Town where prosperity was a way of life: Tories could suffer by-election backlash as chill wind of recession sweeps through traditional stronghold

The voters aren't stupid. They know there will still be a Conservative government in power,' says Bob Mowatt, the Liberal Democrat agent for the west Berkshire constituency of Newbury. That knowledge, he believes, increases the prospect of a 'protest' vote upsetting John Major in the impending by-election.

If history is anything to go by, Mr Major's already slim Commons majority will be reduced to 19 after the forthcoming contest, brought about by the death of Judith Chaplin, the former MP, the week before last.

Back in 1906, when the Liberal candidate, Judge Frederick Mackarness, achieved a shock 5,338 majority over Sir William Mount, the Tory who had held the then South Berks seat for 21 years, the electorate was agitated over Tariff Reform.

Mackarness denounced 'the power of the big house, the brewery and the parsonage, the influence of the farmer, the still lingering serfdom and consequent apathetic condition of the labourer, still by no means certain of the secrecy of the ballot'.

This time, much of the electorate of this archetypal market town, which with two smaller towns, villages and surrounding countryside makes up the 81,000- plus constituency, is likely to denounce the continuing recession, rocketing unemployment, record bankruptcies and business failures. Debacles over the European exchange rate mechanism, Maastricht, and the coalmines may prompt voters to deliver an appropriate rebuke.

The only serious threat to the Conservatives will come from the Liberal Democrats. Labour won only 6 per cent of the vote at the general election last year and holds no seats on the Liberal Democrat-controlled Newbury District Council.

David Rendel, a management consultant, is likely to be adopted as the Liberal Democrat prospective parliamentary candidate the week after next. He has fought the seat twice before, but this time could be different.

He needs only a 9.4 cent per swing to win - a longish shot in general election terms but safely within the bounds of possibility at a by-election in a constituency that has suffered a 125.3 per cent rise in unemployment since the 1987 election.

The Liberal Democrats, unsurprisingly, plan a campaign focused on national issues. 'The message will be unless you can go in and challenge the national policies you can do nothing locally,' Mr Mowatt said.

That strategy may come to grief, or require tactical change, if the Tories decide to fight a 'dirty' local campaign. But here Mr Rendel appears to have a lot going for him - a high-profile Newbury resident, district councillor and chair of recreation and amenities, chairman of the local crime prevention panel, school governor, and with a strong interest in health (his wife is a local GP).

Although Newbury remains undoubtedly prosperous, the effects of the recession are being felt widely. The 18 February issue of the Newbury Weekly News carried a photograph of Mrs Chaplin attending a lunch hosted by Kickstart, the town's self-help group for unemployed and bankrupt people.

The mere existence of the Kickstart group is a compelling reminder of the task facing the Tory contestant. Newbury District Council figures show unemployment running at 7.5 per cent. That is less than the 10.7 per cent average for Great Britain and the 9.7 per figure for the South-east excluding Greater London, but as Jo Hawkins, the Liberal Democrat council leader, said: 'At one time, the only unemployed people in Newbury, a thriving town in the M4 corridor, were those thought to be unemployable.'

As at October last year, 22.4 per cent of the district's jobless had been out of work for more than a year. Recent figures produced by Gordon Brown, the shadow Chancellor, show unemployment in the constituency rising from 844 in January 1990 to 4,023 in January 1993, a striking 377 per cent increase.

Other national, local and 'hybrid' issues that will figure in the campaign include education; mounting home repossessions; rail privatisation - the Paddington-West Country line appeared on the list of early candidates released recently by John MacGregor, Secretary of State for Transport; environmental problems, principally those caused by gravel extraction; and crime - recorded crimes in the Newbury District Council area, covering most of the constituency, have risen from 4,670 a year in 1988 to 8,503 in 1992.

Selecting a Tory candidate, which the Conservatives have delayed until this week could prove difficult.

Mrs Chaplin, who died during a routine hospital operation, is a difficult act to follow. A former political adviser to Mr Major, she was conscientious and hardworking, a pro-Europe and economic loyalist who quickly built a reputation as a caring constituency MP, involving herself in local issues.

