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Industry (West Midlands)

Volume 892: debated on Friday 23 May 1975

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3.2 p.m.

My subject is the industrial problems that we have in the West Midlands.

As that intervention indicates, the fears and worries we have are shared by both sides of the House.

There was a time when, from Bombay to Buenos Aires, if someone bought a candlestick or an ornament and turned it upside down, the chances were that it would have "Birmingham" stamped on it. Unfortunately, those times have passed. History lingers on, and from Whitehall to Widnes, and, I have no doubt, down as far as Cardiff, Mr. Deputy Speaker, people still retain the impression that we in the West Midlands are the blast furnace and the metal shop of the British Isles and that we have no problems.

I want to disabuse the House and Government of such views, as I have tried to do over the five years I have been in this House. We in the West Midlands have many serious problems as was revealed in an extremely penetrating and revealing article published in The Guardian of Tuesday. As it pointed out, although we in the West Midlands are still the heart of Britain's industrial capacity, still producing over 60 per cent. of this island's exports, we have massive and extensive problems.

It is in that very concentration and dependence that we find most of our problems. As yesterday's economic debate revealed, we find most of our problems tied up with this question of investment and productivity. It is not surprising, therefore, that so much of the problem should be concentrated in the West Midlands which has such a heavy dependence upon industry. We have to remember as a community that to be able to live with a reasonable standard of living we have to export. To export we have to produce at the right price, at the right time and in the right quantity. If we do not do so, our standard of living will decline. We knew that in the 19th century but unfortunately over the past 70 years or so that is a fact of life that we have increasingly forgotten.

Those of us who represent the West Midlands, which for 150 years or more has produced the essential goods that this country has sold to maintain the standard of living of this small island, are not selfish when we come here to point out current weaknesses. We do so because we want the country to prosper as well as our region. In this debate my intention is to urge the Government to recognise our problems and urgently to do something about them.

Our problems are manifold. We suffer from low investment and extremely low productivity, particularly when it is compared with that of Japan, Germany and France. We have high unit wage costs. Consequently, we have very low profits. If we in the West Midlands are doing badly, the United Kingdom as a whole must be doing badly. Though we in the West Midlands support successive Government policies for development in the regions, if the foundation of our economy which rests in the West Midlands is not strong there is not much point in patching up the roof and the walls.

Reference to the economic indicator showing how we compare with industry throughout Britain will illustrate the sad state that we are in. Average productivity in the West Midlands as a percentage of that of the United Kingdom was 97 per cent. in 1958. By 1968 it had fallen to 92 per cent. Unit labour costs in the West Midlands as a percentage of the United Kingdom stood at 105·3 per cent. in 1958. By 1968 they had risen to 108 per cent. Profits per employee in the West Midlands compared with the United Kingdom stood at 89 per cent. in 1958. By 1968 they had dropped to 82 per cent.

That shows a pretty disastrous state of affairs. If that is the sort of economic background against which we in the West Midlands have to work, the United Kingdom as a whole stands no chance of dealing with its basic underlying weakness, which is a poor and inadequate industrial structure badly financed, badly capitalised and, in many respects, badly run, with high wage costs and low productivity. We cannot sustain the standard of living which we have enjoyed in the past unless we do something about this situation.

No one in the West Midlands with whom I have discussed the affairs of the West Midlands has attacked regional policy, development aid—call it what one will. There is an underlying feeling that perhaps we have neglected the principal area in which we produce the bulk of our industrial wealth and that, consequently, the economy of Britain has suffered.

However, we have some hopes. There is a ray of hope in the Industry Bill if, when it becomes an Act, it is not used solely as a development tool but is applied to the West Midlands industrial economy. The planning agreement system, if it is applied to West Midlands industry, could reveal the underlying weaknesses to which I have referred. Some weeks ago the Chancellor of the Exchequer said that he would consider very closely the problems of foundries—we have many small foundries in the West Midlands—and he suggested that £100 million might be made available to assist foundries. Today the Prime Minister suggested that the textile and footwear industries might be assisted. We would hope that, as with the textile and footwear industries, the foundry industry will be assisted. I should be grateful if the Minister could, if not today then early in the future, give some indication of that.

