HC Deb 26 March 1979 vol 965 cc222-32

Motion made, and Question proposed.

That this House do now adjourn.—[Mr. Jim Marshall.]

12.42 a.m.

Mr. Eddie Loyden (Liverpool, Garston)

In this debate I wish to draw attention to a matter that is of great concern on Merseyside, and indeed to the Government, namely, the closure of the Dunlop plant at Speke.

The House has on other occasions discussed closures and redundancies on Merseyside. The decision by Dunlop relates to only one of many closures on Merseyside in the recent past. Those closures include major national United Kingdom companies as well as multinational companies. The list includes Plessey; Western Ship Repairers, whose establishment has closed; GEC, which suffered redundancies; Lucas, where redundancies are threatened; British Leyland, which last year suffered 3,000 redundancies; and the latest casualty is Rank-Hovis, which has threatened redundancies.

The present closures are extremely serious for the people who live in the area. We have always suffered from high unemployment, and even when things are going well we have twice the national average of unemployment.

The Dunlop closure, because of the very nature of that firm and its products, poses a serious problem. It is necessary to go briefly into the history of the events that led to the decision to close. When we met the Dunlop management some weeks ago, the chairman told us that there was 25 per cent. over-capacity in the United Kingdom tyre manufacturing industry. Indeed, he thought that that was a conservative estimate and that the actual figure was likely to be about 30 per cent. It is important to recognise the point made by the chairman of Dunlop about excess capacity, because a common pattern is emerging. It is that whenever there is excess capacity in any industry the cut-off point appears to be in areas of high unemployment, and we on Merseyside have had more than our fair share of the cutting off of excess capacity.

The estate in which Dunlop is sited was built during the post-war years and has housed such famous names as Metal Box. Dista Products, British Leyland and, right on the borderline with the next con stituency, Ford at Halewood. In the past two years we have seen about 8,000 jobs go from my constituency. Speke has a total population of 20,000, so if one accepts that in all probability most of the 8,000 workers who have been made redundant live in or about the Speke area—although one accepts that some of them are from other parts of the city—one can readily see the high concentration of unemployment in that area. If one recalls the dream of the post-war period that Merseyside would develop alternative industries to deal with the decline in the docks, in transport and in warehousing, upon which the city had depended for so long, one can see the serious problem on Merseyside.

I think that Ministers must understand that, with the exception of British Leyland, the bulk of the closures and redundancies on Merseyside are in the private sector. We all recognise that the Government's policies for industry and for special development areas have been used on Merseyside with generosity, but they have not in any way coped with the job erosion that is going on daily in that area.

In one year, about 14,000 jobs have gone. I know that Ministers will say that the Government have done all that they can to assist Merseyside with job replacements and with the various measures at their disposal, but my hon. Friends and I must tell the Government that to workers in that area, where massive job losses are still going on, statements by Ministers provide little comfort

There is one other thing about the Dunlop situation that the Government must bear in mind, and that is that in spite of their efforts there appears to be no control over or power of intervention in multinational companies. Dunlop has argued—certainly it did so at the meeting that we had with it—about the poor performance at the Speke factory. I want to make one or two points to the Govern- ment on this matter. I am not suggesting that this will provide all the reasons for what has happened at Dunlop, but it will give some indication of the strategy being followed by Dunlop on investment in the United Kingdom.

According to the Financial Times, over the past decade Dunlop has invested about £165 million in exporting technology to the Soviet Union. That has resulted in the creation of tyre manufacturing bases in the Soviet Union which must inevitably take a share of the global world market. In addition, Dunlop has invested in other East European countries. In my view, there is strong evidence that the dumping of tyres made in those factories has been partly responsible for the crisis not only in Dunlop but in the whole of the United Kingdom rubber industry, and particularly in the tyre section of it.

Dunlop has invested in 22 countries outside the United Kingdom. I do not disagree with the exchange of technology with the Soviet Union or the Third world. That is essential for the progress of human society. That work should take place in order to benefit other parts of the world, but when it is done in the way that Dunlop has carried out its strategy, it leads to the deindustrialisation of large sections of United Kingdom activity. That enables Dunlop to make investments in other parts of the world where there are no trade unions or no free trade unions or where there is hyper-exploitation of cheap labour which makes it impossible for the United Kingdom to compete.

The landing price of tyres from many of those countries is 50 per cent. of the price at which Dunlop sells tyres to its retailers here. It is impossible for our industry to face that sort of competition, particularly given the level of United Kingdom investment by Dunlop.

For example, the autoclave machines at Speke have been the subject of an order for improvement by the Factory Inspectorate. The order followed an incident in which a man lost part of a finger, but the improvement has not yet been carried out, even though it would cost a mere £15,000 to put the machines in order. Dunlop has resisted its obligation to make the place safe for its workers.

Another example is the case-making machine, which was manufactured in 1925 and written off with depreciation in 1936 but which arrived at Speke in 1971. That is an indication of the sort of investment taking place by Dunlop at Speke. Is is a scandal that the firm should weep crocodile tears over the United Kingdom industry while it is investing so much overseas.

