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Orders of the Day — Regional Policy

– in the House of Commons at 4:49 pm on 8th July 1981.

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Photo of Mr Eric Varley Mr Eric Varley , Chesterfield 4:49 pm, 8th July 1981

I beg to move, That this House condemns Her Majesty's Government for pursuing disastrous economic and social policies which have reduced overall financial assistance to the regions, crippled local authorities and increased unemployment to intolerable levels in every region of the United Kingdom.

When we in the Opposition decided to use some of our Supply time for this debate, we particularly wanted to focus attention on the massive rise in unemployment in every region of the United Kingdom. We were surprised, therefore, that the Government regarded it as exclusively a Department of Industry debate, although naturally we cannot determine who speaks for the Government in response to our motion. In normal circumstances, my right hon. Friend the Member for Salford, West (Mr. Orme), who is, of course, here, would offer his assessment of industrial affairs when the Secretary of State for Industry opened for the Government.

In a debate on this subject, it is instructive to look back at what the Conservatives promised at the last general election. On this, as on so many other issues, the Government would no doubt prefer us not to do so. Fortunately, there are still in existence a few copies of the Conservative 1979 election manifesto. No doubt, they would like to take up all those copies and turn the manifesto into a non-document, just as they tried to turn the former Conservative Prime Minister into a non-person.

I have retained my copy of that manifesto. On the subject under debate today, it says: Too much emphasis has been placed on attempts to preserve existing jobs". I think that the whole House would acquit the Government of any guilt on that charge. The manifesto continues, however: We need to concentrate more on the creation of conditions in which new, more modern, more secure, better paid jobs come into existence. This is the best way of helping the unemployed and those threatened with the loss of their jobs in the future.

What conditions have the Government created? They are more than two years of historically high interest rates and a policy on exchange rates surpassing anything that we have known in the past, pursued with such incompetence that the prolonged period when they were unacceptably high has now been followed by a collapse in the rate of the pound against the dollar, with the Bank of England recently moving in to provide support. After 26 months, the internal inflation rate is still higher than the rate that the Prime Minister inherited from the Labour Government and may now begin to rise even higher following the collapse of the pound against the dollar. There has been a reduction of 18 per cent. in manufacturing investment in the Government's first full year and an overall reduction of 12 per cent. There has been a reduction in industrial production of 13·2 per cent. since the Government came to power and a devastating reduction of 17 per cent. in production by manufacturing industry.

The latest official figures published this week by the Central Statistical Office show that living standards are now falling, that personal incomes rose less in the first quarter of this year than at any time in the last 10 years, and that the increase in average earnings of those at work has been almost neutralised by the reduction in incomes of the additional number of people thrown out of work. Sales in the shops are being funded more and more by savings and savings in relation to incomes are falling.

That is what the Government have done to carry out their manifesto promise to create conditions in which new, more modern, more secure, better paid jobs can he brought into existence. It is therefore not surprising that the Government have also broken their pledge on industrial aid for the regions. The manifesto stated that "government can help to ease industrial change in those regions dependent on older, declining industries. We do not propose sudden, sharp changes in the measures now in force.

When the Government came to office, they claimed that they would concentrate regional assistance to make it more effective. That is the message of the amendment that the Secretary of State will be moving later. It is, however, a grotesque distortion of the English language, because on the Government's interpretation the word "concentrate" simply means "reduce". They have reduced the areas of the country which qualify for regional assistance from about 40 per cent. to 25 per cent. They have reduced regional development grants in development areas from 20 per cent. to 15 per cent. They have failed to increase grants in special development areas and are wiping them out in the intermediate areas. Although the Government claimed that in the areas whose intermediate status is to be removed they were easing the transition by not ending that status until next year, regional development grants were abolished immediately. If there were any potential investors for the assisted areas, the Government scared them off straight away with the Secretary of State's statement on 17 July.

One of the areas affected by the removal of intermediate area status is Warringon, whose regional policies the Conservative candidate has no doubt considered long and deeply over the past two years in the traffic jams while driving his No. 13 bus down Finchley Road.

The emasculation of the National Enterprise Board has been a further blow to areas losing intermediate area status. [Interruption.] I do not know what the Secretary of State for Wales is saying. If he wishes to come to the Dispatch Box and take part in the debate, he is welcome to do so. I do not have time to consider in detail his record in Wales, but, given the destruction that has happened in Wales, he certainly has no reason to sit there and chatter. Perhaps I should, indeed, deal with Wales later in my speech.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I was merely commenting on the extraordinary contempt in the Labour Party for bus drivers as candidates. That is, no doubt, part of the new line being put over by the Labour Party.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

My comment had nothing to do with that. I know, however, that the Secretary of State for Wales has nothing to be proud of in his record of giving regional or, indeed, any kind of assistance to Wales, but I shall return to him later.

Photo of Mr Donald Anderson Mr Donald Anderson , Swansea East

It may help my right hon. Friend to know that in March 1980 the Welsh Office estimate of unemployment was 125,000 at its peak. It is now more than 150,000 and rising. That shows the extent to which the Government are wholly out of touch with and ignorant of the chaos that they are causing.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I entirely agree. It is amazing that the Secretary of State for Wales dares to show his face at a debate such as this.

Under the Labour Government, the National Enterprise Board opened an office in Liverpool, where I insisted that it be located. Under the Secretary of State for Industry's new guidelines, however, the regional role of the National Enterprise Board has been narrowed to the assisted areas, which, again, will exclude Warrington. The Government amendment to be moved today claims that financial assistance … in the regions continues at high levels". What they describe as concentration of regional assistance, however, has been a 25 per cent. reduction in money spent on regional development grants, a 30 per cent. cut in regional and general industrial support, and a cut of nearly 50 per cent. in selective assistance to industry in assisted areas. All those figures are taken from the White Paper published on 10 March this year, the same day as the Budget.

The impact on the deprived and declining areas of the country has been shattering. With the grave and serious exception of the West Midlands, the biggest job losses have occurred in regions where unemployment was already high. Comparing last month's unemployment figures with those in May 1979, the following frightening statistics emerge. The unemployment rate has risen in Yorkshire and Humberside from 5·4 to 11·9 per cent., in the North-West from 7·3 to 13·5 per cent., in Scotland and Wales from about 7½ to more than 13 per cent., in the Northern region from 7·9 to 14·9 per cent. and in Northern Ireland from 10·6 to 18 per cent. Again, some areas have suffered particularly severely.

Since the Government came into office, unemployment in the country as a whole has risen by 106 per cent. In Warrington, it has risen by a devastating 180 per cent., nearly twice the national rate. When Labour left office, unemployment in Warrington, at 5 per cent., was below the national average. It is now well above the national average at 12·8 per cent.

The latest figures in that town now show that unemployment stands at 8,737. The number of vacancies is only 472. Therefore, in that once-prosperous town 19 unemployed people are now fighting for each available vacancy. What is more, it will get very much worse throughout the country.

The Manpower Services Commission, the Government's body, forecasts that by 1983 unemployment in Yorkshire and Humberside will be 12·4 per cent., 16 per cent. in the Northern region, 16·3 per cent. in Scotland and—if the Secretary of State for Wales is listening—17·9 per cent. in Wales. That is the forecast of the MSC based on the Government's unchanged policies.

There is another region of the country that cannot be found on any map—the region of the young. When the Government came into office, only 9 per cent. of all young people under 18 were unemployed. The latest figure is 19 per cent., and the MSC forecasts that by this time in 1983, 68 per cent. of all young people under 18 will be out of a job. That will be the Prime Minister's achievement after four years in office. She will have thrown two-thirds of our young people under 18 on to the dole.

The Government's achievement in the country as a whole is bad, but the situation in Warrington proportionately dwarfs the national increase. The number of unemployed under-18s in Warrington has been multiplied more than fivefold since the Government came into office. In May 1979, the figure stood at 214. Today, it is 1,106. A total of 2,939 Warrington boys and girls become eligible to leave school this month. What prospects do they have?

The Secretary of State for Industry is to speak next. I am told that when he went to Paris a short time ago to meet his opposite number in the last French Government, he said that the object of both of them should be to make their jobs unnecessary. It is true that British workers would have been far better off had the office of Secretary of State for Industry been left vacant during the past two years. In fact, some people would say that to all intents and purposes it has been, but they are not the people who have had to put up with the muddling and the meddling of the Secretary of State. An outstanding chairman of the Post Office was driven to resignation by the Secretary of State's arbitrary borrowing limits. The whole of the NEB was driven to resign. A total of £2 million was spent to hire a chairman for the British Steel Corporation, with the job specification of taking the axe to the British steel industry. Unreal targets and unfair financial limits were forced on British Shipbuilders, forcing up unemployment in some of the country's most vulnerable areas.

All that is bad enough, but it is far worse than that, because in a debate on regional policy two years ago the Secretary of State offered this prospectus: I think that the House will agree with the proposition that, in general, the assisted areas will thrive only if the economy as a whole thrives. It is intensely in the interests of the assisted areas that the economy as a whole should thrive. That is why the Government's policy of improving the economic climate to encourage decision-taking, risk-taking and enterprise is so important to the assisted, as well as to the non-assisted, areas."—[Official Report, 24 July 1979; Vol. 971, c. 367.] Had the right hon. Gentleman offered that kind of prospectus as a business man to a company meeting, no doubt he would now be assisting the fraud squad in its inquiries.

But the Secretary of State for Industry made yet another extraordinary statement about regional policy also in July 1979. It seems that whenever we discuss regional policy, the right hon. Gentleman is afflicted with midsummer madness. He said: I must emphasise that regional differences will not be reduced simply by redistributing money from taxpayers".—[Official Report, 17 July 1979; Vol. 970, c. 1307.] I suspect that he will say the same this afternoon, because words like that are included in the amendment.

However, the Government are redistributing huge sums from the taxpayer. They are taking billions of pounds just to fund unemployment, and there is no less cost-effective way of using taxpayers' money.

I challenge the right hon. Gentleman to supply two sets of figures for each region of Great Britain. If it is difficult for the right hon. Gentleman to do so now, perhaps the Under-Secretary will do so later. First, how much is the right hon. Gentleman's Department spending on regional assistance? Secondly, how much are the Department of Employment and the Supplementary Benefits Commission paying to the victims of this non-regional policy, and how much tax revenue is being forgone by the Exchequer?

No wonder the right hon. Member for Sidcup (Mr. Heath) describes the Government's policy as "incomprehensible", because it makes no sense. No wonder he describes the impact on the social system as "disastrous".

The Conservative Party likes to prate on about law and order as though in some way it was their proprietor. The greatest enemy to law and order is unemployment, and the greatest producers of unemployment are the Government. The right hon. Member for Sidcup is right to demand a change in policy. We need a change in national economic policy. We need a genuine and properly focused regional policy, not half-baked enterprise zones which, even in the unlikely event that they will fulfil the Government's optimistic hopes of producing jobs, will produce only a tiny proportion equal to only a fraction of one week's redundancies. We need positive policies, not the panicky fumblings to which the Government are now reduced.

We had a pathetic display from the Prime Minister at yesterday's Question Time, which showed that she has little idea of what is going on, and even less idea of what to do about it. The humiliation that awaits her constituent in Warrington a week tomorrow is only a foretaste of what she can expect when the whole country gets a chance to deliver its verdict.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East 5:08 pm, 8th July 1981

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, noting that Government expenditure on financial assistance to industry in the regions continues at high levels, supports the Government's policy of concentrating regional assistance on the areas of greatest need; notes that regional assistance is provided at the expense of individual and corporate taxpayers throughout the whole of the United Kingdom; and believes that Government interventions are less important than the efforts of existing and new managements and their workforces to be competitive and so to secure prosperity and fuller employment in the regions.'.

