HC Deb 03 August 1972 vol 842 cc1099-110

10.13 p.m.

Mr. John Stonehouse (Wednesbury)

Just over a month ago, on 28th June, a bombshell exploded in Walsall when an announcement was made that Tube Investments' stainless tubes plant would be shut down and 1,400 men would be made redundant.

This is the most serious blow to Walsall for 50 years. It has created a shock wave, not only in Walsall, but throughout the West Midlands, because everybody thought that Tube Investments' plant was an example of up-to-date plant in a sophisticated industry which would have a great future.

The fact that the directors of Tube Investments have decided to close this modern plant sends a fear around the West Midlands, because there are now so many other plants which are not so modern, which are not in such sophisticated industries, and which could be "for the chop" if the chop is applied to Tube Investments' plant in Walsall.

As I say, this will produce 1,400 redundancies itself, but the effect does not stop there, because many sub-contractors supply these works. If the works are closed and no alternative employment is found, the earning capacity will be so reduced that it will have consequential effects on employment in Walsall. It is reliably estimated that the extra redundancies created could well be as many as 1,000. This gives a total redundancy figure of up to 2,400 as a result of the plant being closed. Already unemployment in and around Walsall is extremely serious and numbers about 5,200 in the town and district. The effect of the closure could increase redundancy by about 50 per cent., and in anybody's language that is a serious position. The effect on the town will be so great that Walsall Town Council is united in its opposition to the closure, and that opposition includes both political parties represented on the council.

At a protest demonstration held by the workers a few weeks ago the deputy mayor himself marched through the town and the mayor attended a protest meeting. I am very sad to hear tonight that the mayor, Alderman Wilkins, has just died, and I wish to express my condolences to his family. It was a very fine gesture for the mayor to attend the demonstration although his health was not 100 per cent. perfect at the time. The mayor's action had the full support of his colleagues because they knew how great the impact of the closure would be on the town. The council has requested the Secretary of State to receive a deputation, and I hope that the Minister will be able to announce tonight that his right hon. Friend has agreed to do so.

What are the ostensible reasons for the decision to close the plant? The company says it is because of foreign competition and the lack of orders. Frankly, these excuses are the typical refuge of a badly run concern. The recent devaluation of the pound should help a great deal in the fight against foreign competition. Walsall prices should now be lower and more competitive than those of Stuttgart or Stockholm. Confidence in the management of the Walsall Tube Investments' plant would be much undermined by a full page advertisement which was placed by the company in the Walsall Observer a week or so ago. A director of the firm, Mr. Frost, heads his advertisement: Our aim is to reduce risk to jobs. What a facile statement to make when it is clear in the sixth sentence of the announcement that the decision to close the works will not be reversed. Reduce the risk to jobs, indeed. His statement is cold comfort to 1,400 men when it is clear from the text that there are only 150 jobs in the other Tube Investments plant and therefore very few of the redundant men can expect to get jobs in other parts of the company.

An analysis of the official statement by the company throws doubts on the decision of the directors themselves that the viability of the plant is supposed to be in doubt. Figures filed by the company make clear that Tube Investments, Walsall, made a net profit of £274,000 in 1969, a return on investment of 8.3 per cent. In 1970 the net profit was £170,000, a return of 4.4 per cent.

Indeed, the parent company makes a substantial return. In 1970 and 1971 the total profit of Tube Investments was £13 million and £10 million respectively, a handsome return of 14.8 per cent. and 13.6 per cent. Compared with the results of other industrial combines, that is very good. Therefore, we can imagine that Tube Investments is in a good position to carry its Walsall plant through perhaps an awkward time, particularly as it has invested nearly £2 million in the plant during the past two years. It is now saying that in 1971 the Walsall plant made a loss of £122,000, or £65,000 after a tax credit from the year before. But in that year the depreciation figure was increased by £110,000 and the audit fee by £36,000, a total increase of £146,000. If the accountants had made some adjustments of those two flexible figures, the results could easily have been shown as a surplus.

