FACTORY CLOSURES (NORTHERN REGION)

HC Deb 07 March 1977 vol 927 cc937-75

4.16 p.m.

Mr. Frederick Wiley (Sunderland, North)

I am obliged to the Chair for affording us an opportunity to raise the question of the Plessey closures. I am also grateful to the Departments of Employment and Industry for agreeing to a deputation from Sunderland meeting the respective Ministers of State tomorrow. shall confine myself to the subject of the closure of the Sunderland Plessey factory, but I share the concern about the position in the North-West.

We have to consider this closure in context, and therefore we must look first at the position of the Northern Region. Along with Scotland, the Northern Region ranks as the region with the worst unemployment, and the prospects are not good. A fairly good indicator are the construction trades. Unemployment among craftsmen in the building trades has increased by 40 per cent. in the last four months. Unemployment in the area is now running at an unprecedentedly high figure in the building industry.

All this re-emphasises the need for a quick decision bringing British Shipbuilders' headquarters to the North-East. Wearside is the worst-hit area in the Northern Region. We are told that this is due to the loss of the traditional industries, but alongside that we now have, in the closure of Plessey, the loss of new technological industries. Unemployment on Wearside is three times what it was in 1966. It is running at the level of 11 per cent. to 12 per cent., and the male unemployment rate is between 13 per cent. and 14 per cent. But I emphasise that the Wearside area is large. Within it are districts whose unemployment figures are much higher than these figures. We have unemployment that is comparable with that of the 1930s.

This is a serious situation, and we welcome the fact that we are to have seven more advance factories, although I must express my concern that the Department of Industry felt that it could not encourage the local authority workshops. I think that these would have provided an aid and should have been encouraged, While we welcome the building of seven more advance factories, we must recognise that we already have seven factories empty. The building of advance factories will not solve our problem, although we welcome it in that it will provide something for the future. We cannot afford to have these factories empty, and we cannot afford to have Plessey's being added to the seven empty factories.

The position of the Sunderland Plessey factory has to be considered in the context of the telecommunications industry, which is largely dependent on the Post Office, which provides two-thirds of the orders taken by the industry. No one can deny that over the past few years there has been an erratic and irresponsible ordering policy from the Post Office.

I should like to summarise. There was a 40 per cent. cutback under the Conservative Government just before the General Election. The cuts were then restored, to a limited extent, but further cutbacks were subsequently envisaged, and there followed the statement by my right hon. Friend the Member for Huyton (Sir H. Wilson). That statement was understood to be sufficiently definitive to ensure that there would be no loss of working in the factories, but since then the programme has been revised four times.

The basic cause has been, first, the economic recession and its effect on the Post Office, secondly, the effect of the increase in tariffs imposed by the Post Office and, thirdly, the swing to a fully electronic switching equipment system and, as an intermediary, the TXE 2 and the TXE 4. The factories are dependent on Post Office orders, and Post Office orders very much affect export orders. Rightly or wrongly, the companies feel that this chopping and changing of ordering, and the way that it has now been imposed, has virtually killed the export potential of the industry.

There has been a dispute between the Post Office, the companies and the unions. The Prime Minister said last week that there would be an inquiry into the Post Office calculations and that Professor Posner would hold the inquiry. That idea is not new. Although it was said last week, the Secretary of State said a few weeks ago that there would be such an inquiry. Not only is it not new; it is inadequate. The terms of reference are not wide enough to deal with the issues at stake. In any case, it is unacceptable locally.

As some of my hon. Friends will know, we had trouble at Greenwells. There was an inquiry in that case, but at the end of the day the redundancies took effect. As an aside, I would say that a nationalised company cheated on the Employment Protection Act by not affording us the opportunity to take advantage of that Act. We are not persuaded that this inquiry will be either very relevant or very helpful. In the case of the Post Office, we have new measuring techniques. These demonstrate that there would be a substantial and growing surplus of capacity. We are concerned not only about the accuracy of the figures but about their validity.

The first point that arises concerns the marketing and pricing policies of the Post Office. The high cost of telephones installation obviously should be drastically reduced in these circumstances. In addition, there must be a promotional policy to increase sales from the Post Office. The case of West Germany has been cited, where an independently-run campaign met with spectacular success. It is all very well producing figures, but we must also consider the assumptions upon which the figures were based. We want to be satisfied that there will be a joint campaign to promote the use of the telephone.

I have already touched on the second matter that arises. It has been argued, it seems to me convincingly, that the excessively rapid transition to the fully electronic system should be revised. The industry should be given time to condition itself to the new circumstances. This particularly affects Sunderland, because we are concerned with the phasing out of Strowger.

The Government should consider this in its proper context. This may be a saving to the Post Office, but overall it is a loss to the country. Figures have been produced in terms of redundancy pay and social and other benefits. That will undoubtedly be more expensive to the country than the money which the Post Office will save according to its own figures.

Apart from that, many other matters demand independent investigation. There is the international trunk-switching contract concerning Ericsson's of Sweden. We were assured that this would have no effect on employment. I do not know how that assurance can now be maintained, but that was the case at the time.

We also have the controversial decision to admit Pye/TMC to the domestic market, and there has been the lateness of the Post Office in following up the fully electronic private exchanges. I am not wholly biased against the Post Office exclusively. We want to know why more research and development money has not been put in by the suppliers.

Most important is export performance. Here again we have a pattern, which has become almost traditional in this country, of an industry failing to remain up to date and competitive and steadily losing ground in our export markets. The United Kingdom is now running fifth behind Sweden, West Germany, Japan and Belgium. We must realise that there will be an intense rationalisation in respect of these markets. We must look ahead and see what will happen in Europe as a whole. If we are to bid for a position in Europe we must have a viable industry, otherwise we shall be squeezed out of Europe as a whole.

The telecommunications industry is having to fight for its survival in extremely difficult circumstances. A new generation of telephone exchanges is coming into operation. They are cheap to assemble and maintain and foreign companies have the edge on us because they are already in production with the systems.

Obviously, Professor Posner's inquiry can make no attempt to deal with these essential questions. It has been officially suggested that there ought to be an export consortium. That is well and good, but it is not enough. We are driven to the position that we shall have to have a single company, probably with the National Enterprise Board having the major holding.

I was concerned about the power station industry when we had a similar sort of inquiry. The present inquiry must be conducted by the Central Policy Review Staff, or a similar body. That is what is needed overall.

We in Sunderland cannot accept the present position that we shall just be put out of work. As was pointed out on Saturday, to some of us who met the trade unions affected, we want a return of the work that has been sub-contracted out of the factory, such as relays being brought in from GEC. We do not want this potential run-down unnecessarily aggravated.

Secondly, the key to this problem is to have a temporary employment subsidy to hold the present position for 12 months. That means that we shall have to persuade Plessey to apply for the subsidy and we shall have to persuade the Government to grant it.

Compared with other regions, the Northern Region is badly off in terms of the temporary employment subsidy. We have lost regional employment premium—a loss of £64 million—which means that we have a good margin within which to work if the intention is to turn to selective aid. If we look to the temporary employment subsidy, oddly enough, we find that in the North we have had only £10 million, whereas, as my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) will know, the North-West has done very well out of it, having had more than £48 million. So this is an opportunity, at any rate, for us to begin to match the North-West.

I am sure that this is a proper use of the subsidy. It would keep the work force in productive employment while the basic structure of the industry was examined and while the Post Office, to some extent at any rate, revised its ordering programmes.

When my right hon. Friend the Prime Minister mentioned this problem last week, he talked about retraining. Retraining could be done under the umbrella of the temporary employment subsidy. There has to be retraining, of course. Sunderland cannot survive unless there is retraining to get on to new work.

