whole period of their office—and successfully—reasserted itself. It is this factor which the Government have only so belatedly acknowledged. The gravitational pull of London and the big markets, and the decline of certain traditional industries in these areas operated together to accentuate the drift to London and the South. My right hon. Friend the Member for Battersea, North told the House, quite clearly, the measures that would be necessary to solve the problem. Of course we can solve this problem. There is no difficulty about solving it, given the resolution and the will, and if the Government are prepared to govern.

The hon. Baronet the Member for Fife, East (Sir J. Gilmour) told us about the position in Scotland where there are 250,000 fewer workers than ten years ago. The hon. Baronet said that half of them have emigrated. The other half have come to London or the South. That may be contrasted by saying that in Great Britain as a whole, since 1951, an extra 1¾ million jobs have been created, but there are 250,000 fewer workers in Scotland. In Wales, there are only 40,000 extra jobs out of the 1¾million. In Scotland, there is an actual loss. Let me put these figures to my right hon. and hon. Friends and to hon. Members opposite.

If we consider London, the South-East and the South, during this period of ten years, according to the Treasury Bulletin, 550,000 extra jobs have been created—well over 500,000. In the East and West Ridings, the north-west area, the northern area, Scotland and Wales what do we find to put against that figure of 500,000? The number of extra jobs and workers in those areas today is 32,000. That is the measure of the tilt which has taken place in the economy as the result of the relaxation in the efforts of the Government and the deliberate failure of Government will and policy. What is needed is to reverse the engines of policy, and that is what the Chancellor has to do. If he does it, he can solve this problem. The consequences of the problem are seen in the South and accepted as they are known in the North. They are seen and accepted in the South in terms of the severe congestion of transport.

What the South will not tolerate, and what hon. Members on this side should not advocate—nor do they—is the idea of trying to solve the problems of Wales and Scotland at the expense of the South. We cannot solve them by taking the bread and butter out of each other's mouths. What is needed is a general expansion in industry. It is only in the context of a general expansion that this problem will be solved. In other words, we need a national plan. We need a plan to take and match and measure the resources of this nation and its needs and then to settle how those resources and needs are to be allocated and worked out.

There is a whole battery of instruments which we can use if we want—fiscal instruments, taxation instruments. Do not let us be too proud to draw on the experience of others. I was very impressed when I read the other day an account of how the situation in Norway has been handled; how there has been created, under a Social Democratic Government, a whole series of cornerstone industries—and, goodness knows, they have a problem of drift which is quite as bad as the one that we have—how they have concerted those cornerstone industries with other local ancillary industries and how they are solving the problem. It can be done. All that it needs is the will. There are several instruments, differential taxa- tion allowances, investment allowances and depreciation allowances. We have used them all. They are all known, but they have all been rejected by the Government time after time. They are there available as soon as the Chancellor cares to pick them up and put them to the House.

The next step is to amend the Local Employment Act. It is far too narrow; it covers only 12·6 per cent. of the population. It deals with unemployment, as was brought out in the debate on 17th December, on far too narrow a basis. What is more, it does not deal with it with the effort or overall degree that are necessary. I have a list of some of the towns which have been left out—my hon. Friend the Member for Abertillery (Mr. LI. Williams) mentioned some of them—St. Helens, Middlesbrough, Gateshead and Newcastle. Those areas should not be left out of development facilities. If, when drawing up our employment Statutes, we do so on such a narrow basis that we do not include areas such as these, we fail to take a grip of the problem of drift from North to South. It is wrong to pick out a narrow group of areas and leave out areas such as these.

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

Surely the hon. Gentleman is not quite accurate in what he has said, because the Local Employment Act allows areas not necessarily designated to receive the benefits of the Act if they attract industry which would attract workers from the other development districts.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I am sure that that is so. The hon. Member had a great deal to do with putting the Act through the House. My complaint is that the Government's approach to this problem is too narrow. I objected to the abolition of the development areas and the substituting of local employment areas. I think that we should do much more planning on a regional basis than we do at present.

The experience of Norway shows that if the local community can be associated on a wide scale with what is being done there is much more chance of its being successful. I think that all of us have been concerned at the way in which the powers of local government have got sucked into the centre, sometimes to such an extent that local initiative is not so forthcoming as it could and might be in solving these problems. Liverpool, for example, has taken an excellent initiative in the matter of planning and trying to start public works. That is a general expansion of government. I want to see a strengthening of regional government in this country.

If we associated this with the breakdown of a national plan we could revive both local initiative and local government, and revive it especially in areas such as those in Wales and Scotland and the North-East and other areas, and do much more than we are doing at the moment. The excellent work which our former colleague, George Chetwynd, is doing is being done only because there is not a proper form of machinery either established by the Government or created by local initiative in order to solve these problems. I am a great believer in an expansion and a strengthening of regional planning and regional government in this regard.

I should like to see the conditions for grants or loans defined much more clearly. One of the proposals put forward from Scotland was that minimum standard grants should be made. I believe that all this would be extremely valuable. Above all, be resolute in using the I.D.C., be resolute in determining what one should be ready to allow to settle in a particular area. That is the government that we want. The powers are there. I believe that much more could be done than is being done at present if the Government would change their philosophy and policy in these matters.

My right hon. Friend referred to the need for controlling new office and commercial buildings. He referred to the fact that in the days of the Labour Government the Inland Revenue went to Cardiff, and, indeed, it has been a very welcome addition to the capital city of Wales. We are delighted to have it there, at any rate for some purposes.

But what about the other Departments? What about the nationalised industries? What is the Coal Board doing in London? I do not know whether this would be very popular with Lord Robens—and no doubt he will tell me what his reaction is when I see him—but it seems to me that if we are in earnest about this problem there is a very good case for arguing that the Board could well be established in some other part of Britain. What about the headquarters of British Railways? Why should the headquarters of Eastern Region be at King's Cross, or of Western Region at Paddington? There are other places outside London where many of the functions of these headquarters could go.

Of course, the Government made their own contribution: the Ministry of Transport moved from Mayfair to South-wark. But, as I know from personal experience, there are a great many functions of the Ministry of Transport which need not be carried out in London at all but could well be decentralised. I say to the Government that if they are serious about overcoming the congestion of London, then let them look at the nationalised industries, the public corporations and some of their own Departments and see what could be done.

All this will cost money. Of course it will. But, as my right hon. Friend pointed out this afternoon, it is costing us at present about £335 a year to keep a family of three on the dole, and it is far more worth while to invest a little money in putting people back into work than to keep them rotting on the dole.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

In his national plan, how would the hon. Gentleman deal with the question of export industries, which employ 5 million people?

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

The hon. Member has not been here all day. He will find out tomorrow if he reads my speech.