The right hon. Member for Chesterfield (Mr. Varley) made a relatively brief speech. I hope to copy him because this is a short debate. He went through the usual catalogue of unemployment rises—legitimate in our debates—but it would have been far better had it been accompanied by some serious analysis of why successive Governments, not just the present Government, have presided over massively rising unemployment throughout the last 15 to 20 years. The right hon. Gentleman's speech would have been better if he had given us a serious alternative to the policy found in the amendment to the Opposition's motion. Surely the right hon. Gentleman does not think it practical simply to suggest that, given a bit of good will, the unemployed could be put to work. What would they work at? Would they work voluntarily, or does the right hon. Gentleman have some form of compulsion in mind? What would they make? Would the Government have to identify the market that they would serve? Where would the money come from?

It is simplistic to a degree to imagine that for the cost of unemployment benefit people could be put to work, with all the overheads, administration, raw materials, transport and costs that would be involved.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I shall not give way as I wish to be brief and to allow as much time as possible for hon. Members to speak.

The tone of the right hon. Gentleman's speech was that the only difference between the two parties was their intentions. He implied that the Opposition had good intentions towards unemployment and that the Government did not. If it were simply a matter of good intentions, why did unemployment rise when the Labour Party was in office? It is true that unemployment has risen by about 102 per cent. since the general election. I admit that the peak of unemployment has probably not been reached. It will peak, flatten and then begin to fall. However, we must be approaching the end of rising unemployment—[HON. MEMBERS: "Why?"] The figures show that from month to month in the past four months the rate of increase in the number of registered unemployed has declined sharply. That is solid evidence. It does not follow that one can reliably depend on an extrapolation of the same trend. However, month by month for four months we have seen a declining rate of increase in unemployment.

Under this Government unemployment has risen by 102 per cent. That is a depressing figure. However, the right hon. Gentleman spoke as if the facts under a Conservative Government were far worse than the facts that appertained when the Labour Party was in office and when the right hon. Gentleman had my job. When measured on the same basis—from the lowest point to the highest point during five years of office—unemployment under the Labour Government rose not by 102 per cent. but by 165 per cent.

Given the problems that both Governments faced, should not the right hon. Gentleman have a little humility? It is a question not of which party cares more but of which party can make available to a Government of any colour the analysis of and cure for rising unemployment. For 20 years Britain has suffered from rising unemployment.

This debate focuses on the regions. It is a truism that the regions do better in terms of jobs when the country does better. It is also a sad truism that we are trying to help much the same regions in terms of geographical area as our fathers tried to help 40 or 50 years ago. So far, the treatment administered by both parties has not been notably successful.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

It has been successful.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am speaking in general terms. My hon. Friend has made a legitimate correction. Treatment appears to have brought some benefit to some places, but in general the assisted area map is much the same as that found 40 to 50 years ago.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The right hon. Member for Chesterfield charged the Government with departing from their manifesto commitment. We promised that there would be no sudden change in regional policy. We have not made a sudden change. We have given three years' notice of the change in status and we are keeping to that. Moreover, it was obviously sensible to concentrate assisted area status help and to reduce it from the 44 per cent. of population covered when the Labour Party left office to the 25 per cent. of the population covered today. No hon. Member who sits for a constituency in a special development area can disagree privately, whatever he may say publicly, with that judgment. There will be more help available to assisted areas from incoming or expanding industry, the smaller the proportion of the map that is covered by them.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am sorry, but I shall not give way as I have refused to give way to other hon. Members. In fairness, I must ask my hon. Friend to accept that.

We have reduced the number of areas being helped and we have concentrated the help given by taxpayers—admittedly a reduced amount—on those areas that are most in need. However, we have kept the proportion of investment met by the taxpayer in the worst-off areas the same. The motion suggests that our policies are crippling local authorities. On the contrary, some local authorities are crippling firms and, consequently, losing jobs in their areas through their rate increases.

The right hon. Gentleman teased me, the Government and, in particular, my right hon. Friend the Secretary of State for Wales. Indeed, my right hon. Friend has taken the trouble to come to the Chamber. The Government have mustered far more right hon. and hon. Members on the Front Bench than the Opposition have mustered on their Front Bench. The right hon. Gentleman teased us and said that we had not fulfilled our declared intention of creating new and more modem jobs. However, there is tangible evidence that such a change is being made in Wales. Wales is visibly changing from a narrow industrial, agricultural and mineral base into—[HON. MEMBERS: "A desert."]—an area with a much broader industrial base. I am delighted to say that the reputation of Welsh management and of Welsh work forces is such that many overseas companies are moving into Wales. Their inquiries show that there is substantial interest in Wales.

The right hon. Gentleman not only ignored the unemployment figures that prevailed when his party was in office but spoke as if regional grants and help from the taxpayer were magic wands. Objective studies, carried out not by political parties but by academics, commissioned by the Department of Industry—which the right hon. Gentleman once presided over—show that, at most, regional policy produced 20,000 more jobs a year in the regions in the late 1960s. That is not a small figure. In the early 1970s the figure was 11,000 more jobs a year.

Hon. Members should realise that those were extra jobs not in the United Kingdom but in the regions. They may well have been redistributed from other parts of the country, particularly from the West Midlands. That area has changed from the powerhouse of the economy into something nearer the industrial desert that Opposition Members refer to in connection with Wales.

Industrial development certificate control—which we have relaxed—steered jobs elsewhere that might have gone to the Midlands and to the South. Those jobs would have made those areas so busy and prosperous that, in the interest of employees, work would have had to go to the regions. In addition, raising the taxes or borrowing the money to pay for the regional grants must have destroyed other jobs in the economy, including jobs in the regions.

The regional grant system may do some marginal good, but at a cost. The Opposition and those of my hon. Friends who lay such enormous emphasis on whether their constituency comes in an assisted area, and, if so, in what grade of assisted area, misunderstand the importance of regional policy—whether under a Labour or a Conservative Government.

My hon. Friends and I in the Department of Industry receive many delegations, all sincere, trying to persuade us to change the status of their areas. We do not begrudge the time involved. We try to study objectively all cases made and come to decisions within our statutory requirements. However, regional policy is based on relativities between one area and another. It is the relative economic health of any area compared with all the other areas that must be assessed, difficult though that is, in deciding where to use taxpayers' money fairly and effectively.

I want to make a point that I do not think has been made before. All the money made available in regional policy—the regional development grant and the special financial assistance—amounts, one would assume from the emphasis put on it, to a vast proportion of manufacturing industry's expenditure. The fact is, however, that that expenditure amounts to between 3 per cent. and 4 per cent. of the wage costs of industry in the regions. That means that if an area loses some form of assisted status and its entitlement to more or less of the grant, a relatively small adjustment in productivity to reduce by an equivalent amount unit labour costs would make that area just as competitive and would help as much as if it had continued to receive money from the taxpayer.

Photo of Mr Robert Ellis Mr Robert Ellis , Wrexham

Will the right hon. Gentleman give way?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am trying to complete my argument as quickly as I can. I shall not give way.

It is true that by regional aids this country can occasionally attract mobile investment from overseas. That mobile investment is valuable for this country. It brings technology, skills of management and, possibly, access to markets, which benefit this country. It must be at cost, however, because the money to pay the grant that is often payable must be raised by increasing borrowing or increasing taxes, but it is a legitimate use at a time when all industrialised countries compete with each other for mobile investment. I recognise the significance of it. We must also recognise that in so far as regional policy applies to industry, it is largely a case of redistributing industry that must expand somewhere and that we persuade to go to the regions. That is valuable. I am not underestimating it. But it does not mean net new jobs for the country.

The question that the right hon. Member for Chesterfield should have asked and should have tried to answer is: Why have successive Governments, including the Labour Government, experienced such rapidly rising unemployment? My answer to that question is a view that the House will have heard me put before. For many years our manufacturing industry has become less competitive. It is not a question of inadequate demand. For most of the past 20 years, while unemployment has been rising in cycle after cycle, demand has been high and rising. Even now, consumer demand has held up remarkably well. Investment demand has been cut, largely because wages have eaten into funds intended for investment. Consumer demand has held up well. Our share of our market has been falling for years because, on average, manufacturing industry has been less and less competitive.

Against this analysis—the right hon. Gentleman offers no alternative—where will more jobs come from? There is a limited amount of internationally mobile industry. We try to put it in the best place. There is a limited scope for expansion of jobs with existing firms. We hope that we are experiencing rising productivity—we think that we are. That means that many firms will be able to produce more without much increase in labour. However, we must realise that while some firms will expand, others will contract.

The Government believe that there is scope for new jobs in new firms and in small firms that may expand. We do not want to exaggerate the contribution that they will make, but they are significant contributors. The Government are striving hard to improve the climate and encourage the birth rate of new small businesses and expansion of existing small businesses. My hon. Friend the Under-Secretary will explain later, if he catches your eye, Mr. Deputy Speaker, that he is giving special attention to that whole range of issues.

All these matters—the possibility of attracting mobile international investment, the scope for redistributing existing firms as they expand, the benefit of new firms and expanding small firms—are still not enough. To limit our hopes for the regions would be to take too static a view of our prospects. We must encourage the regions not only to compete for the limited pool of expansion by way of grant but to seek to increase the rate of expansion. Perhaps I should explain what I mean. This subject is rarely discussed in a debate on either unemployment or regional policy. There is real scope for expanding the markets of existing firms and enabling firms to price themselves back into markets that they have either lost or have not yet had. The route to that happy possibility is that people should endeavour to make viable and profitable projects that at present are not viable or profitable by their behaviour or their undertaking to behave.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

Will the right hon. Gentleman give way?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I should prefer to finish my argument. I am attempting to put an argument. I am not maintaining that changes of behaviour in management and work forces can recapture or capture markets in every case. Of course I am not. There are occasions when we have lost markets or are not winning markets because of patchy management or because of work force attitudes. The House will agree, either publicly or privately, that overmanning and restrictive labour practices have been, and to a large extent still are, the bane in our economy.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

Will the right hon. Gentleman give way?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I think that the right hon. Gentleman is being unfair. I have only a small amount still to say, but I do not want to be rude to the right hon. Gentleman.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I understand the right hon. Gentleman's reluctance to give way and I shall be quick. I understand the right hon. Gentleman's argument and his sincere ideological belief, but what does he say not only to me and to my right hon. and hon. Friends but to his right hon. Friend the hon. Member for Sidcup (Mr. Heath), who, last Thursday, described the Government's policies as disastrous and incomprehensible to both sides of industry? He should answer not only our charges but the charges made by a former Tory Prime Minister.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

It must be true that my right hon. Friends and I have failed effectively to explain the analysis underlying our policies and arguments. What I am saying now I do not believe can be contradicted, even by my right hon. Friend the Member for Sidcup (Mr. Heath).

We are discussing unemployment in the regions, so let us examine what leads firms and individuals to set up industrial or commercial activities or to expand those that already exist. The answer must be that it is the hope of profit. The risk funds that they invest come generally from pension funds or insurance companies, or from individual investors. It would be very wrong if investment were to take place without a prospect of a profit. All of the people in Britain, after all, are interested in the sensible investment of the funds that will be used to pay their pensions or are being used now to fund their existing pensions. I would not have thought that there was any dispute about that.

Where will expansion occur? It will occur where there is a prospect of profit. Where will there be a prospect of profit? The answer is where good management—not to be taken for granted, but there is plenty in Britain—and an adaptable, productive, co-operative labour force come together. [Interruption.] I hear the interjection "Not textiles." I am trying to make a general case that is true even of textiles. I said earlier that there are industrial situations in which, for reasons of design or of the international division of labour—[Interruption.] I hope that hon. Members will listen. I accept that there are situations in industries, sub-sectors and even firms in which superior design abroad or the international division of labour, or barriers, tariffs or unfair trading practices, does not make what I am saying immediately practical. However, hon. Members should also accept that there are very large sectors of the economy in which these propositions that I am trying to maintain operate.