My right hon. Friend the Prime Minister also talked about alternative production. If we cannot keep Plessey in being, we have to have alternative production. We cannot see this factory closed. We have suffered too much. We have had the experience of Thorn Electric and Greenwells. Now we have Plessey. This factory must be kept going. Again, if we are thinking of coming in with alternative production, the best umbrella is the temporary employment subsidy. This can be provided to Plessey. The company can be persuaded to apply, and the Government should grant the money.

I regard this as a test case for the Government. They were defeated on devolution, partly because some of my colleagues from the Northern Region felt that, as an assisted area, the region had second-class status. We have to overcome this feeling. I do not think that this charge is made out, because, on recent figures, the Government could show that they have aided the North-East comparatively better than some of the other regions. But the feeling is there, and we are very sensitive to it. Therefore, the keeping of this factory in employment is a test case.

Also coming along we have the Budget, and we hear talk of tax concessions. But the major responsibility of the Government is to deal with unemployment. That must be done before any tax concessions are given. I suppose that this is a matter of about £2 million. We need this money. It can keep in employment a couple of thousand people for a year. We need that, and the Government must show that they have the right priorities and that they will ensure that this factory is kept in work.

4.34 p.m.

Mr. T. W. Urwin (Houghton-le-Spring)

I am pleased that my right hon. Friend the Member for Sunderland, North (Mr. Willey) has been able to initiate this debate on what is a very important subject in the Sunderland area and the Northern Region.

In my right hon. Friend's introductory remarks, he very properly laid stress on the heavy unemployment which exists not only in the Northern Region but more especially in Wearside itself. My constituency lies half divided between Durham County and the Sunderland metropolitan district as a result of the last local government reorganisation, and it is fair to say that everyone in my constituency is every bit as much concerned as my right hon. Friend and my hon. Friend the Member for Sunderland, South (Mr. Bagier).

My right hon. Friend dealt at some length with the vacuum which would be created if all the efforts to retain the Plessey factory in his constituency eventually failed. There is already building up in Sunderland a massive reaction, with people realising the extent of unemployment, the special skills which they have acquired in telecommunications and the inordinately difficult problems which they will face in finding suitable alternative employment should the Plessey factory close.

My right hon. Friend also referred to the construction industry, with which I have been associated all my life. We extend a very warm welcome to the statement last week about a programme of new advance factories. Even though there are quite a number of empty factories in the Northern Region at present, we must at all times seek to make provision for the expected upturn in the economy, when we are entitled to expect that more industries will come into the Northern Region, so that we have facilities for them to occupy. In turn, it provides a small but much needed fillip for large numbers of construction industry workers who have been unemployed for a considerable time.

I endorse entirely my right hon. Friend's remarks about the first priority having to be the retention of the Plessey factory, preferably in its existing form. But, if it is to be retained, we also understand fully that it must be responsible for the right kinds of manufacturers.

I recall the lobby on this subject of telecommunications by Post Office workers a few weeks ago. The Post Office Engineering Union advised right hon. and hon. Members by letter that it was its firm intention to support all efforts to retain telecommunications work in the development areas. However, the union also went on to point out at some length that it could not support the investment of public funds to manufacture equipment which already was obsolete.

In this connection, the Plessey organisation, anyway in Sunderland, has deservedly come under criticism. It seems that, although it has seen this development coming for some time, it has not been prepared to reinvest and to retool to meet the new challenge in the telecommunications industry. This is the price which 2,000-odd workers in Plessey's Sunderland factory may be called upon to pay for the shortsightedness or possibly the greed of the Plessey company.

As a public corporation, the Post Office is also entitled to some share of recrimination—I put it no higher than that—because of its ordering policy. We are told that there are considerable hiccoughs in the placing of orders. There is no relatively continuous flow of orders for equipment to the firms which are contracted to the Post Office. But, here again, the firms concerned—and I am sure that this is equally true of Plessey—apparently have been quite content for a long time to feed upon the home market to keep their factories in operation, when everyone knows that in this rapidly developing technological age there are ready avenues open all over the world for the exports which these companies are capable of producing. There appears to have been a wholly inadequate accent on the export aspect of the telecommunications industry in Sunderland.

The problems on Sunderland is accentuated, as my right hon. Friend the Member for Sunderland, North has said, by the fact that a considerable amount of work appears to have been sub-contracted to firms outside the northern area. This is work that the union representatives claim could have been done equally well in Sunderland and may well have saved some, if not all, of the jobs. There is also, as my right hon. Friend also pointed out, the question of materials being bought from GEC and from Plessey's own factory in Northern Ireland, which of course does not meet with the approval of the workers in the Sunderland factory.

Unemployment in the Sunderland area is enormous. The morale of people in the area is at present very low indeed. If another 2,000-plus redundant people from Plessey are added to the labour market in a few weeks time, one can imagine how much more chaotic, difficult and desperate the position will be for so many people searching for all too few vacancies of all kinds. It is imperative that in the 90 days breathing space from last Wednesday, when the announcement was made, the NEB should start busying itself to ascertain just what the prospects are for the retention of the factory and what the NEB can do to assist in rejigging and retooling in order to meet the increasingly difficult challenge of the developing technological age. We must have this breathing space.

My right hon. Friend the Member for Sunderland, North also referred to the temporary employment subsidy. This morning my hon. Friend the Member for Sunderland, South and I went to a meeting attended by a very wide range of local authority representatives, including representatives of the Northern Economic Development Council, representatives of Government Repartments, trade unions, and everyone else who has an interest in employment in Sunderland. The importance of the temporary employment subsidy was referred to at the meeting, but here there could be a difficulty. While the subsidy would certainly be a lifeline in the present difficult circumstances, I understand that it is only the employers who can be held responsible for making an application for temporary employment subsidy. If the attitude of the Plessey management is as intransigent as was outlined this morning and on Saturday at another meeting, I am afraid that the management might not be prepared to make that effort.

In the interests of Sunderland and the interests of the morale of the people of Sunderland I call upon my right hon. Friends in the Department of Industry and the Department of Employment to do everything that they possibly can to ensure that this highly damaging blow does not fall on the people of Sunderland and in particular on the Plessey factory in Sunderland, North.

4.43 p.m.

Mr. Gordon A. T. Bagier (Sunderland, South)

I am grateful to my right hon. Friend the Member for Sunderland, North (Mr. Willey) for being fortunate enough to obtain a debate at such early notice after the disastrous announcement of the closure of the factory by Plessey last week.

I know that my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) is anxious to speak, but I know that he understands that it may be for the convenience of the House for those hon. Members representing Sunderland to put their views first, and he then hopes to mention the issues that affect Liverpool.

My hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) and I attended a meeting this morning with various representatives from the North, comprising trade union leaders, the development council, the Tyne and Wear County Council, Sunderland District Council, also representatives of the Department of Trade, the National Enterprise Board and the Department of Employment.

The message coming from that meeting load and clear was that this factory must not be allowed to close, certainly not at this stage, for various reasons. There were long discussions this morning on the reasons why the Sunderland factory was in difficulty. One was that it was producing outdated equipment, the Strowger equipment. Another was that the equipment is no longer required because the Post Office has changed its ordering policies and has not maintained the flow of orders to the extent which was expected by the factory. There were other reasons, but all these did not take into consideration the attitude of the people who actually work in the factory.