Everybody saw this crisis coming. Everybody knew that unemployment would mount. Everybody knew that industry was depressed—including, as I understand it, the Government; for when I asked the Minister of Labour this afternoon why they had not taken action earlier, he said, "We could not take action earlier because the Chancellor of the Exchequer did not want to do something which he might have to undo later."

Is it the Government's position, then, to say, "We knew that it was coming. We saw it approaching. But because we were strong and stern in our policies, we refused to be budged from the policies which we were following"? Have I the argument right? Is that the Government's position? Because if that is the Government's position today, it is a lie. I will tell the Government what their attitude was during 1962. In January, the Chancellor said: I do not believe that a depression is round the corner". In April, he said: Do not believe the prophets of woe. Addressing the Sheffield Cutlers' Feast, he said—and these are his words about his critics— The critics say demand at home is sagging and there is a recession ahead". Indeed, we did say that; we made the point throughout the whole Budget debate. He continued: 'You ought in your Budget', they say, to have pumped a whole lot more purchasing power into the domestic economy. You missed an opportunity." My answer"— said the Chancellor— is simple. I did not do that because I expect to see Production expand in 1962 without any additional stimulation.… He was still saying the same thing in May, when he said: The upturn in the economy is beginning". The Prime Minister joined in: "Production is rising". As late as 3rd October the Chancellor was telling us: Looking at the broad trend underlying the monthly figures, industrial production has been rising at an annual rate of about 7 per cent. What is this nonsense about the Government seeing it coming? They did not see it coming. In the teeth of every piece of advice given them from their own back benchers, from this side of the House, from industry, and from trade unionists, they walked blindfold into this crisis. There has not been an exhibition like it since the day of Ethelred the Unready.

I will tell hon. Members opposite why we are in this mess today. We are in this mess because the Government insisted that 1962 was a year of inflation, when every sign and portent showed that it was a year of deflation. They increased taxes at the time of the pay pause, and last April, instead of relieving the nation of those taxes, they reinforced them and turned the screw down even heavier.

My hon. Friends and I protested about this at the time. We told the Government that their expectations of an export boom and an upsurge in domestic con- sumption, which was what they based their policy on, was falsified by every practical consideration we knew, but the Government insisted on believing the experts in the Treasury rather than the evidence of their own eyes and their own common sense.

The Government are responsible for the present recession. They are responsible for the level of unemployment. Let there be no doubt about that in the country. The result, according to the I.L.O., is that Great Britain was the only country in 1962 which registered an increase in unemployment, and the Government are the culprits. One of the financial pundits said the other day, "We are paying heavily for these mistakes". We are not, but the unemployed are. We will do our best to bring it home to the Government to ensure that they pay in due course.

"Let us not be mealy-mouthed", says the Prime Minister, always watching for an alibi, always willing to splash in the gutter and spread the mud over everybody else. He says that what the people are really troubled about and the reason for it all is the fear of the result of the next General Election. I do not know whether the Prime Minister believes that, but, if so, I can assure him that nobody else does. The only fear people have about the next General Election is that the Government might trick themselves back into office once again.

The Government have taken certain measures now. They have taken them belatedly, but they have taken them. They have repaid the post-war credits. They have reduced Purchase Tax. They have cut the Bank Rate. They have made borrowing easier. They have increased tax allowances for new plant. They have increased pensioners' earnings allowance. They have increased pensions and insurance benefits. They have increased public investment. I am sure that all this will have an effect, but we have seen this bit of the film played before.

In the autumn of 1958 and the spring of 1959 unemployment was at a high level and the Government took certain measures then to put the situation right. What were those measures? I must read the last page again! Every one of the measures the Government have taken this time they took in the autumn of 1958 and the spring of 1959, but there were three other things they did, also. In the spring of 1959 they made a substantial and whacking reduction in Income Tax, they cut the Beer Duty and they held a General Election.

We must wait for the forthcoming Budget for the cut in Income Tax, the solace to Schedule A taxpayers, no doubt something for the beer drinker, and then it is off to the polls again. In the autumn, if we are to follow form, the Government will increase the duty on tobacco, impose restrictions on hire purchase, restrict bank borrowing, increase the Bank Rate, and increase Purchase Tax.

One question remains unanswered. Can the Government tell us the answer? How soon after all this rigmarole do they expect the next balance of payments crisis? How soon after the election are we to go through, once again, the pay pause, cuts, and the appeals for sacrifices, with "phoney" national incomes commissions heavily weighted on one side with the pretence of independence? The Chancellor has not produced a single new vestige of policy or instrument to avoid this country going through the cycle of events culminating, of course, in a Conservative victory at the General Election, other than they did before the 1959 Election.

The great need, the overwhelming need, is for increased exports. The hon. Member for Louth (Sir C. Osborne) asked me to come to this point. I will. I regret that that hon. Member was not in the House to hear my hon. Friend the Member for Burnley (Mr. D. Jones), for he said many things about exports which the hon. Member for Louth and other hon. Members would have appreciated. If we are to maintain the 4 per cent. growth rate in this country, to which the Government are pledged, we need an increase in expansion of 5·7 per cent. per annum. Last year it was less than 3 per cent.

The President of the Board of Trade seems to be very coy about taking part in these debates nowadays. He was expecting a great upsurge. I do not know why we always get the Minister of Labour speaking in these debates. His job is to count the number of unemployed. The President of the Board of Trade's job is to find the jobs. My hon. Friend the Member for Burnley told us about his experience in Nigeria and of the pitifully small supply of exports from this country being sold there today as against exports from Germany and Italy. This is quite true. It is an absolute lie to tell us that Commonwealth trade is decreasing. Commonwealth trade is increasing. What is decreasing is Britain's share of it.

One thing I can never understand is why it is that we do not sell our goods in the Commonwealth as against Germany and Italy while we can beat Germany and Italy in their own home markets. Why is it, if we can beat them in their own markets in Europe, that we cannot sell our exports in Nigeria and the other countries? My hon. Friend asked that question and we would like the answer from the President of the Board of Trade. I believe that this insistence by Ministers, this concentration on the Common Market negotiations over the last eighteen months, has meant that many of our valuable and traditional markets have had less emphasis placed on them than they should have had, and it is high time we got back to them.

Private investment is down. The public sector is going to take it up, and I hope so. I have no doubt—and I can assure the hon. Member for Louth on this score—that we shall need another debate, and perhaps the Common Market inquest will provide the opportunity, to deal with the problems of exports, productivity, balance of payments and how to expand world trade. Only by increasing our exports and productivity will we solve permanently the problem of unemployment in this country. Let there be no doubt about that.

I have listened to the whole of today's debate. I think that everyone has lambasted everyone else. The trade unions have come under fire for restrictive practices. Managements—and this has come from hon. Members opposite—have lacked initiative for their inadequacy of top training in management and poor communications with the workers. Monopolies and restrictive practices have not been mentioned as much as I would have liked, but I am certain that if we are to get out of the present situation a much tougher attitude will have to be taken towards monopolies than the President of the Board of Trade has taken towards British Oxygen and others over the last few years.