If a group of people in a region really want to increase jobs in that region—and there are thousands of such groups who sincerely want to do so—why do they not contemplate persuading the work forces, through the unions, to seek to help those who are making investment decisions by offering co-operation—it exists in many firms—high productivity and the prospect of competitiveness and profit to activities which now, under present assumptions about manning and productivity, are just not viable or likely to be profitable?

People in Britain, under the influence mainly of unions and some work force representatives, have in many cases priced themselves out of jobs. I am suggesting that it is not sensible for regions to depend entirely upon persuading Governments to provide more money from the taxpayer. I am not denying that there is a contribution from the taxpayer, but there could be a much bigger contribution from the work habits, the work effectiveness and the cooperation, and the reputation for those things, that a region can win for itself or lose for itself.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

No.

When investors or possible expanders are contemplating whether there is a profitable market for them, let them think at once "Yes, let us go to this town or that town, or to this region or to that region, because they have a reputation for co-operation and intelligent enlightened self-interest."

There is evidence—I shall not give names, because that would be unfair—that investment decisions are being made in some cases only because in the regions the work force in a particular area has shown by its attitudes and performance that it is willing to make profitable and viable activities that otherwise would not have been profitable and viable.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

No, I shall not give way.

I do not often make appeals to the press. However, I think that the leader writers and the editors of the very vigorous newspapers in the regions ought to realise that the future of jobs in their regions does not depend only upon how much those regions can win from the taxpayers. It depends also, to a large extent, on the performance and the reputation of those regions and on the work forces, managements and entrepreneurs of those regions, too. I hope that we shall have more investment in Britain, because the regions accept that there is that scope for their own action. I believe that from this House a message could go out to the representatives of all the work forces suggesting that there is a form of self-help that they can practise. I am not over-generalising. I am not saying that this will serve every firm or every sector of industry. I am saying that there are great prospects.

Because the Opposition's motion is so party-political and so narrow, and so ignorant in the light of their experience when in office, I hope that right hon. and hon. Members will reject the Opposition motion and accept the Government's amendment.

Photo of Mr John Evans Mr John Evans , Newton 5:35 pm, 8th July 1981

As my right hon. Friend the Member for Chesterfield (Mr. Varley) said, the background to the debate is the appalling level of unemployment in almost every region. Another element in the debate is the serious damage which has flown to the regions from the Secretary of State's Industry Act 1980. The other major purpose of the debate is to show once again that the Government have no regional policy. An important element in the Secretary of State's appalling lecture is that he is not even interested in regional policy, and, frankly, he does not accept that a regional policy will work.

It is significant that the general impression left with hon. Members when they listen to the Secretary of State—here I mean no disrespect to him—is that he should be in a college lecturing students and not prattling on in this House with some of the nonsense that he has produced today—blaming the trade unions, the work forces, the oil price rises and virtually everyone bar himself for the appalling damage that he has inflicted upon Britain's economy.

No one will be surprised if I concentrate my arguments on Warrington. That is hardly surprising. Over 50,000 of my electors live in Warrington, and over 65,000 of my electorate are in the Warrington travel-to-work area.

In the Warrington by-election, the Government's record on unemployment and their economic and regional strategy are very much on trial. The Government will suffer a resounding defeat. I attach no significance to the fact that the Conservative candidate is a bus driver. Many excellent people drive buses. I feel a great deal of sympathy for the poor man who has been drafted in to defend the Government's appalling record. The real candidates in the Warrington by-election are the Prime Minister and the Secretary of State for Industry, their appalling Government and their appalling policies.

I throw a challenge to the Secretary of State to go to Warrington in the next few days and to give the electorate of Warrington the lecture that he has given the House today. Let him see the response that he will get from the people there—people who have lost their jobs over the past two years as a result of his Government and their policies. I shall return shortly to the job losses in Warrington.

I understand that the Prime Minister will not go to that constituency. I believe that the right hon. Lady believes that it is not normal for Prime Ministers to intervene in by-elections. But that does not apply to the Secretary of State for Industry. Employment and unemployment and regional policies and the lack of regional policies are the key elements in that by-election. This is the first time for almost two years that a seat has been fought in such a region, that the Government's policies have been put under the microscope and that people have been invited to pass judgment on them. I therefore challenge the Secretary of State to go to Warrington and to give the electorate the reasons for his policy or lack of policy.

The Secretary of State accused my right hon. Friend the Member for Chesterfield of failing to give alternatives. Some hon. Members remember, although the Secretary of State would dearly like us to forget, the campaign that the right hon. Gentleman fought in the last general election when he and his party issued huge posters up and down the country saying that Labour was not working and that 1·3 million were out of work. Many people were "conned" by those posters and assumed that unemployment would be reduced if a Tory Government were returned. They now find that unemployment has doubled in two years. The Secretary of State, with the Prime Minister and the Secretary of State for Employment, has been forced to admit repeatedly from the Dispatch Box that unemployment will rise.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I do not believe that the hon. Gentleman even wants to know why unemployment has risen so strongly. Does he not recognise that by the wage claims of 1980, following upon the pay control of the Labour Government, scores of thousands of people priced themselves out of jobs?

Photo of Mr John Evans Mr John Evans , Newton

I hope that the Secretary of State notes that in giving way to him I showed him more courtesy than he showed me. Unlike Conservative Members, I spent considerable periods out of work in my native Tyneside. It is nonsense for the Secretary of State to accuse working people of being opposed to change, indulging in restrictive practices and pursuing policies that restrict new investment and new industry. This shows that the Secretary of State has not even studied the history of British working people since the war.

The right hon. Gentleman has only to see areas like the North-West and the North-East, where whole stretches of industry—shipbuilding, the coal industry and the textile industry—have been removed due to the change in world demand, to realise how the work forces in those areas cooperated with new employers to introduce new industry and new technology. Working people have always been prepared to change. They have had to change throughout their lives. It is disgraceful for the Secretary of State to stand at the Dispatch Box and make that statement repeatedly.

I make no complaint that the Secretary of State has left the Chamber. I recognise that the right hon. Gentleman is a busy man and that he has important functions to fulfil. I only hope that he got my message before leaving the Chamber.

Photo of John Prescott John Prescott , Kingston upon Hull East

The right hon. Gentleman has gone to Warrington.

Photo of Mr John Evans Mr John Evans , Newton

I hope that my hon. Friend is right. I hope that the right hon. Gentleman has taken up my challenge by catching the next train to Warrington.

I should like to discuss the need for regional policy. Some hon. Members, on both sides of the House, have tried for many years to argue the need for a coherent regional strategy. We have tried to argue that if one is serious about these subjects one has obviously to work to a basic plan. It was evident from the Secretary of State's speech that he has abandoned all hope of any plans and that he is banking on such nonsenses as enterprise zones, the odd urban development corporation and a bit of money from the Home Office for inner city areas to solve some of the major and, as the last few days have unfortunately shown, dangerous situations that exist in many areas.

A classic example of the error of Government policy exists for all to see in Warrington. As events have shown over the past 10 to 15 years, Warrington is a natural growth point. The expertise, experience and drive of Warrington new town in attracting industry to the area over the past few months have been first-class.

It has been shown that the development of road and rail networks and airports has brought prosperity to regions. Although far from moving ahead, Warrington had been able to maintain employment, despite all the problems created in the traditional industries and despite the effect of natural rundown. That was due to the expertise, drive, care and planning devoted to the area around Warrington. There has now been a substantial increase in unemployment.

One factor that the Secretary of State and the majority of the Tory Party will not recognise is that a natural growth point is crucial to any regional policy. Warrington is a natural growth point. One would have assumed that any sensible, rational Secretary of State would have recognised the value of a natural growth point and would have put money behind it. The Secretary of State's answer is to remove all assistance from Warrington.

The right hon. Gentleman argues that crude unemployment statistics alone do not warrant assisted area status. I am waiting, as I have waited for two years, for the Secretary of State to inform the House of the other elements of his regional policy. Does the Minister who will be replying to the debate intend to inform the House of the elements of the Government's regional policy strategy? The only element that I can see is the crude unemployment figures. There is no rational analysis of emigration from areas, immigration into areas, or the shortage of skills in areas. All these are factors that affect the decisions of firms to go to certain areas.

There are some areas—Warrington is again a classic example—that can offer a wide variety of skills. Even now, we are told by some Tory Ministers, there is a shortage of certain skills in certain trades. A place like Warrington can offer plenty of skills. Yet we gel nothing from the Government. We get an increase in unemployment. The announcement today by the Minister for Consumer Affairs is another kick in the teeth for Warrington. One of the largest gas cooker factories in the country, TI New World, is situated in Warrington, producing nearly 20 per cent. of the market in gas cookers. We know that there will be massive redundancies in the TI factory. The Tory candidate must be delighted when he hears the news coming from the House of Commons that further redundancies face the work force in Warrington.

I listed during a recent debate on the North-West no fewer than 17 firms that had declared over 4,000 redundancies in Warrington in the last 18 months. It was significant that the redundancies in Warrington all occurred in industrial manufacturing and mainly in the private sector. All were good firms with a good reputation. They were turning out good products. However, because of Government policies, they face closure in some cases or redundancies in others. It is a tragedy that so many towns in the regions should be left only with the platitudes of the Secretary of State for Industry, often aided and abetted by even more platitudes and crocodile tears from the Prime Minister, about the problems of the unemployed.

I asked the Secretary of State to give way when he posed the rhetorical question to my right hon. Friend "What will the unemployed do?" after my right hon. Friend had made the point about the growth in unemployment. The question "What will the unemployed do?" sums up the attitude of the Tory Party. I should like to pose a question to the Tory Party that I hope will be answered honestly. Like every area, Warrington has terrifying problems of youth unemployment. When the Secretary of State for Employment comes to the House to propose schemes to give all youngsters places in youth opportunities schemes, will Conservative Members have the guts to pose the question "What will they do?" That is the question that should be asked.

The Government have no policy. They are now doing what they used to accuse the Labour Government of doing. They are simply throwing money at the problem, hoping that the problem will somehow go away. The problem will go away only when we have a Government who recognise the absolute necessity for regional policies that are meaningful and who take account of the terrifying problems that exist in many areas where long-established industries are going to the wall and nothing is offered in their place. It is hardly surprising that there have been outbreaks of violence recently. No one condones them, but when young people react violently in our inner urban areas all that we get from the Government are platitudes arid cries about law and order.

I have a final question for the Government. What about some justice for the young people who recognise that they have no hope as long as this incompetent Government are in office? I hope that the Warrington by-election, when the Tory canditate will be humiliated, will be the signal for a massive revolt by our people, who will put the Government where they belong—into the dustbin of history.

Photo of Mr Keith Best Mr Keith Best , Anglesey 5:51 pm, 8th July 1981

It is a shame that the right hon. Member for Chesterfield (Mr. Varley) does not make his electioneering speeches in Warrington instead of forcing us to suffer them. He should have directed his remarks to the serious issues raised by the debate.

Until we heard the right hon. Gentleman's speech, none of us realised how rattled the Labour Party must be by its opponents in the Warrington by-election. The right hon. Gentleman devoted the lion's share of his speech to the by-election and, by default, did not deal with the major problems that we ought to be discussing.

It was a disappointment to me and my hon. Friends and, I am sure, to many Labour Members that the right hon. Gentleman did not make one constructive proposal. It is easy to say that the Government have got it wrong, but we have to judge such comments in the light of the alternatives that are proffered and the right hon. Gentleman put forward no alternative. All that he did was to refer to my right hon. Friend the Member for Sidcup (Mr. Heath). I do not know whether my right hon. Friend represents the aspirations and policies of the Labour Party. We have no way of telling, even after the right hon. Gentleman's speech.

