Northern Region (Economic Situation)

Part of Prayers – in the House of Commons at 12:00 am on 19th February 1971.

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Photo of Dr Jack Cunningham Dr Jack Cunningham , Whitehaven 12:00 am, 19th February 1971

I beg to move, That this House calls on Her Majesty's Government to increase public investment and industrial incentives and to restore confidence in the Northern Region, thus activating full employment and a better environment. Before speaking to the Motion, it is right for me, as the first speaker from this side of the House, to record our deepest regret at the death of one of our cherished colleagues, Arthur Skeffington. He has recently been national Chairman of the Labour Party and for many years has been an outstanding Member of the House. His untimely death will be deeply mourned by everyone in the Labour movement. We are very sorry to see him go.

I wish to call attention to the deteriorating economic situation in the Northern Region resulting from the doctrinaire weakening of regional policies by Her Majesty's Government. I have tabled the Motion in general terms so that we may have a debate about regional policies, because my constituency is part of the Northern Region and is directly affected by regional policies pursued by Her Majesty's Government. Regional policies are vital to the whole framework of society within my constituency, where unemployment is now more than twice the national average.

Many people will regard the subject of this debate as a small rider to yesterday's debate about the general economic situation, and this kind of thinking has bedevilled regional policies for years. The idea that regional policies should be an addendum or an afterthought to the general economic policies of central Government is nonsense.

We welcome the presence of the Secretary of State for the Environment. I understand that among his other accomplishments he speaks on behalf of the Northern Region in the Cabinet. I am not quite sure on what premise he does that but, nevertheless, it is reassuring to know that a man of some substance in the Cabinet—and, goodness knows, there are not many of them—is speaking on behalf of the Northern Region. He also has much wider responsibilities, of course, for the whole framework of regional planning and the development of regional planning policy, and I want to say some thing more about his duties later.

There never has been any argument in the House about the existence of the regional problems. They are intractable; they have been with us for decades, and both sides of the House have said, when in government, that they were determined once and for all to solve the regional imbalances which have existed in Britain for so long. Various attempts have been made. This debate is about the different philosophies employed by the two sides of the House and the different policies which have been followed—in particular, how these differences have affected the Northern Region and my constituency.

The debate centres on the argument of intervention by the central Government in industrial development and in industrial affairs in general. The opposite view—the non-intervention view, the market forces argument, which we hear so much about from the Government—is incompatible with any realistic policy for development in the regions. This is crucial to the whole argument. Any Government who do not believe in intervention in industrial development cannot possibly hope to pursue realistic regional policies.

Why should we have intervention? It is a good question. The very impracticable nature of the regional problems suggests that positive action by the Government must be taken. Market forces patently have not solved the regional problems. Indeed, those same market forces have created the other side of the coin in the prosperous areas of Britain in the West Midlands and the South-East, where we have manifest overcrowding and over-utilisation of the social capital of those regions. It is no accident that the urban problems which have developed there—the problems of racial tension, housing and wage-cost inflation—have arisen in those regions where market forces have been allowed to run freely and unbridled.

It is interesting to note, in talking about population, that some estimates say that, by 1990, the population in the South-East and the West Midlands will have increased by possibly up to nine million. This is a staggering increase when one sets it beside the social problems which already exist in those areas, and it will take a very brave Government, and a Government with full commitment to overall planning of the economy on a regional basis, to arrest this bulge, which is rapidly coming in the South-East and the West Midlands, and to create a more evenly balanced growth throughout the United Kingdom. We can learn many lessons by looking at what has happened in the United States, where there are tremendous problems of urban renewal and of ghettoes simply because of the completely unplanned nature of growth.

It is well known that, for every new job created in a growth area, the income multiplier in effect produces approaching three times the actual wage of that job in terms of extra growth through services and the like. This is important. Until we can provide the situation where higher paid jobs going into the development areas create all these elements of growth in the mini-economies of the regions, we shall not solve the problem.

True regional policies must involve quite strong and wide-ranging Government intervention. There can be no argument about that central fact. I want to say something now about the kind of policies which were pursued by the last Government. I shall pick on only certain of the main features, because no doubt my hon. Friends from the Northern Region will be going into these policies in greater detail.

First, and probably most important, we had the first commitment to any attempt at regional planning. The structure was not perfect—we all acknowledge that fact—and this is where the right hon. Gentleman has such an important rôle to play. We may need a new structure to develop adequate regional planning. That is not in dispute. What is being argued about is the very need to maintain and develop such a structure. I have no doubt that the right hon. Gentleman will be giving us his views on that.

Apart from the creation of this structure for regional planning, we had direct intervention in the industrial situation in many ways. We had strict control of industrial development certificates; we had direct investment grant payments; we had the regional employment premium—to name three of the most important aspects of intervention in industrial development. Coupled with this, we had a high level of general public expenditure in the development areas. Nevertheless, in seven of the basic industries, mainly in the development areas, in the same period there was a decline in employment of almost 750,000 jobs, and it is against this background of declining employment in our basic industries that we must objectively judge the effects of the Government's policy in that period.

