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Industrial Development(Northern Region)

Volume 959: debated on Friday 1 December 1978

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3.36 p.m.

I beg to move,

That this House, recognising the considerable contribution made to the Northern economy by regional asistance, calls on the Government to reaffirm its commitment to regional policy, and to consider increased help to special development areas, the introduction of further subsidies related to employment, and more help for small firms; and, while believing that the setting up of a development agency would be in the long-term interests of the North, requests the Government to provide for better co-ordination in the region, so that the North is able to speak with one voice.

This is the second Friday on which we have discussed Northern matters. I make no apology for that because, despite all that has been achieved by regional policy, in many respects the Northern region still lags behind many other regions—and certainly behind the South.

We can see that this is true if we glance at the relative job opportunities, the activity rates, the housing figures and the statistics relating to incomes, education and health. They show that the Northerner is likely to be born, and indeed to remain, at a disadvantage compared with the Southerner.

Let me briefly deal with some of the statistics which I am sure my hon. Friend the Under-Secretary of State for Industry will not challenge. On the subject of health, despite considerable improvements, the statistics relating to incapacity due to sickness, rate of mortality and incidence of chronic illness are all higher in the North than the national average, and much higher than in the South-East. Although the number of hospital beds per 1,000 is slightly better in the Northern area than the national average, the figure is well below a number for other areas, and certainly well below what it should be, given the needs.

On the subject of housing, despite a number of improvements, in terms of unfit dwellings, lack of basic amenities and repairs the statistics show that once again the Northern region is well below other regions.

On education, the record is not so unfavourable when one examines the pupil-teacher ratio. Indeed, that ratio is slightly above the national average. But, if we examine the crucial statistics relating to the proportion of pupils staying on at school beyond the statutory leaving age, there is a lower proportion in the North compared with any other region except one.

Of course, the best known statistic about the Northern region is that relating to unemployment. The region has had consistently higher unemployment ratios than any other region, except Northern Ireland. On the important matter of incomes, the average weekly income in the North is below the national average.

These statistics are well known and, indeed, the causes of the statistics are also relatively well known. The main cause is the economic and industrial weakness of the Northern region compared with other regions. It is very much like our national economic situation compared with other stronger economies. If one region cannot compete fully with other regions, it will have a trade and capital flow deficit, a lower domestic product and a higher level of unemployment. It will also have a lower level of earnings and a lower standard of social provision. That is what we are experiencing in the Northern region.

The reason for our industrial weakness is again well known. A number of reports have examined this situation. I refer, for example, to the excellent report of the Northern region strategy team which examined and identified our well-known over-dependence on large-scale heavy industry and the failure to adapt to market changes, except fairly recently and only in respect of one or two industries. That has meant that our employment has declined at a faster rate than the rate of creation of jobs in new firms, hence our high level of unemployment. Over-dependence on heavy industry affects the whole situation. The report from the strategy team states:
" The nature of the indigenous sector and its past problems of structural adjustment have created an interlinked set of social, economic and environmental problems that are now inhibiting economic growth."
As employment has been concentrated mostly in manual grades the growth in education, in training and in managerial, professional and technical skills has not been sufficiently stimulated. There is also the legacy of ugliness and decay left by heavy industry, which is in marked contrast with the great beauty of the Northern region.

Surely the case for a regional policy is a strong one. Once a regional economy starts to fall behind it is extremely difficult for it—the same applies to a national economy—to catch up with the others. There is the power of attraction of the more successful regions. In the North there is also the problem of geographical distance from the main centres of decision-making. There is the well-known statistic—I am sure that my hon. Friend the Under-Secretary of State knows it well—that 42 of the top 62 large companies in the Northern region have headquarters outside the region.

Government action is needed. That is the case for regional policy. It is part of my argument that without regional policy the Northern region would be a good deal worse off than at present. In education, housing and social and cultural amenities the gap has been narrowed. The great communications revolution of the 1960s in the north means that we have a first-class set of roads. They are, perhaps, second to none in the whole of the United Kingdom. In industry our investment and manufacturing-productivity ratio has begun to catch up with the national average. The Northern strategy team has shown that 50,000 new manufacturing jobs were created between 1963 and 1973.

The industrial structure has been improved by regional policy. There is a diversification of industry. At Washington new town, in my constituency, there are jobs in light enginering and all sorts of different manufacture. Jobs are not concentrated in the old large-scale heavy industries.

However, one of the most encouraging features is that some of our heavy industries have considerably improved their performance. I have in mind coal. But as I am sure my hon. Friend the Member for Wallsend (Mr. Garrett) knows we have had great difficulties in shipbuilding and there are still difficulties ahead of us in steel that we shall have to tackle.