What we need in the West Midlands at the earliest possible moment is an extensive analysis of our problems. The Government have already been given something of a lead by the timely document, drawn up by the West Midlands County Council, "A Time for Action". It is probably one of the most thorough appraisals ever carried out on the West Midlands economy, although I must point out that the Regional Economic Planning Council and the former metropolitan boroughs have done similar exercises but that precious little notice was ever taken of them.

The Government should read the document that has been drawn up carefully and give a positive response to it. The document reveals, for example, that the West Midlands area is dominated by small firms which are very vulnerable to the slightest flutter in the economy. We have a specialised structure. The small firms are closely linked to the major firms in the region, such as British Leyland. This makes us vulnerable to any kind of economic downturn. That feature exists at present with the rapid increases in the level of unemployment.

The dependence that many of our industries have, for example, on the car industry is a factor that should be borne in mind in any analysis that the Government make about the future of the West Midlands economy. Although we realise that the car industry is there and must stay there, we should like to see much greater diversification of our industrial structure than exists at present.

I ask the Minister to cast his mind back to 1972, when there was a rapid increase in unemployment. Then there was evidence enough of the serious imbalance in our economy. At the beginning of 1971 we stood second from the top in the league table of the employment status, but by the end of 1972 we had gone down and were second from the top in the unemployment league. We are extremely vulnerable to these economic downturns.

The fear in the West Midlands at present is that the situation will get rather worse in the future—even worse than the current deplorable level of unemployment. We recognise that the remedies will be long-term. We do not ask for immediate and spontaneous action, but we should like an early indication by the Government that they recognise our problem. Equally, we recognise that the aid that has been granted to British Leyland, to enable it to restructure and reinvest, will be of great importance to us.

However, we want to ensure that that aid is spent in the most profitable way. We do not want to find, for example, that £3,000 million of investment goes into British Leyland and that the retooling and restructuring that is carried out merely results in British Leyland going abroad to buy machine tools.

A timely article was published in The Times on Thursday 22nd May entitled "Investment warning by machine tool firms". This indicates that there is a serious possibility of the machine tool industry not being ready to take advantage of the investment that is going into British Leyland. Mr. A. M. G. Galliers-Pratt, president of the Machine Tool Trades Association said that
"The industry … would be unable to meet the time-scale of massive capital projects such as the British Leyland plan."
He said that this was because the British Leyland plan was being implemented rather quickly and his industry did not, therefore, have sufficient time to prepare for the reinvestment that British Leyland will carry out in the next decade or so. With the inevitable redundancies that will result from the restructuring of British Leyland, we shall have the problem of retraining and re-equipping people for the new industry that we hope will come to the area.

In order to deal adequately with the restructuring of British Leyland and with the problems of people leaving that industry and going into others, there must be growth. There is little human point in restructuring the car industry and producing a profitable enterprise if, at the end of the day, we double, treble or even quadruple unemployment. We must ensure that the restructuring of British Leyland goes ahead in as planned a way as possible. We recognise that there will be some unpalatable effects, but we must ensure that retraining facilities are made available, that growth within the economy takes place, and that alternative jobs are made available.

I do not expect the Ministry to make any dramatic announcement today about the West Midlands. We in the West Midlands are not being over-selfish in pointing out our problems to the Government. We do so in the interests of the economy as a whole because we know that if we, as the heart of industrial Britain, do not prosper, no one will prosper.

Although what I have said today may appear to have been rather selfish coming from a region that has known fairly high levels of employment over the past 15 years, I have presented the case in a spirit of wanting Britain's industry to prosper—not in a carping spirit, but in a constructive spirit, hoping that the Government will come forward at the earliest possible moment with positive proposals to help us to restructure industry and to modernise it within the West Midlands and, in so doing, make a positive contribution to Britain's economic recovery.

3.16 p.m.

I understand that the Minister agrees to the hon. Member having three minutes of his time.

I am grateful to the hon. Member for Birmingham, Northfield (Mr. Carter) and to the Under-Secretary for their courtesy and co-operation in allowing me a few valuable minutes to raise a subject of particular importance to West Midlands industry about which I know they share my concern.

