HC Deb 03 April 1980 vol 982 cc716-27 1.32 pm
Mr. David Alton (Liverpool, Edge Hill)

I am glad to have the opportunity to present the point of view of those in Merseyside who are concerned about the increasing problems of unemployment. I am especially pleased to see you, Mr. Deputy Speaker, in the Chair, as you have the same concern and know about the problems.

I wrote to the hon. Member for Liverpool, Garston (Mr. Thornton) and told him that I would be prepared to share with him the debate on the problems of the closure of the golf ball factory. I have not received a reply. If he arrives, I shall be prepared to give him some of my time.

The loss of 230 jobs at Speke last week was part of a wider loss of jobs in the Dunlop factories in Liverpool. The managing director wrote to me last Friday and told me that the jobs were to be lost. He knew that 2,400 jobs had been lost in Speke at the Dunlop tyre factory only a year earlier.

I spoke as recently as this morning to the managing director, Mr. Findlay Picken. He confirmed that the previous Labour Administration had discussed a package, including a rent-free factory. In total, the package was worth £2.6 million. That would have matched the needs of the company. Regrettably, the constraints and the policies of the present Administration resulted in that global sum being reduced to £975,000. In addition, there would be a 22 per cent. regional development grant, which would have covered such items as new plant and equipment, and a temporary employment subsidy which would have been worth about £20 per week for 26 weeks per employee.

Mr. Anthony Steen (Liverpool, Wavertree)

Does the hon. Gentleman agree that while the Government have indicated that they are unable to dole out money from the taxpayers which they do not have, the real problem is that companies must be prepared to invest their own funds in Merseyside? That is what this company seems unwilling to do, largely because of the appalling track record of the work force in the Dunlop plant, which resulted in the company suffering severe losses over a long period.

Does the hon. Gentleman agree that the company should not abandon hope for Merseyside by looking elsewhere or closing down the factory but should consider that Liverpool will be one of the first enterprise zones in the country? For that reason, it may be that all its needs could be met by placing a new factory in the enterprise zone. While I am on my feet—

Mr. Deputy Speaker (Mr. Richard Crawshaw)

The hon. Gentleman is intervening. He should not make a speech. He has said sufficient for the present.

Mr. Alton

Mr. Keith Ely, the Liverpool Daily Post business editor, said on Friday 11 January: the workforce—136 of them women—have raised productivity by 13 per cent. and agreed to new manning levels since the tyre plant closed last April. Productivity was on the increase. The pre-tax profits for Dunlop at the end of last year were £43 million. It can hardly be said to be a firm which is in severe financial difficulties. The only jobs created by free enterprise zones and urban development corporations are those of the chairman and vice-chairman of the new urban development corporation. About 90,000 people are out of work in Liverpool. It is ridiculous to talk in such terms and to ignore the fundamental problems.

The managing director to whom I spoke this morning said that he did not believe that the money offered by the Government was enough to enable the company to go on trading there. His associate, Mr. Allan Stewart at Dunlop House, confirmed that, following the closure of the tyre factory, a joint working party comprising the management and unions was set up to examine alternative products and new ways of creating jobs. He said that it met once a month for six months but that nothing was achieved and that no jobs were created.

It is important to regard the closure in the wider context of Merseyside's growing unemployment problem. The closure of the Dunlop golf ball factory is only the latest in a string of factory closures in the last 10 years. In the last decade the number of people employed in the Merseyside special development area, which was designated in 1972, has fallen by 123,000. The present total of employees is about 667,000. About 143 firms each made more than 100 people redundant in that time. Last year, a total of 8,804 jobs were lost to Merseyside. In the previous year 9,935 jobs were lost.

Following the closure of the Meccano factory at Christmas we had a similar debate. Merseyside lost a further 2,603 jobs in the first three months of the year. A total of 700 of those jobs were at the Merseyside Docks and Harbour Company, 550 at Massey-Ferguson, 50 at Ulapalm, 400 at Tillotsons, 670 at Hygena and now 233 at Dunlop's golf ball factory.

