HC Deb 13 November 1979 vol 973 cc1156-68
The Secretary of State for Wales (Mr. Nicholas Edwards)

With permission, Mr. Speaker, I should like to make a statement on Shotton.

The British Steel Corporation announced its decision last Friday to end iron and steel making at Shotton. All concerned will want to do everything possible to provide alternative employment opportunities throughout the area affected by the closure.

The Government have decided that, subject to the necessary approval by the European Commission, the Shotton travel-to-work area will be upgraded to special development area status as soon as possible. My right hon. Friend the Secretary of State for Industry will be making the necessary arrangements. This will be of substantial benefit to the area, and firms in the area or to be located there will now be eligible for the highest rates of regional incentive as are firms in the Wrexham travel-to-work area, where about 9 per cent. of the Shotton work force reside and which was upgraded to special development area status last July.

As a special development area Shotton would continue to be eligible for assistance from the European regional development fund towards infrastructure and industrial projects and also, as a steel closure area, from the non-quota section of the fund and from the European Coal and Steel Community.

The Manpower Services Commission has made contingency arrangements drawing on experience gained at earlier major steel closures in Wales. These will be put into immediate effect and include the provision of a special jobcentre in the works with augmented advisory and counselling services. For workers seeking retraining, over 4,500 training places in a wide variety of TOPS courses are available at skillcentres, colleges and on employers' premises in Clwyd, Cheshire and Merseyside.

The area has already benefited from substantial investment for the provision of infrastructure and industrial estates by the Welsh Development Agency, local authorities and BSC (Industry) Ltd. In particular, the Welsh Development Agency and BSC (Industry) Ltd. have spent or committed over £6 million on the development of 300 acres at the Dee-side industrial park. A start on factory building has already been made; 17 factories are under construction or completed—15 of these have been formerly allocated—while work is going ahead on further site preparation. On present information nearly 1,000 jobs are expected to arise over the next three or four years in the Shotton travel-to-work area from projects under way or planned and over 2,000 in the Wrexham travel-to-work area. In addition, the area has been chosen, as my hon. Friend the Under-Secretary of State for Energy said last Thursday, for a major oil-from-coal pilot project at Point of Ayr colliery. This is a welcome development for the area, which in the medium-term will add to the range and number of job opportunities in Deeside.

Communications in the Shotton and Deeside area will be substantially improved by schemes in the Department of Transport and Welsh Office trunk road programmes. In particular, work is under way on the extension of the M56 motorway westwards, which will bring the motorway very close to the Deeside industrial park. Opportunities will be taken for upgrading communications between the Shotton area and Wrexham and the Midlands.

Every effort will be made to attract and establish new industrial developments in the area. I see it as a main task of the Welsh Development Agency to complete the site infrastructure and services on land in its ownership at the Deeside industrial park and to make an early start on the building of advance factories in the area affected by closure. I am therefore making additional resources available to the Agency. But I also see it as essential to engage private sector support, and the course and scale of public expenditure will depend on how quickly this can be obtained. Meanwhile, I am asking the Agency to plan its provision of sites and factory space on the basis of further expenditure of up to £15 million over the next three or four years. Work is already under way in the job of obtaining private sector finance, which will enable new development to take place on the scale required while reducing the cost to the taxpayer.

A substantial and sustained effort will be required to attract new business into the area and encourage existing businesses to expand, but the strategic locational advantages of Deeside, the enhanced regional incentives available from special development area status, the provision of serviced industrial sites and factories and the availability of a willing, adaptable and responsible labour force provide the basis for the successful regeneration of the wider Deeside area.

Mr. Alec Jones

Irrespective of the contents of the statement, does the right hon. Gentleman accept that if 7,000 unemployed Shotton steel workers join the dole queue next March, the Government will bear the ultimate responsibility? I welcome that part of the statement which is, in fact, a catalogue of the achievements of the previous Labour Government and the plans that they had in that area. I also welcome the decision to grant special development area status, which is essential if any area such as Shotton is to deal with the problems that it now faces.

However, on its own, as the right hon. Gentleman said, that will not be enough. It will need a rapid mobilisation of resources, both financial and physical, from a variety of organisations such as local authorities, the Welsh Development Agency, the British Steel Corporation, the Government and many Government agencies. The most disappointing part of the statement is the miserable sum of £15 million to be allocated over three or four years. It is a pathetic contribution when we bear in mind the size of the problem facing not only Shotton but the whole of North Wales.

I trust that the right hon. Gentleman will make it quite clear that the £15 million is a first instalment and that more—in the order of £50 million—will be needed. Will he confirm that the additional money will be extra Exchequer money and will not be filched from other Welsh programmes or areas?

