It falls to me to congratulate the hon. Member for Oxford (Mr. Patten) on making his maiden speech, which he did without a note, with great confidence, good will and an absence of controversy. My right hon. and hon. Friends will appreciate the hon. Gentleman's kind reference to Evan Luard and will remember Mr. Woodhouse who preceded him, and even the present Lord Chancellor who once represented Oxford.
I leave the hon. Gentleman with one paradox on which he might like to reflect. In Oxford there are two great industries—the university and the motor works. The motor works have to fight in the hard and harsh world of competition. The university, like all universities, is exempt from anyone asking it whether anything it does brings any return to anyone. Yet it is the professors who live in a secure atmosphere free from market forces who are usually the most forward in telling everybody else to face the harsh realities of life. If some of the professors in our universities, who have never been asked to justify any of the work that they do in economic terms, and who are quite properly maintained because what they do is worth while, were to appreciate the necessity of maintaining manufacturing industry even during the difficult years when market forces tend to contraction, we might have less of the two intellectual worlds in the United Kingdom that we now have.
Those remarks take me on to what I wish to say in the debate. My contribution will be brief because I appreciate that there are many hon. Members who want to speak about their constituencies. However, having twice been the Minister responsible for regional policy, I wish to make one or two comments.
The honesty of the Secretary of State for Industry is often commented upon. We have heard his analysis on an endless number of occasions. In the past 40 days we have had an opportunity to understand what his policy really means to the British people. The regions are not exempt from general policy decisions. The significant events that will take place in areas of high unemployment as a result of the first two months of the Government's policy will flow not only from the changes in the boundaries but from the cuts that will be made in public services and that are still being argued about in the Cabinet.
Significant events will flow from the raising of the minimum lending rate, which will have a bad effect on businesses in development areas. They will flow from the terminal grants for shipbuilding—two years and then withdrawal. Shipbuilding, like mining and parts of the steel industry, has always operated mainly in areas of high unemployment. The end of exchange control and the dismantling of controls over international industry, in so far as they existed, will have the effect of accelerating branch factory closures that many development areas have experienced so seriously in the past.
The failure of the Secretary of State, who is an attractive lecturer to the House on his own philosophy, is that he failed to make clear that the policies to which he is attached are to be implemented at a moment when the Western industrialised world is probably dipping from recession into a slump that many world economists believe will continue throughout the first part of the 1980s.
Why does the House imagine that President Carter is so worried about the oil situation? He is worried not only about oil supplies but about the impact that the present situation will have on the United States dollar. OPEC deficits will build up again as a result of the increase in the oil price. There will be the influence of the IMF in forcing countries to cut public expenditure. These factors will tip the world back into a severe recession. As we know very well, the parts of Britain most affected when the country is in recession are the development areas. At this moment a policy that was born out of the 1930s slump is to be whittled away, if not dropped, as we enter a serious world situation made worse by the fact that Britain and British industry have suffered from underinvestment over a long period. When profits were high, companies said that they did not need to invest. When profits were low, they said that they could not afford to invest.
As a result of the clutch of policies announced since 3 May we shall witness substantially higher unemployment. I wish that the Secretary of State, who is so keen about eliminating waste, would take account of the loss of production due to even our present levels of unemployment, which runs to about £10 billion worth a year. I wish that he would consider the cost of unemployment pay and redundancy pay, which comes to about £4 billion a year. If the forecasts are right—they are quite cautious ones—and there are 2 million unemployed in 1980, the public sector borrowing requirement will have to take account of even higher increases arising from unemployment.
The contraction of British manufacturing industry will be made worse by the cuts in support that have been announced, by lower public expenditure, by higher imports that are coming in as a result of the oil revenues and by keeping the pound high. Hon. Members, especially those representing development areas, are bound to be concerned because if there is a world recovery so much damage will have been done to our manufacturing industry that when British industry tries to re-equip there will be a flood of imports and a short fevered boom followed by a balance of payments crisis that will blank off British recovery at the moment when the recovery of some of our major competitors can go ahead.
It would be wrong for this debate to continue without this being plainly said. When our manufacturing industry has been cut back in a way that is inevitably going to follow present Government policy, including regional policy, and we must re-enter the world oil market when oil will be $60 a barrel, we shall not have the money to pay for it. This country will be confronted, as were other countries in the past, with emigration of our skilled people as the only way in which we may manage. The whole of development area policy was designed to check as far as possible the emigration of people from Scotland, the North-East and the North-West to the South of England. There will be an accelerated export of capital, for the Government have carefully said that they want profitable industry at home with no restraint on the export of that profit as a result of lifting exchange controls.
The House would be foolish if it did not look one stage ahead at what can happen when unemployment levels reach the levels we may experience, on the basis of present policies, before the 1980s are out. Anyone who thinks that unemployment does not matter any more—as there is neither starvation nor destitution as there was in the 1930s—misunderstands the disruptive effect of unemployment, even in a society that has minimum levels of unemployment pay. It is divisive, it creates bitterness and it is destructive of business confidence. If business men see the social disruption that will inevitably follow from the Government's divisive policies, they will not invest in the regions of this country. They will seek greater security elsewhere.
We should be foolish not to consider the possibility that if the Government's industrial policy has the effect that is widely expected we might end up, in some respects, in a law and order situation. Anyone who looks at Northern Ireland, where there are a sectarian dispute and high levels of unemployment, can see what social disruption does to an area that is deprived of hope, employment for its youngsters, and a perspective for its people.
The policy will fail economically, industrially and morally. Many people—I am one of them—believe that high public expenditure is a moral obligation on a society and not just something that must be justified by its economic return. Some people believe that maintaining proper standards of education, health, housing and the environment is what a civilised society owes to its own people. If there is a scaling down, as is expected, of the levels of public provision, which over several generations people have been led to expect, and if there is a withdrawal of the Government from the economy on the basis that market forces will necessarily benefit the community as a whole, the opposition to the Government's policy will be much more formidable than they imagine.
Perhaps the Government are dreaming of a danger, as they see it, of a re-run of the 1970–74 confrontation. It will be much more than that. The people of this country are entitled to expect that the Government that they elect, whatever their political philosophy may be, will see it as their job to try to maintain full employment. They expect the Government to ensure that areas adversely affected by market forces—which may affect the prospects of an industry but for which there is no moral responsibility on those who work in those industries—are given a perspective of growth and development comparable to that in areas where, perhaps for other reasons, market forces are working better. People are entitled to expect that the benefits that flow from those areas of the country where industry is successful shall be deployed, in part, in maintaining and expanding public provision in other parts of the country.
Indeed, if we consider the 1930s, to which I referred on a previous occasion, it was massive public expenditure, in the form of rearmament, that ended the slump. Nobody wants to return to that solution. However, the Government, at exactly the wrong moment in our history, have decided to cut back on public expenditure which alone can bring our own people back to employment in the whole country and especially in the development areas. The Government are setting us on a course that will deepen the depression. shut out the hopes for young people leaving school, make it harder to develop the new technology, and reduce the quality of life.
In the end the mandate argument will not be sufficient to overcome that criticism, for a mandate is a wasting asset. No one disputes the outcome on 3 May. The Secretary of State for Industry, as the main architect of this policy, is trying to reverse a consensus around which many generations of Ministers have been working to improve the lot of our people. The niggling, mean policy of scaling down regional aid will cost him dear when he and the Government have to account to the people who elected them.