None of those factors could be laid at the door of the people employed in the factory, who had been taking their intruction from management via the Post Office and, I suppose, via the Government. They feel extremely angry about the treatment they have received. When I asked this morning what discussions had taken place, and what advance notice was given by Plessey, I was very surprised when a local representative of the Department of Trade said that his Department knew nothing about this. The Department knew that the equipment was out-dated and that some changes would he required and that there was a need for new investment in order to produce other equipment, but the representative said that the Department did not know—and I accept that it did not know —that Plessey would announce last Wednesday that a factory employing 2,088 people was to close. I do not want to put this local official across a barrel, but he told me that in his view his bosses at national level in London also did not know.

To me this is an indictment of the Plessey company. Nor is it the first time that I have had trouble with the Plessey company. Two or three years ago I criticised the company's management-staff consultation procedures to such an extent that Dr. Willits, the chairman of that section, came up to Sunderland to see me about it. Last week we had another example of the staff first finding out that they are out of a job when they saw it on television.

These are extremely serious cases. The Plessey factory employs men, women and younger people. We have families with as many as four wage earners all working in the factory. We can imagine the disastrous consequences on their living standards if four members of the same family, all working at Plessey, find themselves without employment. We have to find out where the blames lies. I was abroad last week and heard the story of the closure then, but a Plessey director at the conference that I was attending was able to give me some more information.

I have read newspaper reports stating that the former Prime Minister, my right hon. Friend the Member for Huyton (Sir H. Wilson), said during Questions that he had received some undertakings from the Post Office about forward ordering. I want to find out whether that is true. I do not doubt my right hon. Friend's word, but if what he said is a fact and there has been a drastic change of direction in Post Office ordering, the House should know something about this because time is of the essence. Our unemployment rate in the area is already 13.5 per cent. male unemployed. Perhaps we shall be able to look at the problem better in 12 or 18 months' time. We should have a period in which we can consider redeployment of the staff and carry out an examination to see what is wrong with the organisation of Plessey or the Post Office.

I am grateful to my right hon. Friend the Prime Minister for announcing that there is to be an inquiry under Professor Posner, but, as my right hon. Friend for Sunderland, North has said, we have seen these inquiries before but nothing seems to come from them. It is nice to be promised that the Manpower Services Commission will move in and that we shall have the fullest possible inquiry into alternative job opportunities. We already have quite a number of empty factories, and with an unemployment rate of 13.5 per cent. we are looking for jobs to fill those factories. We just cannot produce the extra 2,000 jobs that are needed. There is no way in which these people can be employed except by the continuation of the Plessey factories which must be kept open. This is a matter of some urgency which should be examined not by Professor Posner and his staff but by the Central Policy Review Staff. It must get down to examining why a nationalised industry is at fault, if it is at fault, and how a large corporation which is responsible for the livelihoods of so many of our people can fall down so badly and drop this bombshell at this time.

I suggest, therefore, that the matter should be referred to the CPRS. That is an urgent requirement. Secondly, the Government must step in to maintain this factory. They must find money to do that. My right hon. Friend the Secretary of State has said that it might cost £2 million or £3 million. I do not know what the cost will be, but the money must be spent to give us the breathing space we need. We cannot possibly accept the 90-day redundancy notice and watch the gradual closing of the factory. We must know the full facts of the situation before that is allowed to happen.

Let us have a full and urgent inquiry by a major body which has the power to act. Further, we have to examine why Plessey's export performance has been so deplorably poor. This factory has an immense turnover, but only 10 per cent. of that turnover goes for export. That seems to indicate that this major company has been cruising along comfortably on a home order policy from the Post Office, and that is not good enough.

We are aware that the equipment made by the Sunderland factory is out of date, but that is not the fault of the people who work there. There should have been a gradual moving over to the production of sophisticated equipment with a more realistic attack on world markets. It gives us no joy to see countries such as Saudi Arabia placing orders for telecommunications equipment in Japan and elsewhere. The recommendation of Sir Raymond Brown of NEDO last year that a telecommunications export order body should be set up and should be considered a matter of urgency, although I realise that this will not save our factory.

The trade union representatives said at the meeting this morning that life was tough, that they know that Plessey has problems and that the demand for equipment is probably low. But their point is that not all the weight should be allowed to fall on Sunderland. A great deal of sub-contracting work has been spread throughout the country because Plessey has been unable to handle it. Some of that work should be brought back to Sunderland. I realise that this could affect factories and sub-contractors elsewhere in the country, but such a move would soften the blow for a town which already feels that it has been tremendously hammered.

The message I bring from the meeting this morning is clear. Tomorrow we shall be meeting my hon. Friend the Minister of State, Department of Employment, with a representative group from the North of England Development Council, from the trade union leaders, from the councils, from Members of Parliament, and from the work people in the factory. We have to decide what should be done about this matter in the first instance, but the underlying aim is to point out that in no way can we accept this savage closure if it is possible for the Government to intervene.

I have mentioned three important points which must be tackled—Government help, the bringing in of the CPRS and the export potential of Plessey. If we can succeed in these points, not only will it do this factory good, it will do the whole industry good. It would give us a year or 18 months in which to retool, rejig and retrain in order to keep the work force occupied.

I know that my hon. Friend the Under-Secretary is actively interested in Post Office matters. He will be interested to hear that over the weekend, with the Post Office announcement of a ½p increase in postage rates to boost a collective overall profit of some £400 million, the people in the North-East have been spurred on to a mood of anger. They have been lashing out angrily and demanding to know whether the Post Office is just a publicly-owned piece of capitalism which has to make as much profit as it can or whether it is supposed to look after the people who work in the industry.

4.56 p.m.

Mr. Erie Ogden (Liverpool, West Derby)

You will know, Mr. Deputy Speaker, that I usually obey the injunctions of the Chair by trying to keep my remarks to 10 or 15 minutes. If today I exceed that time, it will not be to catch up on the time taken by my hon. Friends from North-East England but a recognition of the importance of this debate.

There are no differences between hon. Members from the North-East and those from the North-West on this subject. There are no differences between the workers in Plessey factories on Merseyside and those in Plessey factories in the North-East. We are not fighting each other for a larger share of a smaller cake. This is an occasion on which we each give our own experience and put forward the case of the factories and the people in our own constituencies.

We are, however, engaged in a parallel endeavour. The meeting of Merseyside Members last Thursday was not an attempt to steal a march on anyone from the North-East. Only an extreme optimist would try to do such a thing. My right hon. Friend the Member for Sunderland, North (Mr. Willey) said that Merseyside had done rather better than the North East from the Temporary Employment Subsidy. He gave the amounts at £10 million for the North-East to £48 million for Merseyside.

Yet on Merseyside I am constantly told that if only I made as much noise about things as the North-East Members do, Merseyside might do better. My hon. Friends from the North-East therefore are envied on Merseyside, and no doubt I am envied in the North-East—that is the way of things. We have a common cause for concern, about the employment of those who work in our respective areas. There are no differences between the two sides of the House on the subject. This is not a party political matter.

We have to link our debate with particular parts of the Estimates for 1976–71. To show, therefore, that my comments are relevant, I refer the House to page 128 of the Supply Estimates, 1976–77 Class IV, 15 under the description expenditure by the Department of Employment on grants in aid to the Manpower Service Commission". I was surprised to see there the sum of £410 million, which is an increase this year of more than £1 million. I refer also to page 84, Class IV, 3 Section B under the heading, Industrial Research and Development Contracts", because the telecommunications industry depends very much on research and development.

I take also Class XIV, on telecommunications, and also the section which refers to overseas aid. A great deal of overseas aid ought to be in the form of overseas trade. These are the four sections which I hope will make absolutely certain that my remarks are relevant to the Bill.

The Plessey company is a major electronic engineering company. The Financial Times recently reported: Electronics group Plessey is still holding up well to the sharp drop in telecommunication orders from the Post Office. In its third quarter, the group lifted overseas sales to more than half the total. Profits rose from £8,013,000 to £9,650,000, bringing the nine-monthly tally to £27.99 million against £25.02 million. Plessey is relatively successful, but not wholly so—at least holding its own abroad, although the company has been less successful at home.