Now we come to the current year. The celebrated "Reduce risk to jobs" Mr. Frost says that the loss will be £400,000, but that figure could be as artificial as the 1971 result. What is the allowance for depreciation in it? What are the prices charged for inter-company transactions? The results of the firm must depend to some extent on what is charged to other parts of the Tube Investments group. Mr. Frost cannot expect the workers of this factory to be fobbed off with excuses. Even if his prognostications are correct, and there is a loss of £400,000 a year, this is only the second year of the loss, and with a modern up-to-date plant like that one could expect that Tube Investments would keep it going until it could get to grips with the problems of demand.

I turn now to a most serious allegation which is being made by responsible trade union officials. This concerns the long-length seamless tube capacity of the plant, which is the only one in the United Kingdom capable of making the special tubes required for the nuclear power industry. It is not only the best plant in Europe but perhaps the best in the world for producing such tubes. It is being suggested that under arrangements for the future of atomic energy a deal has been made and the plant has been shut down so that the business can be transferred to the French in return for concessions to British industry. I do not know whether the allegation is true or false, but the Government must make their position clear tonight in answer to the rumours which are creating such concern. The Government must also say what is their policy for the future of the process plant industry in Britain, because Tube Investments, Walsall, has depended on process plant.

Even more important, what are the Government doing about the power plant orders now required for the CEGB? In particular, what are they doing about the future of the nuclear power industry in Britain? I know that the problems are complex, but uncertainty is playing into the hands of our competitors, particularly the Americans. This country's investment in nuclear power technology is second-to-none in the world. We have a wonderful opportunity not only to build nuclear power plants which could meet our own power requirements in Britain but, if we make the right decisions now, we can organise our industry to take advantage of the increasing demand abroad for nuclear power plants.

I recognise that the performance so far has been disappointing. There has been no lack of trying, but now we are reaching the position where our experience is beginning to pay off. The Central Electricity Generating Board has acknowledged that the cost of producing electrical power from nuclear plant in Britain is now less than the cost of many other alternative forms of power. With the increased price of oil and the increased price of fuel generally, it will be more economic to install nuclear power plants than conventional power stations. The opportunity is, therefore, there to have a viable nuclear power industry in Britain, and to use it as the springboard for sales abroad. This will give us as taxpayers an opportunity to get a return on the hundreds of millions of pounds of investment that we have put into the industry.

The lack of decision by the Government on the future of the nuclear power industry is having a direct effect on the situation of components suppliers like Tube Investments at Walsall and it is therefore relevant that this issue should be raised in the debate tonight. An early decision by the Government is necessary; this delay is intolerable. The Vinter Committee, which has been studying the nuclear power industry, was set up as long ago as spring 1971, and it presented its report to the Secretary of State early this year. What have the Government been doing with the report?

I hope that the Minister will give an assurance to the House tonight that an announcement will be made about the Government's policy for the future of the nuclear power industry in Britain before we rise for the recess. Industry generally is anxious for their decision, and Tube Investments at Walsall is directly concerned. A clear announcement before next week could help to avert the closure of this plant, and an order for a nuclear power plant before we rise for the recess would also help to ensure that Tube Investments at Walsall does not close.

To their credit, the Government have intervened to secure employment on Clydeside following the collapse of UCS. They have even gone to the extent of bringing in an American firm, with an inducement of over £6 million. The Government have intervened in the Rolls-Royce situation to save jobs in Derby. I want the Minister and the Government to understand that in the minds of Walsall people Tube Investments is as important to Walsall as is UCS to Clydeside and Rolls-Royce to Derby.

The Government are responsible for producing the economic malaise which is creating so much unemployment, lack of investment and lack of job opportunities. In particular areas where the effects of unemployment are so serious and where there are major shutdowns the Government have acted, and I implore the Government to act in this case, as they have elsewhere, before disaster strikes. I want them to act to help to save the jobs of 1,400 skilled men in Walsall.