By 1969–70, the amount of aid in total to the development areas was running at about £310 million per annum and still—let us be quite frank—the problems remain. No one on this side could realistically claim that in these areas the problems of the Northern Region or for that matter of Scotland or Wales had been solved. I do not think that anyone has ever made this claim. The claim was made that the foundations were being laid for the solution of these problems, which is much more important.

There are major disparities not only in employment but in housing and in the provision of health and education facilities. A major effort was made to hold the employment situation in the hope that, with the progression of the Government's policy, the whole infrastructure of the regions could later be improved. Nevertheless, there were significant changes, even in that period.

Perhaps I might quote a few statistics. Public investment in new construction in the South-East in 1965–66 represented 30·9 per cent. of the United Kingdom total. In the Northern Region it represented only 5 per cent. of the United Kingdom total. However, by 1968–69, the percentage in the South-East was 29·7, a small decrease. In the North of England it was 6·9, representing a significant increase of 38 per cent.

In terms of industrial development certificates and job creation, in the five years from 1960 to 1964, I.D.C.s in the development areas numbered 2,470. This represented 19·4 per cent. of the Great Britain total. Between 1965 and 1969, the percentage rose to 23·1 of the Great Britain total. That represented a significant increase of 20 per cent. The estimated additional employment in the region resulting from the increase between 1960 and 1964 was 70,700 jobs. That figure compared with the total of 96,100 in the five-year period from 1965 to 1969, representing an increase in additional employment of 36 per cent. These are significant improvements in the share that the Northern Region obtained as a result of these policies, and even better statistics can be quoted for Scotland, Wales and other regions.

When this situation set against the background that in, an almost similar period, the decline in employment in existing industries in the Northern Region topped 100,000 jobs, one has some measure of the problem. My constituency is situated on the western side of Cumberland. It is a very odd constituency in that it contains some of the most beautiful parts of the Lake District and also some very old industrial establishments and run-down towns and villages, where worked-out mines are a complete contrast to the surrounding environment.

In the period to which I have referred, there were two disastrous closures in my constituency. Millom Haematite collapsed and 1,000 jobs were lost in a town where only about 7,000 were employed. That was a staggering blow to an isolated community which is 30 miles away in one direction from Whitehaven and 30 miles away in the opposite direction from Barrow. Today, 2,000 men in that town do round trips of 60 miles to work, very often for low wages. The impact of their travelling expenses on family incomes in the area is extremely serious.

At about the same time, Harrington Colliery closed, which meant that another 1,000 jobs were lost in one fell swoop in a constituency of 50,000 electors. Those two major employers of labour have not yet been replaced, so I do not claim that even in my constituency the projects and policies which were being pursued have solved the problem. However, we have the projected growth and the coming development at Lillyhall, on the boundaries of my constituency—it is in fact in the constituency of my right hon. Friend the Member for Workington (Mr. Peart)—where several hundred new jobs are being created. I might add that currently in my constituency some 1,800 people are still out of work. It is perhaps as well that the developments at Lillyhall have already been given the go-ahead, in view of the changes in policy that have been announced. Had they been known, one wonders whether they would have gone there at all.

Employment is not the only problem. Family incomes in the regions and, consequently the economy of the regions, are also a problem. If I may make another comparison, in 1967–68 the average family income in the South-East was £32.65. In the Northern Region, it was £26.65. There is a staggering difference between average family incomes in different parts of the country. These basic facts of family income, employment opportunity and educational opportunity are matters about which any Government committed to realistic regional policies should be thinking. In this six-year period. there was also a tremendous expansion of the industrial training problem. The number of establishments doubled. The number of places in those establishments trebled.

We on this side of the House ask ourselves the reason for these changes in policy. This is the salient point. We have been told that a thorough-going review of the situation is in hand. Investment grants and R.E.P. began only in 1967 and, when we have asked for statistics, we have been told that they are not available. It is an odd kind of review which is going ahead without the latest statistics.

The Gracious Speech promised to … stimulate long-term growth in the less prosperous areas by increasing their economic attractions and improving their amenities."—[OFFICIAL REPORT, 2nd July, 1970; Vol. 803, c. 46]. There were immediate moves to alter the incentives on offer in the regions. They have caused a crisis in confidence. People no longer have faith in the Government's determination to solve the problem by means of industrial expansion in the regions. There has been a slackening of resolve in respect of industrial development certificates. In addition, we have seen the scrapping of investment grants and the announcement of the Government's intention to scrap R.E.P. which was worth £109 million last year. They have decided to change to investment allowances, which are not directly related to the number of jobs being created. This is important, since we had several statements from senior Ministers before and after the election saying that value for money was not being achieved by the previous policies. But at least with investment grants there was some control, whereas with investment allowances there is no relationship to the number of jobs.

