HC Deb 10 March 1977 vol 927 cc1758-68

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

9.55 p.m.

Mr. Eddie Loyden (Liverpool, Garston)

I am grateful for the opportunity of raising the important matter of employment in the telecommunications industry and the effects that a recent decision has had and will have on employment in that industry, in particular on Merseyside.

The decision by Plessey to declare redundancies in the telecommunications industry caused another shock-wave on Merseyside and in the North-West. The Minister will be fully aware of the desperate unemployment situation on Merseyside and, indeed, in other regions.

On Merseyside there is the question not only of problems in the telecommunications industry but of major problems in the construction, shipbuilding and ship repairing industries. The frightening aspect about the figures is that there is no indication of the bottoming-out of unemployment on Merseyside. If anything, the situation appears not to have improved but to have worsened. That has been borne out by the decision, to which I referred in my opening remarks, to declare redundancies and closures in the Plessey section of the telecommunications industry.

We are debating an industry which is not in decline but which is and will be an essential part of any modern industrial economy. In my view, the shattering news of last week is only the tip of the iceberg for the telecommunications industry. The industry's problems are not new. Indeed, in my opinion the problems are not confined to that industry. Its history is a classic example of the difficult, if not impossible, task of dealing with technological change in our society.

Arguments have raged as to where the fault lies. On Monday, during the debate on the Consolidated Fund (No. 2) Bill, my hon. Friend the Under-Secretary of State for Employment dealt in great detail with the problems of the industry. Indeed, he referred to the technical problems involved in the transition from electro-mechanical to electronic equipment in the telecommunications industry. He clearly indicated that he was fully aware of the history of the industry and of the problems that have followed it over the years.

On the one hand, we find the industry blaming the Post Office in the sense that it argues that the vacillation and uncertainty of its ordering programme has been the cause of the problems that have faced the industry over the years. On the other hand, the Post Office argues that the industry is not producing the systems that it requires. There is obviously justification in the industry arguing that, if Plessey is producing gear and systems which are not required by the Post Office, there is a problem.

The history of this problem goes back to the setting up of the programme in the early 1970s with the objective of achieving a proper relationship between the industry and its main customer, the Post Office.

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. Cryer.]

Mr. Loyden

This shows the problem in the industry. In spite of the attempts which have been made, there is no apparent solution.

The programme was affected by the Barber cuts of the 1970s. When the Labour Government came to power, the intervention of my right hon. Friend the Member for Huyton (Sir H. Wilson) led to the cuts being partly reinstated. Nevertheless, the long-term objectives of the industry in finding a slow phasing out of the Strowger electro-mechanical equipment into electronics were not being achieved in accordance with the ideas of Plessey and the Post Office. The sharp downward trend of manufacture of the Strowger gear has created these problems since then.

One difficulty in the telecommunications industry is that there are conflicting arguments about where the fault lies. It has been argued that, if Plessey and the industry generally had a clear indication of a long-term programme of the phasing out of electro-mechanical gear in favour of electronics systems, there would be a peaceful transition.

In a letter to the trade unions in November 1975, my right hon. Friend the Member for Huyton drew attention to the conflicting views among the workers. He said: I now turn to your questions six to twelve. On the modernisation projects at Edge Lane site, I raised this with the representatives of Plessey's management but I think that this is more for the Company than for the Government to comment on. You say that the Plessey company have complained that they have no official planning base to work from and you have asked when the Post Office will confirm ordering levels. This has now been done at the meeting with the Chairman of the Post Office to which I referred earlier and you can take it that the levels of orders then confirmed are to be regarded as definitive. The workers, having suffered a great loss of jobs to accommodate that plan, now find, instead of a definitive ordering policy, that major redundancies are once more threatening the industry. Therefore, the problems remain unresolved and the necessary relationship between the industry and its main customer leaves much to be desired in co-ordination and planning.

Last week we met representatives of the management of Plessey in Liverpool. They showed us graphs and gave evidence of their commitment for the transitional period. However, even their figures, which visualised a higher level of wastage because of sickness and retirement, were not realised, and that created a further problem.

The decisions that have been taken affecting this industry have not been taken by the workers, but it is the workers and their families who suffer when they lose their jobs. That is why I support the stand taken by the workers at Speke, at Kirkby and at Edge Lane. Those workers are defending their jobs. Given that they have had virtually no say in the decisions —or, rather, the lack of them—in the industry over the years, it is right that they should not just passively accept that the answer for them is to join the never-ending dole queue on Merseyside.