Some hon. Members have thought that the way to achieve a solution—to fire the British people with zeal once again—is to indulge in space research. Others have thought that more concentration on the basic needs of housing and sanitation might do the trick at less cost and with more satisfaction. There is no doubt that there is great unease about Britain's rôle in the world.

There is no doubt that a great many people feel that the rôle which we fulfilled for several centuries has come to an end and has been inadequately replaced and that our present course is uncertain. We have been told that we are insular and maritime. I do not resent being told that I am insular and maritime. It is a function of my geographical position to be so. The fact that we are insular and maritime, however, has never allowed us to become narrow-minded. If "insular" is used in that sense as a term of reproach, we should start to examine ourselves. As an insular and maritime nation we have voyaged over every ocean, taking treasure and ideas from wherever we might find them. But I think that it is true that we have become insular in the narrow-minded sense over the last ten years.

Over the last decade, particularly, a smog of complacency has been allowed to settle on us. It is that leadership that we want to see which will drive the fog away. I like the Minister of Labour but, with the best will in the world, could one imagine that, arising out of his speech today, there would be great zest and determination on the part of everybody to come out and make sure that Britain has a great rôle in the future? I do not look to that Front Bench opposite for the great leadership we need. A great many young people today, to the discomfiture of some of those of us who are older, are examining current morality and the conventional beliefs which many of us have held for a long time.

It is very uncomfortable to be rather older when this process is happening. But I do not attack them for doing this. I believe that they are blowing away a sham of hypocrisy which has overtaken the country over the last few years. What I would ask of them is that they should not confine their attack merely to conventional morals and conventional social attitudes and that they should expand their attack and turn their attention to political and economic problems. Most of us here belong to a different generation, but I believe that if these young people attack the sham and hypocrisy in that field they will bring under attack a different set of shams in our political and economic life.

If they do that, I believe that they will render a very great service to the country, because I have no doubt that once our course is clear, once we have stripped ourselves of our illusions, a closely knit, highly inventive, tough-minded, hard-working family of people such as we are has a great rôle to play in the world, depending on none and ready to co-operate with all.

9.29 p.m.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I should like to start by congratulating my hon. Friend the Member for Chippenham (Mr. Awdry) on his maiden speech. I must apologise for not having been in the Chamber when he was making it, but from all I have heard from those who were present I know that I was most unfortunate to miss it. I know that, as the hon. Member for Cardiff, South-East (Mr. Callaghan) said, the whole House looks forward to hearing him again on many occasions.

The hon. Member for Cardiff. South-East has made a very vigorous and colourful speech. I will not try to compete with him in rhetoric. After all, I am not in the same competition as he is in at the moment. [HON. MEMBERS: "Cheap."]

I intend to confine what I have to say to the terms of the Motion and of the Amendment which refers to the deep concern at the rise in recorded unemployment, commends the measures already taken by the Government to stimulate expansion in national production and to promote sound long-term industrial developments in areas of heavy unemployment and emphasises the importance of the adoption by the nation as a whole"— that is an important point because the right hon. Member for Battersea, North (Mr. Jay) referred to adoption by the Government— of the objectives of more rapid economic growth and greater industrial efficiency and competitiveness". May I, first of all, stress the importance of not exaggerating. It is obviously right for hon. Members to bring to the attention of the House in such a debate the difficulties that they and their constituents are facing, in whatever part of the country they may be. But, as has already been pointed out, it is no good for anyone to exaggerate the difficulties, either general or local, because exaggeration creates its own problems.

Look at the total figures which have been quoted so often this afternoon—815,000 unemployed. Everybody who thinks straight about this knows perfectly well that a very large proportion indeed of that figure is a temporary figure arising from the weather. [Interruption.] It does no good to argue with people who will not listen to the facts. The figure in December was 2·5 per cent. over the country as a whole, which is still well within the 3 per cent. figure which the party opposite adopted some years ago.

The right hon. Member for Battersea, North, I think, quoted figures from June, 1951. I do not quite understand why he quoted June, 1951, in comparison with the present position. What I remember about June, 1951, is that it was a very short time before the then Labour Government abandoned the very difficult balance of payments situation and left it to us to sort it out.

There is a danger of exaggerating the regional problem, and one or two of my hon. Friends have referred to this today, including my hon. Friends the Members for Manchester, Withington (Sir R. Cary) and for Newcastle-upon-Tyne, East (Mr. Montgomery). It is wrong, dangerous and misleading to talk about what is called a North-South problem. That is not the position. There are, as we know, many areas—Northern Ireland is the worst hit—including Scotland, the North-East Coast, Merseyside and some other districts which are suffering exceptionally high levels of unemployment. To talk about the whole of the North and include Manchester, Leeds, Bradford and Huddersfield is misleading and dangerous.

Frankly, the more that people emphasise the difficulties of the areas in which they are living the better, I quite agree, but the more they create the impression of gloom, depression and decay, the less the chance of our people going to those areas.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I want hon. Members on both sides of the House to make clear the difficulties but not to exaggerate them, and when they are talking about the difficulties also to dwell upon the prospects, because that is the best service that can be given to the country as a whole, including those areas.

I want to talk about the measures that the Government have taken, about their timing and possibly, if I have time, the alternative suggestions which have been put forward from the benches opposite. First, let us look again at the measures that the Government have taken to deal with the problem. They amount to a subtantial total: the release of special deposits, £160 million; increased public investment expenditure, at first £70 million but many millions have been added since; the release of post-war credits, £42 million; Purchase Tax reductions, over £80 million annual rate; social benefits increased and, as a contribution from the Exchequer, some £40 million. All this amounts to a very large addition indeed to the spending power of the people of this country and the prospective demand upon our economy.

Of course, we are still producing further measures. I can give one or two examples to the House this evening. For instance, we are encouraging local authorities to bring forward maintenance work. The House knows how successful this has been. I have written to the chairmen of the nationalised industries asking them to do the same, and I have had a very helpful response.

Now, roads. In addition to the increases of public expenditure already announced, we are to provide a further £1½, million to £2 million for new roads to be started before the autumn in the North-East and the North-West.

Next, there is the work which can be done on derelict sites. Under the Local Employment Act, Section 5, I think it is, local authorities have power to do work in areas of high unemployment to improve the general position, clear up derelict areas, get rid of pit heaps, and so on. I am sure that this is a very important power, but I think that it has probably not been used enough hitherto. I am told that the reason is that the grant of 75 per cent. paid by the Government to local authorities is not large enough, and I am considering whether we should increase the level of grant. I think that we should not make it 100 per cent. I am sure that the local authorities should make some contribution. However, if it be true that the 75 per cent. is too low and is holding up this sort of work, which in these areas is very valuable, then I shall certainly consider raising the percentage above 75.

