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Unemployment (Cleveland)

Volume 23: debated on Friday 14 May 1982

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Brooke.]

2.33 pm

I am pleased to have this opportunity to raise in the House the question of the level of unemployment in Cleveland. We on Teesside regard the present levels of unemployment as a scandal in a civilised society and as a sad waste of human resources and other resources which could benefit our area and the whole country and as a personal tragedy for many individuals and their families who are suffering as a result of being unemployed. The position is truly horrific. I do not think that I can illustrate it better than to deal initially with the position of young people who are unemployed in Cleveland.

Immediately before the end of the spring term the unemployed register for young people was higher than in any previous comparative period. There were only 10 permanent vacancies at careers offices and 4,262 young people were eligible to leave school at the end of the term. About 80 per cent., or 3,439, have returned to continue education. One hopes that they will qualify and go orb to employment. Only 823, or 20 per cent., of those eligible to leave school did so to seek employment, of whom 414 entered the youth opportunities programme or other schemes and 356 were registered as unemployed. Only 43 out of the 4,262 entered normal employment. That is the scale of the tragedy in Cleveland.

Of the young people on the register, 1,132 have been unemployed for between six and 12 months and 1,627 for over one year. The figures are unprecedented. They cry out for the attention of the House and the Government.

Overall in Cleveland 18·5 per cent., or 50,000, of the work force are unemployed. The regional figure is 16·3 per cent. and the national 12·6 per cent. The county has the second highest unemployment figures in the country. We share that position with two others. The Western Isles has the highest. Our position has deteriorated over the past five years. In 1976 we were sixteenth with only 6·7 per cent. unemployment. By 1978 we were in seventh position with 9·2 per cent. The situation is now desperate. In pockets in the county unemployment is over 20 per cent.—over one in five of the potential work force.

The situation in Cleveland reflects the national picture of over 3 million unemployed. When the rest of the economy catches a cold we get pneumonia, as has been said many times. Over the past three years national income has fallen by about 7 per cent. in real terms. Manufacturing production has dropped by 20 per cent., which is worse than the experience 50 years ago in the depression in the inter-war period.

Many other parts of the country are experiencing a similar tragedy. Without Government action to change the national situation, Teesside will not recover. We have experienced a terrible decline in the past year. Our major industries have cut back further and further. One such major industry, steel, had 3,700 local job losses announced in the MacGregor plan in 1980, originally to be spread over two years. The plan was revised and all the jobs were lost in 1981. The British Steel Corporation has since called for a further reduction of 1,900 in its Cleveland labour force.

ICI's petrochemicals division based on Teesside has merged with the plastics division because of the serious difficulties. It is sad that that once-thriving plant on Teesside has such bleak prospects. Already substantial numbers of jobs have been lost.

Press reports suggest that about 13,700 jobs in the area were lost in 1981. That includes the 3,700 jobs lost at the British Steel Corporation and the losses announced before the end of the year, which have not yet occurred. Of the total number of jobs lost in the area, 2,375 were due to closures and 11,330 to contractions in existing plants.

The desperate situation demands action by the Government and by the people in the area, in so far as they are able to make an impact. My colleagues and I have made proposals on how the national position can be improved. We want the Government to take a number of steps to increase activity in the economy, and to reflate the economy which will create an increase in the number of jobs available. We have spelt out how we believe that can be achieved.

We propose that a £70 a week grant be paid to every employer who takes on an additional worker who has been unemployed for over six months. Secondly, we propose a job guarantee for the long-term unemployed. Those taking part in such a scheme would be paid a bonus of £15 above their social benefit entitlement. The scheme would be organised by the Manpower Services Commission.

The third proposal is that employers should be offered £30 a week subsidy for each youth under the age of 18 whom they employ. A major training scheme should be linked to that. Each worker under the age of 18 should be provided with at least eight hours a week formal training of the job. The fourth proposal is for increases in domiciliary services. Home helps are value for money as well as being of service to people who need them.