Our experience in Ebbw Vale clearly demonstrated the need for a special organisation, such as our monitoring committee, to supervise and co-ordinate the activities of those involved in attracting new industry and training to Shotton. Will the Secretary of State establish such an organisation and ensure that it is chaired by a Minister from the Welsh Office?

Local authorities will lose rateable value as a result of the Shotton closure. Considerable rate income will be lost. What assessment has the Secretary of State made of those losses and what steps will be take to compensate local authorities?

Mr. Edwards

I note the comments of the right hon. Gentleman about the responsibilities of this Government. I also note that the former Secretary of State for Industry on 22 May 1978 said that the policy of the then Labour Government was that the British Steel Corporation should break even by the financial year 1979–80. That undertaking was repeated in the Labour Government's public expenditure White Paper in January 1979. This Government have carried that undertaking forward for a year and we are doing no more than the previous Government asked of the Corporation.

In the last two years of the Labour Government nearly 24,000 jobs were lost in the steel industry as a result of closures. I am grateful for the welcome given to the work and the contribution of the WDA, though I agree with the right hon. Gentleman that we shall need the contribution of a variety of agencies. He talked about a miserable sum of money and put in a bid 50 per cent. higher than that made by Clwyd county council. That authority's bid was based on assumptions that I do not entirely accept and on expectations of an increase in population carried forward to 1991.

I must make it absolutely clear that the £15 million is additional to resources already available from the budget of the Welsh Development Agency and from the resources of BSC (Industry) Ltd. I have also emphasised the very important contribution that we believe can be made by the private sector. It is not true to suggest, as the right hon. Gentleman did, that the £15 million indicates a limit on what is possible if all these agencies and the private sector are combined. I assure him that the money has not been filched from other programmes. The £15 million is additional to the resources made available to the WDA, and though I expect the WDA to concentrate its efforts on areas with the greatest problems—the SDAs and the development areas—I would also expect it to maintain its programme in existing steel closure areas.

The right hon. Gentleman asked about a task force. We are in the closest possible contact with all organisations involved, including the local authorities. I have seen them, and I and my officials will continue to see them. I am taking a close personal interest in every development and I do not think that much will be gained, at present, by the creation of a task force. I will continue to keep an open mind on that point however.

Concerning rateable values, the right hon. Gentleman will be aware that there is an adjustment mechanism in the rate support system, though I acknowledge that it takes a year or so to take full effect. My judgment is that it is right to concentrate public expenditure on the creation of infrastructure and new factories rather than in the direction suggested.

Sir Anthony Meyer

Is my right hon. Friend aware that the measures that he has just announced will alleviate some anxieties and demonstrate that the Government are accepting their responsibilities for a very large number of lost jobs as a result of the closure of a State enterprise? Is he further aware that the problem is essentially a short-term one, in that the area is extremely attractive to incoming industrialists, but that there is urgent need of first-aid measures? Will orthodox Treasury methods of controlling local government expenditure inhibit the ability of local authorities to finance industrial development by methods other than recourse to central borrowing agencies, which some local authorities have recently been successfully employing in the creation of jobs in the area?

Mr. Edwards

I agree that the area will be very attractive for other industries. No work force in the country has enjoyed a higher reputation, over many years, than that at Shotton. I believe that that will be an attraction. There is also a notable improvement taking place in communications. Shotton will be very close to the end of the M56. The links through Cheshire and on through the Chester southern bypass and the Hawarden bypass will further improve communications. As to my hon. Friend's specific question, I believe that the proposals that the Government are putting forward for the control of capital expenditure will give greater freedom to local authorities, within overall totals, to decide how they spend their capital.

Mr. Barry Jones

An appalling risk has been sanctioned by the Government in their proposal to put 6,300 workers on the dole within three months and I still hope that the Government will rethink their position. Will the Secretary of State return to the request for a task force, which should be led by one of his Under-Secretaries, so that day-to-day supervision may be exercised? Will he tell the House specifically how many new factories, with guaranteed new jobs, are planned for next year? His three-to-four year estimate of 1,000 jobs is pie in the sky for the thousands of workers who will be on the dole next year. This was a weakness—though a crucial point—in his statement. Whilst welcoming the special development area status, I believe that the right hon. Gentleman's proposal falls well short of the demand of the local council for a £38 million package and over 1,500,000 square feet of advance factory space.

How safe is the Wrexham to Birkenhead railway line? Will the Wirral motorway be linked with the A55? I support the view of my right hon. Friend the Member for Rhondda (Mr. Jones) that the package is disappointing. Did the Secretary of State fail to push all his measures through Cabinet?