These seem to be the sort of measures which we should adopt.

Photo of Mr John Hynd Mr John Hynd , Sheffield, Attercliffe

The right hon. Gentleman has referred to a contribution of £40 million from the Exchequer towards purchasing power as a valuable measure in easing the problem. Has he not at the same time taken out of current purchasing power a sum approaching £200 million for future benefits, and is not the result, therefore, a negative one?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

The £40 million I spoke of was the net contribution from the Exchequer. Additionally, of course, by paying unemployment benefits as early as possible and before the higher contributions come in, we are carrying that on the Exchequer for a period of several weeks.

Now, the depreciation allowances. I do not think that it is yet realised—

Photo of Mr Simon Mahon Mr Simon Mahon , Bootle

Dr. J. Dickson Mahon (Greenock) rose

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I have very little time. I cannot give way.

I do not think that it is yet realised how very generous are the new depreciation allowances which I announced on 5th November. They are now the best in the whole of Western Europe, and I think that this should be known. The whole initial cost of any new machinery can now be written off in seven years as a maximum, and there will be 30 per cent. investment allowance additional to come after that.

The amounts allowed in other countries after seven years are as follows: France, 86 per cent.; Germany, 80 per cent.; Holland, 93 per cent.; Belgium, 70 per cent. Italy does it in six years, but we have the investment allowance on top which Italy does not have. All these countries will give 100 per cent. write-off in 10 years, but by that time we shall be giving 112 per cent. The fact is— I think that it should be more widely recognised in British industry—that this new system of depreciation allowances gives to our industrialists a more rapid rate of write-off and a more generous treatment of capital allowances than is received by any of their competitors in Western Europe and, I think, probably, almost anywhere in the Western world.

Those are the measures which the Government have introduced. I was not quite sure from what he said whether the hon. Member for Cardiff, South-East agreed with them or not. He was a little scornful. He said that it had been done before. The fact that a thing has been done before does not mean that it is wrong. Is it wrong? Should not I have done what I have? Should not I have introduced the new allowances? Should not I have released Post-War Credits? Perhaps I have done too much. Perhaps the hon. Gentleman is worried, wondering when the next balance of payments crisis is to come. Does he think that I have released too much purchasing power? Does he think that what I am doing is leading to inflation? Does he think that I want to restore the credit squeeze? He should say so. He cannot argue in that way. Either he agrees with what I have done or he does not.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

No; it is not the right hon. Gentleman's day. He has had his turn.

If the hon. Member for Cardiff, South-East does not agree with what I have done, let him say so. Equally, if he does agree, let him admit it.

The two industries which have made the biggest contribution to the rise in the level of unemployment are the construction industry and the engineering industry. I think that the measures which we have taken are particularly designed to help these two industries. In construction, the increase in public works expenditure, to which I have referred, was very large indeed. The increase in public investment between 1962 and 1963 will be about £200 million, about 10 per cent., probably the biggest increase made in peace time. Most of this will fall on the construction industry.

Private enterprise housing is, in our estimate, likely to increase substantially again in 1963, possibly by about 10 per cent. When the present weather, which is holding up construction all over the country, passes obviously there will be a very big build up of work to be done by these industries. Generally speaking, the amount of money we are putting in and the conditions through which we are going mean that the load on the construction industries w H be very heavy in 1963. It is to no one's advantage to overload these industries, leading to a deliberate rise in costs and difficulties all round.

In looking at the level of load on the construction industries, we must distinguish between the country as a whole and the development districts. I am prepared to take much bigger risks in the development districts than in the country as a whole. If we gel an overload in the development districts that can be dealt with, but if we get an overload in the country as a whole this will run us back into the previous difficulties which we had with exports and costs.

I turn to the engineering industry. The Purchase Tax reductions, amounting to an annual rate of over £80 million, on cars and television in particular will be a substantial help to the engineering industry because the ramifications of the motor and radio industries are spread so wide. I was interested to see from the mid-day newspapers that hire-purchase sales of motor cars in January showed a substantial increase, despite the fact that most of the roads were under two feet of snow. It is remarkable that that should happen. My guess is that a reduction of the kind made in the Purchase Tax on motor cars should be a substantial help to the industry in the years to come.

In the new depreciation allowances, I paid special attention to the importance of encouraging investment in heavy plant, which in the past had been depreciated over a wholly unreasonable length of time. We have shortened that deliberately to give encouragement to the purchase and installation of heavy plant.

The Government have taken a number of actions with regard to ships. My right hon. Friend the Minister of Labour made an announcement in this connection this afternoon. We have approved ships for the Scottish services. I am looking at the possibility of providing ships as part of our aid payments. I can assure the right hon. Member for Battersea, North that the President of the Board of Trade and I are pushing to the absolute limit the terms of credit that we give to our people exporting ships within the international obligations to which we are committed. If he talks to some of the ship owners, he will find that they agree that we are exercising all the ingenuity that we can to ensure that our people have the best possible advantages.

This is the scale of the measures which we have adopted. I now turn to the timing of them, because this has bean criticised. It is right that we should not do too little too late. Equally, it can be damaging to do too much too soon. I have noticed alien recently that people who in the past have been particularly eloquent in criticising what they call "stop and go" policies are just the people who are now urging us to go so fast that we will have a wail of "stop" in about six months' time. This is not sensible. If we are to avoid "stop and go policies", we must adopt measures which last. It is no good trying to fill in a short-term dip with long-term commitments which become an embarrassment.

There is no doubt that the measures introduced in 1961 by my predecessor have had very good results. The balance of payments position is very much stronger. We have repaid within a year the borrowings we made from the International Monetary Fund and the strength of the £, in the face of recent crises in Cuba and in India, and the breakdown of the Brussels negotiations, has been very impressive. No one should under-estimate that.

The latest figures published for January, which do not contain the figures for Wednesday and Thursday of last week when there was on one particular day a flurry in the markets, show a very satisfactory result. If it had not been for the measures taken by my predecessor, certainly sterling would not have been able to face recent difficulties in the healthy way that it has. Also, without any doubt our economy is now more competitive.

Our costs have risen a good deal less than those of many of our competitors. As a result, we have been able to halt the fall in our share of the world market in manufactured goods.

In May of last year, my predecessor had taken certain measures to relax hire-purchase restrictions and to pay the first 1 per cent. of special deposits. He had also initiated plans to increase public investment. The situation as I saw it when I took over my present responsibilities in July was that unemployment had been rising, but not seriously, and was still at about 2 per cent. Production had been, and still was, rising sharply, but admittedly it reached a low point at the turn of the year; it was moving on a curve in that direction.