It is as if there were a death wish on Liverpool. Liverpool is suffering more than other parts of the country from the Government's vicious policies. The unemployment-vacancy ratio on Merseyside is 36 unemployed persons to each vacancy. Nationally, the average is eight unemployed persons to each vacancy.

On Merseyside, the unemployment rate is 12 per cent.—twice the national average. More people on Merseyside are out of work than in the whole of Northern Ireland. Statistically, it is harder to get a job in Liverpool than it is in Scotland or Wales. Yet on April Fool's day the Government announced a £48 million package spread over two years for the development of 200 factories in Wales. I do not begrudge the Welsh that help, but I wonder why all that Liverpool got was a mixture of enterprise zones and urban development corporations.

The Government's whole economic strategy is based upon a 2 per cent. reduction in output which forecasters say will lead to 2 million unemployed by the end of the year. Inevitably, Liverpool will he at the sharp end of that policy.

Losing a job means losing self-respect, independence, dignity and security. The Prime Minister and her colleagues have shown a callous contempt for the fate of Liverpool people. Her Government's policies are failing miserably.

What happened yesterday in Bristol could happen tomorrow in Liverpool. The same bitterness exists among the young people and ethnic groups. It all stems from unemployment. Can we blame the 3,000 Merseyside school leavers who are still out of work for feeling bitter? Can we blame the 5,000 young people who are out of work for feeling the same?

The Prime Minister is so out of touch with ordinary people and life in our cities that she seriously believes than one can leave nearly 90,000 Merseysiders out of work and not expect riots, disturbances, alienation and bitterness. If she honestly believes that, she is even more insensitive than most people think.

The challenge to the Government, as I see it, is that they must set about developing a long-term strategy for conquering unemployment. First, more help must be given to small businesses. At present, there are 25,000 registered firms on Merseyside. If every firm took on three or four people, our problems would be solved virtually overnight. But how on earth can small businesses flourish or develop whilst they are crippled by a 17 per cent. minimum lending rate and inflation running at 14 per cent?

Mr. Steen

What about the rates going up?

Mr. Alton

How can they survive when they have to cope with a 50 per cent. rate increase, as the hon. Member for Liverpool, Wavertree (Mr. Steen) points out, imposed on them by the Labour Administration in the city of Liverpool? I earnestly implore Conservative Members to ensure that the rate support grant is increased so that Liverpool does not have to cut services or create more unemployment in its own services by creating redundancies in the local authority, which would be the effect if the rates were not to be increased by at least 42 per cent.

I think that in the long term the Government must also look at things like work sharing and profit sharing. I am sure that that is the only way to remove the concept of victors and vanquished from our system of industrial relations.

We need to put more incentives into people's lives. We cannot expect workers to work harder if they are not given proper rewards. That is why I believe in the three Rs: rights, representation and reward. We should also have profit-sharing schemes on the West German model and tax cuts as well for people at their places of work. People should be given incentives to work harder. Yet all that we have had from the Government so far, despite their manifesto promises, has been £3½ billion in tax cuts given away last year, nearly half of which went to only 5.5 per cent. of the people.

The Government are obsessed with a crude belief in monetarism, and it grips half the Cabinet. I believe that they must now rethink that strategy and what they are doing in increasing unemployment and the dole queues. What are we achieving by making more and more people unemployed? What problems are we solving by paying out more money in social security and unemployment benefits? That policy has no tangible long-term effect on communities in cities such as the one that hon. Members like myself and the hon. Member for Waver-tree represent.