The right hon. Member for Chesterfield mentioned my right hon. Friend the Secretary of State for Wales, who has been sitting in the Chamber throughout the debate. I am sure that there are many good reasons why the shadow Secretary of State for Wales is not on the Opposition Front Bench.

Photo of Mr Donald Anderson Mr Donald Anderson , Swansea East

The Opposition's spokesman was here earlier.

Photo of Mr Keith Best Mr Keith Best , Anglesey

The shadow Secretary of State was here briefly, but no other Opposition spokesman on Wales has been present during the debate. That is a sad derogation of duty by the Opposition in respect of Wales.

The right hon. Member for Chesterfield mentioned the problems of Wales, and I shall devote my speech to that subject. The right hon. Gentleman did not mention that the main reasons for the massive unemployment and the redundancies in Wales are the closures in the steel industry, a major industry that has sustained Wales in the past. Our people realise that if only the previous Labour Government had grasped the nettle of the steel industry earlier and had taken the decisions that the present Government have had to take the rundown in the industry would not have been so precipitous.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley Leader and Party President, Plaid Cymru

Will the hon. Gentleman estimate how many of the 10,000 unemployed people in Gwynedd are out of work as a result of steel closures?

Photo of Mr Keith Best Mr Keith Best , Anglesey

I am grateful for that intervention. I am coming on to the problems affecting the whole of Wales, but the hon. Member for Caernarvon (Mr. Wigley) will accept that much of the unemployment in Wales has been caused by steel closures. There are many other factors, particularly in Gwynedd, and the hon. Gentleman will wish to refer to those if he catches your eye, Mr. Deputy Speaker.

The Development Corporation for Wales is optimistic that, within the next two or three years, about 30 Japanese companies will be establishing subsidiaries in Wales. It is sad to have to acknowledge that Japanese industries have greater faith than Labour Members in the future of Wales, the work force of the Principality and what the Government are doing. The Opposition do not have the confidence that those companies feel in establishing themselves in the Principality.

Photo of Mr James Dunn Mr James Dunn , Liverpool Kirkdale

Japanese industry wants to be situated here because it gives it free and easy access into the European Community.

Photo of Mr Keith Best Mr Keith Best , Anglesey

I look forward to the hon. Gentleman disclaiming the Labour Party's policy of bringing this country out of the EEC. He must do that if he believes what the has said. If a Labour Government withdrew Britain from the EEC, they would destroy hundreds of jobs in Wales and endanger the inward investment of American and Japanese firms that seek to establish themselves in the Principality.

Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Bothwell

Does the hon. Gentleman concede that the Japanese companies that are supposed to be coming to Wales—they have not yet arrived—will receive incentives from the Government's regional policy while traditional industries that want to expand cannot get money from the Government? The only way that our industries can get money for expansion is for them to move out of their existing localities.

Photo of Mr Keith Best Mr Keith Best , Anglesey

I dispute that the money is not available. It is available, and the hon. Gentleman will be aware that the business start-up scheme, the loan guarantee scheme, regional development grants and further facilities provided in the Budget will assist companies in the Principality.

The hon. Member for Bothwell (Mr. Hamilton) is wrong when he says that Japanese companies have not yet arrived in Wales. They are already there. Wales has more Japanese industries on inward investment than any other region within the EEC. Those companies are in Wales because they wish to share in the European market, and the Labour Party threatens to destroy the opportunity for that.

The Welsh Development Agency is committed to spending £100 million in creating 3 million sq. ft. of factory space to provide 10,000 job opportunities in manufacturing industries. Last year, 1 million sq. ft. was allocated in 131 factories by the WDA and the Development Board for Rural Wales—almost a record allocation.

I wish to analyse the reasons behind regional policy. They are probably twofold. The first is to try to bring the supply of, and demand for, labour in assisted areas more closely into balance and the second is to try to sustain growth once it has taken place. One can easily do the former by shifting labour rather than capital, but I do not think that any hon. Member will suggest that that is the best way of trying to overcome the problem.

It is right that greater facilities should be given for people to move, and the Government introduced a scheme to facilitate the movement of council tenants from one area to another. The Opposition claim that they want to encourage mobility of labour, but the Labour Government did nothing to facilitate that. It took this Government to do that. I welcome it, but it is not the complete answer to the problems confronting the regions.

The nature of the problem in Wales is twofold. Areas such as those represented by the hon. Member for Caernarvon and myself have work forces in the small villages which must be sustained to retain community life.

Secondly, the more populous areas of Wales have been relying on large industries created within the last 200 years. Both, and particularly the former, need a great deal of infrastructure.

The hon. Member for Caernarvon will acknowledge that infrastructure is critical for North-West Wales and Anglesey. The hon. Gentleman will acknowledge the Government's commitment to dualling the A55 by the end of the decade to facilitate industry moving into Anglesey and his constituency. A tremendous amount of money is being spent by the Government on roads and telecommunications. Railways in certain areas are to be electrified. I hope that the hon. Member will join me in trying to persuade those responsible to electrify the Holyhead-Crewe line.

We must encourage diversity rather than just help one major industry in an area. If one analyses the problems of Wales, that is the stark reality facing the work force in Llanelli, for example. The people there have relied upon one industry. We must now try to channel Government assistance to create diversity. The problem exists in the steel closure areas in particular.

Two factors are involved. First, we must encourage small firms. Secondly, we must ensure that not only manufacturing industries but the service industries are assisted. I do not have time to develop the nuts and bolts of that, but the tourist industry, which in Wales is the second most important industry, needs to be treated more as an industry than something which is by the way. The tourist industry creates jobs cheaply, in terms of capital investment.

We are moving from manufacturing jobs to service jobs. That process is being assisted by the technical revolution. Hon. Members must acknowledge that. It is no good throwing money at manufacturing industries if we do not try to move more towards the service industries.

A garage proprietor wants to move to Anglesey. He wants to set up business on the island but no Government assistance is available. He has links with the area, so a new industry is not involved. Therefore, he cannot be assisted by a grant as manufacturing industries could.

We must encourage the small business sector. In the United States of America in the last 10 years, two-thirds of the 12 million new jobs created were in firms with fewer than 20 employees. We take risks with taxpayers' money in large industries such as British Leyland and the British Steel Corporation. If we can do that, we can afford to take risks with the small industries. Through the Welsh Development Agency and other agencies, I hope that the Government will take more risks with taxpayers' money by putting it into small industries where the growth will come.

Several Hon. Members:

rose—

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I remind the House that if the Division takes place at about 7 o'clock and the Front Bench spokesmen take only 15 minutes each there will be only 25 minutes left for all the hon. Members who catch my eye.

Photo of Mr James Craigen Mr James Craigen , Glasgow Maryhill 6:04 pm, 8th July 1981

I shall not discuss Wales, but I wish that the hon. Member for Anglesey (Mr. Best) had taken on board the point made by my hon. Friend the Member for Bothwell (Mr. Hamilton) that, although inducements exist for people to move into a particular area, the problem is that of sustaining the people already there.

This afternoon we listened to a clapped-out Polonius. The country needs more than a tired philosopher in charge of the Department of Industry. The Government have no regional policy. Moreover, I gained the distinct impression that the Secretary of State does not even believe in the need for a regional policy. It is no wonder that the consulate offices are busy with people who are thinking of emigrating to Canada and Australia. Young families see little hope of assured employment prospects in Britain.

The Government's regional policy is one of drift and despair. I am glad to see that the Minister responsible for industry at the Scottish Office is on the Front Bench., because the industrial style of the Scottish Development Agency has been cramped since the change in Government. I welcomed the way in which the agency encouraged environmental work. Many derelict sites in Glasgow were improved as a result of the agency's work.

My right hon. Friend the Member for Chesterfield (Mr. Varley) referred to a non-person and to that expensive chat programme on the radio last week. I did not disagree with many of the points made by the right hon. Member for Sidcup (Mr. Heath) during that chat show. However, I say that the show was "expensive" because we have such a thrawn woman at No. 10 Downing Street that she will be even more determined to pursue her lunatic industrial and economic policies if only because her predecessor made those remarks.

There has been a dramatic decline in manufacturing employment, but many inner city areas such as Glasgow are also facing a decline in service employment. The main problem is falling demand. Companies find it difficult to obtain orders. Companies are desperately taking on orders that two or five years ago they would not have looked at because they are so small. The Government cannot ignore that problem. Falling demand is beginning to feed the recession.

I visited a careers office last week to ascertain the latest jobs position of young people leaving school. I formed the impression that our careers offices are becoming placement agencies for the special programmes division of the Manpower Services Commission. I do not fault it for the work that it is trying to do, but such is the paucity of employment prospects for young people that the careers offices are busier than ever. More of their time is spent assisting fewer young people into employment. Much of their time is spent helping qualified and unqualified youngsters to join youth opportunities programmes.

In Clydeside, we are particularly affected by the drop in demand for apprentices. I hope that when the Government eventually produce a policy for traineeships they will realise the need to underwrite the cost of training for young people, because otherwise we shall be paying out money for special temporary employment measures when we could more effectively assist employers to take on young people for permanent jobs. At present the youth opportunities programme is effectively becoming a pre-employment course for far too many young people.

This morning I received in my mail—as I think most Scottish Members did—a circular from the Scottish Construction Industry Group, which claims to represent all sectors of the industry in Scotland—and it did not strike me as having come from Walworth Road. It is an all-party organisation and, if anything, it is slanted towards the employers. The circular points out that over 50 per cent. of the work load of the construction industry comes from the public sector. It does not draw a distinction between the public and private sector but realises the interrelationship in employment. The circular asks: Must this be our future? It talks about the need to rebuild many of the "Victorian sewers" and of the need to renovate thousands of homes and to repair many of our motorways. That is becoming a problem in Scotland, and I dare say in England and Wales, too.

The problems of our inner cities have been starkly drawn to our attention more than once this week. I think of the tenement properties that could be renovated this year if it were not for the fact that the Government are not providing sufficient money.

Conscious of the time available, I shall simply put forward two points. First, if the Government want to give immediate help to firms in special development areas—I go so far as to include the whole of Scotland—the cost of abolishing industrial rating in Scotland would be £152 million. At a stroke, the Secretary of State could assist many industrial firms by doing what he already intends to do in the enterprise zones and abolish rates. Incidentally, I note that in South Wales that has led to an increase in the rentals that are being looked for in the enterprise zones.

In the West of Scotland we know only too well that when the good times come, and the tide comes in, we are the last to get the benefits, but when the bad times are here we are usually the first to know as the tide goes out.

On Monday, when I attended a meeting of the Inner London Employment Consultative Group, my arm was twisted. The inner London boroughs are worried about the rise in unemployment as it is higher there than it is in Wales. It is even higher in Scotland, for we now have over 300,000 unemployed people. There has been a decline in office employment in London, and as that trend continues the importance of regional policy will be borne in on the minds of the politicians in the South-East. But the tragedy is that by that stage the possibilities of effectively doing anything about regional policy will largely have dissipated, because it is now a matter of dog eating dog over obtaining major industrial developments in any part of the country.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I now understand that the Front Bench speakers are co-operating and will not seek to wind up until 6.40 pm. If we could have five-minute speeches—I hate asking for them—I could call many more hon. Members.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley Leader and Party President, Plaid Cymru 6:13 pm, 8th July 1981

I shall do my best, Mr. Speaker, to abide by what you have said.

I think that today we learnt of the ending of regional policy. We heard of no new initiative, and circumstances have deteriorated so much that we must question even whether there is a regional policy in operation. Over the past 10 to 15 years regional policy has been chopped and changed in a devastating way. Investment grants of 40 per cent. and 45 per cent. have come down to 20 per cent., and now in my area they are 15 per cent. Areas have been chopped and changed so that now large parts of Mid-Wales have the same status as Kent.