Possible contenders include four former ministers deposed at the last election - John Maples, Francis Maude, David Trippier, and Michael Fallon - and Richard Benyon, a popular Newbury councillor, local farmer and son of a former MP.

Despite Newbury's reputation as a Tory stronghold, opposition parties have made some impact since Mackarness's victory in 1906. In 1923-24, the constituency was represented for 10 months by a Liberal, Harold Stranger, and in the 1950s Labour attracted 40 per cent support before being superceded by the Liberals and later the Liberal Democrats as the main opposition.

At the last election, they achieved a 4.9 per swing and a cut in the Tory percentage lead from 28.4 per cent to 18.6 per cent.

Should it happen, a Conservative defeat would be in keeping with Newbury tradition. Its citizens have a history of reacting badly to interruptions in prosperity. But voting Liberal Democrat would, however, be a mild sort of protest compared with earlier expressions of discord. In 1766, the poor of the town rioted over the price of bread, the result of disrupted trade and a moribund economy following years of war with France.

In 1830, farm labourers, squeezed out of their jobs by mechanisation, took to the streets, burning and looting.

Today, jobs are once more the dominant issue. The Confederation of British Industry estimates that a third of companies in the area are operating a pay freeze.

In the offices of James & Cowper, one of Newbury's oldest firms of accountants, Duncan Campbell, a partner, said that keeping afloat was the main topic of conversation with at least half his clients. 'The fat has gone,' he said.

Statistics bear him out. Up to a fifth of commercial property lies empty; rents have fallen by more than 30 per cent; the number of families in Newbury receiving free school meals almost doubled last year, from 617 to 1,012.

House prices have dropped by a third since 1988, and many buyers are trapped with mortgages higher than the value of their property.

Home repossessions have bucked the national trend. While last year the number of repossession orders and actions dropped 18 per cent nationally as building societies tried to combat criticism, in Newbury they rose by more than 3 per cent.

It is not yet the stuff of revolution, but disenchantment is clear, none the less.

'People are very disappointed,' David Dormer, chairman of Newbury's Chamber of Commerce, said. 'We are suffering problems we've never experienced, like negative equity in homes, which is hindering recovery. People are frightened to spend money and can't move. People blame the Government for that.'

Newbury may be hurting, but there is no evidence of long-term decline. The town is suffering from a hangover, not a terminal illness.

Unlike many northern manufacturing towns, its fate is not dictated by a single industry. The biggest employer is the fast-growing mobile phone company, Vodafone, which moved its headquarters to the town centre in 1982 and has 1,200 staff. Even so, Vodafone accounts for less than 2 per cent of total employment in the Newbury district.

More than 90 per cent of Newbury companies employ fewer than 25 people; the remainder are national and international companies involved primarily in high technology, manufacturing, processing and distribution. But even computer-related industries, one of the fastest-growing areas, still account for only 10 to 15 per cent of local employment.

Admittedly, the slump in the property market has had a widespread knock-on effect on many related businesses. Trencherwood, a local housebuilder, lost pounds 21.4m last year, and sold barely half as many houses as in 1991 - its survival has followed a deal with its bankers. The slump has also taken its toll on the surveyors and retailers who did well on the back of the 1980s boom.

Chris Watts, assistant planning director with Newbury District Council, said: 'The back-up support, the cleaners and servicing equipment groups, the small companies and one-man bands, they are the ones that have been forced under. But the principal businesses are still there, and in some cases they are even growing.'

For while the ills Newbury currently suffers are shared with the rest of the country, the factors that have given it a relative economic advantage over many other towns still apply.

Until the Second World War Newbury was a classic market town, straddling a river and a main road - a centre for buying and selling agricultural products.

Its relatively prosperous economic destiny was settled by its favourable geography, at a key intersection of trade routes between London and the West Country and between the Midlands and the South Coast.