Mr. Edwards

We shall continue to listen to proposals for a task force. It may not be as welcome, from the hon. Gentleman's point of view, as having one of my Under-Secretaries doing the job, but at the moment I am doing the job myself and giving the operation the closest personal attention. Though I think that the task forces in Ebbw Vale and East Moors undoubtedly had an impact as far as confidence was concerned I do not know that they have made all that much difference in relation to the developments that have taken place, but we are certainly prepared to look at the proposal.

I cannot give the hon. Gentleman a precise figure for the number of jobs during the coming 12 months, but it is encouraging that in the two travel-to-work areas most affected there are 3,000 jobs in the pipeline from current projects before any new efforts are made. That suggests that the area is attractive. As to the money being well short of the figure proposed by the local authority, that authority put forward two figures. The first figure was £28 million, excluding the fifth phase of the factory building programme. The second figure was £33 million, including that phase. I have announced planning permission for an additional £15 million.

The Welsh Development Agency and BSC (Industry) Ltd. will allocate further resources. We believe that a major contribution can be made by private investment, by making use of the Agency's existing assets and by disposing of factories to tenants as they are built. In the long run this will have a major impact on the scale of what is achieved.

I shall write to the hon. Gentleman about the rail link, since that is a matter for the Minister of Transport. We are pressing on with the completion of the M56 link and a number of important improvements are taking place near the Queensferry interchange, which will improve the links there. We are progressing with the statutory procedures for the Hawarden bypass, which should begin early in 1981. The link between the M56 and the A55 is scheduled, but I cannot give a date. That is the responsibility of the Minister of Transport and I shall write to the hon. Gentleman about it.

Several Hon. Members


Mr. Speaker

Order. A short debate is to follow on the textile industry, and many hon. Members have an interest in that. However, if hon. Members are brief I hope to call all those who have already indicated their desire to ask a question.

Mr. David Hunt

Does my right hon. Friend accept that the proposals will be welcomed in the area, since they go some way to meet the anxieties of those who work at Shotton? However, I must press my right hon. Friend about the Bidston-Wrexham railway line. Will he make representations to the Minister of Transport and convince him that this is a vital lifeline for the area? Will he repudiate the rumours that that line is to be closed? Is encouragement being given to private enterprise to take over the important Shotton works?

Mr. Edwards

I shall examine the question of the rail link to Wrexham. There are plans for the improvement of the road links from the Chester southern bypass to Wrexham and for improvements in the Wrexham area. The Minister of State made it clear yesterday that the Government will certainly consider any serious propositions that do not involve public expenditure. We must face the reality that there is considerable overcapacity in the steel industry. One must consider the viability of any proposition against that background.

Mr. Roy Hughes

Does the Minister recognise that packages such as he has just announced will not end the problems of Shotton and the rest of the steel industry? Will he consider introducing controls to curtail the import of steel and steel-related products? Does he agree that such a policy would put people back into work and help Britain's balance of payments?

Mr. Edwards

I have no doubt that the most important aspect for the future of the steel industry, not least in Wales, is that the steel industry should be fully competitive. I welcome the notable improvement in recent months at Llanwern, where there has been a sharp upturn in productivity. I also welcome the similar pattern that is emerging at Port Talbot. Such progress represents the best solution for the steel industry.

Mr. Dorrell

Does my right hon. Friend agree that the best way to secure employment in the steel industry in the Shotton area is, as my hon. Friend the Member for Wirral (Mr. Hunt) suggested, to encourage private sector investment in the Shotton plant? If the British Steel Corporation opposes such a proposal, will my right hon. Friend consider using the powers in the Competition Bill, since a refusal to sell one of the BSC plants would be an anti-competitive action?

Mr. Edwards

Not only are the Government willing to examine such propositions; we have initiated inquiries in that direction. We have had discussions about the possibilities, but they have come to nothing so far. The Government are prepared to consider any proposals.

Mr. Tom Ellis

Will the right hon. Gentleman consult the Manpower Services Commisison's Welsh office with a view to restoring the cuts in services at the Wrexham training centre? Will he also consider substantially increasing the range of services provided at that training centre?

Mr. Edwards

I have already had discussions with the Manpower Services Commission. I am satisfied that it will be able to meet the likely demand arising from the closure. Our experience at East Moors and Ebbw Vale suggests that the demand will not be overwhelming. The response in those areas was a little disappointing in terms of the amount of retraining demanded.

Mr. Porter

Does my right hon. Friend not find it ironic that the £15 million and the further sums from other sources to be spent in the next few years is about the same as the capital investment required to make Shotton profitable? Will he consider carefully any serious propositions to take over Shotton that are made by private interests? If there is a serious interest in taking over Shotton, will my right hon. Friend bring to the attention of his colleagues the fact that there must have been something wrong with BSC's attitude towards Shotton in the last few years?