Between 1964 and 1970, the rate of new jobs going to the Northern Region had virtually doubled, yet the Secretary of State for Trade and Industry, who, I understand, will not be attending this debate, told my right hon. Friend the Member for Bristol, South-East (Mr. Benn): The reason for the change of policy was that quite evident failure of the policies pursued by the last Administration.… The faults were quite evident to us all. The changes were, therefore, urgent and were carried out urgently. As a longer-term measure, the whole review of the structure of regional policy is being carried through."—[OFFICIAL REPORT, 8th February, 1971; Vol. 811, c. 7.] If the faults were self-evident and if it were an abject failure, it is interesting to pose the question: why, in his announcement yesterday, has the Chancellor effectively extended the policies? First, we are told by the Secretary of State that they had failed and that this was self-evident. Then yesterday the Chancellor told us that he was actually extending them.

Cmnd. 4516, "Investment Incentives", tells us that the cost of providing jobs is too high. This was before any review had been completed. So the question is again posed: how do we know that the cost is too high until we have a thoroughgoing review of the effects of past policy?

We have referred to these changes as doctrinaire, because of quite categorical statements that a future Tory Government were not prepared to invest in the regions at the current level. This was a euphemism for saying that less money would be provided.

We have tabled this Motion because of the increasing rate of unemployment in the Northern region and in other development areas. There have been fewer inquiries for development sites. I can quote several people who are not normally known as sympathetic to the Labour Party. Mr. Tom McIver, a director and executive of Tyneside Shipbuilders, is quoted in the Evening Chronicle of Saturady, 13th February, as saying: All we ask is that Mr. Heath and his government take a realistic view of the situation, that they are far-seeing enough to ignore doctrinaire prejudices. That is not a statement from any Labour politician. It was a pious hope. The doctrinaire decisions were taken before the right hon. Gentleman even came to office.

There were rumours recently about a development in the British Steel Corporation. The Sunday Times of 14th February states: £1,000 million steel plan for the South-East coast. It is incredible when one compares that with the fact that a projected 3,000 jobs will be lost in the steel industry on Teesside alone in the Northern Region by the end of this year. There will be more on this point about the environmental implications later.

The movement of manufacturing industries since the war highlights, quite succinctly, the different results from different Government policies. In the period 1945–51, movements involved 373,000 jobs, of which 237,000–66 per cent.—went to the regions. In the period 1952–59, 274,000 job movements were involved, of which 79,000–29 per cent.—went to the regions.

Experience in my constituency highlights this trend. Not one major employer of labour in my constituency has gone there under a Tory Administration. It is beyond doubt that the changes in policy have already had a serious effect. Was yesterday's announcement the final word? Was this the thorough-going review which we had been promised? Or is there more to come? We should like to hear something about that.

The extension of special development areas is welcome. So is the improvement in building grants. But this is not the solution. The solution must involve a complete commitment from the Government to embark on regional policies of planning and of intervention in the industrial scene. There can be no other way to solve the problem.

Any talk about one nation—this kind of glib statement which we hear about creating one nation—when at the same time the Government are acquiescing in the almost three-quarters of a million unemployed is nothing more nor less than cant. Incentives and controls alone will not work. We need growth, as was highlighted in yesterday's debate. I do not intend to repeat what was said then.

We also need a better and deeper statistical analysis of the effect of regional policies. When we ask questions on this score we are told that at sub-regional level no statistics are available. Again, a very odd survey, a very odd examination, must be in hand which cannot produce sub-regional statistics for an area like, say, West Cumberland.

We can learn some lessons, too, from policies pursued by the Common Market countries, particularly in looking at schemes such as the Taranto-Brindisi area which has some similarities with West Cumberland in that major industrial complexes were established there but no smaller industrial infra-structure developed. I ask one of the Government's Front Bench spokesmen for at least a commitment to publish a statistical analysis of either a region or a subregion affected by development area policies so that we can have an objective assessment. There will no doubt be good arguments for change—no one would deny this—but let us see the evidence and let us have change based on some concrete data.

We are talking about the regions of this country in which 30 per cent. of the population resides. We are not talking about some odd appendages to the Metropolis, but about 30 per cent. of the total population of this country. We need constructive policies. We need more help for industries to evaluate the cost of moving to the development areas, for instance, and we need the transfer of complete units, not depôts, as was instanced by my hon. Friend the Member for Sedgefield (Mr. David Reed) in his maiden speech.

We also need regional planning in all its aspects upgraded and moved more closely towards the centre of the general economic policies of any Government. Let us make no mistake: the last Government were equally at fault in this respect. They were too far from the centre of activities, but at least we had a firm commitment for the first time to set up the framework necessary to do the job.