My hon. Friends the Members for Onnskirk (Mr. Kilroy-Silk) and for Liverpool, West Derby (Mr. Ogden) know that the workers are seeking to protect their jobs not only for themselves but for the benefit of those who in the near future will seek to obtain work on Merseyside. If those jobs are not defended and retained, the already scandalous position in regard to youth employment will be worsened.

We were grateful that my right hon. Friend the Prime Minister intervened with alacrity and commissioned the Posner Report so that we could have a proper assessment of the problem. We have been bedevilled by a lack of information. At no time in the recent past has Plessey attempted to acquaint Members of Parliament representing these areas and the workers with the facts.

The present work-in at the factories must be accepted as a reality of the desperate situation in the areas. The threatened redundancies of these workers makes it difficult to get to grips with the problem dispassionately.

My right hon. Friend the Member for Huyton has raised the question of the possibility of reducing telephone traiffs in an effort to invigorate the telecommunications industry, as lower tariffs would encourage people to have telephones installed. In discussions which we have had with management—and I have no absolute evidence that this is correct—it has been argued that while this step would be helpful it would have only a minimum effect on the total problem. While it is a helpful contribution, it is not seen as a solution.

For that reason, I urge the Government to say clearly to the telecommunications industry that proper consideration must be given to the Department's proposals, to action that the National Enterprise Board may take, to the question of the effect of the temporary employment subsidy, and to the question of the prospects of a co-operative. None of these things can be discussed unless a proper climate can be created. I also urge the Minister to urge his right hon. Friend to urge Plessey's to withdraw the notices of redundancy until the discussions can take place and the workers can take their proper position in those discussions.

It is my opinion that this is a classic example of an industry that requires Government intervention. We will not get the co-ordination, planning and the long-term interests of the industry resolved unless we take it into public ownership. That is another matter that the Government should consider.

It is not just a question of the future of Plessey's. I know that the Government are concerned about the prospect of Official Trustee intervention and the effect of that. If these considerations are to be treated in a meaningful way, there must be a return to near normality for the Plessey workers.

This is merely the tip of the iceberg for the telecommunications industry. We are talking about the whole future of the British telecommunications industry, and, therefore, we cannot afford to fiddle around with this problem. The Government must act as speedily as possible in a decisive manner. They should treat this matter with urgency and on the scale of a national disaster, because if the telecommunications industry fails it will be a national disaster.

10.13 p.m.

Mr. Robert Kilroy-Silk (Ormskirk)

I am grateful to my hon. Friend for allowing me to intervene briefly in his Adjournment debate. There is a whole cloud of confusion and misery hanging over the telecommunications industry and many people, not least hon. Members, have attempted to attribute blame to Plesseys, the Post Office, or the Government.

I am not concerned with who is to blame—that is a matter for the Government acting with the company. I am concerned about employment prospects on Merseyside as a whole. This is a parochial matter for my constituency, where there are 350 to 400 jobs at risk in the Plessey factory at Kirkby. That may not seem many, but in a town like Kirkby, where there have been so many redundancies and closures recently, it is a disaster. The town is now threatened by the closure of Albright and Wilson, and there are rumours of further redundancies at the GEC-AEI factory in Kirkby Road. In these circumstances, even 350 jobs are too many to lose.

Unemployment of 20 per cent. in Kirkby is the highest in the United Kingdom and the highest in any town of its size in Western Europe. The unemployment situation is catastrophic, and the effect of losing another 400 jobs is unimaginable in terms of the blow to morale and the sapping of confidence. We are talking not just about the fight for 400 jobs. We are talking about the fight for survival of a whole town and the confidence of the people in that town's future and prosperity.

It is all very well to say, as many people have said, that the majority of the employees at Kirkby factory are women. With male and juvenile unemployment so high locally, the fact is that the majority of those women are family breadwinners. If they go to the wall through loss of their jobs, their families will suffer. Important though the employment of these women will be of itself, we have to remember as well the families whom they represent and for whom, in the unfortunate unemployment situation, they are the primary breadwinners.