Our programme is for the short term. It is designed to stimulate immediate employment. It must be associated with a longer-term programme of reflation involving, for example, a further cut in the national insurance surcharge. There must also be an increase in public capital expenditure of about £2½ billion for the nationalised industries and other parts of the public sector, particularly to boost the construction industry. One in eight of the unemployed are associated with building and construction work. That industry is particularly labour-intensive.

Spending on house building should be increased by about £1½ billion to provide for the rehabilitation and modernisation of old council estates and blocks. That is desperately needed, as the people of Thornaby, Stockton and Middlesbrough know only too well. That would be of particular value in the Cleveland area. We must also increase improvement grants and funds available to housing associations.

That amounts to a programme costing between £4 billion and £5 billion. It represents a steady increase in public expenditure over two years. It would help to reduce the level of unemployment throughout the country and in the Cleveland area. Without such reflation, accompanied by an incomes policy, we shall not succeed in bringing down the unacceptable high level of unemployment in the Cleveland area.

In addition, we need action at local level to help us to help ourselves. We should like the Government to reintroduce the system of industrial development certificates which they have suspended, indeed almost abolished. It is wrong that firms should be able to develop in areas that have nothing like the number of problems that we face, and we hope that the Government will consider reintroducing the IDC scheme soon.

We want the whole of Cleveland to be given special development area status. The Government believed that aid to the regions had to be changed and that assistance should be targeted to smaller areas. Their policies have resulted in a cut in aid to the regions. The change took place in July 1979 and only the Hartlepool area of Cleveland has special development area status, but unemployment increased in Hartlepool by 37 per cent. between July 1979 and April this year and it rose by 81 per cent. in the rest of the county during the same period.

If the Minister of State studies the unemployment levels in Cleveland he will see that they are worse than the rates in many special development areas in the rest of the United Kingdom. I hope that the Government will reconsider their decision not to accede to the request of our county council and others that the whole area be given special development area status.

I hope that the Minister will enlighten us about the plans of Nissan. Two sites in the Cleveland area were proposed for the car plant which we hope will be built in this country, and we have been waiting an inordinately long time to hear the outcome of the discussions that have been taking place with the company. Our sites at Ingleby Dyke and Eaglescliffe would be ideal. They have access to transport and docking, the necessary relationship with the rest of Europe and the required on-site facilities. We could provide the company with the facilities that it needs, and we hope that it will make a speedy announcement of a decision to place the plant on Teesside, with all the jobs and spin-offs that will result.

I hope that the Government will continue to press for more aid from Europe. I was pleased to see in a recent parliamentary answer the announcement from the Department of Industry of an extension of the European regional development fund, which is making extensive provision for support for the conversion of disused buildings, consultancy services, technical innovation and other operations and facilities in the Cleveland area. I hope that the Government will ensure that those funds are fully used and will press for more such funds for the area.

One of my main messages is that I hope that there will be a change in the Government's attitude and approach to helping the regions. We want the changes that I have mentioned and we also want a move from seeking to attract industry into the area towards industry and jobs being created in the area. Instead of money being spent outside the area in seeking footlose capital or branch factories, funds should be used to provide the seed corn from which to grow our own industries.

All the evidence that we have from the Northern regional strategy team and from other reports and research demonstrates that the Cleveland area—and, for that matter, the whole Northern region—needs more home-grown industries. We have a great history of new industries starting in our region. The chemical industry, the engineering industry, the steel industry and the railway industry all began in our part of the country. They did not come as a result of money from outside the region being used to attract their businesses. They grew from within the region. I hope that the Government will change the direction of their policy so that funds come into the Cleveland area and can be used in a variety of ways to stimulate the growth of new businesses and existing businesses in the county.

Cleveland county council has taken an initiative recently to help the development of businesses and the creation of employment in the county. That is just the sort of initiative that is needed—the assistance of firms to embark upon local purchasing, both of services and of goods, the selection of capital schemes for support, the assistance scheme for employment, the flexible assistance scheme which the county is starting, the extension of the small business grant and loan scheme, and the establishment of a co-operative development agency and an enterprise agency in the county.