On 14th February this year a delegation from Plessey Telecommunications came here to tell their Members of Parliament from the North-East and the North-West of their complaints, fears, anxieties and anger at the threats of enforced redundancies and unemployment in the near future. These were skilled workers, trade unionists, who wanted to continue to work. Members responded in their own way. There was a series of meetings with Ministers. My hon. Friends in industry and employment have been most anxious, careful and diligent in making sure that communications were constant all the way. They know of the continuing discussions and our real concern.

One unique aspect of the Plessey company on Merseyside, compared with any other company there, is that Plessey is the one major company which has never, in the 12 years during which I have been a Member made any attempt to interest local Members of Parliament of all parties in the management of the company, their problems, and hopes. So far as Plessey was concerned, we did not exist. Every other company on Merseyside—Ford, Lever Brothers, Cammell Laird, GEC, United Biscuits, Ogden's Tobacco, whose interest is understandable, Fisher-Bendix, Standard-Triumph, Royal Liver Insurance and Royal Insurance and many other companies large and small have kept close contact with their Members, not only when there was a crisis but to keep us informed of progress, to report and to involve us in their affairs. They had an interest in us and we in them. Their purpose was to continue working and our purpose was to help them to do so. Not Plessey, Liverpool.

Others may have had a different experience in other parts of the country, but this is my complaint. I did not complain too much. After all, there is more than enough work for any MP in the area. I assumed that if we did not hear from the company this was because the company did not need us, and we wished it good luck. Experience showed us otherwise.

The unions at Plessey were not much better. During the Thorn Ericson dispute a delegation came to visit us in November 1976 and again on 14th February, but we did not have the closest possible contracts which ought to exist. After 14th February there was an attempt to have a meeting, but it was not possible in the time available. Then, on 2nd March, I received my first-ever letter from the Plessey management, local or national. The letter, from Mr. M. E. Glynn, Managing Director, Public Telecommunications Systems, I presume went to every MP in Sunderland and on Merseyside. It said: It is with great regret that I have to advise you of the decisions forced on us by the continuing falls in changing Post Office ordering programmes. The situation is summarised in the Company's public announcement, issued tonight, and I thought you would wish to have the attached copy without delay. Obviously, this matter is the subject of consultation with the Trade Unions concerned but should you wish to discuss any questions arising, perhaps you would contact my office so that a meeting may be arranged. To be fair to the Plessey company, that was appreciated.

It is important that we get on record what the company said to its Members of Parliament in a public statement. Released on 2nd March, 1977 and headed Post Office Cuts Force Redundancies in Plessey Telecommunications ", it said: The cumulative effects of Post Office cuts since 1974 will cause a net reduction of about 4,000 jobs and some factory closures in the electromechanical systems sector of Plessey Telecommunications, it was announced tonight. The Company is issuing formal consultation notices, under the Employment Protection Act, covering a total of about 4,800 jobs but it is expected that by retraining and redeployment there will be new job opportunities for about 800 of the people affected in growth product areas, such as TXE4, Pentex and System X. Tonight, the Company's management presented the facts to representatives of the Trade Unions concerned at national, regional and local meetings. There was more, and I am sure that my hon. Friend and other hon. Members will have copies of that statement.

The Plessey company has known about continuing problems for some time, but it has now said to its workers, "These are the problems, this is the solution. How will you help to work out the details?", instead of telling the workers months and years ago that the company was going to have difficulties, how the company saw future programmes, and how it would have to change and organise. In other words, the people who work in the factory should have had the opportunity of providing other solutions at other times. But the decision was announced and the only opportunity the workers have is to object or to sit-in as is being done in Kirkby because they want to keep on working. The company allow only minimal changes in the closures now imposed.

The whole attitude of the Plessey company, public and private, to Members or its own workers is to say " These are the problems, and these are the solutions. The fault, the responsibility, is entirely

that of the Government and the Post Office." The company says that this is where the responsibility for the difficulties lies. Plessey blames the Post Office and then the Government cuts.

It is not as simple as that. The Post Office and the Government have some responsibility, but the main responsibility for the management of its own affairs and its failure to manage them lies with Plessey. It is time that Plessey accepted at least a major share of the responsibility instead of trying to push the blame on to the Post Office and the Government.

My hon. Friend will also have the views of the Post Office Engineering Union, which were put on the record some time ago. That union seems to be taking a more responsible attitude. Everyone ought to base comments and proposals on facts, not assumptions. I am not the most avid reader of The Sunday Times. I often complain about my right hon. Friend the Leader of the House always quoting it and The Times. The number of people in my constituency who read them is minimal. Their influence in West Derby is not too great. More of my constituents read the Daily Mirror and the Liverpool Echo.

In The Times last week there was a letter from Mr. Peter Rodgers, who set out a balanced idea of what the Post Office was doing. One of my hon. Friends referred to the £400 million profit that the Post Office had made. In that paper this neutral observer said: The much-maligned Post Office offers some of the best telephone bargains in Western Europe and has an extremely well-organised tariff structure. This remarkable conclusion emerges from what is claimed to be the first full survey of European telephone charges and services. Your total telephone bill here is about average for Western Europe, but the Post Office does more than anybody else to promote cheap offpeak calls, at anything from an eighth to a half of the levels in most other European countries. International calls from Britain are also among the cheapest in Europe, on and off-peak, and the PO is the only telephone company to offer a proper system of cheap off-peak rates for international calls. Rental and connection charges do not look quite so bad when compared with the rest of Europe. Only Belgium, Luxembourg and Portgual charge substantially less for connection, and Denmark charges nearly three times as much. (This does however hide the fact that subscribers a long way from an exchange can be heavily penalised in Britain, unlike most other countries.) Again, monthly rental charges are about average for Europe, with some countries considerably more expensive—West Germany charges two-and-a-half times as much. The survey, by the London-based computer and management consultants Logica. That was not a survey commissioned by the Post Office.

There have been comments about changes in Post Office charges for letters. In the Sunday Times, which is a useful newspaper to read, even if only occasionally, there was a front-page report this week headed Are we really so badly off? It compared costs in terms of working time compared with 25 years ago. Iii 1950 it required 21 minutes of the average worker's time—if there is such a thing as the average worker—to pay for the postage of five letters. Nineteen minutes are now required.

It is easy to talk about the Post Office using some of its £400 million profit to help prevent unemployment in Plessey. I went to the Post Office telecommunications headquarters at No. 2 Gresham Street this afternoon, when it was confirmed that there would be 400,000 business connections this year and 1 million domestic connections. The Post Office plans a programme of 1,100,000 domestic connections next year, a record level. There are 40,000 on the waiting list, and the Post Office recognises that that number should take two months to deal with at the most. It is proposing to do all it can, so the suggestion that a drastic reduction in installation charges and othet telephone costs would have a dramatic effect on the immediate position of Plessey, or even the position over the next 12 months, is open to doubt. I think that there is room for adjustments, but they would have a marginal effect at most.

My hon. Friends from the North-East have said that 60 per cent. to 70 per cent. of the telecommunications orders for Plessey, GEC and Standard Telephones come from the captive home market. The Post Office places hundreds of millions of pounds-worth of orders with those three companies each year. It is also providing GEC, Standard Telephones and Plessey with £65 million investment in research and development for System X, which is the real growth area for the years ahead. That investment is one of the best examples I know of co-operation between Government and private enterprise.