We have seen schemes come and go: selective employment tax, regional development premium, industrial development certificates. Companies do not know where they stand, with the result that they often do not treat seriously regional policy and the funds available under it. They are regarded as miscellaneous income below the line and as a result do not come into investment decisions.

Over the past 10 years regional policy has not worked as well as we hoped it would. We hoped to see a major effect, particularly in those areas in which there has been a serious rundown of structural employment—the ending of coal, steel, slate and other industries. Yet today I can address myself to the same problems as I did in 1974, when I became a Member of the House.

Major construction projects in my constituency include the Dinorwic pumped storage scheme, which has 2,000 jobs coming to an end. Although we have known for the past seven years that that would happen now, nothing has been done, because there is no planning system that addresses itself to such questions.

There are two ways in which we can carry out regional regeneration. One is to improve regional planning. We need to be more flexible. I noted the words of the Secretary of State for Wales in Caernarvon last week. The right hon. Gentleman said that in Wales we had difficulty in competing with the Irish package. We do. We need to look at our package of industrial incentives, examine the carrot, the grants available, and relate them to the number of jobs created. Money is often going to major capital projects that do not provide so many jobs.

We also need to consider training. There has been a rundown of the old skills in many areas, particularly in Wales. Many of the old skills have gone, and there has been no generation of new skills, so we are turning our workers into a semi-skilled work force, fit only for branch factories, which are the first to close down at the first ill wind of recession.

We need more capital support for small companies in particular, for businesses that are starting up and have no track record to attract investment by institutional investors, merchant banks and even the Welsh Development Agency. Agencies such as the WDA need more flexibility. They should take more risks with the smaller companies that are trying to start. I agree with the hon. Member for Anglesey (Mr. Best) that we also need more flexibility in service industries, because they can provide jobs that are just as valuable as those in manufacturing industries in many areas.

Our regional policy has often concentrated on the private manufacturing sector. It must be remembered that in Wales nearly 40 per cent. of the employment is in the public sector. Therefore, we cannot consider regional policy without considering the coal and steel and similar industries. Decisions on those industries should be brought into the orbit of decision-making for regional planning.

On the other side of the coin there is the question of how to generate more jobs from inside an area. There are no longer hundreds of footloose manufacturing concerns running around the world. There is the odd Nissan or two, but apparently Wales has missed out on Nissan as well. We read in the Liverpool Daily Post that the Secretary of State has intimated that that is so. Because there are many fewer footloose concerns today, we need to generate more jobs inside Wales. We should help young people to set up their own ventures. For that, we should examine our tax structure and provide tax incentives, whether the ventures are private or co-operative enterprises. There should be more emphasis in our education system on such enterprises.

We need to instil confidence in the future of areas such as Wales. Speeches about the need for people to move away from Wales to look for work do nothing to encourage confidence in the future. We should examine indigenous possibilities as well as strengthening regional policy from outside.

We also need to look at the way in which we relate to local government. We could and should have a bigger capital investment programme, geared to a regional programme, so that there is capital investment on roads, railways, schools and hospitals in those areas in which unemployment is rising. We cannot take the items in small compartments, because the policy on grants to local authorities has a big effect on the ability to provide jobs in sectors such as construction. We cannot rule out matters such as the parity of the pound and interest rates.

Over the past 15 years regional policy, as it has been administered from London, has failed to solve Welsh problems. Wales has been regarded as a peripheral region, and the action that has been taken has not solved the problems. We now need to turn away from an inbred dependence on London, which has gone on for far too long. Regional policy can tinker with the problems of Wales, but those problems will be solved only when the people of Wales decide to generate their own future from inside. For me, that means self-government, not regional government.

Photo of Mr Anthony Beaumont-Dark Mr Anthony Beaumont-Dark , Birmingham, Selly Oak 6:19 pm, 8th July 1981

Debates on regional policy are usually pegged on a particular feature. Today that feature appears to be Warrington. In case the Opposition have not heard, may I say that there are other places in Britain.

Some believe that regional grants create prosperity and new jobs. The West Midlands does not believe that they do anything of the sort. IDCs did tremendous harm with good intent. Regional grants stop businesses which, having gone to an area and prospered, wish to expand in the same place because it is sensible not to have a 200-mile production belt from doing so. Regional grants mean that they must move to Liverpool, Wales or Scotland. That may be a laudable objective, but the companies which moved have bitterly regretted it. They have the worst of all worlds. The production facilities are in the wrong place. That is happening with British Leyland. It is not wicked because it wishes to rationalise. It wishes to bring some sense of rationality back into its business so that it can make cars under one roof—as do the Japanese, the Germans and the Italians.

Let us consider the steel industry. Once again, with good intent, the House has written off £3,000 million of taxpayers' money. There was a lack of rationality about where the steel industry was forced to locate. It was forced to have a mill here and a mill there. I understand that regional policies are of good intent. Since 1975, £685 million from the Common Market has gone north. During the past 10 or 12 years £5,000 million of taxpayers' money has gone north. Nothing has come to the West Midlands, especially Birmingham.

Unless regional policies expand industry and encourage it to do what it can do best, they do not work. My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) favours sectoral grants. So do I. That is the only way to encourage industry. The idea that shipping huge sums of money to the North, Wales or Scotland creates something is not correct. It is not honest to suggest that it is. All that that does is to break down the genuine, proper commercial rhythm of a business as it wishes to grow. We must create the right conditions for industry, as was done in the past. That was why Birmingham became a great industrial centre. It was right for people to be there. Birmingham did not grow because of the grants system. The grants system has helped to destroy it and its industry. The good intent of successive Governments has created nothing but an organised chaos. It has prevented businesses from doing what they wanted to do where they could best do it. When they have gone elsewhere because of pots of gold, free rates, free tax periods and this, that and the other, they have not prospered. It was not industrial logic to move.

I come from the area that has suffered most from rationalisation. We should have an open attitude so that businesses are encouraged on a sectoral basis to do what they wish to do. Giving money away is not the right idea. We should reduce the tax paid by industry overall. That is much more likely to make industry prosperous and encourage people to risk their money. Do not think that by spending industries' money for them, by having pious good intent and by the nonsense of referring to unemployment as an evil—which we all know it is—it will go away and that if we talk nicely the right things will be achieved. All we shall succeed in doing is to destroy prosperity in one area without any guarantee that it wilt go elsewhere.

I hope that the House will get away from the nonsense of suggesting that regional policies introduced by this Government, or by any other Government, will create prosperity. They cannot do that. It is the interference of Government in industry that has created the troubles of Britain today.

Photo of Mr James Dunn Mr James Dunn , Liverpool Kirkdale 6:24 pm, 8th July 1981

I come from a city that is shuddering from the impact of recent street violence. Part of its cause is the dissatisfaction, discontent, resentment and bitterness that has been accelerating among the community about the conditions in which they live and the indignities of unemployment. I recognise that that was not wholly responsible for what happened in the south of Liverpool. I would be the last person to say that agitation did not bear a high proportion of responsibility, but even the Prime Minister accepted that contributory factors were unemployment and other difficulties.

My city is in a special development area. It has several advantages over other parts of the region. The enterprise zones are about to come into operation, and there is the Merseyside Development Corporation, which has not yet had resources made available. There are signs that they are coming, but they will be insufficient. Planning will be a problem initially, but that can be overcome. We shall probably request the Government for assistance to set the zones and the corporation on the right track.

The inner city partnership has played a large part in mopping up some of the surplus labour in the city. The special temporary employment programme and the youth opportunities programme have played a part. But at the end of the day we still face disaster because of ever-escalating unemployment. What should we do about it? Some say that money should not be put into the area.

The Secretary of State obviously believes in what he says, but he offers no succour to our region. He does not believe that a regional policy should be introduced to salvage a situation from which there is hardly any escape. A catastrophe confronts us.

Whatever the Government put into Liverpool and Merseyside, however much money they have spent, at the end of the day their overall policy has cancelled some of the benefits of the special programmes that they introduced and have attempted to sustain. Those programmes need longer periods. I have already suggested to the Minister one way in which he could lengthen the period of the youth opportunities programme. If I had greater time at my disposal, I would spell it out. When youngsters leave school they need continuing educational opportunities, with financial assistance to sustain them. They need employment prospects and work experience. Perhaps the youngsters could be asked to regenerate the environment. Now that catastrophe has hit us, they could replenish that which has been destroyed through the street riots. That may compensate in some part for the disaster that has hit us during the past four days. We may not have escaped from it yet. There may be more to come.

I hope that the Government will listen to my message. I hope that I am not overdramatising the position or misrepresenting the needs of those whom I represent. Unless the Government grasp the problem firmly, reverse the path they are treading, and forgo the rigidity of monetarism that is guiding them ever and ever away from the people and the real needs of our nation, there is no way of overcoming the disaster. If they do not overcome what has happened in Liverpool and Wood Green, it will be multiplied in other areas many times. I regret that I carry that message. I wish that I could deliver some other message. I warn the Government that time is running out.

Photo of Mr Robert Ellis Mr Robert Ellis , Wrexham 6:30 pm, 8th July 1981

I shall try to complete my remarks in five minutes. It will be difficult for me to do so because the Secretary of State made an outrageous speech that needs to be answered. It is clear that he does not believe in regional policy. If he does believe in it, he probably thinks that it should amount to nothing more than a few cosmetics. The right hon. Gentleman was not honest enough to say openly that he believes that regional policy does more harm than good.

I shall concentrate my remarks on one of the many factual errors and misconceptions in the right hon. Gentleman's speech. He said that it is important for the regions that the whole country should prosper. He claimed that if the country prospers the regions will prosper. I accept that the regions would prosper to the extent that there would be fewer unemployed than otherwise, but we are talking about relative deprivation. The real test is not how rich a region is but its degree of wealth when it is compared with the rest of the country.

It is relevant to quote some figures that appeared in Cmnd. 6058, which was published in 1975. The figures relate to 1960–70, a decade during which the world was booming. The economies of the developed world were developing faster than at any time hitherto. It was a time when the United Kingdom was prospering. Against that background, what happended in the regions? The White Paper states: Had Scotland, Wales and Northern England secured 42 per cent."— that is, their share of Great Britain employment in 1960— of national employment growth during the 1960s, they would have experienced a growth of 270,000. In fact, employment in Scotland, Wales and Northern England fell by 100,000.

The White Paper continues: Of the deficiency of 370,000, 180,000 was attributed to developments within the service sectors; 120,000 was attributable to the primary sector"— largely because of the closure of the coal mines— and 70,000 due to the manufacturing sector. During the boom period from 1960 to 1970, when there were both Conservative and Labour Governments, there was a loss of about 370,000 jobs in the regions. At the same time, the increase in jobs in the South-East and Midlands was about 390,000. In the decade, there was a net transfer of 370,000 jobs.

What is the price of regional policy? We have had regional policies for 50 years. When the Industry Bill was being considered in Committee, I said that I travelled by car from Genoa down the leg of Italy for about 100 miles to a place called Lerici. We passed through rural country—for the most part it consisted of vineyards—and mountainous land. Soon after starting the journey, we entered a tunnel that passed through a large mountain. We emerged from the tunnel after about a mile. We were travelling on a large double carriageway road. Having passed through the tunnel, we crossed a huge ravine on a marvellous bridge. The road ran straight and level. We passed through another mountain and crossed another bridge. That was the pattern for about 100 miles. When we reached our destination, I told the driver "In my country we cannot have a road from Conway to Cardiff because the mountains are in the way."