10.28 p.m.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

We are grateful to the right hon. Member for Wednesbury (Mr. Stonehouse) for bringing up this subject for debate. I am sure his interest will be extremely well received by his future constituents, as it is by me. But we have to remember that we are not addressing ourselves to the management of Tube Investments but to the Minister, and it is to the Minister that I wish to address my remarks.

I have no brief for Tube Investments, but I cannot believe that after an investment of £1¾ million less than two years ago it has abandoned that investment overnight for other than strictly commercial reasons. In my capacity as Chairman of the Select Committee on Nationalised Industries, I am aware that the British Steel Corporation is facing exactly the same problems at the tube factory in Newport.

Speaking without any deep knowledge, I suspect that there is considerable over-capacity for the production of steel tube in this country and, unfortunately, the workers in that industry are now having to face this horrible situation. It is a horrible situation. I agree absolutely with the right hon. Gentleman. According to my calculation, Walsall has an unemployment rate of 4.7 at the moment. That is above the average for the rest of the Midlands and above the average for the country. If we add these further figure the total will be 7 per cent. In the whole 18 years in which I have represented Walsall, we have never had such a situation. This is a crisis situation which must be dealt with on a crisis basis.

We are addressing ourselves to the Minister. What can he do? First, there are about 80 apprentices included in these 1,400 people. Obviously it is necessary that their training should be continued in other forms. I hope that the Ministry is paying special attention to that. Secondly, I believe that Tube Investments have indicated that they could absorb 150 to 200 from Walsall in other activities. If there can be encouragement to local industry, particularly by more generous provision of industrial development certificates in Willenhall, Walsall and Darlston, that would be generally welcome and would bring extra local employment. Thirdly, the Industry Bill is not yet on the Statute Book, but I believe that the Minister will have powers under that Measure to deal with an area of specially high unemployment, which will be the position of Walsall very shortly.

These are all matters which require the direct attention of the Minister. He cannot allow the House to rise for the holiday with the thought that we are to have an unemployment rate of 7 per cent. in a town which is the workshop of the West Midlands. For one of the great workshops of England, an unemployment rate of 7 per cent. would be very painful and would reflect deeply on the Government. I hope and believe that the Minister has constructive suggestions to put before us. I must tell him that unless he has it will be a grave disappointment to members of his party from whom over the years he has had unflinching support.

Finally, I join with the right hon. Member for Wednesbury in paying tribute to the Mayor of Walsall, a very distinguished citizen, whose death I join in lamenting.

10.34 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)

In the short time I have to reply to this debate, I start by expressing the Government's regret at the sudden death of the Mayor of Walsall. I am sure that all hon. Members would wish that the condolences of the House should be expressed to his wife and family in this considerable tragedy.

I of course realise the concern of the right hon. Member for Wednesbury (Mr. Stonehouse) and of my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) over this problem. The closure has been described as a tragedy, but tragedy has been defined as conflict of right with right. It is right that, as far as possible, people should be spared the upheaval and anxiety that redundancy and possible unemployment would bring. But it is no less right that companies should operate efficiently and make such changes in their operation as may from time to time seem necessary. It is right that companies should be able to rationalise their production so that they can produce and compete because if they do not take those steps nothing can keep them in business.

I do not regard myself in any way as an advocate or an apologist for Tube Investments. The management has made certain decisions and it is their right to do so; in fact, their job to do so. However, since the consequences of these decisions affect a large number of people, I thought it right to discuss the overall problem with the senior management, and this I did on Tuesday. I can announce that my hon. Friend the Under-Secretary dealing with industrial development will be seeing a deputation. I am not certain of the date, but I believe it will be 16th August.

Let me now, in what I hope will be a reasonable speech, take to task the right hon. Gentleman for one specific statement which he made. He said that if this plant closes other plants in the West Midlands will be for the chop. I must point out to him in all seriousness that that is a dangerous and damaging statement. It is not inclined to assist investment coming into the West Midlands or to Walsall. I think that he will perhaps regret that statement and its overall implication.