I understand that on the electrical-mechanical engineering side the present versions of the Strowger and crossbar systems began before the 1940s. Research and development on the new systems is not a matter of turning something on this year and having the results coming out of the pipeline next year. These are long-term programmes. Plessey has invested a large amount in the TXE4 electronic systems, a great deal of the work going to Huyton. I do not know the full significance of that, but it is a fact that while the company neglected the older part of Merseyside it poured a great deal of money into the newer TXE4 work, which has not been affected to any appreciable degree by the Post Office cuts. System X and TXE4 are the growth areas for the future.

The Post Office tells me that it has six years supplies of the older type of equipment being made at present by the Plessey company. It normally holds three years' supplies, and its present holding is twice its normal reserve. Since November the Post Office management and Ministers have met and met again to talk about the continuing programme. There are times when politicians are not very popular. I think that most of us have stopped hoping that we ever would be popular. In some ways the Post Office is in the same position. If it is regarded as a public service, there are newspaper headlines if it makes a loss. If we then tell it, as Parliament did, "It's your job to act as a commercial organisation, to raise your own capital, to create money for your own investment", we complain if it will not act as another means of rescuing private enterprise. Therefore the Post Office knows that it will not win. But it does not matter who gets the credit or the blame so long as we get something done.

The Government have been pressing the Post Office since long before last November to look at its ordering programme. If it does give help, is it to come out of the £400 million profit this year? We do not refer to the last year or the year before. I believe that Post Office capital equipment is worth £1,000 million. All that capital investment produced a profit last year of £400 million. The Post Office would do better to sell up and put the money in the Post Office Savings Bank, where it would have a better return on investment.

Changes could be made in the Post Office sales policy. These would have a useful short-term effect, but it would be only marginal. Someone told me at my advice bureau last Saturday "I want to put in a telephone for my mother, a widow who lives on her own. I could manage it if it cost £20 or £25, but at £40 or £50 it is more than I can reasonably provide" Perhaps there could be lower charges for some connections that are socially desirable.

My right hon. Friend the Prime Minister said last week that under the Employment Protection Act there was a 90-day delay in making the workers redundant. I believe that during that period something can be done, though it is not a great deal of time. The present position should have been planned for six years ago, and could have been foreseen nine years ago. In the Labour programme for 1973 it was proposed that in such circumstances, rather than wait for a concern to go bankrupt and an official trustee in bankruptcy to be brought in to dispose of the assets, the Government should be able to appoint an official trustee who would be able to keep the situation as it was. All the options would be kept open so that there would be a viable operational unit still in existence while talks continued. My workers in Kirkby are holding on to the factory and carrying on production in the hope that during the 90 days something will be achieved.

Anyone who thinks that the British Medical Association representatives are tough negotiators has not yet met Plessey representatives. There must be co-operation between Plessey and the Government, but the Government must also involve GEC and STC. I do not want another debate such as this in six months' or a year's time about GEC Telecommunications or STC. They must be brought in now. Temporary employment subsidy must be offered, and strong pressure must be put on the company to accept. The company has nothing to lose and everything to gain.

If it is a matter of tax concessions in the Budget or of some of the money being used for the maintenance of employment, I should have no difficulty in arguing with my workers on Merseyside that employment for others must come first. I hope that my hon. Friend the Minister will have a word with my right hon. Friend the Minister of State for Overseas Development. Overseas aid has been flowing back from Egypt to GEC on Merseyside, which has been supplying pole-mounted transformers. That is a good example of taxpayers' money doing a good job in Egypt, right where it is needed, in the village—not for the massive Kariba Dam but following through from that—and coming back to Merseyside to create more employment there.

The Manpower Services Commission is also important, as is the advance factory programme, although it is a tragic irony that alongside the Plessey factory at Garston, which the company proposes to close down, the Government are building an advance factory. The idea is to provide sub-contracting work on Merseyside. The Government have the right to complain that Plessey failed to provide them with any advance information on this matter.

I appreciate that my hon. Friend knows about the unemployment situation on Merseyside. I need not go into detail. If the three parties concerned accept their share of responsibility and are prepared to work together, then I think that within the 90 days available to us, there is some hope of a solution. All we are asking for, whether on Merseyside or in the North-East, is the opportunity to work.

5.21 p.m.

Mr. Ivan Evans (Aberdare)

I congratulate my right hon. Friend the Member for Sunderland, North (Mr. Willey) and others of my hon. Friends from the North-East and Merseyside on raising this subject today. The debate has ranged to a large extent on the problem of Plessey in Sunderland and in Kirkby, but it raises the important need for the Government to make additional provision for dealing with unemployment and redundancies following the closure of local factories generally.

Most hon. Members will have had experience of the closures of local factories. We should realise that unemployment in any area affects employment prospects throughout Britain. We in South Wales have plenty of experience of unemployment over the years. It is not good to hear of any factory closing anywhere.

When a factory closes, it tends to have a cumulative effect on other industries. I thought that I knew the circumstances of all local factories in Aberdare and Mountain Ash, but I was surprised to discover that, had British Leyland collapsed, it would have had a serious effect on a number of component manufacturers in my constituency. People tend to think that the British Leyland problem affects 200,000 workers primarily in the Midlands. In fact, it has a major effect on 1 million people throughout Britain, many thousands of whom are in my constituency. Therefore, I hope that the difficulties facing British Leyland will soon be overcome.

Last week it was announced that British Leyland production was 30 per cent. up this January compared with January last year. There was a substantial improvement in the company during that period. I hope that the difficulties can be resolved. If British Leyland fails, the effect on British industry and on component manu. facturers in particular will be tremendous.

The debate has centred on the recent development at Plessey. My hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) said that other companies supplying the Post Office could also be affected. For example, Standard Telephones and Cables and GEC supply equipment to the Post Office. Representatives of the Post Office Engineering Union have lobbied Welsh Members on this matter.

Mention has been made of the profit of £400 million made by the Post Office last year because of increased efficiency. I suggest that there should be some new thinking on industrial strategy. We tend to have a situation in industry of all go or all stop. The Post Office having made a profit of £400 million, I suggest that the Government should encourage it to go ahead with the installation of telephones. There are many skilled workers in the telecommunications industry and many people are waiting for telephones to be installed. Therefore, the Government should, at a time of recession, encourage the Post Office to meet all the demands being made for the installation of telephones in houses, offices and factories. They should say to the Post Office "We wish you to plough some of this surplus profit into encouraging demand for telecommunications equipment rather than cutting back".

There is a danger of over-simplifying the problem. We get demands for cuts in public expenditure. Industry is being encouraged to cut back. I believe that at a time of world recession we should call on industry to involve itself in increasing public expenditure if it results in more employment opportunities.

When we get out of the present recession, manufacturing industry will be calling out for skilled workers and it will not be easy to get them. Therefore, during a downturn we should plan to encourage the public sectors, especially those involved in manufacturing, to expand.

The Post Office has considered moving into manufacturing. It is strange that it has been prevented from manufacturing its own equipment. The Under-Secretary of State is knowledgeable on these matters because, in another context, he has close contact with the Post Office Engineering Union. If there is no other way out of the problem, the Government should seriously consider extending public ownership in this area to maintain jobs.

I am glad that this important issue is being discussed early in our proceedings on the Consolidated Fund Bill. Unemployment is the major problem facing the Government. I know that many suggestions have been and are being made to the Chancellor of the Exchequer regarding what he should do in his Budget. I hope that the main emphasis in the Budget will be to try to get this country back to full employment.