All the evidence that I have from my time as a Member of Parliament representing Teesside and working and living on Teesside and in other parts of the country shows that the people best able to invest money to create jobs and successful businesses are those on the ground closely associated with those businesses and the markets which they are trying to serve. That is why a local enterprise agency, a co-operative development agency and other local agencies of that type run by local business men, trade unionists and local authority representatives and their staff in the area can make a greater impact on jobs than spending money overseas or in other parts of the country to attract people to the area.

In planning their future policies I hope that the Government will look at the work being done locally, seek ways in which their funds can be used to support those local initiatives and not try to introduce broad-brush grant schemes that apply to whole areas and are administered from Whitehall or from the regional headquarters rather than by the locality.

If the Government can move in that direction they will make a major impact on the inequality that exists between our county and others in the country and be able to help to overcome some of the sadness, low morale and tragic experiences that people in Cleveland have been suffering in recent times to a growing extent. The tide must be reversed, and I ask the Minister to give us hope that the Government will do all that they can to help us reverse it.

2.54 pm

The hon. Member for Thornaby (Mr. Wrigglesworth) is to be congratulated on having secured this Adjournment debate, and I welcome the opportunity to reply to some of his points. He will have noticed, however, that he took rather a large chunk of the available time. As a result, he will have to allow me some indulgence in my not being able to deal with all the matters that he raised. If I miss any important ones, I shall, of course, drop him a note about them.

The hon. Member has made clear in his speech the deep concern he feels over the difficulties that the area is now facing. It is an area which, as he said, is mainly dependent upon chemicals, metal manufacturing and heavy engineering.

In recent years, Cleveland has benefited from a considerable number of construction jobs as a result of major investment in new chemical/petrochemical and steel plants, and the area has been successful in gaining the major share in the North-East of contracts related to the North Sea oil industry. However, major construction projects in the area have now passed their peak, and during the last three years there has been a steady rundown of the construction engineering labour force throughout the county. I greatly regret that.

In addition, there has been further rationalisation in the iron and steel industry, and more recently in chemical industry, which has resulted, alas, in substantial job losses. I can assure the hon. Gentleman that the Government are acutely aware of the problems and anxieties that confront those who lose their jobs, and whose feelings were eloquently expressed in the hon. Gentleman's speech.

We accept that unemployment is too high. Of course, we would like to see it brought down as quickly as possible, but we have to face the fact that we are in a world recession. Add to this the decade literally of low productivity, excessive public spending, high inflation and high wages, unmatched by higher productivity—which have contributed significantly to the decline in competitiveness of British industry over many years—and a clear picture emerges of the magnitude of the problem with which the Government were faced.

What we have at last begun to do is tackle the root causes. We cannot shirk that responsibility if we are to have any hope of expanding industry and creating new real jobs in the future. It is, of course, profitable businesses—not Governments—which in the end create worthwhile and durable jobs. What Governments can do is to help create the right environment in which firms are able to prosper.

Therefore, the Government's policies are aimed at developing a soundly based economy, which meats, among other things, continuing to bring inflation steadily down. The more British firms that can offer, at home and abroad, goods and services which people want to buy at prices they are prepared to pay, the more jobs we shall see both in Cleveland and, indeed, throughout the country.

There are now some encouraging signs that our policies are succeeding. Inflation has been reduced to 10·4 per cent., with a continuing fall in prospect. Total output rose in both the third and fourth quarters of last year and manufacturing productivity has gone up by less than 10 per cent. during 1981. The number of strikes in 1980 and 1981 was less than in any year since 1941, and the number of working days lost is only one-third of the average of the last 10 years.