It must be understood that this is a heavy industry. Dunlop's argument about the general problems facing tyre-making in the United Kingdom and the problem of overcapacity fall on stony ground at Speke because that factory does not make motor car tyres. It specialises in heavy tyre manufacture—for the rear wheels of tractors, for buses and other heavy vehicles. Its only light work is motor cycle tyres.

When all those facts are judged against the background of inadequate investment at Speke, we can see at least some of the reasons for the performance of the Speke tyre-producing plant.

It is also evident that the industry produces many health hazards. One of the points made by Dunlop concerned the incidence of sickness, but it has been known for years that stomach cancer is just one of the diseases with a relationship to the rubber industry. It was pointed out in The Guardian recently that in one rubber factory in our part of the world—the factory was not named—there were twice as many cases of stomach cancer as in similar industries in the rest of the United Kingdom.

The industry also uses a great deal of carbon black in the manufacture of tyres, and the EEC recently reported that there is a suspected relationship between carbon black and skin cancer. The conditions in the industry lend themselves to the possibility of a high level of sickness, and the industry itself is responsible for that.

I think the Minister will agree that many strong approaches have been made by Merseyside MPs about the problems on Merseyside, but there does not seem to be an answer to them.

I accept that there are limits on the Government's right to intervene in private industry, but that rests on the weakness of the Industry Act, which did not bring about compulsory planning agreements and enable the Government to take inter- ventionist action when, in their view, the balance of industry and unemployment could be dealt with in that way. The lesson to be learnt is that, while the private sector is left completely uncontrolled and the multinationals are unaccountable to the nation, the Government must think carefully about alternative policies for regional employment.

The Dunlop situation has brought into the unemployment struggle on Merseyside new layers of people in the community. There is an abundance of evidence that the community in that area is becoming more and more involved in the closures which are taking place and in the decisions by firms such as Dunlop. It is significant that, in the last demonstration in the city, leaders of the three Churches marched with the men in support of their resistance to the Dunlop closure.

I believe that community involvement will continue. The attitude prevailing in Liverpool is that we have gone too far along the road of closures, redundancies and unemployment. Therefore, it is becoming the responsibility of all on Merseyside to resist further closures, such as Dunlop and Rank-Hovis—the latest in a long line of redundancies in that part of the country.

I hope that the Minister will take note of the point that Dunlop has approached the Government for financial aid. If Dunlop were to accept equity sharing through the National Enterprise Board, the Government would be able to exercise some influence over the company's rationalisation plan. I hope that the Minister will resist any approaches by Dunlop unless that condition is fulfilled. We look to a Labour Government to resolve Merseyside's problems and to end the disaster of job loss, redundancies and closures in that part of the country.

12.58 am
The Minister of State, Department of Industry (Mr. Alan Williams)

I thank my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) for giving us the opportunity to have this debate. I agree with him about the magnitude of the problem facing Merseyside. I gladly confirm what he said about the strength and number of approaches that have been made by Merseyside Members to myself, to the Secretary of State and to any Minister who could exercise any influence over the area's prospects.

I should like to give my hon. Friend what I hope will be a welcome assurance. He said that we should look to alternative policies for regional employment. I do not believe in great dramatic changes for their own sake—indeed, there is great value in having consistent policies—but one can learn from the exercise of policies where extra effort may be needed. Therefore, I assure my hon. Friend that, within a matter of hours, I shall be announcing alternative proposals for the service sector of industry in assisted areas. This is a matter which Merseyside Members of Parliament and those concerned especially, for example, with the prospects for Liverpool and its inner city have impressed upon the Government, and when my project is announced I hope that it will commend itself to my hon. Friends.

My hon. Friend made the point that the Government had used aid with generosity, and I was grateful to him for that. Equally fairly, he made the point that although this aid has been generous it has not solved the problem. I have emphasised continuously in answer to questions and in debates that the tragedy of Merseyside is that as rapidly as we create new opportunities there, we lose existing opportunities. As my hon. Friend said, this loss is not in the Government's control. Substantially, it has been in private sector industry over which we have no control.

My hon. Friend reminded the House that the Government gave special development area status to Merseyside in 1974. Since we have been in office, Merseyside has received £240 million worth of Government industrial aid. Of this, £178 million has been regional development grant and £60 million has been under section 7 of the Industry Act. This £60 million in itself has given rise to new investment projects amounting to £409 million, 22,600 new jobs and the safeguarding of another 21,800 jobs. My hon. Friend will see, therefore, without the policy that we have been pursuing, what would have been the scale of additional job loss and the deterioration which would have faced Merseyside.

In addition to all this assistance, we have also generated £36 million worth of new investment on Merseyside under section 8. Under my advance factory programme, I have been able to allocate more than 1 million sq. ft. of Government advance factories to Merseyside. Considerable help to the inner city area has been given by my right hon. Friend the Secretary of State for the Environment under his partnership schemes. The National Enterprise Board has now established one of its two regional offices in Merseyside Some 58,000 workers there have benefited from programmes of special employment and training which have been largely introduced by my right hon. Friend the Secretary of State for Employment.