Last year my hon. Friend the Member for Consett (Mr. Watkins) introduced the Industrial Common Ownership Bill, which was supported by the Government and the Opposition. That measure gives powers to afford assistance in the formation of workers' co-operatives. That measure may not be applicable to large industries, but it provides for assistance to be in cases where workers are willing to take over the management of small factories. In many instances the factories concerned have good order books and are efficient. Their problems are the result of the financial set-up of the organisations to which they belong getting into difficulties. Therefore, we should have machinery available to encourage the formation of workers' co-operatives.

I hope that the Government will consider setting up a co-operative development agency which, with the National Enterprise Board and other development agencies, could play an, important part in keeping local industries going.

We are concerned with additional provision to deal with unemployment and redundancies. We must seek, in a more positive way, to prevent unemployment and redundancies. The Government are taking many measures and have a catalogue of various things that they have done to encourage industry but I hope that they will look again at the regional employment premium which has played an important part in encouraging manufacturing industries to move into needy areas.

5.30 p.m.

The Under-Secretary of State for Employment (Mr. John Golding)

My right hon. Friend the Member for Sunderland, North (Mr. Willey), and my hon. Friends the Members for Houghton-le-Spring (Mr. Urwin), Sunderland, South (Mr. Bagier), Liverpool, West Derby (Mr. Ogden) and Aberdare (Mr. Evans) have spoken eloquently and with great feeling. I need hardly say how distressed the Government were to learn of the declarations of the Plessey redundancies in Sunderland, affecting 2,088 workers and at Kirkby, Speke and Edge Lane, Liverpool, affecting 1,278 workers, because of the massive unemployment in those areas. We know the great hardship that this will mean for many families and the blow that it will be to the pride of the individuals concerned.

My mind goes back to the visit that I made to Plessey in Liverpool before 1974 when that company was campaigning against the possibility of further modernisation by the Post Office. The company specifically said that it had invited me to the factory to see the girls and other workers who would be made redundant if the modernisation programme took place. I have a picture of those girls and other workers in my mind when I speak this afternoon.

I shall clarify the situation from the Government point of view. But before doing that I shall restate the case which Plessey has made and which is supported to some extent by the workers in the Plessey concerns. In a letter to workers and unions about the proposed redundancies within the customer service and installation division the company stated: Following the successive cuts by the Post Office in its requirements, it has been necessary for this Company as a major Post Office supplier to examine critically their cumulative effects on its present and future position. Particularly this is because cuts have fallen most heavily upon the labour intensive electromechanical type of equipment which currently forms a substantial proportion of our total output which will become obsolete progressively over the next few years. The rapid decline in requirements for electro-mechanical switching equipment, the installation of which is labour intensive, is occurring at the same time as a change to electronic and semi-electronic equipment, the installation of which has a lower labour requirement. As a consequence of the reduction in ordering levels and the change in technology, the present levels of employment in the installation division cannot be maintained. It is therefore proposed that redundancies be effected to reduce the work force to a size consistent with the level of demand existing. In the company's letter to all district officials, staff and hourly-paid workers involved in manufacturing, the company stressed: The rapid decline in demand for such equipment is a reflection of increasing requirements (including overseas) for electronic equipment, the production of which has a considerably lower labour requirement. It goes on:

As a consequence of the successive volume cuts and the changes in mix requirements by the Post Office and the changes in overseas demand, it is apparent that the level of employment, and production activity, both in terms of numbers and locations within the Company is higher than can be sustained. In this situation, with the greatest reluctance, the Company must now propose substantial redundancies (including some factory closures) in order to reduce the total work force to a figure which is consistent with the market demand as it now exists and is likely to continue for the foreseeable future; and also to enable the Company to concentrate upon the newer technology and thereby safeguard the position of the work force which will remain. In its PR handout Plessey, while not mentioning to the Press the fall in export orders, says that it is the cumulative effects of Post Office cuts since 1974 that will cause a net reduction of about 4,000 jobs and some factory closures in the electromechanical systems sector of Plessey Telecommunications.

Mr. Urwin

My hon. Friend has said something which is important about the developing situation and the development of new techniques. Has Plessey said anything to the Government about its intention to develop new techniques in Sunderland or in Liverpool?

Mr. Golding

I was impressed by the speech of my hon. Friend the Member for Houghton-le-Spring. I am sure that he will wait for me to reach the point where I make it clear that developments are taking place. Those are in Liverpool, but I am not aware of any such developments in Sunderland. However, I shall come to that later.

The company in their Press handout went on to say: A reduction in resources is now essential, due to continually changing Post Office ordering programmes, the most important effects of which are:

1. 1. The excessively rapid transition from electromechanical to electronic systems, which has effectively been brought forward by about four years against the Post Office Modernisation Plan.
2. 2. Projected orders for a number of major projects, including a further Crossbar International Switching Centre and additions to the Whitehall Private Crossbar Exchange complex, have been postponed.
3. 3. The Post Office announcement of further cuts last November aggravated an already serious forward situation. Even if the November 1976 cuts are restored there will be no benefit to the industry for at least 12 months."

I put the Plessey point of view at length because I want to answer some of the allegations that are being made by the management and by others. First, let me make is absolutely clear that the present situation does not arise from Government cuts in public expenditure. Post Office telecommunications expenditure slightly increased from £916 million in 1975–76 to £917 million this year. The Government have not cut back in real terms in telecommunications investment since the Conservative cuts late in 1973 which were restored to the levels required by the Post Office after the February 1974 election. The Post Office has cut investment only to respond to reduced needs for equipment. There have been no Government-imposed cuts. The Post Office has reduced telecommunications investment only when the demand has been lacking for equipment.

Incidentally, those who refer to the size of the telecommunications surplus must understand that it is entirely swallowed up to meet some of the cost of the investment. Hon. Members who refer to sums of £150 million, £300 million or £400 million profit must appreciate that on telecommunications alone, £916 million was invested last year. Those are the vast sums with which we are dealing in telecommunications.

There have been some problems in the past because of the delays on the part of British manufacturers in delivering equipment on time, and problems because Plessey, for example, has been unable to supply modern equipment that is much needed, and the Post Office has been forced, and is being forced, to go abroad to purchase that equipment. Overall, however, the ordering programme has increased year by year.

The present problems stem, first, from the inability to sell out-of-date equipment abroad. They stem, secondly, from the decision to develop a modern semi-electronic system in place of outdated electro-mechanical systems, a development from which Plessey withdrew at an early stage before it achieved ultimate success, a success which led to the endorsement and support—rightly, in my view—of the right hon. Member for Bournemouth, West (Sir J. Eden) in 1973 when he was Minister of Posts and Telecommunications. I supported him then, because he was right to give that endorsement. It was later endorsed by my right hon. Friend the Member for Huyton (Sir H. Wilson).

Thirdly, the present problems stem from the reduction in orders when demand fell not only because of the recession but as a consequence of tariff increases which followed the ending of the massive subsidies being paid from taxpayers' money to the potentially profitable Post Office telecommunications. Again, I certainly supported the ending of massive State subsidies, from taxpayers' money, to Post Office telecommunications.

Fourthly, the ironing out of telephone traffic over the day by means of a varying call charge also reduced the amount of new equipment needed, as it avoided a situation in which a lot of expensive equipment was required to meet rush hour demand for as little as an hour or two hours a day.

Fifthly, the latest ordering cuts are the result of computer studies which have given the Post Office a measure of actual traffic flows. The Post Office has been able to measure them more accurately than hitherto, and to match capacity to them, exchange by exchange. These studies have shown a large measure of spare capacity.

Quite clearly, the problem is that the Post Office wants to modernise the system. This is absolutely essential if it is to provide the quality of service that our people want. Certainly Post Office users cannot expect to receive good service from the use of out-of-date equipment. If Britain continues to build up an obsolescent system, it has no chance to improve on a poor telecommunications exchange equipment export record. There will not be orders from abroad in the years to come if the British telephone system has not itself an international reputation for being relatively fault-free, easy to maintain and providing the necessary range of services called for by telephone users, particularly businessmen, throughout the world.