There must also be an acceptance that Merseyside workers are as good as workers anywhere else. In The Guardian on 26 February there was a story about factory workers who gave up half their wages to help pay the plant's £900 electricity bill. That was at the Ulapalm children's clothing factory at Knowsley. Those people had a certain sense of bitterness when, a few days later, they were told that they were still to be sacked. Nevertheless, where workers show concern and where management behaves not in an off-handed way by sacking an entire work force—such as at Meccano, where, on half-an-hour's notice, 900 employees, some of whom had worked for 40 years for the firm, were sacked—but treats its work force properly and gives it a share and a stake in the firm, I am sure that we can get the proper response from the work force. There has to be a realisation that long-term unemployment is not acceptable and that it can only undermine order in our society.

I make two points for the short term. I renew my plea that there should be a Minister for Merseyside. I am sure that one of the reasons why Wales and Scotland do better than Merseyside in terms of regional aid and help is that they have Ministers who are prepared to fight for them. Merseyside is a neglected and forgotten area. We should have a Minister to tie together all the different agencies—the urban development corporation, the free enterprise zone, the county council and the city council—all of which sometimes seem to be doing conflicting jobs.

Secondly, Sir Campbell Fraser, in an interview he gave to Robert Heller, the editor of Management Today, said: I expect 1979 to go down in Dunlop's history as the year of the salesman. Sir Campbell Fraser, the chairman of Dunlop, when asked by Mr. Heller whether he thought that people on Merseyside reacted to the Speke closure as though it was directed specifically against them and, further, whether they felt that there was any justice in that view, replied: Dunlop still have four factories in Liverpool, quite apart from the substantial plants elsewhere in Merseyside, so I think that it would be ridiculous to say that the closure of the Dunlop Speke factory was directed against Merseyside people. But it is a fact that a number of companies have closed factories in the Liverpool area and that should be a matter of concern to us all. I hope that it will be a matter of concern to the Minister. There are still 1,300 Dunlop jobs on Merseyside. I am of the belief that the Minister should meet Sir Campbell Fraser at an early date and discuss the future of those jobs. I hope that he will come forward with a package of proposals which will give some hope and optimism to the people of Merseyside for the future.

I thank you again, Mr. Deputy Speaker, for enabling this Adjournment debate to take place.

1.45 pm
The Under-Secretary of State for Industry (Mr. David Mitchell)

The hon. Member for Liverpool, Edge Hill (Mr. Alton) was lucky to have caught your eye Mr. Deputy Speaker, for a debate on the problems of unemployment on Merseyside. I welcome the opportunity to discuss them, because I share with him a concern about the subject. I share, as does my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen), the hon. Member's deep concern about the problems of long-term unemployment.

As the hon. Member said, unemployment is something that challenges one's self-respect. It is one of the most human of problems. It is a problem of special importance to older people who have a real fear that they may not be able to find work again.

We all know the syndrome of "too old at 40". I think that much of British industry is now coming to realise that that is a very foolish policy on industry's part, because an older person will often give more stable service than a younger person. Nevertheless, there is a genuine fear, and it causes great concern to my colleagues and myself.

Mention has already been made of the very serious problem of young people who are unemployed—the problem that arises because of the danger that they will come to accept a pattern of life in which regular work is not a part and then face all the dangers, risks and problems of relearning a pattern of regular work, which for those who left school to become unemployed is an immensely serious matter. Therefore, we are deeply concerned about unemployment.

The hon. Member referred to the particular question of the International Sports Company factory, which is in the Garston constituency, not his own. He said that my hon. Friend the Member for Liverpool, Garston (Mr. Thornton) might have some views on the subject. I should like to return to that matter. However, I should like to use the few minutes that I have, first, to pose a question that cannot be ignored. I pose it as a principle rather than specifically. Secondly, I should like to consider the very important points that have been made about unemployment on Merseyside in general. Thirdly, I want to deal with the specific question of the factory that has been mentioned.