Regional policy must not always be considered on the ground of investing to make money. The various economic indicators tell us that Wales is the best region in the United Kingdom in terms of investment and per capita production. The Secretary of State argued that if we are to attract investment we must do better. Wales is already the best in the sense of narrow and technical economic assessments. I should like to have an hour or two hours to teach the right hon. Gentleman what regional policy should mean. If he does not believe in it, let him say so openly and pursue his policy of looking after the rich parts of the country.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West 6:35 pm, 8th July 1981

The hon. Member for Caernarvon (Mr. Wigley) spoke about industrial derating. That strikes a chord with many. There is no doubt that the high level of rates is a killer of businesses. The hon. Gentleman should be reminded that it is Labour councils throughout the country that are increasing rates the most. That must be rammed home. We must try to reduce rates for industry.

If the House is honest in considering regional policy and how it reflects on the past 20 or 30 years, it will accept that both Conservative and Labour Governments have tried to attract industry to the difficult regions, the regions of high unemployment. There has been a bipartisan policy. It is true that there have been successes. Some firms have gone to the regions but would not have done so if it had not been for regional policies. Despite these successes, the extreme regions of Britain have the worst unemployment records. It would be sensible if the House and both major parties reconsidered the value for money that the taxpayer is receiving from spending almost £1,000 million on regional policy. It is not that we do not want to spend the money, but are we certain that the money is being spent in the right way? A great deal of money has been spent, but the country appears generally to have stood still or to have gone down a little further.

In a sense, regional policy is not a cure but a tourniquet. It is not a cure for the problems of the regions. It merely prevents the problems from becoming worse. It does some good in that sense. There are a number of doubts about the policy. There is evidence of a great deal of taxpayers' money going to a number of large energy industries in various areas when that assistance is not necessary. Many of the companies would probably go in any event to the places that they select because they are convenient for North Sea oil or gas. Part of the taxpayers' money could be better spent in other ways in the regions.

My right hon. Friend rightly said that we have to protect the internationally mobile projects. We have to ensure that they come to Britain. We have to offer aids to them that are equivalent to those offered by other EEC countries. If we do not do so, we shall not get the projects. That is the dichotomy. In some instances we are spending the taxpayers' money unnecessarily. On the other hand, there are truly international mobile projects—for example, manufacturing companies—that could go to any country. The aid that we give to those projects has to be maintained.

If there is an ability to review the regional aids that are offered to internationally mobile projects, perhaps the review should be undertaken in an EEC context. There is an argument for de-escalating the general level of aid to mobile projects. That could not be done unilaterally.

If there is a criticism to be made of the inward investment policy for the regions, it is that there is evidence of a lack of co-ordination in Government services. The Department of the Environment is responsible for regional policies for the inner cities, which include policies to take account of the problems referred to by the hon. Member for Liverpool, Kirkdale (Mr. Dunn). The policies for the councils are also the responsibility of the Department of the Environment. That is true of inward investment and development. The Department of Industry is otherwise responsible. Planning decisions, of course, are the responsibility of the Department of the Environment.

In general, the co-ordination of the Government's services is in a mess. Reference has been made to the Republic of Ireland, which has an efficient system. The Irish Development Agency is responsible for the whole of Ireland. Anyone who is contemplating investment in Ireland can be given by the one body all the information about planning, about cities and about the aids that are available. That is not so in Britain, and that may be to our disadvantage.

It is worth while to consider whether we could have a more efficient system, especially for the inward investment that we must continue to attract. It would be better if the Government took a slightly different attitude. Instead of saying to inward investors "We have a wonderful site for you at Newcastle and we suggest that you go there", it might be better to ask "Where would you like to go? What is best for you?" That approach would be more likely to succeed. If we did that and considered again the value for money that we get from regional policy without making party points across the Floor of the House that will not create one additional job, we would have a successful debate and ensure that our regional policy for the next 20 years was rather more successful than it has been in the past.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes 6:40 pm, 8th July 1981

I should like to share with my right hon. Friend the Member for Chesterfield (Mr. Varley) the Opposition's surprise that the Government have chosen to deal with this debate purely as an industry debate. We were debating regional policy and clearly the House wanted to debate matters other than industrial grants. Hon. Members wanted to talk about the environment, roads, rail electrification and so on.

We were surprised that Ministers from the Department of Industry both opened and will wind up the debate. As the hon. Member for Caerarvon (Mr. Wigley) made clear, the Department of the Environment has a crucial role when we are discussing regional policy. The Department of Transport is also crucial. There should be co-ordination. But what came out clearly during the debate is that not only do the Government not have any policy for the regions but the Secretary of State for Industry does not want any such policy. He does not believe in a policy for the regions.

That is surprising, because we must be one of the few countries which do not have a regional policy. Most of the countries in Europe have regional policies. They accept the fact that there are certain areas of a country which need special assistance not only from one agency but from many agencies co-ordinated together. That is the practice not only in Europe but in most parts of the world. Therefore, it is surprising that the Secretary of State is so opposed—and apparently the Government likewise—even to the concept of an industry policy.

What surprised me further was the tone of the speech of the Secretary of State for Industry. When listening to him, one would have thought that all was going well and that the Government were succeeding in all their aims. That is the message which he complacently put across. On the one hand, he says, of course, he must admit that unemployment has not yet reached its peak, but the next minute he talks of all the changes which are coming about which suit our industry.

My next-door neighbour, my hon. Friend the Member for Newton (Mr. Evans), invited the Secretary of State to go to Warrington, which is next door to me. I wish that he would take up that challenge. If he did so, the cloud-cuckoo-land theories of monetarism which he has been putting forward to the House would be dispelled at the first doors at which he knocked.

I do not want to labour the point about Warrington because it has been mentioned many times in the debate, but it exemplifies the fallacies of the Secretary of State's argument. I shall not give percentages, as my right hon. Friend the Member for Chesterfield did. The number out of work in Warrington in May 1979 when the Government took office was 3,199. In June 1981 it was 8,737. That is an enormous increase. The Secretary of State referred to the causes of and answers to unemployment. He talked about entrepreneurs—that lovely word—and a forward-looking policy of employers. Let him go to Warrington and see what is happening in the Science Park. There are industries such as microprocessor industries and nuclear industries there. All are forward-looking industries. But there are still over 5,000 more people unemployed in Warrington than there were in May 1979. That dispels the idea of entrepreneurs which the monetarists believe to be the answer to unemployment.

The Secretary of State delivered his usual lecturette to the House about the trade union movement. He said that we should bash the trade unions and that it was their fault, really: they put in wage demands and claims that were so excessive and that they forced industry out of business. Let the Secretary of State go to Warrington. It is an area which has no history of industrial unrest. It is not an area of strikes or of industrial trouble. It is not an area of high wages—quite the reverse. Where is the monetarist theory which the Secretary of State preaches to the House in practice in an area such as Warrington?

The facts of Warrington belie everything that the Secretary of State has said to the House today. I repeat that I wish he would take up the challenge and go there. I wish that other Ministers would go there. The Opposition feel sorry for the poor Conservative candidate, who has been completely abandoned. The Government know what a frightening result the Warrington result next week will be, when the people will clearly show what they think of monetarism and of the Secretary of State's policies.

The hon. Member for Anglesey (Mr. Best) talked about the electrification of the rail line between Holyhead and Chester and the extension of the A55. At a time of high unemployment in Wales, both those would be excellent projects to undertake now. The hon. Member for Anglesey should go to the Secretary of State for Wales or the Secretary of State for Transport and ask why we cannot have some capital for such projects.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Three schemes for the A55 in Wales totalling £55 million have been announced. They will start this month or next month. The right hon. Gentleman should ascertain the facts before making such statements.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

I do not know about my ascertaining the facts. That is what the Secterary of State's hon. Friend the Member for Anglesey was asking him to do. If he has already done it, I am delighted that at least in Wales the Government's general policy for investment in capital projects is not as obtuse as it is in the rest of the country.

The Government do not seem to understand that investment of public money in a project which is of benefit to the community is not waste. They consider that any public money spent for any purpose is a waste of money. That is clearly ridiculous. There can be waste of money or investment of money. The Opposition are asking for the investment of money in the regions, particularly at this time, not merely to create jobs now but to create jobs for the future—something which I should have thought that a Government who were supposed to be business men would be well aware of. One needs to invest now for the future.

Unemployment is an emotional subject. One of the worst things which I saw was "The Money Programme" on television some weeks ago which revealed that a furniture factory was being put under the hammer and equipment worth £200,000 was being sold to South Africa and Israel for £20,000. What was left was sold for scrap. When the boom comes, if it comes, which is doubtful under the Government's policies, we shall have to re-equip and reinvest in industry from the ground. This country will be like Paraguay when we re-equip industry. Everything will have been sold off thanks to the Conservative Government, who will have allowed everything to fall into disuse and into an industrial death.

The prime areas where that is happening are the regions. It might be argued by the Government that we do not need a regional policy now because we have reduced the whole country—London, Birmingham and everywhere—to one policy of misery. That might be a fair argument. In fact, it would not, because there is still inequality between the different regions and between Wales and Scotland and the rest of the country.

It is regrettable that the Government have completely abandoned all question and all hope of a regional policy. It is terrifying that they cling to the theory rather than practice even when hon. Members and some of their right hon. Friends, respected by them hitherto, tell them that they are clinging to a theory and that they are not concerned for the needs of the people or the needs of their supporters in many areas. If the Government doubt that, let them talk to the local authority associations—not just the Labour-controlled ones. Associations such as the Association of County Councils and the Association of District Councils will give them their answer to the monetarist policy and its effects on local government.

This has been a useful debate because it has cleared the air and has shown up the Government for what they are as regards the regions. On behalf of the Opposition, I say that the enormous energy wealth of coal, gas and oil will be applied by a Labour Government to assist regions and to bring them up to the best standards so that we do not have a hideous desert of unemployment such as that which is now spread over the face of half the country.

The Under-Secretary of State for Industry Mr. John MacGregor):

The right hon. Member for Widnes (Mr. Oakes) is very long on hot air but very short on facts, and I shall give him one fact immediately. He talked in some detail about the need for capital investment, with which I agree, but is he aware that capital investment in real terms in the nationalised industries this year is up 14 per cent. on last year? The Opposition have been wrong in a wide range of matters, as I shall hope to demonstrate.

I assumed that the right hon. Member for Chesterfield (Mr. Varley)—and I say this in a kindly way—had been put up to speak for the Opposition instead of the right hon. Member for Salford, West (Mr. Orme) in order to make amends for the emptiness of the speech by the Leader of the Opposition in the recent unemployment debate. I was looking forward to a serious and constructive contribution from the right hon. Member for Chesterfield because he is a serious and constructive man. But he seems to have been affected by his colleagues and, alas, he was just as empty and sterile today as the Opposition have been in their policies. Like other Labour Members, he made a few subtle references to Warrington, but his speech contained very little else.

As many of my hon. Friends have said, in the right hon. Gentleman's speech there was no serious analysis and there were no policies—not a word. As my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) mentioned in a very interesting speech, there was not a word about whether the regional policies that have been pursued by all of us over the last 20 years or more have been effective in achieving the objectives that we have all set ourselves.

As the Public Accounts Committee—an all-party Committee—recently pointed out, in the last 10 years £5,000 million has been spent in budgetary terms on regional policies, and we cannot be certain whether that money has been effectively and wisely spent in every respect, as my hon. Friend the Member for Surrey, North-West (Mr. Grylls) said. The House should address itself seriously to this question, in the interests of the regions alone.

At least the right hon. Member for Chesterfield refrained from urging more Government spending, perhaps because he knows the dangers of that. In that respect he was markedly different from the Leader of the Opposition, who put forward his prescription in a recent speech in Cardiff. He did not expose them to the House of Commons, because that would have shown the emptiness of his policy. His prescription was to cut income tax massively, reduce indirect taxes, reduce the minimum lending rate, increase public expenditure, encourage major infrastructure programmes, and to have big decreases in taxation and big increases in public expenditure.