On the other hand, the balance of payment prospects were rather uncertain and a difficult time for sterling, particularly September, which is always a difficult month, lay ahead. The Brussels negotiations were still causing a certain amount of uncertainty. Nevertheless, it was clear that something was needed, particularly in the development districts. That was why, at the beginning of August, we decided to bring in the £70 million increased programme of public expenditure and particularly arranged to concentrate as much as possible of this expenditure in the development districts. It seems to me to have been precisely the right decision to take at that time.

Clearly, it was desirable also to proceed with further easing of credit. The timing was affected by the International Monetary Fund meeting. Hence it was at the end of September that we released £80 million of special deposits. Meanwhile, however, the rates of interest, and particularly long-term rates, which affect investment more than short-term rates, had been moving steadily downwards, which, obviously, was a good development. In early October, we announced the £70 million public investment programme and released the post-war credits.

The situation got worse in the last quarter of 1962. Two things happened. First, the upward curve of production flattened out. Funnily enough, the same thing happened in America, Germany and Japan—in fact, in most of the main industrial nations of the West. The reasons were threefold. First, our exports flattened out, as did those of the European Econo- mic Community at the same time. Stock-building possibly turned downwards, although it is difficult to be certain, and our hire-purchase debt, which we had expected, on the whole, to increase, showed a decline. For all those reasons, there was a flattening out in production.

At the same time, there was a shakeout, as it is called, in the labour market. I agree with the hon. Member for Cardiff, South-East in the previous debate that dishoarding should not be used as a euphemism for unemployment. There are, however, two sides to this. The unemployment created by the so-called shake-out is in human and social terms a tragedy, but in economic terms it is also an opportunity. I have no doubt that businesses have found under more competitive conditions that they can get higher productivity and produce more with a smaller labour force. This is an opportunity. I entirely agree that in social terms, the so-called dishoarding is the tragedy of unemployment, but in economic terms it means that we have further capacity for expansion than, possibly, we realised before.

Those were the measures which we took up to the autumn. Since then, we have taken the measures to reduce Purchase Tax, particularly in the case of motor cars. That was timed to take into account the increasingly seasonal or cyclical nature of the demand for motor cars and to catch the market at a time when otherwise it might have gone into a winter trough. The benefits under the new National Insurance Bill are being paid as soon as they possibly can be. Those are the measures we have taken and that was the reason for the timing of those measures.

I listened to all that the hon. Member for Cardiff, South-East said, wondering what he would say about what else we should have done. The right hon. Member for Battersea, North put forward a number of suggestions, but the hon. Member for Cardiff, South-East had surprisingly little to say. He said that of course, the problems could be solved; there was no difficulty in that. If so, he might have told us how to do it.

The hon. Member said that there was an overwhelming need to increase exports. Of course, there is an overwhelming need to increase them, but perhaps the hon. Member can tell us how he would set about it. I have looked back to the speech which the hon. Member made in November, the last time he gave us some suggestions about what should be done. He suggested that Purchase Tax should be reduced; he suggested that a 10 per cent. reduction would release about £60 million of purchasing power. I in fact released £80 million of purchasing power. He suggested that unemployment benefits should be increased. We have increased them, and by a very large amount. He said that we should consider the placing of Government orders, and we have heard about that today. He said that there should be an increase in Government investment. Already, before he said that, we had stepped up the rate of public investment to a degree, as I said before, higher than that experienced before in this country in peace time.

He talked about a firm location of industry policy. Really, it is all very well for hon. Members opposite to say that we should have a firm location of industry policy, to say that we should be firm, but that we are weak and that we give way. They have no evidence whatever to support that. Let them try. Fortunately, it will be a long time before they have an opportunity to see for themselves the practical problems involved. We, the Government, want to see industry moving into development districts. Any Government wants to see it. Of course they do. It is perfectly absurd to suggest otherwise. There is no reason why any Government should wish to see otherwise. But no Government with common sense in their head would do that at the expense of really serious damage to the economy as a whole.

We have always to balance these things together. I saw plenty of cases in the two years when I was at the Board of Trade, and I have seen them since. Time and again there were people who said, "If we can make an expansion in certain sections of our works we could get additional production from them but we do want increased production from the rest of our works". That is the sort of problem one comes up against. People say, "We should like to go further afield, but if we do the costs are higher and we shall not be competitive". It is not possible for those people to go to places where they know perfectly well from their own commercial judgment that they will not be able to make a success of their enterprise there. That is really no good.

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee

If that is the case why does not the right hon. Gentleman follow the example of others and put up publicly-owned factories in those areas?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

It is interesting that that point did not appear in the right hon. Gentleman's catalogue of measures with which he opened the debate. I think the answer is that if circumstances are such that a firm does not think private enterprise could make a show of it in any particular area, public enterprise has much less chance than that.

I noticed that the hon. Member was wise enough to warn his party conference to think carefully before coming out in favour of a direction of industry policy which might also involve direction of labour and other consequences. Good advice. I hope it will continue to be taken. It is no good trying to push firms into development districts, firms which cannot go there and make a success of it. We must hold the balance, and the balance, I think, has been very successfully held. I will say frankly that if hon. Members opposite can produce cases of people who have been allowed to expand in the South-East and the Midlands who could easily have gone to the North or Scotland I shall be glad to see them. I do not know one myself, nor does my right hon. Friend the President of the Board of Trade.

The right hon. Gentleman the Member for Battersea, North also raised a number of points. He raised the point about offices and the question of planning. I am told that this is rather a complicated question, as the hon. Member for Huddersfield, West (Mr. Wade) made clear. I am also told that the London County Council, the planning authority for Central London, has felt considerable risk would attach to refusing consent for office use in many cases. I think that is the position. My right hon. Friend the Minister of Housing and Local Government will make a statement shortly about the whole office problem and I hope that the right hon. Gentleman will be kind enough to await that.

Again, there were several other points which the right hon. Gentleman made. He talked about using I.D.C.s. I have already dealt with that. He talked about the Local Employment Act operating only for small areas. I do not think this is right at all. If we look to areas scheduled under the Act, Merseyside has been, and the greater part of industrial Scotland and many areas in the North-East. The idea of growth areas has attractions if industry can grow rapidly and successfully. But if, on the other hand, one is living in a town a long way from that area it is poor consolation to hear about it. We have to balance one area with another. I think that we have administered the Act rightly by concentrating on these areas.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

As the Government have now decided to schedule the whole of Merseyside, why are they not willing to schedule the whole of the North-East Coast industrial area?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

Merseyside was always scheduled. It was never de-scheduled. It was put on the stop list, which is quite a different thing. In the North-East we have scheduled the areas under the Act. By the Act, the President of the Board of Trade has to judge the areas in which unemployment is likely to reach a high level which will remain persistent.