Perhaps the hon. Member will consider this problem. Let us suppose that there are two widget factories and that demand for widgets is static. Let us suppose that the imports of widgets are rising; and suppose that by rationalising the two factories, with all the production in one factory, widgets could be produced less expensively and more economically than in two factories, and by so doing it was possible to beat off the challenge of rising imports and to supply and satisfy a home market at a price that it was prepared to pay; and suppose that one were able to export the commodity. Would it actually be a kindness, and a proper use of public money in that circumstance, to say to the owners of the two factories "No, you should not do that, even though economically it would help you to keep your share of the market. What you should do is to run two factories, both of them at less than full capacity and both of them, therefore, producing at higher cost than would be possible if you concentrated production in one factory"?

As a result of not rationalising the two factories, part of the market share would be lost, there would be a bigger increase in imports from abroad, and eventually the skids would go under both factories because neither was able to compete when it was not producing at a fully economic rate.

That is the question that lies behind what has been said in the debate. It must be considered whether it is justifiable to use public money to set in train circumstances that will put at risk the jobs of men in two different factories.

I turn to the more specific problems of unemployment on Merseyside and the factory concerned. There is a widespread understanding in all parts of the House of the tragedy of unemployment. It is not new to Merseyside. Successive Governments have recognised that. I, as a new Minister in the Department of Industry, look back at the problem and see the tragedy. We have had a policy dealing with assisted and depressed areas—as they were then called—since the 1920s and 1930s, particularly the early 1930s. That policy was designed to try to deal with the problem of structural weakness. The principal areas that were affected suffered not because of anything that they had done wrong but because of progress at the end of the last century. Their industrial structure was built up for products that are now being phased out. Inevitably, that posed problems of structural change and additional costs.

The hon. Member for Edge Hill said that he felt that the Government should rethink their strategy. He is right to point to the need for a new strategy. The Government have a new strategy. We have examined what has been happening. Through the years we have been spreading thinly aid to the assisted areas, to the point at which last summer we found that over 40 per cent. of the working population in the country had assisted area status. When the jam is spread so thinly, not much of it is concentrated anywhere.

The Government should take on board the points about rethinking strategy. We should reduce the proportion of assisted areas to 25 per cent. of the working population so that we can start to concentrate on those areas. We should do so for two reasons. In the special development areas the full 22 per cent. of regional development grant is available and, in addition section 7 assistance is available. It would also make the relatively small area across the totality of the country—25 per cent. only—stand out, so that there would be a smaller area to which companies wishing to move were attracted. That is a right and proper response to the point—on which I agree with the hon. Member for Edge Hill—that the policies that we tried in the past were not as successful as we had reason to expect.

Mr. Steen

I should like to ask three questions. First, I am sure that my hon. Friend agrees that there is no point in establishing an enterprise zone on Merseyside if the city council pursues a programme that is detrimental to the small firm. The planning controllers on Merseyside are so different and slow that small firms are being driven out. Secondly, if the commercial rates rise by 50 per cent., many more small firms will be driven out of business. Thirdly, local authorities are continuing to destroy and demolish small firms and rebuild public housing on the sites. If that continues, there is no point in an enterprise zone, because many of the firms will be pushed out, despite the new enthusiasm towards the enterprise zone on the docks.

Mr. Mitchell

There is irresistible logic in what my hon. Friend says, in that, while the Government are considering where they will locate enterprise zones, we obviously want to put the substantial amount of resources that will be used into places where the local authorities will create the circumstances in which they will succeed. I cannot quarrel with that view.

If the level of rates in Liverpool is to increase by the amount suggested by my hon. Friend, I can only join with him in expressing deep concern about the effect that that will have on employment in Liverpool, particularly with regard to small firms. In my own constituency, the Basingstoke borough council has this year not increased its rate by a brass farthing, but it has had to make enormous economies in order to achieve that. In so doing, it keeps itself as an attractive place to which industry can come. However, I must not be drawn aside from the important questions that I want to cover.

The economy of Merseyside has been, and still is, closely related to the port of Liverpool, and many of Merseyside's problems derive from the contraction of the port and related activities, resulting from modernisation, changes in shipping patterns and the world recession in shipbuilding. The whole of the South Docks on the Liverpool bank of the Mersey and much of Birkenhead docks are now derelict, as I saw for myself when I looked around the area.

