Unemployment and Economic Policy

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

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Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire 12:00 am, 4th February 1963

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.