I want, in finishing, to turn to the conditions of growth. Our Amendment rightly refers to the importance of a combined national effort for promoting and sustaining growth policies. Many references have been made to the needs we know so well. My hon. Friend the Member for Sevenoaks (Mr. J. Rodgers) referred to better management. Better labour relations, better organisation by management and better levels of education were referred to. I know of no single item in Government expenditure which has risen as fast as our expenditure on education. We should learn to apply better the results of research and development. We want more capital, public and private, which means a higher rate of savings, both individual and corporate.

Above all, the lesson of recent weeks in economic policy is that we can have a higher rate of growth, that the fundamental condition of a higher rate of growth is a much higher rate of exports and that a fundamental condition of a higher rate of exports is to keep our costs competitive, which they now are, but we shall do that only if we keep income levels in line with productivity.

All the argument of recent weeks brings us back to the proposition that in order to have growth one must have a national incomes policy. The one does not conflict with the other. Indeed, the one is entirely necessary for the other. That is why I hope we shall get more support than we have had in the past for the principles of economic policy and for the application of them. It is no good talking of the principles of an incomes policy without having some methods of applying those principles in each individual case. Hence, the National Economic Development Council needs a National Incomes Commission as a complement to make these ideas and principles effective in individual practice.

It is said that wages are treated differently from profits and dividends. This is not true. The principles are the same, but the methods must be different. Wages are settled in advance; profits are struck after the market has worked. Wages are normally uniform within an industry; profits are not. There should be the widest disparity between the efficient firm which gets high profits and the inefficient firm which gets low profits.

It must be made quite clear that wages and incomes generally rising faster than productivity inhibit growth and employment. If high wages are accompanied by high profits, the effects are inflation, rising costs, and loss of exports. If, on the other hand, as happened recently, high wages in disinflationary conditions are accompanied by low profits, one gets what the Americans call "profitless prosperity", when the industrialists are so squeezed on their profit margins that they do not feel like investing, and if they do not invest, one does not create further employment and growth. Either way, a national incomes policy is essential to the maintenance of costs, and the maintenance of costs is essential to the exports that we wish to have.

I have endeavoured to deal with the Amendment, and I have also dealt with what has been put forward by the Opposition. I have put forward reasons why the House should suport the Government in what they have done and are still doing.

Question put, That the words proposed to be left out stand part of the Question: —

The House divided: Ayes 236, Noes 317.