I want to emphasise this point very strongly. My right hon. Friend the Member for Sunderland, North made a very good speech, but I disagreed with him when he supported the manufacturers' view that chopping and changing of Post Office orders has led to the loss of exports. The loss of exports has followed from continuing to produce out-of-date equipment and stems basically from the failure of a joint venture between the Post Office and manufacturers in the 1960s, when they tried to go directly from a simple Strowger electro-mechanical system to an advanced electronic system. Sadly, the experimental exchange at Highgate Wood failed, and it left Britain without exportable telecommunications switching equipment. That is why we do not have the orders.

However, when I have spoken to people abroad, they have made it absolutely clear that they will come to Britain to discuss the purchase of British equipment when they get the impression, once again, that the British internal telecommunications system is providing for its own customers the wide range of services that modern equipment can provide. I do not think that we have any hope in the export market until we produce a modern British telecommunications system, and we cannot do that through the continued installation of obsolescent equipment.

Mr. Wiley

I was making the very simple point that the major supplies are in the domestic market and that this determines the production of the companies, and that is where the fault has been. What my hon. Friend is saying confirms that. There has been a bad ordering policy over the past years and it is reflecting itself now in the inability of companies to meet an export demand because other countries have progressed over us.

Mr. Golding

I apologise to my right hon. Friend if I misunderstood him. It has certainly enabled me to stray from my brief and to speak with some degree of feeling on this subject.

Certainly the Post Office has also faced the discovery that it does not need to instal as many switches as it once thought would be necessary to carry the traffic. If it were to buy this unneeded exchange equipment, the cost would fall on either existing telephone users or the taxpayer. The Post Office does not feel justified in doing this. Rather, it aims for a relatively cheaper and more efficient telephone system, less dependent than at present on borrowing from the Exchequer —because Exchequer money is only taxpayers' money.

But, of course, the Post Office estimates could be wrong. That is why my right hon. Friend the Prime Minister, following representations from both sides of the telecommunications equipment industry, announced that Mr. Michael Posner, of Cambridge University, had been appointed to consider the assessment that led the Post Office in November 1976 to reduce the future levels of orders for telephone exchange equipment and to report. He will be seeking the views of unions and manufacturing industry and will report as soon as practicable—not that I would want Plessey workers to pin too much hope on this, because the company has made it clear that the restoration of these orders would have no effect for 12 months in any case.

Even the Post Office estimates are correct, there are further steps it could take. It could reduce connection charges in order to encourage more people to have telephones, and the Department of Industry will ask the Post Office to consider this once again. I emphasise connection charges because although I would not want to prejudge the result of any discussions, it could be that reducing rentals and call charges, while being of little help in increasing demand for equipment, could place an enormous burden on the taxpayer if it were necessary to make good any losses.

Many people outside the Post Office think that the Corporation could conduct more vigorous marketing campaigns. Some of my hon. Friends have suggested this—wisely, I believe—in the debate today. The Government are prepared to back such initiatives, and I understand that the Post Office is discussing this with those who would be affected by it.

Sadly, however, these measures will not solve the problem within the 90 days' notice that Plessey has had to give under the Employment Protection Act. I wonder how much notice would have been given had we not passed that Act.

Mr. Ogden

My hon. Friend has no need to wonder. The majority of workers would have had one week's notice and then the jobs would have gone for ever.

Mr. Golding

We would have liked to see a much longer notice given than the statutory minimum with redundancies of this size. When the Secretary of State for Employment learned of the prospect of redundancies and that private manufacturing companies had mainly developed much of their work, which had a future, outside Liverpool and Sunderland in the non-assisted areas—Huyton is an exception—he was most disturbed. He decided that this might provide the occasion for the first major jobs initiative by the Manpower Services Commission. Unfortunately, the problem has been that since the autumn the firms concerned have not been prepared to concede that they would be affected by redundancies. In these circumstances it was useless to mount an initiative without the agreement of management and unions at the plants concerned.

Mr. Bagier

Is my hon. Friend saying that the companies at that time—and they must have had some knowledge of what was going on—refused to cooperate with the Manpower Services Commission in order to see what could be done? This is the burden of our remarks—Plessey made its announcement suddenly, without any consultation of any substance at all.

Mr. Golding

My understanding of the situation is that when we knew within the Department of Employment that because of technological changes and changes in Post Office expectations, this problem would arise, the Secretary of State asked the Chairman of the Manpower Services Commission to examine whether this was the right occasion for the first major jobs initiative on the part of the Commission. Of course the Chairman was only too pleased to help. But when the MSC tried to discuss this with the firms concerned it appears that they buried their hands in the sand and no real discussions could take place. The companies failed to recognise that this situation was imcminent. Certainly the Government took an initiative and the Manpower Services Commission took an initiative months ago, but the response was not there.

Mr. James Prior (Lowestoft)

The lion. Gentleman said that the Post Office made its decision in October or November, and reduced its amount of ordering. Presumably from then the Government knew the sort of situation which was likely to arise, and which is now occurring. Is he saying that from then on the Department engaged on a survey to see what could be done through the Manpower Services Commission but the firms concerned refused to co-operate?

Mr. Golding

I will be absolutely precise and say what actually happened. The situation has not arisen merely because of the reduction in November. I have spelt that out very clearly. The situation has built up over the years ever since the decision of the last Conservative Administration—a decision which I supported—to go ahead with the TXE 4. The

situation was aggravated by the discovery of the Post Office that it had spare capacity in switching, and therefore it would need to reduce ordering levels yet again in December. In December the Secretary of State was very disturbed to learn of the possible redundancies. Of course we could only know the overall effect of the decision in terms of jobs. We could not know in which locations and at which plants these redundancies would be declared.

Given the level of ordering, it was for the companies to determine in which plants the redundancies should occur. It was for the companies to determine whether redundancies should be shared out equally over the country or whether they should shut plants at Liverpool and Sunderland. From the departmental point of view, all we could know was that there was a serious problem. We acted immediately and asked the Manpower Services Commission to mount a jobs initiative. My understanding is—and I think I am right, but if I am not I will let the right hon. Member know--that the chairman involved officers of the Commission in talks with each of the companies concerned. But the companies were reluctant to say where the redundancies would occur; in fact, they were reluctant to admit that their companies would suffer the brunt of the loss of orders. In a sense, the companies put off the evil day and that meant that the job initiative could not take place.

We regret this situation very much indeed. We are hoping that the same will not occur in the case of Standard and GEC-AEI. If there are to be redundancies in these companies, we hope that we shall have more time to deal with them.

In the public relations handout, Plessey said that it would call in the Manpower Services Commission. I hope that the unions will assist the Commission in this terrible situation, because to date the unions too have not helped the Commission to deal with the redundancies. We hope that they will in the future.

The job initiative scheme, to be properly effective would have taken 18 months—

Mr. Urwin

I am a little puzzled by my hon. Friend's reference to the unco- operativeness of the unions. After all, only five days have elapsed since the notices were issued and the decision was announced. My impression, and that of my right hon. Friend and my hon. Friend from Sunderland, is the reverse. It is that the management has been difficult over meeting the unions. I am not aware that at any time since last Wednesday, or prior to that, there have been difficulties on the union side about the proposed redundancies. I repeat that the decision was not known until last Wednesday.

Mr. Golding

I stand corrected on the point of view held by my hon. Friend the Member for Houghton-le-Spring about Sunderland, but I think that there have been difficulties in this connection, certainly on Merseyside. The reaction has been there. They have not wanted to accept the inevitability of the redundancies.