It is not that we are neglecting Merseyside. It is that our successes have been overshadowed by the collapse of so many often household names in local industry. Looking at our successes, in our most recent one I was able to give considerable financial support to GEC-Fairchild, which will generate about 1,100 jobs on Merseyside. It was considerably as a result of representations which I made for the resurrection of a scheme by GEC-Schreiber that we are creating an additional 1,000 jobs at Runcorn. I was able to give the Co-operative Bank financial support to create 600 jobs, possibly rising to 1,000, in Skelmersdale.

Those are some of the more dramatic examples—and there are many others on a smaller scale—where we have had an impact. But I accept readily that we have had to run to stand still. Indeed, it could even be said that while running we have been losing ground somewhat. But it is not for any lack of will on the part of the Government. Nor is it for any lack of financial assistance.

I am especially glad to have this opportunity to discuss the Dunlop closure specifically. Here, I must emphasise, we have a perfect example of the situation which my hon. Friend has described where a decision has been taken which cannot be altered by the Government. We can seek to influence it, but we cannot impose a different decision on the company. A decision has been taken by the company, and the Government are in consultation with the company about the future prospects of all its operations.

It is for the company to explain why it felt the plant had to close. I am aware that there have been conflicting statements. On the one hand, it is alleged that past investment has been inadequate and, on the other, it is counter-claimed that industrial relations have been poor. One important fact, which I do not think anyone disputes, is that the Speke plant has been making considerable losses which could not continue on that scale. The choice, therefore, must be to reduce the losses or to adopt the more drastic solution sought by the company and eliminate the losses by cutting out the factory. We are still is discussion with the company on the future of its operations.

We, like the NEDC rubber processing working party, have to recognise that the whole industry is suffering from a static market, due largely to two factors. There is the technological factor of a switch from crossply to radial tyres, which has meant increased tyre life, while at the same time tyre use has been reduced by the average motorist cutting down his mileage to take account of petrol price increases.

Mr. Eric Ogden (Liverpool, West Derby)

I hestitate to intervene in another hon. Member's debate, but the Minister's point does not apply at Speke. That kind of tyre is not made at Speke.

Mr. Williams

I noted that point when my hon. Friend the Member for Garston made it. I was emphasising that this had affected the total viability of the company and, therefore, its ability to sustain what is, in any case, regardless of these factors, a heavy loss-making plant.

I am assured that cheap tyres from Europe have not had an impact on the Speke operation. The company has not imported any such tyres since early in 1978. Looking at the United Kingdom replacement market, I gather that only about 7 per cent. of that market is taken up by East European tyres. We have urged the British Rubber Manufacturers' Association to make an anti-dumping case. This will soon be presented formally at the EEC, and we have promised our full support.

My hon. Friend referred to the export of technology. We have to distinguish between the sale of technology, which is the selling of the plant for someone else to operate, and the establishing and operating abroad of one's own plant. Dunlop has not pursued a policy of operating its own plant in Eastern Europe but has been selling technology. Where there is intense competition, if British companies were not willing to sell the technology, many other European and Far Eastern countries, and the United States, would readily leap in to provide it. Dunlop insists that there has been no question of its having carried out investment in Eastern Europe, as my hon. Friend implied.

Dunlop has approached the Department to explore the possibility of Government assistance for its investment plans. I emphasise as strongly as I can—I know that this will be accepted by my hon. Friends—that the Government are willing to consider any proposals which will save, or create, jobs in Speke and on Merseyside, but we cannot create the proposals. The proposals have to come from the company. This is largely an issue that is being administered by the Secretary of State, but I am negotiating the possibility of retaining the golf ball operation there. While this is small in relation to the total plant operation, it would still save about 225 jobs in the area.

While one must try to save as many of the larger block of jobs as possible, this possibility should not be overlooked. It is too early to say whether assistance will be offered. One of the company's options—the options I referred to in a letter to the local authority were Dunlop's options, not those of the Government—is a proposition under which there would be no need for Government assistance, so the Government would have few bargaining powers. We have been discussing with the company the possibilities of equity participation and NEB participation. We are willing to consider both.

Mr. Loyden

Does my right hon. Friend agree that Dunlop appears to be talking in two different ways? The management made it clear when we met it that there was no problem on the golf ball or footwear sides. Now it appears that it is making approaches to the Government again on the golf ball side.

Mr. Williams

I assure my hon. Friend that there are considerable problems on the golf ball side, which I have been trying to overcome. The company is about to start negotiations with the relevant trade unions about operating conditions. The two sides are dependent on common services, so we should have to devise a formula to overcome the extra cost of this smaller operation without the back-up of the larger one.

The Question having been proposed. after Ten o'clock on Monday evening 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 twelve minutes past One o'clock.