Division No. 37.]AYES[10.0 p.m.
Abse, LeoGrey, CharlesMilne, Edward
Ainsley, WilliamGriffiths, David {Bother Valley)Mitchison, G. R.
Albu, AustenGriffiths, Rt. Hon. James (Lianelly)Monslow, Walter
Allaun, Frank (Salford, E.)Griffiths, W. (Exchange)Moody, A. S.
Allen, Scholefield (Crewe)Grimond, Rt. Hon. J.Morris, John
Awbery, Slan (Bristol, Central)Gunter, RayMoyle, Arthur
Bacon, Miss AliceHate, Leslie (Oldham, W.)Neal, Harold
Baird, JohnHamilton, William (West Fife)Noel-Baker, Francis (Swindon)
Barnett, GuyHannan, WilliamOram, A. E.
Baxter, William (Stirlingshire, W.)Harper, JosephOswald, Thomas
Beaney, AlanHart, Mrs. JudithPadley, W. E.
Bellenger, Rt. Hon, F, J.Hayman, F. H.Paget, R. T.
Bence, CyrilHealey, DenisPargiter, G. A.
Bennett, J. (Glasgow, Bridgeton)Henderson, Rt. Hn. Arthur (Rwly Regis)Parker, John
Benson, Sir GeorgeHerbison, Miss MargaretParkin, B. T.
Blackburn, F.Hewitson, Capt. M.Pavitt, Laurence
Blyton, WilliamHill, J. (Midlothian)Pearson, Arthur (Pontypridd)
Boardman, H.Hilton, A. V.Peart, Frederick
Bottomley, Rt. Hon. A. G.Holman, PercyPentland, Norman
Bowden, Rt. Hn. H. w-(Leics. S.W.)Holt, ArthurPlummer, Sir Leslie
Bowen, Roderic (Cardigan)Hooson, H. E.Popplewell, Ernest
Bowles, FrankHoughton, DouglasPrentice, R, E.
Boyden, JamesHowell, Charles A. (Perry Barr)Price, J. T. (Westhoughton)
Braddock, Mrs. E. M.Howell, Denis (Small Heath)Probert, Arthur
Bradley, TomHoy, James H.Proctor, W. T.
Bray, Dr. JeremyHughes, Cledwyn (Anglesey)Pursey, Cmdr. Harry
Brock way, A. FennerHughes, Emrys (S, Ayshire)Rankin, John
Broughton, Dr. A. D. D.Hughes, Hector (Aberdeen, N.)Reid, William
Brown, Rt. Hon. George (Belper)Hunter, A. E.Reynolds, G. W.
Brown, Thomas (Ince)Hynd, H. (Accrington)Roberts, Albert (Normanton)
Butler, Herbert (Hackney, C.)Hynd, John (Attercliffe)Roberts, Coronwy (Caernarvon)
Butler, Mrs. Joyce (Wood Green)Irvine, A. J. (Edge Hill)Robertson, John (Paisley)
Callaghan, JamesIrving, Sydney (Dartford)Robinson, Kenneth (St. Pancras, N.)
Carmichael, NeilJanner, Sir BarnettRodgers, W. T. (Stockton)
Castle, Mrs. BarbaraJay, Rt. Hon. DouglasRoss, William
Chapman, DonaldJeger, GeorgeShinwell, Rt. Hon. E.
Cliffe, MichaelJenkins, Roy (Stechford)Silverman, Julius (Aston)
Collick, PercyJohnson, Carol (Lewisham, S.)Silverman, Sydney (Nelson)
Corbet, Mrs. FredaJones, Rt. Hn. A. Crecch(Wakefield)Skeffington, Arthur
Craddock, George (Bradford, S.)Jones, Dan (Burnley)Slater, Mrs. Harriet (Stoke, N.)
Crosland, AnthonyJones, Elwyn (West Ham, S.)Slater, Joseph (Sedgefield)
Crossman, R. H. S.Jones, J. Idwal (Wrexham)Small, William
Cullen, Mrs. AliceJones, T. W. (Merioneth)Smith, Ellis (Stoke, S.)
Dalyell, TamKelley, RichardSnow, Julian
Darling, GeorgeKenyon, CliffordSoskice, Rt. Hon. Sir Frank
Davies, G. Elfed (Rhondda, E.)Key, Rt. Hon. C. W.Spriggs, Leslie
Davies, Harold (Leek)King, Dr. HoraceSteele, Thomas
Davies, Ifor (Gower)Lawson, GeorgeStewart, Michael (Fulham)
Davies, S. O. (Merthyr)Ledger, RonStonehouse, John
Deer, GeorgeLee, Frederick (Newton)Stones, William
Delargy, HughLee, Miss Jennie (Cannock)
Dempsey, JamesLever, Harold (Cheetham)Strauss, Rt. Hn. G. R. (Vauxhall)
Diamond, JohnLever, L. M. (Ardwick)Swain, Thomas
Dodds, NormanLewis, Arthur (West Ham, N.)Swingler, Stephen
Donnelly, DesmondLipton, MarcusTaverne, D.
Driberg, TomLoughlin, CharlesTaylor, Bernard (Mansfield)
Dugdale, Rt. Hon. JohnLubbock, EricThomas, George (Cardiff, W.)
Ede, Rt. Hon. C.Mabon, Dr, J, DicksonThomas, lorwerlh (Rhondda, W,)
Edelman, MauriceMcCann, JohnThompson, Dr. Alan (Dunfermline)
Edwards, Rt. Hon. Ness (Caerphilly)MacColl, JamesThomson, G. M. (Dundee, E.)
Edwards, Robert (Bilston)MacDermot, NiallThornton, Ernest
Edwards, Walter (Stepney)McInnes, JamesThorpe, Jeremy
Evans, AlbertMackie, John (Enfield, East)Tomney, Frank
Fernyhough, E.McLeavy, FrankWade, Donald
Finch, HaroldMacMillan, Malcolm (Western Isles)Wainwright, Edwin
Fitch, AlanMacPherson, Malcolm (Stirling)Warbey, William
Fletcher, EricMahon, SimonWeitzman, David
Foot, Dingle (Ipswich)Mallalieu, E. L. (Brigg)Wells, William (Walsall, N.)
Foot, Michael (Ebbw Vale)Mallalieu, J.P.W. (Huddersfield, E.)Whitlock, William
Forman, J. C.Manuel, ArchieWigg, George
Fraser, Thomas (Hamilton)Mapp, CharlesWilkins, W. A,
Galpern, Sir MyerMarsh, RichardWilley, Frederick
George, Lady MeganLloyd (Crmithn)Mason, RoyWilliams, LI. (Abertillery)
Ginsburg, DavidMayhew, ChristopherWilliams, W. R. (Openshaw)
Gordon Walker, Rt. Hon. P. C.Mellish, R. J.Williams, w. T. (Warrington)
Gourlay, HarryMendelson, J. J.Willis, E. G. (Edinburgh, E.)
Greenwood, AnthonyMillan, BruceWilson, Rt. Hon. Harold (Huyton)
Winterbottom, R, E,Wyatt, WoodrowTELLERS FOR THE AYES:
Woodburn, Rt. Hon, A.Yates, Victor (Ladywood)Mr. Short and Mr. Redhead.
Woof, RobertZilliacus, K.
NOES
Agnew, Sir peterElliot, Capt. Walter (Carshalton)Kirk, Peter
Altken, W. T.Elliott, R.W. (Nwcastle-upon-Tyne, N.)Lagden, Godfrey
Allan, Robert (Paddington, s.)Emery, PeterLancaster, Col. C. C.
Allason, JamesEmmet, Hon. Mrs. EvelynLangford-Holt, Sir John
Amery, Rt. Hon. JulianErroll, Rt. Hon. F. J.Leavey, J. A.
Arbuthnot, JohnFarey-Jones, F. W.Leburn, Gilmour
Ashton, Sir HubertFarr, JohnLegge-Bourke, Sir Harry
Atkins, HumphreyFell, AnthonyLewis, Kenneth (Rutland)
Awdry, Daniel (Chippenham)Fisher, NigelLilley, F. J. P.
Balniel, LordFletcher-Cooke, CharlesLindsay, Sir Martin
Barber, AnthonyForrest, GeorgeLinstead, Sir Hugh
Barlow, Sir JohnFoster, JohnLitchfield, Capt. John
Barter, JohnFraser, Rt. Hn. Hugh (Stafford & Stone)Lloyd, Rt. Hon. Geoffrey (Sut'nC'dfield)
Batsford, BrianFraser, Ian (Plymouth, Sutton)Longbottom, Charles
Baxter, Sir Beverley (Southgate)Freeth, DenzilLongden, Gilbert
Beamish, Col. Sir TuftonGammans, LadyLoveys, Walter H.
Bell, RonaldGardner, EdwardLucas-Tooth, Sir Hugh
Bennett, F. M. (Torquay)George, J. C. (Pollok)McAdden, Sir Stephen
Berkeley, HumphryGibson-Watt, DavidMacArthur, Ian
Bevins, Rt. Hon. ReginaldGilmour, Ian (Norfolk Central)McLaren, Martin
Bidgood, John C,Glyn, Dr. Alan (Clapham)Maclay, Rt. Hon. John