So regional policy has been worth while. I reject the argument, from wher- ever it comes, that it is not worth the money. I hope that my hon. Friend similarly rejects that argument. Indeed I should like him to reaffirm this afternoon the Government's commitment to regional policy. It is felt by some of us that the amount of resources now going into regional and industrial aid is not as great as it once was. The regional employment premium has been removed.

We are also worried about some aspects of industrial strategy. I am not saying that I do not support industrial strategy. When I wear my other hat as vice-chairman of the PLP industry group, I am certainly a supporter of the strategy. The accelerated project scheme is an increasingly important part of the money being spent on industry. However, we find that only 7 per cent. of the money from the scheme went to special development areas and only 4 per cent. to the Northern region. It is true that the Government have introduced the inner city programme and that many of our cities in the North are benefiting from it. However, it is not a regionally based programme. So I should like a reaffirmation of the Government's commitment.

I should also like the Minister to consider some specific changes in regional policy. There is a case for saying that the special development areas ought to have a bigger differential in investment grants than they do at the moment. There is also a case for saying that we need more regional incentives and grants which are specifically employment-related. We have had the regional employment premium taken away. The temporary employment subsidy is now a national subsidy. We need more help in that area, because much of the money is going—rightly, of course—in capital projects, and it does not necessarily help our employment problem as much as it should. That is something that we should look at.

The service sector is, in a sense, our weakness but also our strength. The fact is that we could have many more jobs created in that sector, because we are so much behind the national average. I appreciate the help that the Department of Industry is now giving in this area, but what we need to do is to help firms that are already in the area and that wish to expand. That would be of importance to us. I welcome what the Government have done in relation to small firms, but we should like to have more help there.

Finally, I should like to say a word about the contribution of the North. We do not wish to be a mendicant economy. We do not wish to come with the beggar's bowl. We know that in the end our salvation will come from within the region and from the creation of our own enterprise. But for this we have to work together, not only in terms of help from Whitehall but by improving our own industrial performance. I support the long-term goals of a development agency and of an elected regional assembly, but in the short term I back the ideas of the Northern Regional Labour Party document"Let's Pull Together ".

We have a lot of different bodies in the area. We have districts, we have counties, we have the National Enterprise Board, we have the National Economic Development Council, and the regional planning council and so on. But they do not always pull together. Now we have a new body, the North-East County Councils Association, comprising the counties in the North, but not including Cumbria, which have got together. I am glad that they have got together—though perhaps they should have the districts with them.

However, I am disturbed about the very much publicised dispute between the NEDC and the counties and so I strongly support the Northern Regional Labour Party's plan for strengthening the regional planning council. This plan, incidentally, is backed by the trade unions in the area and by many Labour Members of Parliament. I should like to know how the Government are getting on with the consultations which I understand are taking place.

Finally, I wonder whether my hon. Friend the Minister will agree with me that our case in the North will be gravely weakened, despite its undoubted merits, if we cannot unite.

3.48 p.m.

The motion before the House, as has already been pointed out, carries on directly from the debate last week on unemployment in the North. I should like to thank the hon. Member for Chester-le-Street (Mr. Radice) for curtailing his speech and thereby allowing me to make a short contribution to the debate.

In the debate last week it was brutally obvious, as more and more hon. Members made their contributions that this country is not providing the solutions that are needed at present to overcome our huge unemployment problem. In the North over the years a series of bodies and agencies, under a variety of names, have been set up. They have produced a variety of reports, mainly concentrating their attention on the north-eastern side of the Northern region, but after all these reports we still do not find any real prospect of growth, development and job opportunity.

I believe that in the Northern region we run into the danger of worrying about what Scotland is getting, what Wales is getting, and what other deprived areas of the country are getting, rather than concentrating on the real reason for our failure, which is the absolute collapse of the mainstream of our economy.

When I entered the House over two years ago, the Prime Minister announced, to a fanfare of trumpets, that he intended to watch personally over the industrial strategy, of which we hear so much and see so little. Practically every index that one consults today shows that the United Kingdom is sliding and slipping further and further behind other industrial nations. If comparisons of our industrial production were carried out today, we should find that we were struggling to reach our 1973 level. If we discount the effect of North Sea oil, we are 4 per cent. behind.

We in the North tend to forget the poor state of the rest of the country. Therefore, we tend to look at our problems in isolation and not within the overall national context. I believe that the main hope of improvement in the North lies in the creation of a favourable national economic climate. Surely, only through the creation of an atmosphere of hard work, initiative, innovation and the encouragement of rewards can we start to climb back to any form of prosperity.

I know of the resentment felt by the low-paid when they see others enjoying a better life style whilst being unemployed. We must lay emphasis on creating an environment in which our industries can operate profitably and people find it worth while to work, to learn new skills and to accept any form of promotion. Our taxation policy and package, with its direct tax cuts, must be the key to this improvement.

While we believe in this, we must also accept that in the foreseeable future we must maintain aid to certain highly deprived areas of this country. As such, we shall need and must have a strong regional policy in addition to the Welsh and Scottish Development Agencies.