I speak of the motor cycle industry in the region and the announcement made this morning by the Chairman of NVT that a decision was needed from the Government by the end of July about the injection of additional capital of £30 million to £40 million into this industry, otherwise it would have to go on to short-time working and face redundancies. A number of shop stewards were in touch with me this morning to express their concern.

I realise that this is not the Under-Secretary's speciality and I do not expect a concrete reply from him this afternoon. However, I urge that at the earliest possible opportunity after the recess a statement should be made and we should have a chance to debate this very important issue, because the fears which I voiced as long ago as 20th December 1974 in another Adjournment debate and which were repeated in a debate on the motion relating to finance for Norton Villiers Triumph on 5th March have proved to be only too well founded.

Those fears were that the encouragement of the Meriden project—I do not speak of its merits or otherwise as an experiment—has resulted in danger to the jobs of others working in the motor cycle industry. It has necessitated the investment of an additional £30 million or £40 million of public money and it is based on market assumptions which as long ago as December I said were optimistic and which have now been proved to be wildly optimistic.

There is, therefore, very real concern, and I should be grateful if the Minister would assure us that this has been taken on board by the Government and that there will be an opportunity to discuss the matter in the House.

3.18 p.m.

I intervene briefly in this debate, because of the very tight limitation on time—

Has the hon. Gentleman reached agreement with the Front Bench speaker?

Just for one minute.

I intervene to say how much I welcome the fact that the hon. Member for Birmingham, Northfield (Mr. Carter) has raised this subject today. The hon. Gentleman was right in saying that the concerns to which he referred are shared on both sides of the House. The reports which have been prepared locally and to which the hon. Gentleman referred merit serious and urgent study by the Government.

There is not time for me to add to what the hon. Gentleman said about the background to the problems. The Birmingham Chamber of Industry and Commerce, which is highly experienced in these matters, has expressed great concern about the future. It is clear from the latest unemployment figures that that concern is well merited.

There is anxiety also about the growing obsolescence in parts of industry in the West Midlands, because, as a result of Whitehall controls, there has been a tendency for the new science-based industries to be diverted to other parts of the country.

I support many of the points made by the hon. Member for Birmingham, Northfield (Mr. Carter). Some of the Government taxation policies and many of their legislative measures cause considerable worry to people conducting commerce and industry in the West Midlands, because they believe these policies and measures will damage the capacity of their businesses and, therefore, the provision of jobs in the future. These doubts and fears are felt particularly strongly by the small and medium companies which make such a valuable contribution to the West Midlands economy.

I hope the Minister will indicate that the Government understand the apprehensions which are developing in the West Midands, that he appreciates the tremendous contribution which this region can make to the prosperity of the country, and that he will take very serious account of the points which have been put to him.

3.21 p.m.

We are all indebted to my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) for having initiated this debate on a matter which I know is of great concern throughout the West Midlands.

I assure all hon. Members that the Government are very well aware of the problems which the region is facing at the moment, and we certainly take on board all the points which have been made in the debate. If I fail to answer all of the matters which have been raised, I assure hon. Members that it will not be due to lack of courtesy on my part. I shall write to hon. Members and, indeed, I shall be happy to see any of them at any time in order to discuss these matters at greater length.

My hon. Friend properly pointed out that the area has for many years been heavily dependent upon metal-using industries, such as engineering and motor car manufacturing, both of which industries are going through a very difficult period. I think this is one of the reasons which prompted my hon. Friend to raise with me the question of diversification of industry in the West Midlands.

If I may remove my ministerial hat for a few seconds and speak as an ordinary Member of Parliament who represents a Clydeside constituency, as does my hon. Friend the Under-Secretary of State for the Environment, the Member for Glasgow, Kelvingrove (Mr. Carmichael), who is present, I should like to say that we are both very conscious that we on Clydeside were for so long dependent on heavy engineering, shipbuilding, steel making and so forth, and that it was our desire to ensure a degree of diversification.