Biffen, JohnGlyn, Sir Richard (Dorset, N.)Maclean, Sir Fittroy (Bute & N.Ayre)
Biggs-Davison, JohnGoodhart, PhilipMcLean, Neil (Inverness)
Bingham, R. M.Goodhew, VictorMacleod, Rt. Hn. Iain (Enfield, W.)
Birch, Rt. Hon. NigelCough, FrederickMacLeod, John (Ross & Cromarty)
Bishop, F. p.Gower, RaymondMacmillan, R t. Hn. Harold (Bromtey)
Black, Sir CyrilGrant-Ferris, R.Macmillan, Maurice (Halifax)
Bossom, Hon. CliveGreen, Alan Gresham Cooke, R.Macpherson, Rt. Hn. Niall (Dumfries)
Bourne-Arton, A.Grosvenor, Lt.-Col. R. G.Maddan, Martin
Box, DonaldGurden, HaroldMaginnis, John E.
Boyd-Carpenter, Rt. Hon. JohnHall, John (Wycombe)Maitland, Sir John
Boyle, Rt. Hon. Sir EdwardHamilton, Michael (Wellingborough)Marlowe, Anthony
Braine, BernardHare, Rt. Hon. JohnMarples, Rt. Hon. Ernest
Brewis, JohnHarris, Frederic (Croydon, N.W.)Marshall, Douglas
Bromley-Davenport, Lt.-Col. Sir WalterHarris, Reader (Heston)Marten, Neil
Brooke, Rt. Hon. HenryHarrison, Brian (Maldon)Mathew, Robert (Honlton)
Brooman-White, R.Harvey, Sir Arthur Vere (Macclesf'd)Matthews, Gordon (Meriden)
Brown, Alan (Tottenham)Harvey, John (Walthamstow, E.)Maudling, Rt. Hon. Reginald
Bryan, PaulHarvie Anderson, MissMawhy, Ray
Buck, AntonyHastings, StephenMaxwell-Hyslop, R. J.
Bullard, DenysHay, JohnMaydon, Lt.-Cmdr. S. L. C.
Bullus, Wing-Commander EricHeald, Rt. Hon. Sir LionelMills, Stratton
Burden, F. A.Heath, Rt. Hon. EdwardMiscampbell, Norman
Butcher, Sir HerbertHenderson, John (Cathcart)Montgomery, Fergus
Butler, Rt. Hn. R.A. (Saffron Walden)Hendry, ForbesMore, Jasper (Ludlow)
Campbell, Sir David (Belfast, S.)Hicks Beach, Maj. W.Morrison, John
Campbell, Cordon (Moray & Nairn)Hill, Dr. Rt. Hon. Charles (Luton)Mott-Radclyffe, Sir Charles
Carr, Compton (Barons Court)Hill, Mrs. Eveline (Wythenshawe)Nabarro, Sir Gerald
Carr, Robert (Mitcham)Hill, J. E. B. (S. Norfolk)Neave, Airey
Cary, Sir RobertHirst, GeoffreyNicholls, Sir Harmar
Channon, H. P, G.Hnbson, Sir JohnNicholson, Sir Godfrey
Chataway, ChristopherHocking, Philip N.Noble, Rt. Hon. Michael
Clark, Henry (Antrim, N.)Holland, PhilipNugent, Rt. Hon. Sir Richard
Clarke, Brig. Terence (Portsmth, W.)Hollingworth, JohnOrr, Capt. L. P. S.
Cleaver, LeonardHope, Rt. Hon. Lord JohnOrr-Ewing, C. Ian
Cooke, RobertHopkins, AlanOsborn, John (Haltam)
Cooper, A. E.Hornby, R. P.Osborne, Sir Cyril (Louth)
Cordeaux, Lt.-Col. J. K.Hornsby-Smith, Rt. Hon. Dame P.Page, Graham (Crosby)
Corfield, F. V.Howard John (Southampton, Test)Page, John (Harrow, West)
Costain, A. P.Hughes Hallett, Vice-Admiral JohnPanned, Norman (Kirkdale)
Coulson, MichaelHughes-Young, MichaelPartridge, E.
Courtney, Cdr. AnthonyHulbert, Sir NormanPearson, Frank (Clitheroe)
Craddock, Sir Beresford (Spelthorne)Hurd, Sir AnthonyPeel, John
Crosthwaite-Eyre, Col, Sir OliverHutchison, Michael ClarkPercival, Ian
Crowder, F. p.Iremonger, T. L.Peyton, John
Cunningham, KnoxIrvine, Bryant Godman (Rye)Pickthorn, Sir Kenneth
Curran, CharlesJames, DavidPike, Miss Mervyn
Dalkeith, Earl ofJenkins, Robert (Dulwich)Pilkington, Sir Richard
Dance, JamesJohnson, Dr. Donald (Carlisle)Pitman, Sir James
d'Avigdor-Goldsmid, Sir HenryJohnson, Eric (Blackiey)Pitt, Dame Edith
Deedes, Rt. Hon. W. F.Johnson Smith, GeoffreyPott, Percivall
Digby, Simon WingfieldJoseph, Rt. Hon. Sir KeithPowell, Rt. Hon. J. Enoch
Donaldson, Cmdr. C. E. M,Kaberry, Sir DonaldPrice, David (Eastleigh)
Doughty, CharlesKerans, Cdr. J, S.Price, H. A. (Lewisham, W.)
Drayson, G. B.Kerby, Capt. HenryPrior, J. M. L.
du Cann, EdwardKerr, Sir HamiltonProfumo, Rt. Hon. John
Duncan, Sir JamesKershaw, AnthonyProudfoot, Wilfred
Eden, JohnKimball, MarcusPym, Francis
Quennell, Miss J. M.Spearman, Sir Alexandervan Straubenzee, W. R.
Ramsden, JamesSpeir, RupertVane, W. M. F.
Rawlinson, Sir PeterStanley, Hon. RichardVaughan-Morgan, Rt, Hon, Sir John
Redmayne, Rt. Hon. MartinStevens, GeoffreyVosper, Rt. Hon, Dennis
Rees, HughSteward, Harold (Stockport, S.)Wakefield, Sir Wavell
Rees-Davies, W. R.Stoddart-Scott, Col. Sir MalcolmWalker, Peter
Ronton, Rt. Hon. DavidStorey, Sir SamuelWalker-Smith, Rt. Hon. Sir Derek
Ridley, Hon. NicholasStudholme, Sir HenryWall, Patrick
Ridsdale, JulianSummers, Sir SpencerWard, Dame Irene
Rippon, Rt. Hon. GeoffreyTalbot, John E.Watkinson, Rt. Hon. Harold
Roberts, Sir Peter (Heeley)Tapsell, PeterWebster, David
Robinson, Rt. Hn. Sir R. (B'pool, S.)Taylor, Sir Charles (Eastbourne)Wells, John (Maidstone)
Robson Brown, Sir WilliamTaylor, Edwin (Bolton, E.)Whitelaw, William
Rodgers, John (Sevenoaks)Taylor, Frank (M'ch'st'r, Moss Side)Williams, Dudley (Exeter)
Ropner, Col. Sir LeonardTaylor, Sir William (Bradford, N.)Williams, Paul (Sunderland, S.)
Royle, Anthony (Richmond, Surrey)Teeling, Sir WilliamWills, Sir Gerald (Bridgwater)
Russell, RonaldTemple, John M,Wilson, Geoffrey (Truro)
St. Clair, M.Thomas, Sir Leslie (Canterbury)Wise, A. R.
Sandys, Rt. Hon. DuncanThomas, Peter (Conway)wolrige-Gordon, Patrick
Scott-Hopkins, JamesThompson, Sir Kenneth (Walton)Wood, Rt. Hon. Richard
Seymour, LeslieThompson, Sir Richard (Croydon, S.)Woodhouse, C. M.
Sharpies, RichardThorneycroft, Rt. Hon. PeterWoodnutt, Mark
Shaw, M.Thornton-Kemsley, Sir ColinWoollam, John
Shepherd, WilliamTilney, John (Wavertree)Worsley, Marcus
Skeet, T. H. H.Touche, Rt. Hon. Sir GordonYates, William (The Wrekin)
Smith, Dudley (Br'ntf'd & Chiswick)Turner, Colin
Smithers, PeterTurton, Rt. Hon. R. H.TELLERS FOR THE NOES:
Smyth, Rt. Hon. Brig. Sir JohnTweedsmuir, LadyMr. Chichesfer-Clark and
Soames, Rt. Hon. ChristopherMr. Finlay.

Proposed words there added.

Main Question, as amended, put and agreed to.

Resolved,That this House, whilst expressing its deep concern at the rise in recorded unemployment, comments the measures already taken by the Government to stimulate expansion in national production and to promote sound long term industrial developments in areas of heavy unemployment and emphasises the importance of the adoption by the nation as a whole of the objectives of more rapid economic growth and greater industrial efficiency and competitiveness.