HC Deb 25 October 1972 vol 843 cc1324-32

9.48 p.m.

Mr. Arthur Blenkinsop (South Shields)

I make no apology for introducing a subject of deep concern to my constituency. I thank the hon. Gentleman the Under-Secretary of State for Trade and Industry for taking his place in the Chamber and enabling me to introduce this subject in a useful way. I am sorry that notice inevitably was short. Nevertheless, it is of value to raise the matter tonight.

On Friday, 20th October, the United Biscuit Company announced the closure of Messrs. Wright's factory in South Shields by 31st March of next year. As a result, 823 people will be put out of work. Of that number, 150 are male full-time workers and 669 are women, two-thirds of whom are part-time workers. However, the closure has to be seen in relation to the serious unemployment situation which exists in South Shields. I only have to quote some of the latest figures to show the seriousness of the situation. In South Shields alone some 4,000 persons are out of work. That figure includes some 2,900 wholly unemployed men. The latest figure, announced a few days ago in answer to a Question, reveals that in South Shields there are well over 1,000 men and over 200 women who have been out of work for more than 26 weeks. Not many fewer have been out of work for more than a year. In the slightly larger area which will be the South Shields district when local government reform takes place there are well over 7,000 out of work.

These terrifying figures mean that [...]5 per cent. of all the men in South Shields are out of work. The announcement is one more blow to the many South Shields has received recently. The prospects are grim, because there are threats of further redundancies in several factories in the area.

The firm with which I am immediately concerned is a long-established local firm which some years ago acquired its own trade outlet. It became linked with Cans of Carlisle, a well-known biscuit firm, and Kemp's of Grimsby. About 18 months ago it was taken over by Cavenham Limited which, in turn, was taken over in July of this year by United Biscuit Company. Following these two takeovers, the anxiety in the town can be well understood.

The United Biscuit Company, whose Press release I have here and some of whose directors I met at the time of the announcement, claim that the firm operates in South Shields in a very old factory, with old plant and equipment, and on a difficult site for development. I accept some of that; it is a fair criticism of the past operators of the firm that too little of the firm's profits was ploughed back into renewal and redevelopment. The local employees strongly resent some of the implications of that statement and point to a very successful recent trading experience. They claim that the firm is at present running on a profitable basis and that recent output and sales figures are a record. Not long ago extra hands were taken on.

There is, naturally, strong feeling in the town at the fact that this apparently successful firm, which was taken over only a few months ago, is to be closed down only a few months later, and this in a special development area.

What are the facts? I want first to try to enlist the help of the Minister in establishing them, with regard both to the financial and trading position of the firm and to its immediate prospects ahead. Have we not a right to some kind of independent assessment of the real situation? We do not feel that we can simply accept the situation as stated by the firm. We have a right—the employees have a right—to some independent assessment. Will the Minister help us to get it?

The second point of particular importance concerns the effect of take-overs of this sort. It surely should not be accepted that a take-over can be, as it were, approved or allowed to go through without some kind of effective assurance about the future employment prospects of the workers in the factories concerned, especially when they are situated in special development areas, in respect of which, by their designation, the Government accept special concern and responsibility.

I ask the Minister whether he can offer any proposals under which suggestions of take-over can be examined, preferably before and not after they go through—as in this case—in order to obtain clear assurances about employment prospects. That is critical in a town like ours.

Naturally enough, I raised this matter when I met the directors of the firm concerned. I tried to secure some offer in respect of future prospects for development that might ease the situation, but the directors were unable to offer any. I am aware that they have carried out developments in other parts of the North-East, in Teesside, but in respect of this factory they could offer no immediate alternative. Even if we were to accept the unsuitability of the existing factory; with all the assistance available for new developments in the area, I tried to secure some undertaking from the firm to consider the question in terms of new development; to offer some development even on a modest scale. I was not able to obtain any clear assurance.