The Government, with their grants and special schemes, are eroding the effect of having any black spot declared a special development area. That point has already been touched on today. Unless we are careful, we shall need special special development areas. If and when that happens, all that will have been achieved will be another set of rules to administer another bureaucracy.

Whilst being aware of the problems in the Northern region, we must also be aware of the problem of finding a blanket solution. I should like to draw to the attention of the House that Cumbria, to the west, is a much smaller industrial complex than, and quite a distance from, the North-East. As such, there is a feeling of being the poor relation, especially with so many headquarters being established in Newcastle. I believe that feeling is responsible for Cumbria's decision to join the North West Industrial Development Association—NORWIDA. By moving over to that industrial association, it hopes to achieve a greater degree of attention.

I should like to go on, but the clock has beaten us and I want to hear what the Minister has to say in winding up.

3.54 p.m.

I thought that my time was going to be even more truncated, but I know that my hon. Friend the Member for Chester-le-Street (Mr. Radice) will listen very carefully to what I have to say.

My hon. Friend the Member for Wallsend (Mr. Garrett) will, I know, listen very carefully to what I have to say.

Yes, but the hon. Gentleman has only just come in.

I apologise to my hon. Friend the Member for Chester-le-Street for not having more time to reply to many of the detailed points that he made. However, I should like to do that in correspondence because he put a great deal of care and consideration into what he said. Obviously, from the facts and figures which he produced, he has as usual looked into the matter very carefully. That kind of research and that kind of methodical presentation deserve a careful reply and I want to ensure that my hon. Friend gets that, if not now, at least in correspondence. I give that assurance.

The hon. Member for Workington (Mr. Page) must convince his own Front Bench of what he was trying to say. Certainly it is the impression of my right hon. Friend the Secretary of State for Industry and myself that the Conservative Front Bench does not really want to see a regional policy. It is not for him to come into this Chamber at 3.55 p.m. on a Friday afternoon and speak in favour of regional policy when for most of the week his own Front Bench seems to speak against it.

Mr. Richard Page rose

When one looks at the statistics for the North-East one realises that it has always had a serious unemployment problem. In the 1930s unemployment reached a staggering 28 per cent. One in three was out of work. That is the kind of background which my hon. Friend and his constituents know only too well.

I hope my hon. Friend will note that the figures produced by the Northern Regional Strategy Team show that, while between 1965 and 1975 about 104,000 jobs were lost in the traditional industries in the Northern region, about 50,000 jobs were created in the 10 years up to 1973. I hope my hon. Friend will recognise that the loss has been compensated for. I hope he will also recognise that this has been achieved by some of the policies that the Labour Government have put into practice.

When he talks about the North always being bottom of the pile and bottom of the league in statistics, I hope my hon. Friend will recognise —

I am glad that my hon. Friend said that, because I intend to give one which shows that the North does very well. Under this Government over £522·8 million in regional development grants has gone to firms in the Northern region—that is, over 34 per cent. of the total for Great Britain and higher than for any other region.

I could give many more figures. I could talk of regional selective financial assistance between 1974 and 1978, which is employment-based, and as a result of which, we estimate, more than 38,000 new jobs will be created in the region and a further 18,000 safeguarded. I could talk about advance factories. By the time that all these are filled, about 9,500 additional jobs will have been created. I could talk about the 4,000 new jobs that the region will gain from dispersal. Total assistance to industry in the region between 1974–75 and 1977–78 amounted to £699 million, or £224 per head of the population, which compares favourably with other regions.

I am glad my hon. Friend recognised that we must tackle this problem as a nation. The document produced by the northern regional council of the Labour Party—" Let's Pull Together for a Better North "—recommended a strengthening of the Northern Economic Regional Planning Council. The Minister of State, Department of Industry, and the Under-Secretary of State for the Environment have made two visits to hear the views of the North on these proposals. The Government are still giving serious and urgent consideration to them and will be making a statement as soon as possible.

I hope that there will be a general recognition that this Government's policies have led to the industrial base of the region becoming more diversified. Certainly I should like to think that, when the economy begins to grow more quickly, what has been done—with regional development grants, regional selective financial assistance, industrial development certificate policy, and advance factories—will mean that when the upturn comes the North stands better poised as a result.

I shall certainly take to heart very seriously the statistics and points that my hon. Friend has put. I shall reply to him in more detail in correspondence.

Question put and agreed to.


That this House, recognising the considerable contribution made to the Northern economy by regional assistance, calls on the Government to reaffirm its commitment to regional policy, and to consider increased help to special development areas, the introduction of further subsidies related to employment, and more help for small firms; and, while believing that the setting up of a development agency would be in the long-term interests of the North, requests the Government to provide for better co-ordination in the region, so that the North is able to speak with one voice.