The women there have already indicated their determination to save their jobs. It was the women at the Kirkby factory who started the first occupation and sit-in, just as their colleagues did at the Fisher-Bendix works nearby, now a co-operative. It is not a peculiarity of Merseyside people that they are militant and immediately turn to occupation and sit-in. They do it because they know that once they are turned out of the factory and shunted away from the door, there are no other jobs for them to go to locally. They are not doing it simply to be bloody-minded or recalcitrant or obstructionist. It is because they know that unless they do it, there will be no jobs for them this year, next year, the year after that, and perhaps for ever. There are no alternative employment prospects available to them. As people are doing in other parts of the country, they are fighting for their jobs.

Plessey wants the jobs of my constituents, but it does not want the work to go away altogether. It suggests taking jobs from my constituents and shunting the work to South Shields. I do not want to get into the situation of dog biting dog. As a Socialist, I believe in fair shares for all. But I am concerned that an area like mine, where we have the highest level of unemployment, should take the major brunt of the job loss, with the work taken to other parts of the country.

I said at the beginning that I was not interested in apportioning blame. Nevertheless, I must say that Plessey has had it all its own way. It has blamed the Post Office and it has blamed the Government. They are certainly culpable, but only to an extent. Plessey, too, must bear a major part of the blame for what is happening. It has failed to invest adequately during the last decade in order to develop new technology and new techniques and install new equipment. It has failed to win the export orders which new technology could have won for it, thereby providing work. It has failed to bring new products to areas like Kirkby. It has failed in a whole variety of ways to take advantage of the opportunities open to it, both in this country and, more importantly, abroad.

I ask my hon. Friend the Under-Secretary of State to impress upon Plessey that, in exchange for any help that may go to the company from the Government through action on the Post Office, Plessey will return a quid pro quo and extend the 90-day redundancy notice—and here I remind the House that the notice is so long only because of this Government's Employment Protection Act. Without it, the notice would probably have been one week and the workers would have been out on the street already. Could we not have a longer breathing space while these consultations with the Post Office go on? During a longer period the company would be able to diversify and think of ways and means of rationalising production so as to bring new products to areas where they are most needed—areas of high unemployment.

Could not the Government explore what has been inadequately explored so far—the possibility of concluding a planning agreement with Plessey and, indeed, the whole of the telecommunications industry? There is dire need for such an agreement, and a great deal of benefit could derive from it to the Post Office, the Government, Plessey and other companies involved. It is a great pity and a great cause of regret to me and my hon. Friends that we do not have what was supposed to be in the Industry Bill, the compulsion to have planning agreements in circumstances of this kind.

I emphasise that we are not concerned with the technicalities of the issue. We are concerned primarily with the jobs that will be lost once and for ever on Merseyside. We have had too many jobs lost. Every time we take one step forward with new advance factories or new industry moving into the area, we take two steps backwards in losing jobs. We have had enough. We are not prepared to tolerate this any more.

We fully support the sit-in and the work-in in Kirkby and all steps taken by employees on Merseyside to protect their jobs.

10.20 p.m.

The Under-Secretary of State for Industry (Mr. Bob Cryer)

First, may I say how much I sympathise and understand the strong feelings expressed by my hon. Friends, who have expressed the views of Merseyside most cogently. It causes me considerable distress that we hear the same sort of case made far too often. Only on Monday my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden), who is taking a keen interest in the debate, was making much the same sort of case on the same subject. Alas, it is not the first time.

I do not have much time left in which to reply. I accept the point made by my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) that the Government seem to be taking the brunt of the blame for the situation, whereas I think it is only fair that some apportionment of the blame must be made to the private sector of industry. If we have a private enterprise mixed economy, that must be pointed out.

As Plessey's own announcements make clear, the effect has been a cumulative one. It does not simply depend on the 1976 cuts announced by the Post Office. As Plessey said in the announcement, restoration of the 1976 cuts would not benefit the industry for 12 months. It would not be unreasonable to expect that a prudent and reasonable company would have made provision for developing new projects, especially since the company had a profit of £34 million before tax for the year 1975–76. Clearly, there was something in the kitty that could have been used for research and development.

If investment had been made in manufacturing plant and machines, the company would have had a 100 per cent. tax allowance against corporation tax when making those profits. The present position is not unhelpful to companies which are prepared to use enterprise, and in a private enterprise situation it is not unreasonable to expect private enterprise to show just that. Clearly, much of the decision-making capacity here was in the hands of the Plessey management and not in the hands of the workers.