Mr. Stonehouse

What I was doing was bringing to the attention of the House the fears which are being expressed in the area.

Mr. Emery

What I am saying is that by repeating that the right hon. Gentleman himself, with his very considerable prestige as a Privy Councillor, lends weight to the statement, and I would hope that he would stop its circulation, because it is, as I said, dangerous and damaging.

I would meet one of the right hon. Gentleman's other requests immediately, and that is to confirm from the Government's point of view that there is no truth in the view which is being expressed that a deal has been done or carried through that because of nuclear decisions or for other reasons certain production should be transferred from Walsall to the French or to Europe. I think it is important that that should be known at this moment.

The announcement on 29th June that the works was to close certainly came as a shock, but it could not as has been suggested by certain people have come as a complete surprise, certainly not to the workers' representatives. Since the early months of this year the management has said in its periodical meetings with trade unionists and with the shop stewards that the trading position was difficult and that the future of the factory was by no means assured. The management has carried on consultations at those meetings with union representatives. Unhappily the decision has now had to be made to close.

It has been suggested that the Government should in some way step in to prevent the closure from happening. The Government have no powers, and I do not believe that they should have powers, to dictate to industry to carry out work in a particular place, or to demand that unprofitable plant should be kept in operation. It is dictators who dictate, not this Government. The Government have no intention of seeking powers of that sort over industry, or of seeking powers over individuals to compel them to work for one firm rather than another or in one town rather than another.

Another suggestion, on the face of it more reasonable, is that the Government should consider what orders could be placed for work concerned with nuclear energy or what help might be given in other ways under the Industry Bill. I should point out that special tubing for nuclear power use is only part of the capacity of the Walsall works and T.I's plans for relocating work at Chesterfield and Blaenrhondda represent no more than a marginal reduction in overall capacity.

The management is anxious that the run-down of the Plant, if it must come, should be carried through in an orderly fashion. Everyone would be the gainer by that. The Department of Employment's services can be brought into play to help all those affected to find new jobs suitable to their needs. Opportunities to transfer to other plants within the Tube Investments Group can be made available. I would refer to the point made by my hon. Friend the Member for Walsall, South and say that the figure of 150 is an under-estimate of jobs which should be retained. The figure presented to me was that TI would provide 400 jobs within its own organisation if it had to carry through the rundown.

All the time, the management must keep a sharp eye open for opportunities to dispose of the site and buildings as a going operation. At any time an opportunity to sell could arise, in part or as a whole, as an operating works or for adaptation or redevelopment. Any of these possibilities—they are no more than possibilities, but they must not be dismissed on that account—could create new prospects. The Government would wish to give their assistance if a scheme on those lines could be worked out.

I do not belittle the very real anxieties and worries of the people affected by the proposed closure. I was unemployed for a time, and I realise what it means to pound the pavement, the frustration, the terrifying feeling that this has, especially for family men with their commitments. But I ask the right hon. Gentleman and my hon. Friend to use their considerable influence to ensure that those understandable anxieties do not find an outlet in a blank refusal to co-operate for the common good. If change is coming it is better to go along with it than to stand and be overwhelmed by it.

Walsall has much to offer an incoming industrialist, not least a labour force which is skilful, intelligent and adaptable. Those qualities are a tremendous selling point for Walsall. It would be a thousand pities if those were to be marred by a lack of co-operation, since that would most likely deter any industrialist who might be considering a location in Walsall.

I leave the management's authority to say that even at this late stage, after this debate, they are prepared to consider any proposals from the unions for continuing activities in the works. I hope that possibility will be explored fully.

If closure still appears the only answer, there will be full co-operation in ensuring that it takes place with the minimum of personal distress. I hope my appeal will be properly taken at the conclusion of this debate.

Mr. Stonehouse

Will the Minister comment on the Vinter Report? When is it likely to be released?

Mr. Emery

This is not a debate on the Vinter Committee—

The Question having been proposed after Ten 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 seventeen minutes to Eleven o'clock.