Such a policy would have disastrous effects on the public sector borrowing requirement, and hence on minimum lending rates. I agree with the right hon. Member for Chesterfield that we want to see a policy of declining interest rates, but we have an international problem there as well. The Leader of the Opposition's policy would have disastrous effects on the exchange rate, about which the right hon. Member for Chesterfield had a good deal to say in the opening part of his speech.

There was no recognition by any of the Labour Members of the effects of the increase in unit labour costs in this country as a whole—

Photo of Mr John MacGregor Mr John MacGregor Parliamentary Under-Secretary (Department of Industry)

The right hon. Member for Salford, West shakes his head. There is no answer to the point made by my right hon. Friend the Secretary of State for Employment in the last employment debate that one of the major reasons for the difficulties that our economy has suffered in the last two years of world recession is that from 1975 to 1980—four years of Labour Government and the first year of this Government—unit labour costs in the United Kingdom rose by 88 per cent., whereas in France they rose by 45 per cent., in the United States of America by 36 per cent., in Germany by 17 per cent., and in Japan by nil. That fact, more than anything else, has been responsible for the difficulties of manufacturing industry in the last two years. I suggest to the hon. Member for Wrexham (Mr. Ellis) that that has had a great impact on many manufacturing industries in the regions, as elsewhere.

It is widely recognised on both sides of the House, and has been recognised in the recent regional debates, that the regions have had over the years a major industrial restructuring problem. Vast sums of money have been spent in the regions. In most cases the infrastructure is now substantially better, so that to a large extent that problem has been overcome. There is heavy dependence on the industries concerned, and restructuring is essential. They have depended heavily in the post-war years on help from elsewhere.

The right hon. Member for Chesterfield had a great deal to say about the unemployment figures. My right hon. Friend the Secretary of State was right to point out that during his period in office, from the lowest level to the peak, the increase in unemployment was 165 per cent., compared with 102 per cent. now. But during the earlier period the Labour Government were not tackling many of the underlying problems of uncompetitive industries and were not getting the productive potential which is now coming through in many of the manufacturing industries.

My hon. Friend the Member for Anglesey (Mr. Best) made an extremely important point about inward investment. In looking at the direct impact of regional development grants, we can see that the one area where it has been very beneficial is in regard to inward investment in the regions. Even in times of recession, that inward investment has often enabled a region to weather the storm. Indeed, many of the companies in the regions which are subsidiaries of overseas companies are making plans for expansion. [HON. MEMBERS: "Where?"] If I had more time I would list them.

When the hon. Member for Liverpool, Kirkdale (Mr. Dunn) said that the companies concerned were coming here only in order to get into the Common Market, he was hopelessly wide of the mark. [Interruption] They are, of course, of great benefit to us, but the hon. Member was wide of the mark in being critical of them. They are of great benefit because they are helping our exports to the Community. Many of the companies, particularly those from America and Japan, are investing here much more than anywhere else in the Community. That is something to shout about. They are producing good results with the better management that they often bring and with their high technology.

My hon. Friend the Member for Anglesey, therefore, was right in regarding inward investment as being of fundamental importance and significance to the regions. If we shouted a little more about those successes and that kind of inward investment, companies not only from overseas but from other parts of the United Kingdom might think more about investing in the regions.

The hon. Member for Newton (Mr. Evans) and the right hon. Member for Widnes said that we did not have a regional policy. Indeed, the hon. Member for Newton had the effrontery to suggest that no money was being spent on the regions. The hon. Member for Wrexham said that it was merely cosmetic. They are very expensive cosmetics, because in the last year alone we have spent £730 million on regional policy. That is not peanuts, and it is on top of a lot of expenditure from other Departments. That sum has been spent specifically on regional policy.

Opposition Members mentioned urban development. The Department of the Environment has spent £200 million on inner urban areas in the last year.

Photo of Mr John Evans Mr John Evans , Newton

What about some strategy?

Photo of Mr John MacGregor Mr John MacGregor Parliamentary Under-Secretary (Department of Industry)

There is a strategy. There have been regional development grants and selective financial assistance, but it is important to concentrate the regional assistance on the areas of greatest need. That is particularly important for the regions with the highest levels of unemployment, because, particularly at times when the economy recovers, it gives them a considerable advantage over much more of the rest of the country than they had before we came into power.

I point out to the hon. Member for Wrexham that the Secretary of State was not questioning regional development grants. Indeed, I have already indicated the scale of expenditure that we have made in the last year. My right hon. Friend suggested that the mere pumping in of public money was not the sole answer. He also wondered how effective some of that expenditure had been. I should have thought that, as custodians of public money, and as a Government concerned with the regions, we should be asking those questions. Above all, my right hon. Friend was pointing out that many other things also matter and that regional spending on its own is nothing like enough.

I remind the hon. Member for Kirkdale—he was the most blatant in urging that more money should be spent—that in the past year £300 million of public money has been spent in the Liverpool area. [Interruption.] The hon. Gentleman says that that is not enough. He might like to consider the harm that is done to other, viable industries which have to foot the bill for that kind of money. One of the disasters of the Liverpool riots was the effect on Liverpool's image, particularly in regard to small businesses. I feel deeply sorry for the small businesses which have lost so much in the riots and for those who have lost their jobs.

It was a Labour Prime Minister who said that spending our way out of a recession was an option that no longer existed. But in listening to Labour Members today one wonders whether they have learnt anything. They seem to want even more indiscriminate spending than we have seen in the past. They ignore the fact that the Government have already spent a good deal and that there are limits to public expenditure. They ignore the impact on industries in their own regions, let alone those elsewhere in the United Kingdom. What they suggest ignores the consideration of cost-effectiveness that many of my hon. Friends have mentioned. It ignores what can be the debilitating effect on companies' own performance and their ability to tackle their own defects such as the rise in unit labour costs by fostering the illusion that there is and always will be a crutch to hold them up. It weakens the image and attractiveness of the regions to investors from aboard and elsewhere at home and even entrepreneurs in their own midst are inclined to go to other regions. It leads companies and employees into the ultimately self-destroying belief that Governments, not the customer, are their target and their source of economic prosperity.

Much that is good is now taking place in industrial restructuring. I wish that I had more time to concentrate on that. There are developments, for example, in the enterprise zones. There is a very interesting and hopeful development in Corby. There are developments among small businesses. My hon. Friend the Member for Anglesey asked us to take risks in the tax system to help small businesses. He will know that we are doing that, and it is having an effect.

At the end of the day, however, what matters above all and what will work for the regions more than all that we have discussed is what they can do for themselves in improving their own image and effectiveness. The answer to high unemployment is competitiveness. The ultimate employer is the customer. Jobs are created by entrepreneurial managements combining with co-operative work forces to use existing as well as new capital investment to provide goods and services which beat the competition in price or quality or both. That is referred to at the end of our amendment. It is noticeably lacking in the Opposition motion.

For all the reasons that I have given, I urge the House to accept the amendment and to reject the Opposition proposal.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 236, Noes 302.