Mr. Edwards

It is unrealistic to suggest that investment on the scale suggested would have made Shotton profitable. Shotton is likely to lose about £40 million in the current year. The British Steel Corporation envisages that an investment of £40 million would improve profitability by only £7 million. We shall examine any proposals from the private sector.

Mr. Geraint Howells

Is the Secretary of State aware that last week's announcement by the BSC came as a severe blow to the Welsh people, especially those living in the Shotton area? Is the Secretary of State aware that although I welcome many of the proposals, I am a little worried about the future of the young people in the area? What plans has he to safeguard the interests of the school leavers in the next five years? Has he any plans to meet those in the private sector who are interested in purchasing the whole works? If such a proposal is made, will he postpone the closure?

Mr. Edwards

We all share the hon. Gentleman's anxiety about the future of the young people. I have outlined some of the measures that we intend to introduce to attract fresh jobs to the area. I emphasise that Shotton has much to offer. It is an ideal site, it has good communications, and a work force with a high reputation. Those are the aspects that we must sell. I know of no specific proposals by the private sector, so I am unable to meet anyone in that connection.

Mr. Wigley

Does the Secretary of State accept that about 10,000 new jobs are necessary to meet the jobs lost by the closure of Shotton, taking into account the direct and indirect effects of the closure? Does he accept that the 3,000 jobs in the pipeline are already needed because of the high unemployment in the area? Does he agree that about £100 million investment is needed, albeit not all from the public sector?

Will the Secretary of State undertake to provide more than £15 million if he finds that that is not enough? Does he accept that an area wider than the Shot-ton travel-to-work area will be affected by the closure and that large areas of Clwyd and Gwynedd will be affected? Will he examine the full effects of the closure throughout the area?

Mr. Edwards

On the best advice that I can obtain, I believe that the hon. Gentleman's estimates are too high. Indeed, they are higher than those produced by the Clwyd council. Experience at East Moors and Ebbw Vale tends to confirm that the estimates are too high. I accept that the consequences will be widespread, We shall give consideration to them. The fact that we have been willing to upgrade demonstrates that we are prepared to respond to changing circumstances. We shall always consider the circumstances as they develop.

Mr. Parry

The Merseyside group of Labour Members, which has always supported my hon. Friend the Member for Flint, East (Mr. Jones) in his long and valiant battle on behalf of the Shotton workers, will be disappointed with the total package. Does the Secretary of State realise that although we fully support the upgrading of Shotton to special development area status the area will be competing with Merseyside, where there is already a serious unemployment problem?

Mr. Edwards

I understand the hon. Gentleman's fears. I do not believe that a successful regeneration of the Shotton area will harm Merseyside. I take a contrary view. If we have a successful and healthy economic area close by, the reverberations will spread out. As I have said, the Shotton work force has an enviable reputation. Areas can sell themselves on the qualities and facilities that they have to offer. In the long run that applies to Merseyside as much as to Shotton.

Mr. Alan Williams

Is not this ragbag of non-events another example of the right hon. Gentleman's failure to win any meaningful battle for Wales within the Cabinet? Does not he realise that the Government's abandonment of the industrial development certificate control already condemns to failure the proposals that he has put forward? If any marginal value is achieved from his proposals, is it not a fact that that will inevitably be at the expense of the areas of need to the west of Shotton and of Merseyside?

Is it not the cruellest of deceptions to pretend that the Government are willing to contemplate a solution through the private purchase and production of steel at Shotton, when the Secretary of State for Industry has indicated that no funds would be available for that purpose—not even those that would normally be available for alternative job creation in a special development area, and that if a proposal came forward it would have to be subject to the approval of the BSC? Is the right hon. Gentleman aware that only two weeks ago the Prime Minister told the Welsh TUC that in her opinion Shotton had to close because the saving of Shotton would have adverse repercussions that would be unacceptable, in the Government's view, for the rest of the Corporation?

Mr. Edwards

My hon. Friend the Minister of State, Department of Industry made it clear yesterday that the Government would consider representations on their merits. My hon. Friend did not indicate that there would be a veto from the Corporation, although it is necessary to take into account overcapacity in the steel industry. It would be madness for any Government to fail to do so The right hon. Gentleman's suggestion was characteristically unconstructive. He argued that any success that we may have from what he described as our rag-bag of measures will have an unfortunate effect on neighbouring areas. Presumably if we had put more money into Shotton the effect on neighbouring areas would have been even greater. I am not sure what the right hon. Gentleman is suggesting. He also referred to industrial development control. The high level of inquiries, interest and new companies coming to Wales suggests that what he is saying is completely untrue.

Forward to