Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 8 April 1963.

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Photo of Mr Thomas Fraser Mr Thomas Fraser , Hamilton 12:00, 8 April 1963

That is so. I hope that the Chancellor of the Exchequer realises that in every one of the areas of high unemployment skilled workers are moving out week after week and month after month. The right hon. Gentleman knows that when there is a shortage of skilled workers in Luton personnel managers are sent to Glasgow to consult the Ministry of Labour officers there so that highly skilled workers can be recruited from Renfrewshire, Aberdeen-shire, Glasgow, Lanarkshire, and the surrounding areas.

I am not saying that we must not have these training centres. In the complex industrial society in which we live it is essential for our well-being that workers whose skills become surplus to requirements should be trained in new skills to enable them to take up other jobs. I am not against training centres, but I am trying to rationalise the objections of the trade unions to them, and the Government must recognise that in those areas of high unemployment, in which more than half these new training centres are to be sited, it is essential that new employments are created to provide employment for these men when they are trained and thus ensure that after being trained they do not take their skills to a job in the south.

The Minister of Labour knows that for many years workers, after being trained at Hillington, have boarded a train at Glasgow, Central, for Euston, and thence to somewhere in the South. We do not want this process to continue. It is estimated that Scotland loses about 25,000 to 30,000 of her population by migration annually, and we have only kept our high unemployment figure down to its present level—and the figure is now 125,000—by the export of our workers to other parts of Britain.

I say no more now about the training measures for young people, to which the right hon. Gentleman referred, not because they are not important—I consider them to be of the greatest importance—but because this is not a matter which naturally comes into a discussion of the Budget proposals which are now before the Committee. In any case, legislation will be introduced on this subject and we can discuss it in greater detail then.

The Chancellor of the Exchequer, when talking about making use of human resources, said: It is the availability of manpower, and especially of skilled manpower, that sets the limit to our capacity to increase production."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 477.] That is true in theory, but, in practice, it is manifestly untrue. In Scotland and Northern Ireland there are human resources which have not been mobilised for many years. It therefore follows that we have not reached the limit of our resources there, and the same can be said for most of the north of England and, to a large extent, Wales.

One of the limiting factors in recent years has been the concentration of effort in too small an area of the country—the concentration of effort in the Midlands, London, and the South-East. There is no doubt that if growth industry had been better distributed throughout the country, we would have kept highly skilled personnel, the technologists and the technicians, in some of the areas of high unemployment, and we would have taken into industry in those areas a large labour force which does not sign on at the various employment exchanges.

The last time I looked at the figures for the run-down of jobs in Scotland I saw that we dropped by about 48,000 jobs, while the Ministry of Labour recruited only 24,000 people. Thus, 24,000 people simply disappeared. Again, if one considers the proportion of women at work in the South and the Midlands, one sees that the figure is very much higher than that in the north of England, in Scotland, in Wales, and in Northern Ireland. If the Government were to get a proper distribution of industry policy going they would mobilise resources which, at present, are not mobilised, and they would thus increase our capacity to increase production.

The President of the Board of Trade and the Chancellor of the Exchequer claimed that the Local Employment Act had been a great success. I can only say that the prescription offered in the Act has not effected a cure. The patient is worse than he was, but he is still alive, and so the Government say that the prescription has been successful. It may be that the fault lies in the Government's diagnosis being wrong in those areas of high unemployment. This applies to all the development districts, or all the areas as I prefer to call them, in which there is a high level of unemployment and in which there is a high proportion of older industries, some of which are declining and in all of which manpower is being considerably reduced because of technological developments which are taking place.

These are the areas which have not attracted new growth industries this century, and if we continue to deal with them as we have done in the past, that is, by trying to spill into them a little overspill from the growth areas in the South, we shall continue to find that in these older basic industries we shed male labour, but increase the number of women and girls employed in the new industries brought into the area. If the Minister of Labour looks at the statistics, he will find that in all these areas the number of males employed has decreased over the last ten years, while the number of females employed has increased. He may find that, nationally, there has been a net increase in employment, but the number of employed males has decreased.

The other point about these areas which depend on the older industries is that because no new growth industries have gone to them there is no demand for the scientifically trained manpower coming out of our universities. In Scotland, for example, more than half the science and engineering graduates never find jobs there. We do not get the new industries which call for their skills in research and development work. All the new design work is done in the South. The result is that only the simplest work is done in the development districts, and the educated manpower there is not sucked into industries that are being spilled there by the Local Employment Act.