Division No.257][7.00 pm
AYES
Abse, LeoEllis, Tom (Wrexham)
Adams, AllenEnglish, Michael
Allaun, FrankEnnals, Rt Hon David
Alton, DavidEvans, loan (Aberdare)
Anderson, DonaldEvans, John (Newton)
Ashley, Rt Hon JackEwing, Harry
Ashton, JoeFaulds, Andrew
Atkinson, H. (H'gey,)Field, Frank
Bagier, Gordon A.T.Flannery, Martin
Barnett, Guy (Greenwich)Fletcher, Raymond (llkeston)
Barnett, Rt Hon Joel (H'wd)Fletcher, Ted (Darlington)
Beith, A. J.Foot, Rt Hon Michael
Bennett, Andrew (St'kp't N)Ford, Ben
Bidwell, SydneyForrester, John
Boothroyd, Miss BettyFoster, Derek
Bottomley, Rt Hon A. (M'b'ro)Foulkes, George
Bradley, TomFraser, J. (Lamb'th, N'w'd)
Bray, Dr JeremyFreeson, Rt Hon Reginald
Brown, Hugh D. (Provan)Freud, Clement
Brown, R. C. (N'castle W)Garrett, John (Norwich S)
Brown, Ronald W. (H'ckn'y S)Garrett, W. E. (Wallsend)
Buchan, NormanGeorge, Bruce
Callaghan, Rt Hon J.Gilbert, Rt Hon Dr John
Callaghan, Jim (Midd't'n & P)Ginsburg, David
Campbell, IanGolding, John
Campbell-Savours, DaleGourlay, Harry
Canavan, DennisGraham, Ted
Cant, R. B,Grant, John (Islington C)
Carmichael, NeilGrimond, Rt Hon J.
Cocks, Rt Hon M. (B'stol S)Hamilton, James (Bothwell)
Cohen, StanleyHamilton, W. W. (C'tral Fife)
Concannon, Rt Hon J. D.Hardy, Peter
Cook, Robin F.Harrison, Rt Hon Walter
Cowans, HarryHattersley, Rt Hon Roy
Cox, T. (W'dsw'th, Toot'g)Haynes, Frank
Craigen, J. M.Healey, Rt Hon Denis
Crowther, J. S.Heffer, Eric S.
Cryer, BobHogg, N. (E Dunb't'nshire)
Cunliffe, LawrenceHolland, S. (L'b'th, Vauxh'll)
Cunningham, G. (Islington S)Home Robertson, John
Cunningham, Dr J. (W'h'n)Homewood, William
Dalyell, TamHooley, Frank
Davidson, ArthurHoram, John
Davies, Rt Hon Denzil (L'lli)Howell, Rt Hon D.
Davies, lfor (Gower)Howells, Geraint
Davis, Clinton (Hackney C)Huckfield, Les
Davis, T. (B'ham, Stechf'd)Hudson Davies, Gwilym E.
Dean, Joseph (Leeds West)Hughes, Robert (Aberdeen N)
Dempsey, JamesJanner, Hon Greville
Dewar, DonaldJay, Rt Hon Douglas
Dixon, DonaldJohn, Brynmor
Dobson, FrankJohnson, James (Hull West)
Dormand, JackJohnson, Walter (Derby S)
Douglas, DickJohnston, Russell (Inverness)
Douglas-Mann, BruceJones, Rt Hon Alec (Rh'dda)
Dubs, AlfredJones, Barry (East Flint)
Dunn, James A.Jones, Dan (Burnley)
Dunnett, JackKaufman, Rt Hon Gerald
Dunwoody, Hon Mrs G.Kerr, Russell
Eastham, KenKilroy-Silk, Robert
Edwards, R. (W'hampt'n S E)Kinnock, Neil
Ellis, R. (NE D'bysh're)Lambie, David
Lamond, JamesLeighton, Ronald
Leadbitter, TedLestor, Miss Joan
Lewis, Arthur (N'ham NW)Rooker, J. W.
Lewis, Ron (Carlisle)Ross, Ernest (Dundee West)
Litherland, RobertRoss, Stephen (lsle of Wight)
Lofthouse, GeoffreyRyman, John
Lyon, Alexander (York)Sever, John
Lyons, Edward (Bradf'd W)Sheerman, Barry
Mabon, Rt Hon Dr J. DicksonSheldon, Rt Hon R.
McCartney, HughShore, Rt Hon Peter
McDonald, Dr OonaghShort, Mrs Renée
McElhone, FrankSilkin, Rt Hon J. (Deptford)
McGuire, Michael (lnce)Silkin, Rt Hon S. C. (Dulwich)
McKelvey, WilliamSilverman, Julius
MacKenzie, Rt Hon GregorSkinner, Dennis
McMahon, AndrewSmith, Cyril (Rochdale)
McNally, ThomasSmith, Rt Hon J. (N Lanark)
McWilliam, JohnSnape, Peter
Magee, BryanSoley, Clive
Marks, KennethSpearing, Nigel
Marshall, D (G'gow S'ton)Spriggs, Leslie
Marshall, Dr Edmund (Goole)Stallard, A. W.
Marshall, Jim (Leicester S)Steel, Rt Hon David
Martin, M (G'gow S'burn)Stewart, Rt Hon D. (W Isles)
Maynard, Miss JoanStrang, Gavin
Meacher, MichaelStraw, Jack
Mellish, Rt Hon RobertSummerskill, Hon Dr Shirley
Mikardo, lanTaylor, Mrs Ann (Bolton W)
Millan, Rt Hon BruceThomas, Jeffrey (Abertillery)
Miller, Dr M. S. (E Kilbride)Thomas, Mike (Newcastle E)
Mitchell, R. C. (Soton Itchen)Thomas, Dr R. (Carmarthen)
Morris, Rt Hon A. (W'shawe)Thorne, Stan (Preston South)
Morris, Rt Hon C. (O'shaw)Tilley, John
Morris, Rt Hon J. (Aberavon)Torney, Tom
Moyle, Rt Hon RolandVarley, Rt Hon Eric G.
Mulley, Rt Hon FrederickWainwright, R. (Colne V)
Newens, StanleyWalker, Rt Hon H.(D'caster)
Oakes, Rt Hon GordonWeetch, Ken
Ogden, EricWelsh, Michael
O'Halloran, MichaelWhite, Frank R.
O'Neill, MartinWhite, J. (G'gow Pollok)
Orme, Rt Hon StanleyWhitehead, Phillip
Owen, Rt Hon Dr DavidWigley, Dafydd
Palmer, ArthurWilley, Rt Hon Frederick
Park, GeorgeWilliams, Rt Hon A. (S'sea W)
Parker, JohnWilson, Gordon (Dundee E)
Pavitt, LaurieWilson, Rt Hon Sir H. (H'ton)
Pendry, TomWilson, William (C'try SE)
Penhaligon, DavidWinnick, David
Powell, Raymond (Ogmore)Woolmer, Kenneth
Prescott, JohnWrigglesworth, Ian
Price, C. (Lewisham W)Wright, Sheila
Race, RegYoung, David (Bolton E)
Radice, Giles
Richardson, JoTellers for the Ayes:
Roberts, Ernest (Hackney N)Mr. Allen McKay and
Roberts, Gwilym (Cannock)Mr. Donald Coleman
Robertson, George
Robinson, G. (Coventry NW)
NOES
Adley, RobertBlackburn, John
Aitken, JonathanBlaker, Peter
Alexander, RichardBody, Richard
Amery, Rt Hon JulianBonsor, Sir Nicholas
Ancram, MichaelBoscawen, Hon Robert
Arnold, TomBottomley, Peter (W'wich W)
Aspinwall, JackBowden, Andrew
Atkins, Rt Hon H. (S'thorne)Boyson, Dr Rhodes
Atkins, Robert (Preston N)Bradford, Rev R.
Atkinson, David (B'm'th,E)Braine, Sir Bernard
Baker, Nicholas (N Dorset)Bright, Graham
Banks, RobertBrinton, Tim
Beaumont-Dark, AnthonyBrittan, Leon
Bendall, VivianBrooke, Hon Peter
Bennett, Sir Frederic (T'bay)Brotherton, Michael
Benyon, Thomas (A'don)Brown, Michael (Brigg & Sc'n)
Berry, Hon AnthonyBrowne, John (Winchester)
Best, KeithBruce-Gardyne, John
Bevan, David GilroyBryan, Sir Paul
Biffen, Rt Hon JohnBuchanan-Smith, Alick
Biggs-Davison, JohnBuck, Antony
Budgen, NickHavers, Rt Hon Sir Michael
Bulmer, EsmondHawksley, Warren
Burden, Sir FrederickHayhoe, Barney
Butcher, JohnHeath, Rt Hon Edward
Cadbury, JocelynHeddle, John
Carlisle, John (Luton West)Henderson, Barry
Carlisle, Kenneth (Lincoln)Heseltine, Rt Hon Michael
Carlisle, Rt Hon M. (R'c'n)Hicks, Robert
Chalker, Mrs. LyndaHiggins, Rt Hon Terence L.
Channon, Rt. Hon. PaulHill, James
Churchill, W. S.Hogg, Hon Douglas (Gr'th'm)
Clark, Hon A. (Plym'th, S'n)Holland, Philip (Carlton)
Clark, Sir W. (Croydon S)Hooson, Tom
Clarke, Kenneth (Rushcliffe)Hordern, Peter
Clegg, Sir WalterHowe, Rt Hon Sir Geoffrey
Cockeram, EricHowell, Rt Hon D. (G'ldf'd)
Colvin, MichaelHowell, Ralph (N Norfolk)
Cope, JohnHunt, David (Wirral)
Cormack, PatrickHunt, John (Ravensbourne)
Corrie, Johnlrving, Charles (Cheltenham)
Costain, Sir AlbertJessel, Toby
Cranborne, ViscountJohnson Smith, Geoffrey
Critchley, JulianJopling, Rt Hon Michael
Dean, Paul (North Somerset)Joseph, Rt Hon Sir Keith
Dickens, GeoffreyKaberry, Sir Donald
Douglas-Hamilton, Lord J.Kellett-Bowman, Mrs Elaine
Dover, DenshoreKershaw, Anthony
du Cann, Rt Hon EdwardKimball, Marcus
Dunn, Robert (Dartford)King, Rt Hon Tom
Durant, TonyKitson, Sir Timothy
Dykes, HughKnight, Mrs Jill
Eden, Rt Hon Sir JohnKnox, David
Edwards, Rt Hon N. (P'broke)Lamont, Norman
Eggar, TimLang, Ian
Elliott, Sir WilliamLangford-Holt, Sir John
Emery, PeterLatham, Michael
Eyre, ReginaldLawrence, Ivan
Fairbairn, NicholasLawson, Rt Hon Nigel
Faith, Mrs SheilaLennox-Boyd, Hon Mark
Farr, JohnLester, Jim (Beeston)
Fell, AnthonyLewis, Kenneth (Rutland)
Fenner, Mrs PeggyLloyd, Ian (Havant & W'loo)
Finsberg, GeoffreyLloyd, Peter (Fareham)
Fisher, Sir NigelLoveridge, John
Fletcher, A. (Ed'nb'gh N)Luce, Richard
Fletcher-Cooke, Sir CharlesLyell, Nicholas
Fookes, Miss JanetMcCrindle, Robert
Forman, NigelMacfarlane, Neil
Fowler, Rt Hon NormanMacGregor, John
Fox, MarcusMacKay, John (Argyll)
Fraser, Rt Hon Sir HughMacmillan, Rt Hon M.
Fraser, Peter (South Angus)McNair-Wilson, M. (N'bury)
Fry, PeterMcNair-Wilson, P. (New F'st)
Galbraith, Hon T. G. D.McQuarrie, Albert
Gardiner, George (Reigate)Madel, David
Gardner, Edward (S Fylde)Major, John
Garel-Jones, TristanMarland, Paul
Gilmour, Rt Hon Sir IanMarlow, Tony
Glyn, Dr AlanMarten, Neil (Banbury)
Goodhart, PhilipMates, Michael
Goodhew, VictorMaude, Rt Hon Sir Angus
Goodlad, AlastairMawby, Ray
Gorst, JohnMawhinney, Dr Brian
Gow, IanMaxwell-Hyslop, Robin
Gower, Sir RaymondMayhew, Patrick
Grant, Anthony (Harrow C)Mellor, David
Gray, HamishMeyer, Sir Anthony
Greenway, HarryMiller, Hal (B'grove)
Grieve, PercyMills, Iain (Meriden)
Griffiths, E. (B'ySt. Edm'ds)Mills, Peter (West Devon)
Griffiths, Peter Portsm'th N)Miscampbell, Norman
Grist, IanMoate, Roger
Grylls, MichaelMolyneaux, James
Gummer, John SelwynMonro, Hector
Hamilton, Hon A.Montgomery, Fergus
Hamilton, Michael (Salisbury)Moore, John
Hampson, Dr KeithMorgan, Geraint
Hannam, JohnMorris, M. (N'hampton S)
Haselhurst, AlanMorrison, Hon C. (Devizes)
Hastings, StephenMorrison, Hon P. (Chester)
Murphy, ChristopherSpeller, Tony
Myles, DavidSpence, John
Neale, GerrardSpicer, Michael (S Worcs)
Needham, RichardSproat, Iain
Neubert, MichaelSquire, Robin
Newton, TonyStainton, Keith
Onslow, CranleyStanbrook, Ivor
Oppenheim, Rt Hon Mrs S.Stanley, John
Osborn, JohnSteen, Anthony
Page, John (Harrow, West)Stewart, Ian (Hitchin)
Page, Rt Hon Sir G. (Crosby)Stewart, A. (E Renfrewshire)
Page, Richard (SW Herts)Stokes, John
Parris, MatthewStradling Thomas, J.
Patten, Christopher (Bath)Tapsell, Peter
Patten, John (Oxford)Tebbit, Norman
Pattie, GeoffreyTemple-Morris, Peter
Pawsey, JamesThatcher, Rt Hon Mrs M.
Percival, Sir IanThomas, Rt Hon Peter
Pink, R. BonnerThompson, Donald
Pollock, AlexanderThorne, Neil (Ilford South)
Porter, BarryThornton, Malcolm
Powell, Rt Hon J.E. (S Down)Townend, John (Bridlington)
Prentice, Rt Hon RegTownsend, Cyril D, (B'heath)
Price, Sir David (Eastleigh)Trippier, David
Proctor, K. HarveyTrotter, Neville
Pym, Rt Hon Francisvan Straubenzee, W. R.
Raison, TimothyVaughan, Dr Gerard
Rathbone, TimViggers, Peter
Rees, Peter (Dover and Deal)Waddington, David
Rees-Davies, W. R.Wakeham, John
Renton, TimWaldegrave, Hon William
Rhodes James, RobertWalker, Rt Hon P. (W'cester)
Rhys Williams, Sir BrandonWalters, Dennis
Ridsdale, Sir JulianWard, John
Rifkind, MalcolmWarren, Kenneth
Rippon, Rt Hon GeoffreyWatson, John
Roberts, M. (Cardiff NW)Wells, John (Maidstone)
Roberts, Wyn (Conway)Wells, Bowen
Ross, Wm. (Londonderry)Wheeler, John
Rossi, HughWhitelaw, Rt Hon William
Rost, PeterWhitney, Raymond
Sainsbury, Hon TimothyWickenden, Keith
Scott, NicholasWiggin, Jerry
Shaw, Giles (Pudsey)Wilkinson, John
Shaw, Michael (Scarborough)Williams, D. (Montgomery)
Shelton, William (Streatham)Winterton, Nicholas
Shepherd, Colin (Hereford)Wolfson, Mark
Shepherd, RichardYoung, Sir George (Acton)
Shersby, Michael
Silvester, FredTellers for the Noes:
Sims, RogerMr. Spencer Le Marchant and
Skeet, T. H. H.Mr. Carol Mather.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House, noting that Government expenditure on financial assistance to industry in the regions continues at high levels, supports the Government's policy of concentrating regional assistance on the areas of greatest need; notes that regional assistance is provided at the expense of individual and corporate taxpayers throughout the whole of the United Kingdom; and believes that Government interventions are less important than the efforts of existing and new managements and their workforces to be competitive and so to secure prosperity and fuller employment in the regions.