To compensate to some extent, there has been new industrial growth, largely on the periphery and in the new towns, and there are now important national concentrations on Merseyside of the motor vehicle, food processing, general engineering and petrochemical industries.

The Liverpool travel-to-work area has been hard hit by redundancies in recent years, and for most of the decade unemployment in the Merseyside SDA has been double the national average. However, there have been some notable successes recently, such as GEC-Fairchild Limited, which is setting up its new microprocessor plant at Norton, with the creation of over 1,000 jobs in the early 1980s; CEC-Schreiber Limited, which is equipping a new factory at Runcorn to manufacture furniture, creating up to 1,000 jobs by March 1982; the Cooperative Bank, which is setting up at Skelmersdale. Six hundred jobs are expected by 1982, and the Ford United Kingdom Company is investing about £600 million in production of a new model. Therefore, there are some hopeful signs. I announced yesterday a new scheme of training to industry in areas such as Merseyside for in-plant training, which I am sure will be a major attraction.

Liverpool was designated as a partnership area under the Inner Urban Areas Act 1978. I can announce today that it has been allocated about £17 million, at 1980–81 outturn prices, for the year 1980–81 for projects to improve the area.

Mention has been made of small firms. I believe that they are immensely important. I should like to have been able to go on and talk about how important I believe it to be to create the, circumstances in which they can succeed. However, I want to say a word about the Dunlop golf ball plant in Liverpool, because that presents a real problem. That plant is located within the Dunlop Speke tyre factory and has been wholly reliant upon the tyre factory for steam, water, power and some engineering services. It is not viable for it to continue on its own once the tyre factory closes, because all the overheads of a large factory cannot possibly be borne by the smaller unit on its own.

The factory is in the constituency of my lion. Friend the Member for Garston, who has been most active in dealing with the problem. He has had a series of meetings with the trade unions, the management and the Department, including a visit to my noble Friend the Minister of State. He has also discussed the problem with me. He is currently involved in sensitive negotiations, in full consultation with the trade unions involved, and in arrangement with it he has sought and secured an Adjournment debate specifically on the subject of a factory in his own constituency on Friday 18 April.

As sensitive negotiations are at present in progress, it might be more appropriate to have a further discussion at the time of that Adjournment debate with my hon. Friend the Member for Garston, whose constituency is involved.

I agree with my hon. Friend the Member for Wavertree about the need to encourage industry into the area. This is a central part of what the Government are seeking to do. In this case there is no problem of bad industrial relations; indeed, it belies the unfair reputation that so often attaches itself to parts of Merseyside. Of course we admit that there are bad industrial relations, but there is also much good. It is a great pity that the whole of Merseyside is maligned because of what might have happened in one or two cases. Indeed, the factory where I have seen the greatest degree of hard work in this country since I have been a Minister is in Birkenhead, on Merseyside, and I pay tribute to it.

I do not want to prejudge what might be raised by my hon. Friend in the debate on Friday 18 April, but if the company were to conclude that even with Government aid a factory would not be viable we would be wasting public money if we were to twist its arm and seek to persuade it to set up a project that it knew would not make economic sense. I doubt whether it would be a kindness to the workers involved to lavish immense amounts of public money on creating a factory that could not pay, for the reasons that I have spelt out. That would mean that shortly after commencing work the men would lose their jobs. At the same time, it would endanger the prosperity of the second factory at Normanton, which has a real prospect of producing economically. If it receives the extra throughput that is available to it at present, that company has a real prospect of securing a large part of the United Kingdom market and successfully holding off competition from abroad.

I hope that the hon. Member for Edge Hill will understand that as my hon. Friend has been so actively involved in this matter it would be wise to leave the question of industrial relations for him to deal with. However, I am grateful to the hon. Member for raising the problems of unemployment on Merseyside as a whole. Like my hon. Friend the Member for Wavertree, I am deeply concerned about them, as are the Government.

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