Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Orders of the Day — Regional Policy

Part of the debate – in the House of Commons at 5:08 pm on 8th July 1981.

Alert me about debates like this

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

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.