Company profits rose by 28 per cent. between the first and fourth quarters of 1981. Improved profits are essential, as I think the hon. Gentleman would agree, if we are to get new investment and new jobs in the future from what he described as the local seed corn. This improved profit performance is no doubt one of the contributors to the improvement in business confidence that we have seen from survey evidence over recent months. Labour unit costs have stabilised and workers are now showing a new sense of realism about the effects of future wage demands on their jobs. All this is good news, but it will take time for the benefits to work through.

I cannot resist reminding the hon. Gentleman of a statistic which sticks in my mind—and, indeed, almost in my throat. In the five years up to 1980—that is, just up to the point when the great jump in oil prices took place—British unit costs in manufacturing industry went up by 100 per cent. In Canada they went up by half, in the United States they went up by one-third, in Germany they went up by one-fifth, and in Japan they did not go up. To be under starter's orders when the world recession came in 1979, against a background of that kind of doubling of unit labour costs, explains a great deal.

The hon. Gentleman mentioned Japan, so perhaps I may say in passing that I understand that Nissan will not be considering the location of its proposed car plant until the very delicate discussions on the general issues raised have been advanced further, but the company has been fully informed about the advantages of the available sites, including Cleveland, and will almost certainly wish to have local discussions with unions and local authorities before coming to a final decision. The Government have not sought at any stage to influence the company's choice of location, which is clearly a matter for the company to decide, but it knows about the advantages of Cleveland and the North-East.

There is no doubt that the Government have a major role to play in helping areas such as Cleveland to overcome the problems of long-term unemployment and structural decline. One of our main objectives, when we came to office, was to cut down the number of areas which were eligible for regional assistance, precisely so that aid could be concentrated to a much greater degree on those areas with the worst problems, such as Cleveland.

Hartlepool, as a special development area, will continue to benefit from the full range of regional incentives at the highest levels available in Great Britain. No doubt that will be an attractive feature for Nissan. Teesside is a development area. Since the Government came to office, over £4 million has been offered under section 7 of the Industry Act 1972 to projects that are estimated to have created nearly 2,000 jobs and safeguarded a further 770. Over £175 million in regional development grants has been paid to firms in the area.

Cleveland also benefits from our inner city policy. Middlesbrough's allocation for 1982–83 is 26 per cent. above last year's, and at £4·31 million the borough now has the fourth largest programme authority allocation. I am very pleased to note that Middlesbrough gives top priority—as the hon. Gentleman would wish—to employment-creating projects within its inner area programme. Hartlepool, too, has done very well out of the urban programme this year with a provisional allocation for industrial and commercial projects of some £700,000, which is 38 per cent. more than last year.

Hartlepool also has an enterprise zone where, encouraged by the concerted promotional efforts of Hartlepool borough and the local land owners, a great deal of interest has been shown. Again, a local seed corn enterprise is in prospect. A number of serviced sites and advanced industrial units are available for sale or lease, and there has been considerable development activity in the zone since we designated it last October. The Budget provided further help for small businesses, increasing to over 90 the number of measures that we have taken to help existing small businesses. These new measures will help existing firms and, together with the small workshops being built by the Government, will encourage start ups. Again, that facility is designed to help local firms—not large, remote enterprises with branch factories—because, as the hon. Gentleman rightly said, such firms are of permanent advantage to the locality.

Despite the difficult circumstances, people in the area are finding jobs. I do not dispute the unemployment figures given by the hon. Gentleman. It is worrying that about 50,000 people are out of work in the county. However, in the past 12 months over 13,500 people in Cleveland were placed in jobs by the Manpower Services Commission's employment service and many more will have been found jobs by other means. It is not only the MSC's employment service that finds jobs. Expansions are taking place in the area and new jobs are being created, although nothing like as speedily as we should have liked.

Nevertheless, there are good news stories, stories such as the Stockton-based construction engineers, Davy-McKee, who have won a £1·9 billion contract to build a steelworks in India. It is likely that some £550 million of work will come to Britain's heavy industries from the contract—

The Question having been proposed after half-past Two o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at three minutes past Three o'clock.