Mr. Urwin

There is no sit-in in Sunderland.

Mr. Ogden

The major objection of my hon. Friends is that they are concerned about even one person becoming unemployed. They are concerned, too, that redundancy means that jobs will for ever leave Merseyside. A job declared redundant is a job lost. Nobody can come in and take it over, and the total number of jobs available in the area is reduced. There is a real fear that once there is talk about redundancies it means that one accepts sackings and that jobs go for ever. That is the reason for the resistance and reluctance on Merseyside.

Mr. Golding

I understand that, and if I were on the shop floor I should be fighting hard and saying hard things about everybody in authority, but we hope that the unions will assist the Manpower Services Commission to deal with these terrible redundancies.

The Plessey proposals cannot be dealt with by way of a job initiative, because of the time factor. Joint teams from the Employment Services Agency and the Training Services Agency will go into the Plessey factories to discuss what help can be given, and particular attention will be paid by the Training Services Agency to the possibility of using some of the firm's facilities for training purposes.

My hon. Friend the Member for Liverpool, West Derby mentioned the public trustee. My hon. Friend the Member for Keighley (Mr. Cryer), the Under-Secretary of State at the Department of Industry, on hearing what my hon. Friend had to say assured me that the Department was giving, and would continue to give, careful consideration to the points that had been made.

My hon. Friend also asked about overseas aid and the use of it to boost our exports, as it were. I shall draw his comments to the attention of my right hon. Friend the Minister of State for Overseas Development.

The Manpower Services Commission will do all that it can within the plants if it is allowed to do so. In the localities also, particularly Liverpool and Sunderland, the Government and the MSC will seek to alleviate what is a desperate situation. Both Merseyside and Wear-side have been designated special development areas, which means that industries are offered a full range of incentives to relocate or to expand there; for example, regional development grants, selective financial assistance under Section 7 of the Industry Act, and Government factories. Talking of selective assistance, the House may like to know that the £4½ million loans and grants offered to Merseyside during the last two years could provide about 3,800 new jobs. On Wearside, in 1975–76 offers of assistance amounting to nearly £500,000 were given, and that is estimated to involve 1,000 new jobs.

Mr. Wiley

My hon. Friend will remember that I said that we already had seven empty factories? Seven more are to be built, but that will not deal with the problem that we are facing.

Mr. Golding

I appreciate that, and I realise that we have to do everything possible to provide jobs in those factories. But it is better to have factories and try to provide jobs in them than not to have the factories and therefore be unable to try to get the jobs. The Government will do what they can for Wearside.

Mr. Bagier

I appreciate my hon. Friend's difficulty, because of the situation, but the burden of our message is that we do not want these Plessey factories to close. We have suggested several ways in which the Government can deal with the situation. With respect to my hon. Friend, we are aware of all the opportunities that are available to us as a special development area, but the fact is that we now have a 13½ per cent. rate of male unemployment. Every lost job is a disaster for the individual. The burden of our argument is that we do not want 2,088 people added to the present unemployment figure. The only way in which something can be done is not through my hon. Friend's good offices, certainly not in the short term, but by my mounting a rescue operation of some sort to keep these factories open. That is what we want to hear.

Mr. Golding

I shall be up and down like Punch and Judy and be told what I should say before I say it, but I shall do my best. The men from the North-East are very rough.

Mr. Urwin

Not at all.

Mr. Robert Adley (Christchurch and Lymington)

They are Punch, and the hon. Gentleman is Judy.

Mr. Golding

If I were in the place of my hon. Friends I should be punching as hard at any Judy standing at this Dispatch Box.

My right hon. Friend the Prime Minister told the House on 3rd March that he had asked the National Enterprise Board, which has a regional director in both the North-West and the North-East, to investigate the investment potential in both areas and to report to the Government on what can be done to offset the disastrous consequences of the Plessey closures. In that sense, the Prime Minister and the Government are determined that we take a close look at what can be done in practical terms to offset the disaster of these closures. My Department is determined to do all that it can to assist.

My right hon. Friend the Member for Sunderland, North made a specific request about the temporary employment subsidy.

Mr. Barney Hayhoe (Brentford and Isleworth)

I am not clear whether the hon. Gentleman is saying that there is still the possibility of a rescue operation for the factories which it is proposed to close M. the North-East and on Merseyside. Or is the hon. Gentleman saying that the Government's action is concerned only with trying to do something to mitigate the disasters that will follow when those factories have closed? In honesty to the men, the women and the families concerned, no false hopes should be held out as a result of the Minister's not using clear language. Is there a hope of a rescue operation, or is the only action that the Government, the Manpower Services Commission and others are likely to take one that will help to deal with the disastrous unemployment situation in those regions?

Mr. Golding

Under our system of private enterprise, that depends largely on Plessey. I wanted to come to the question of the temporary employment subsidy. Plessey has given 90 days' notice of redundancies. The Government in turn have drawn the company's attention to the temporary employment subsidy, which could give 12 months' grace. So far, Plessey has said that it is not interested.

Bluntly—I have said this publicly on television—I do not think that there is any chance of those factories continuing to produce out-of-date equipment which is not required, but the Government would very much like the situation to arise where Plessey could find another product to produce in that factory. If Plessey says that it would take more than 90 days to arrange that, we in the Department will again point to the TES.

I would do everything that I could to ensure that those jobs were saved by TES, not only in Sunderland but on Merseyside. The Secretary of State for Industry will do everything he can to persuade Plessey to produce alternative products in Liverpool and Sunderland. It is clear—again, I depart from the brief—that there are telecommunications products which would have a sale in the export market. However, they certainly could not be out-of-date products.

Mr. Urwin

I am sorry to interrupt again, but this is perhaps the most important statement that my hon. Friend has made in his speech. He will recall that I pointed out that the TES can be applied for only by the employer. There is some doubt about the willingness of the Plessey management in Sunderland to do so and about whether that application could or would be made. What my hon. Friend has said must be borne in upon the Plessey management in Sunderland at least. TES available to the company would amount to over £2 million for one year. This would assist the company's research and help it towards the development of a new technique which would fit in with Post Office and export requirements. If the company did not take up that offer, would the same offer be made if a co-operative were established in Sunderland?

Mr. Golding

I would not answer that question as categorically as I answered earlier points. Some hon. Members on the Opposition Front Bench who have just come in seem to think that that is a joke. I do not treat this matter as a joke. I do not think that the right hon. Member for Lowestoft (Mr. Prior), who has sat here throughout the debate, has treated it in that way either.

I would need to discuss this with officials of the Department of Industry, but if my hon. Friends wants a meeting to discuss the subject, the Government would be willing to meet him and his colleagues from the North-East and Liverpool to explore the possibility. However, I could not give such a categoric answer to that question as I have given to the others.

I am to discuss the situation of Liverpool shortly with the North-West Regional TUC. I should be only too willing to do the same in the North-East. Our special measures include not only the temporary employment subsidy but the job creation programme, the work experience scheme, the youth employment subsidy and the job release scheme, which together have helped over 20,000 people on Merseyside and about 3,000 on Weir-side.

We are prepared to increase our efforts even further in the light of these closures, but we know that these special measures are not enough. That is why we are pledged in our industrial strategy to bring about the recovery of British industry and why the Prime Minister is so keen to ensure international action against this international course of unemployment. Only in that way, eventually, when we are making goods which people at home and abroad want to buy, can we ensure prosperity for the workers of Liverpool, Sunderland and the country generally.

I thank my right hon. and hon. Friends for the courteous way in which they have approached the terrible situation which faces their constituents. We in the Government feel deeply for them and will do all we possibly can to help them in this dilemma.