I must make it clear that the firm is making offers of some financial compensation for those affected—possibly beyond its legal responsibility. Nevertheless, the crucial issue is surely the question of responsibility for employment. I feel that there is an analogy between the position of a local authority that carries out, or proposes to carry out, a major redevelopment or slum clearance and the position in the case of this factory. Before a major redevelopment scheme is sanctioned the local authority has to accept full responsibility for the rehousing of the people affected. When a takeover that affects firms in special development areas is proposed, or even when it is carried through, should not a comparable kind of assurance or guarantee be required from the firm concerned before any sanction is given? Why should not a firm that is undertaking a project of this sort accept this as a financial responsibility, just as a local authority undertaking major redevelopments has to accept rather similar responsibilities?

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

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

Mr. Blenkinsop

I feel that these are reasonable requests to put to the Minister. I assure him that there is very strong feeling indeed in the town, and properly so, about the situation and I ask sincerely for his co-operation and for that of his Department both in the matter of the factual assessment of the situation and in trying to secure adequate guarantees in cases of this kind.

10.1 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)

I congratulate the hon. Member for South Shields (Mr. Blenkinsop) on the alertness with which he has secured this Adjournment debate. He will appreciate that the very speed with which he brought this most important matter to the attention of the House means that perhaps the answer I shall give to him will not he in as much detail as I would wish. But undoubtedly, if I am unable to satisfy him on all the points he has raised, he may rest assured that we shall be able to pursue this matter in another way.

I can well understand the anxiety which is caused by a closure such as this in the hon. Gentleman's constituency. Of course, there are many parts of the country where it would raise a much smaller ripple—indeed, parts of the country where there is a great demand for labour. This is not the case in South Shields which is a special development area, and we entirely accept the very serious unemployment situation prevailing in the hon. Gentleman's constituency —an unemployment situation which, he will know only too well, has been continuing for a very long time and is a deep-seated problem of over-dependence perhaps in the past on the heavy capital industries.

Having said that, I should put the unemployment position in a little more perspective by saying this. It was encouraging—I put it no higher—to see that in the overall Tyneside travel-to-work area there was a fall in male and female unemployment in the last month. The figures went from 10.6 per cent. male unemployment in September, 1972, to 9.7 per cent. unemployment in October, 1972. I do not want to over-emphasise this because there is a great deal more work to be done. Also there was a modest but nevertheless encouraging increase in the number of unfilled vacancies in the Tyneside travel-to-work area for males rising from 1,077 in September to 1,220 in October. These may he straws in the wind, but it should be said because otherwise one might get the impression quite falsely that all is complete doom and depression in this region, which is not wholly true.

As the hon. Gentleman said, United Biscuits Ltd. took over the biscuit interests of Cavenham Ltd. in July, 1972, and in the process acquired the South Shields factories formerly known as Wright's in the hon. Gentleman's constituency. In the process of that they took over Carr's in Carlisle and Kemp's in Grimsby. Therefore, it was part of a fairly broad takeover exercise. The effect of the closure which has been recently announced is to create a situation in which ultimately, when the closure finally takes effect next year, there will be, as the hon. Gentleman said, just over 800 redundancies of which a little more than half are female part-time employees.

The company has said that, although it is its group policy to offer alternative employment within United Biscuits and to give as much warning as possible to those affected, it is not expected that it will be possible to offer continued employment to more than a very few employees. However, as the hon. Gentleman was good enough to acknowledge, United Biscuits will, I understand, offer its company compensation arrangements, which are considerably in excess of those laid down by the Redundancy Payments Act, even though the employees have been with United Biscuits for such a short time. That should be said in the company's defence.

I can tell the hon. Gentleman also that the company is working closely with the Department of Employment, which was officially informed of the closure on 20th October. I believe that the national officer of the General and Municipal Workers Union was informed on 19th October and the local union representatives and employees were informed on the 20th. I assure the hon. Gentleman, on behalf of my colleagues in the Department of Employment, that they are well in the picture and will do everything they possibly can to assist the workers in the firm.