I come now to the question of the Post Office cuts. It is quite true, as my hon. Friend has pointed out, that in the past two and a half years the level of orders by the Post Office for the latter part of this decade, particularly for telephone exchange equipment, has fallen sharply. I shall not go into the reasons in great detail now because they are fairly well known. The reasons include the general recession in Western Europe following the increases in oil prices and increasing technology and alterations in technology, which meant that with new equipment more calls could be handled more easily.

The net annual growth in the number of exchange connections has fallen from around 9 per cent. in the early 1970s to around 5 per cent. in 1975–76. In the worst six-month period from October 1975 to March 1976, there were more business telephone disconnections than installations. Although business has picked up, the position still remains that the changes in technique have brought about serious alterations.

But the latest cuts in the Post Office ordering programme announced by the Post Office in November 1976 are due to a quite different cause. I am sure my hon. Friends will make the point in Merseyside that these cuts were in no way part of the Government's expenditure cuts. They were the result of new computer-based studies which measured the traffic through telephone exchanges more accurately and matched it more closely with existing capacity than was previously possible. The studies revealed a very much larger amount of spare capacity than had been expected.

The Post Office was faced with the fact that even a reduced ordering programme on the October 1975 scale would provide a significant amount of equipment which was simply not needed.

Mr. Loyden

Can my hon. Friend confirm whether the telephone traffic had reduced?

Mr. Cryer

My hon. Friend is on to a good point. This is part of the general investigation which we have announced which is to be undertaken by Michael Posner of Cambridge University. We have asked him to consider the assessments which led the Post Office in November 1976 to reduce the future level of orders for telecommunications equipment. We hone that he will be able to do that within the 90-day period. I am sorry that Plessey has taken the action it has. It would have been far better to have awaited the outcome of the investigation.

There are other remedial steps which have been suggested by my hon. Friends. One was an all-out ordering campaign and promotional campaign by the Post Office. My hon. Friend the Member for Liverpool, Garston (Mr. Loyden) mentioned the question of installation charges. We shall certainly take up with the Post Office the question of its using its discretion in this respect to a greater degree than hitherto. It has discretion in setting installation charges up to a maximum of £45. We shall take this matter up with the Post Office to see whether it will help and whether more vigorous marketing will assist in improving the rate of installation of telephone services.

The general position is extremely serious. My hon. Friend the Member for Garston mentioned that a sit-in was taking place as a demonstration of the strength of feeling in the area on this matter. The shop stewards of the Kirkby plant have asked for a meeting with Ministers, and this is being arranged.

The Government are very willing to consider an application for a workers' co-operative, bearing in mind the very difficult background that a workers' cooperative must have a product to market—something people actually want—and that a workers' co-operative must he assessed under the general published criteria of viability that we apply to all schemes for assistance.

Under Section 21 of the Department of Industry's published criteria for selective assistance, however, there is a provision relating to the social need and unemployment position surrounding that application. Of course, that would weigh very heavily in any assessment which was made. We shall certainly consider an application very carefully, and we are looking forward to meeting the Kirkby shop stewards for this serious and imporant discussion.

Mr. Kilroy-Silk

I do not want my hon. Friend the Minister to raise any false hopes among my constituents. Is he now saying as a matter of Government policy that the Government will consider an application from the shop stewards at the Kirkby factory for that factory to become a co-operative like KME across the road?

Mr. Cryer

I am saying that if application is made for that factory it will be given serious consideration. I must point out, however, that there are published criteria. Simply calling an undertaking a workers' co-operative is not a solution. A co-operative would have to have a product which people wanted and which could be marketed. If an application is made, we shall subject it to very close scrutiny. Within that scrutiny, however, there are provisions for consideration of social factors. Economic viability is not the only consideration, although it is important.

I fully understand the point raised by my hon. Friend the Member for Orms-kirk about planning agreements. I regret that planning agreements have not made much greater headway. We would be in a much better position with the whole of industry if they had.

We are happy and willing to approach Plessey to see whether it will extend the 90-day period which the Government, in the teeth of criticism and opposition from the Conservatives, applied under the Employment Protection Act.

The Question having been proposed at Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.