Changes in transport infrastructure, the waxing and waning of road, canal and railway links, have accordingly been the main force driving the town's fortunes.

Its position on the old road from London to Bath helped the growth of the core activity in the Middle Ages, the manufacture of woollen cloth.

The industry reached its zenith at the beginning of the 16th century with the establishment of what is claimed to be Britain's first weaving factory. It concentrated 200 looms under one roof, employing nearly 1,000 men, women and children.

After 1520, however, the cloth trade faced increasing international competition, and it declined progressively towards the end of the century - taking with it the town's prosperity.

Salvation came with improvements to the road network in the 1670s, when stage-coaches started running from London to Bath. Inns and other businesses servicing the coaching industry sprang up and the town prospered.

Passenger trade was supplemented by goods transport in the 18th century, and with the progressive improvement for navigation of the river Kennet, Newbury wharf became the centre of a busy barge service to London.

Completion of the Kennet and Avon Canal in the early nineteenth century enabled barges to travel from London to Bristol, and the town became one of England's most important inland ports.

The advent of the railway age again threatened the town's prosperity. The first line between London and Bristol bypassed Newbury and its traditional business vanished as stage-coaches became the stuff of history.

The town survived thanks to its subsequent inclusion on the rail map. But it was still to face its biggest change, which came at the beginning of this century, with the invention of the car and the consequent revival of road transport.

Situated at the meeting point of two of England's most important and oldest road routes - the A4, linking London and Bristol, and the A34 between the Midlands and South Coast, Newbury was ideally placed to benefit.

'Until the end of the Second World War - possibly even until the end of the 1960s - we were primarily an agricultural market town,' Mr Watts said. 'It wasn't until the arrival of the M4 in 1972 that we got a lot of 'footloose development'.'

Footloose development, he said, was typically service industries that can locate anywhere so long as it is near London and Heathrow, and has good communications. Like many of the towns along the M4 corridor between London and Bristol, Newbury attracted large international, often high-technology, companies looking for somewhere pleasant to base their headquarters.

The other longstanding economic engine of the area, agriculture, has also changed. Farms have got bigger. 'Even 30 years ago Newbury would have had lots of back-up agricultural businesses,' Mr Watts said. 'Now farms source nationally.' The cattle market in the town centre made way for a car park in 1969.

Farming and horse-related industries, which service Newbury racecourse, are still important. But the switch from market town to headquarters location has continued inexorably.

Office space in Newbury has increased threefold since the mid- 1970s, while the amount of warehouse and distribution space has doubled. An influx of newcomers has driven up the local population by almost 13 per cent since 1981.

Behind this growth has been the relative shift of economic power and population to the south of England and the areas nearest Continental Europe - a trend that is expected to continue. As a result, Newbury is still planning for growth, though at a slower pace, once the recession is over and the glut of development works its way through the system.

Berkshire County Council expects the population of the Newbury district to rise from 137,460 to 143,230 by 1999.

Newbury's current housing stock is about 55,000. The council originally planned for an extra 9,600 homes between 1986 and 1996, 6,000 of which have already been built. In the next planning period, between 1991 and 2006, it wants an extra 7,900 homes.

As a result, development issues, which dominated the agenda in the 1980s, will also be to the fore in the 1990s. Other key issues are likely to involve road and traffic schemes - a western bypass is planned for the A34 which still runs through the centre of Newbury - and whether to permit out-of-town shopping,

A battle is currently raging over an application by Sainsbury's to move to a greenfield site. There are fears that if Sainsbury's leaves the Kennet Centre, a 1980s shopping precinct in the middle of Newbury, the heart of the town will begin a process of decline.

It may be, however, that the prospect of growth will deprive the Liberal Democrats of victory. Some businesses in the town are beginning to scent the first signs of recovery.

Allan Kennerly of Dreweatt Neate, estate agents in the town for 234 years, believes the Conservatives will scrape home. He said: 'Business here has just started to see some signs of activity. People may feel they want to stick with it. It may just tip the balance.'

(Photograph, map and graph omitted)