If that is true, as I know it to be, it seems to be fairly obvious that if we are to deal with the problem of harnessing the human resources of this country in the interests of the whole population, there has to be a different approach to the whole subject of the distribution of industry.

The Chancellor, in his Budget speech, said something in explanation to those of his hon. Friends who want to see the duty on fuel oil removed. He said that, if he did that, it would make matters too difficult at present for the National Coal Board. He knows that very considerable financial burdens have been imposed on the Board over the years, burdens which would not have been put on any privately-owned industry.

The Coal Board, for a great many years, was not allowed to charge for its coal even the cost of production. The Government decided the level of coal prices, so the Board was obliged to make losses. From time to time it could not even meet its running costs out of income, and it most certainly could not meet the cost of capital investment out of revenue. It had, therefore, to borrow very heavily for all its capital investment, and was obliged to meet a loss of £70 million on imports of American coal.

The Coal Board now has outstanding borrowings of a little more than £900 million, on which it is paying interest of £42 million to £43 million a year. Half of that burden ought not to be lying on the Board. If the Chancellor were to agree to a capital reconstruction of the Coal Board so that, on behalf of the taxpayer, he might take that part of the burden which properly belongs to the taxpayer, the Board might be in a position fairly to meet any competition that comes along.

I say to the right hon. Gentleman that without capital reconstruction of the Coal Board he must certainly not proceed to remove the duty on fuel oil. We should also be reminded that we do not spend any scarce exchange on procuring coal in this country. It does not make very much foreign exchange, but it does not cost us anything.

In the Report of the National Economic Development Council, page 69, table 40, we see that imports of oil in 1961 cost us £483 million, that our exports of oil earned £93 million and that the balance of trade on oil was minus £390 million. By 1963, at the current rate of expansion, the Council tells us that our imports of oil would cost £589 million and that our exports would be down to £57 million, giving us a balance on oil of minus £532 million. This is quite a lot of money. There is something to be said for affording a little protection to the coal mining industry, which provides 70 per cent. of our energy requirements.

The Coal Board, up to now, has never asked for protection, but only not to be laid open to unfair competition. Every other industry basic to the well-being of this country is protected. On behalf of some industrialists, who want to see the duty on fuel oil removed, we must not remove it without having a look at the consequences. The National Union of Manufacturers and the Federation of British Industries have been recognising the unfair imposition that was put on the Coal Board by its being denied the right to charge the proper prices for coal for a number of years.

At present, consumers of coal, judging by the White Paper on the Financial and Economic Obligation of Nationalised Industries, published in April, 1961, say that the consumers of coal are paying a higher price than they ought to pay, and there ought to be a capital reconstruction of the industry. It is claimed that if we can get capital reconstruction of the industry, the Government could then see their way to take away the duty on fuel oil and all industry would then benefit from having a lower cost fuel, but I say to the Chancellor that he must not get rid of the fuel oil duty without first doing something to assist the coal mining industry.

The Chancellor's new measures to help the unemployment areas are free depreciation, particularly in connection with the building of new plant and the clearing of derelict sites. I have been told that free depreciation means a great deal to industrialists. I am not an accountant, and I do not know how much it will add up to, but I was amused by the President of the Board of Trade tailing us the other day what a benefit it would be to the industrialist who was able to write the whole thing off in twelve months. I have met a good many Scottish industrialists over the years, but none of them who could give me a picture of the economics of his undertaking led me to believe that he could write off 100 per cent. of the cost of establishing himself from the profits of one year's operations.

In any case, it is a change in the law by which they can write off more rapidly than a seven-year period. They will not be able to write off any more, but they can do it more quickly and this will be of benefit to them. I do not know to what extent this will be of help to them, but I welcome the change. I have advocated that there should be tax concessions but I think that it should have been by means of giving a more generous investment allowance in the unemployment areas than in other parts of the country. I welcome what has been done, but I am not sure that it will be sufficient to change the attitude in those parts of the country.

The second change is the fixed percentage grant for buildings and plant. Twenty-five per cent. of the cost of the buildings appears to many hon. Members to be a very generous offer. I ask them to remember, and I ask, in particular, the President of the Board of Trade to note, that the Board of Trade will be building factories, the economic rent of which will be 5s. or 6s. per sq. ft. I think that he will agree that he is offering these factories to industrialists at a rental of less than 3s. per sq. ft. Industrialists are not readily taking up these factories—not as readily as we would like them to do.

If an industrialist takes up a factory which has been built by the Board of Trade, he will be paying about half the economic rent of the factory and getting assistance equal to 50 per cent. grant towards the cost of providing the building in which he carries on his industry.