What is of significance in this closure, however, is that, on the information before us, it is quite possible—I do not think I should put it higher than that—even if the takeover by United Biscuits had not taken place, the South Shields factory would have had to close since, on the face of it, it did not appear viable. As the hon. Gentleman said, it was an old-fashioned works, and to a large extent the site precluded modernisation and expansion. I am informed that it had been making considerable losses in the years preceding this merger. I am informed also that employment there was reduced by about 300 in the earlier part of this year.

Mr. Blenkinsop

Undoubtedly it has had a varying record, with periods of quite good profits in recent years and, on the other hand, some recent losses. But it then appeared to be on the upgrade again, and not long ago extra labour was taken on. This shows how necessary it is to try to establish the true facts. This is where I should like the hon. Gentleman's help.

Mr. Grant

These are matters of fact which we shall have to endeavour to discover. I was merely pointing out that it would be wrong to assume that this unfortunate event would not have happened had there been no takeover. I wanted to put the matter in perspective in that sense.

I come now to the question regarding takeovers which the hon. Gentleman raised. In broad principle, my Department's approach to the matter is that, when deciding whether to make a reference to the Monopolies Commission, the effect of such a takeover on employment, especially in special development areas, is taken into consideration along with other factors of importance in this context, the protection of the interests of the consumer, and so on. The hon. Gentleman may rest assured that employment, and especially employment in areas of particular difficulty, is very much taken into account. It was taken into consideration in the present case, and the view was clearly formed that it would not necessarily have avoided the event which has taken place if the matter had been referred to the Monopolies Commission.

The hon. Gentleman is quite right, in the interests of his constituents and the proper development of his area, to endeavour to ascertain the full circumstances of this case. We should like to do so also because it seems that there is some divergence of view. It would be wrong for me at short notice to pontificate on who is right and who is wrong. My industrial director in the area went to see the firm, Wright's, last Friday, I understand, to hear so far as possible the position at first hand. He is in touch with the parent company to ascertain the full facts. We shall do our best to clarify points which have emerged in this debate and in correspondence and I shall, consistent with commercial confidentiality, which we must respect, be glad to give the hon. Gentleman such information as we have. I have considerable faith in our new regional structure and our industrial director, who is a new appointment following the new regional policy that we have embarked upon.

We as a Department, and my regional officers in particular, shall use every possible endeavour to alleviate the difficulties which the hon. Gentleman's constituency suffers as a result of this or any other closure. We are in a much more powerful position so to do than we have been for a very long time, following the passing of the Industry Act. The Act gives us new powers to provide new and unique incentives to industries which wish to locate themselves in special development areas like the hon. Gentleman's constituency, or to existing industries which wish to expand there.

With those new powers, with the incentives that are available and the efforts which will be made by our new and strengthened regional structure, I very much hope it will be possible before long to find fresh employment and create that diversity of industry which I know the hon. Gentleman wants very much. I understand that the firm has sufficient orders for it to carry on work until Christmas. Obviously, the Department will not sit idly by. We shall try to find out the facts and encourage new industry to go to the hon. Gentleman's area and existing industry to expand to provide the sort of employment that the hon. Gentleman wants to see there.

Mr. Blenkinsop

I am very grateful to the Minister, but could he go just that little further? I welcome any help in getting at the facts, and any information the hon. Gentleman can give, but on the rather wider Question, on the takeovers will he at least agree to look further at the point that I have set out in a letter which I think he has just received, and perhaps give a considered reply after he has had an opportunity of studying it further?

Mr. Grant

I assure the hon. Gentleman that I will study in greater detail his letter, which I have only just received, and he will receive a reply from me or from my right hon. Friend the Secretary of State. I was only seeking to emphasise in the broadest possible way that there are certain powers in dealing with the references to the Monopolies Commission which we exercise and take into consideration.

I have no doubt that we can pursue the details of this matter with the hon. Gentleman. He may rest assured that I well understand the anxiety being experienced by his constituents. I hope that some of their anxieties may well prove to be exaggerated. We shall make every endeavour, using all the new powers that we have, to see that they are properly placed and, so far as possible, to bring new, prosperous industry to the area.

Question put and agreed to.

Adjourned accordingly at fourteen minutes past Ten o'clock.