I hope that the National Exhibition Centre, which I saw from the train when I was going through Birmingham last week, will be a long-term venture and will prove to be of value in creating this kind of diversification and in bringing some new service jobs into the West Midlands. Nevertheless I know that the engineering and motor manufacturing industries have formed the basis of prosperity of the area, and I hope that they will continue to play this active rôle which is valuable not only to the West Midlands but to the country as a whole.

My hon. Friend, as did other hon. Members referred to the West Midland Metropolitan County Council's Report "A Time for Action", and I know that the planning board has been studying the situation in depth. We are all grateful to the board for the study that it has undertaken, and I give the categorical assurance that the results of this work will be given the most careful consideration by the Government.

In the report, and at various times when I have been in the West Midlands, it has been represented to me that we should modify our IDC policy and grant assisted area status to the region and promote the area to attract new industry. I sympathise with all of these points, but, as we all know, there is a very limited supply of mobile industry available, and in promoting industrial development we must concentrate our assistance on those areas where unemployment is very high—in Scotland, South Wales, the North-East and so forth. However, that is not to say that we shall neglect the problems of the West Midlands.

My hon. Friend was particularly concerned about the lack of investment in the West Midlands and the United Kingdom generally. One of the reasons for the current unemployment rates referred to by the hon. Member for Hall Green (Mr. Eyre), is that there has been a failure by the private sector to invest as much as we would have liked, although I do not expect to carry Conservative Members with me on that point. Over the past decade private enterprise has failed to invest sufficiently which is why at two successive General Elections we canvassed the notion that we are now putting forward in the course of the Industry Bill Standing Committee. It is because we believe that the Industry Bill is so important for investment that we are anxious to have it on the statue book as quickly as possible.

My hon. Friend asked whether the Industry Bill when enacted would be used only in the assisted areas. On Second Reading of that Bill my right hon. Friend the Secretary of State for Industry sought to draw special attention to the need for increased investment in the engineering industry in the West Midlands. Once we have the National Enterprise Board and the planning agreements system, we shall have much wider powers to stimulate investment throughout the country and we shall get a very much better understanding of the problems facing industry in areas like the West Midlands in the course of contact with those companies.

My hon. Friend, like other hon. Members, has been concerned about the situation of British Leyland. I was present the other day to hear their speeches and I hope that the measures we have taken over the past few days will be of considerable help not only to the motor manufacturing industry but to the West Midlands generally. I do not think we can take the substantial investment in British Leyland in isolation. Much of the money which will be spent by British Leyland will go to British manufacturing firms, particularly the small firms, and I am always interested in that aspect of the matter because it is one of my particular responsibilities in Government.

One of my hon. Friends said in the course of the British Leyland debate that it was important that that company should buy British. Of course, it is up to British Leyland and other British companies to buy British components and I hope very much that that will happen. This is a question for the components industry and the machine tool industry, both of which are so important in the West Midlands.

There has been reference to the motor cycle industry. I am conscious of the importance of this matter, although I cannot pretend to have any specialised knowledge of it, as could one of my colleagues in the Department. However, if it employs 3,000 people it is important. My right hon. Friend the Secretary of State is much concerned about it. He has invited representatives of the industry in the West Midlands to have discussions with the view to reviewing the situation. In addition to representatives of my Departments, representatives will also be present from the Norton Villiers Triumph management and the Meriden co-operative. The Department is already involved with the motor cycle industry, its problems and its prospects, and we have commissioned services and consultants, and a multipartite review will be taking all these matters into account.

My hon. Friend was concerned about training, retraining and employment prospects for young people in the West Midlands. There are four skillcentres in the region and two new centres are to open this year, making a total of some 1,500 places. In addition, 120 trainees are under training in employers' establishments and another 1,200 are taking part in courses in colleges of further education. Since we are all conscious that these days there is this great need for training and retraining as the industry changes its pattern, my hon. Friends in the Department of Employment will be constantly watching this point, especially in the West Midlands and areas like it.

Order. The time allocated for this debate has been exhausted. The Minister is now taking up the time of the next debate.

I apologise, Mr. Deputy Speaker. I shall conclude by stating that I take on board the points which have been raised. If I have failed to answer them all, I shall certainly deal with them in correspondence with my hon. Friend.