HC Deb 15 April 1981 vol 3 cc409-16

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

10 pm

Mrs. Gwyneth Dunwoody (Crewe)

If, Mr. Deputy Speaker, you were to drive up the M1 from London and then along the M6 towards my constituency, and turn off the main motorway at what is called the Sandbach exit, you would drive into a town which has a very special character of its own. Going quickly through it, Sandbach looks like a nice little market town, with a very pleasant open-air market, a funny old Victorian town hall, and a tiny shopping centre. It also has some antique Saxon crosses. But it is the home of two companies whose names have come to mean a great deal in engineering in this country.

The story of Sandbach and the problems that it is encountering at the present time are directly tied up with those companies. One of them is Fodens and the other is ERF. To any small boy—or even large boy—these names are directly connected with two very high quality vehicles which have been produced in my constituency for many years.

Fodens was founded in 1856 in order to manufacture agricultural equipment. In 1903, when it became Fodens Ltd., it was concentrating on steam-driven road vehicles. Since that time it has concentrated mainly on heavy transport. It has produced a number of very important vehicles which have featured not only in our defence budget but can be found on roads all over Britain. Therefore, obviously it is a very important firm.

Recently, when I started to look for the information that I wanted to bring before the House tonight, I turned tap a number of files, and I discovered that I had in my files, in a sense, the whole history of my own involvement with Sandbach and certainly with the employment position there.

When I became the Member for the constituency, Fodens was an extremely well-known firm. In 1975, it employed 3,000 people and it was the major employer in Sandbach. The other well-known household name, ERF, which was capable of producing many efficient vehicles which were sought after, employed fewer people but was still in a very successful sense a supplier of heavy vehicles.

What has happened over the years in both Fodens and ERF has not just affected the town; it has affected a great many jobs in the area. Originally, Fodens employed many skilled engineers, men and women. If there were problems of any kind, the work force rarely altered. It was exceedingly stable. When we look at the history of industrial disputes or of the development of new lines, we begin to realise that it is the very character of that work force that has in many instances created Fodens' reputation.

In some cases four generations have worked in the same factory. People were not only so used to working in Sandbach that they regarded it as normal for their children to follow them into apprenticeships; they had a relationship that meant that they rarely moved far from home for employment. Therefore, it is clear that what happens to Fodens affects Sandbach.

When I first came to the constituency Fodens was a working firm. It had many employees and appeared to be doing well in world markets. However, several management decisions were taken soon after I became the Member. They were to have far-reaching consequences which the firm did not realise at the time. A new line was created. A new factory unit was developed. There was a great deal of retooling and development. In 1973, there were considerable difficulties as a result of a change in the world fuel market. Fodens began to encounter difficulties. The line was still not working properly and there were even new design difficulties with the new model. However, it looked as if everything would be all right, because the firm had a stable work force. Although there were problems from time to time, the company's future seemed fully assured.

In 1975, it was a considerable shock to be told by the management that the company was faced with financial difficulties. I was asked to visit the firm and was told that unless there was radical action within a short time the firm might not be able to meet its local wages bill. I asked the Department of Industry—under the Labour Government—for assistance. It was forthcoming. However, as it was a viable private firm and as the product had a bright future, the Government decided to underwrite the firm until it had obtained capital on the open market in the City.

Indeed, the Expenditure Committee asked Fodens to give evidence to the Committee. It presented a detailed memorandum, which set out not only the company's history and the way in which it had used its capital but its investment programme and the difficulties that had been encountered with both management and labour. Although Bill Foden, then managing director, said that strikes had affected the company, the company was careful to say that those strikes did not necessarily involve its work force. Fodens' rates of pay showed that some workers were receiving less money than comparable workers in other industries.

The firm fulfilled all the qualifications for the Conservative Government's new deal. Evidence was given to the Trade and Industry Sub-Committee of the Expenditure Committee on 19 February 1975. If the Minister wants information, he should consider the report, which is both detailed and informative. The City believed in that firm and it managed to raise cash in order to continue.

Why did the firm find itself in considerable difficulty soon after the Conservative Party came to power? The truth is that there has never been a high standard of management in the firm. The management has been full of good intentions. I acquit it of any deliberate desire to cause unemployment, but the situation in Sandbach shows that some of the outside factors that have caused the lorry industry problems were beyond Fodens' control. However, Fodens is definitely responsible for some of the factors that have led to the present situation.

At the end of last year Fodens Ltd. went into voluntary liquidation, with over 2,500 people on the books. Since that time the people of Sandbach have been faced with real problems. Sandbach has a smaller unemployment problem than elsewhere in the North-West but that is frightening to a community that has always been stable, that has never had a high rate of unemployment and has always been able to find jobs for its children It suffers a sort of culture shock when the basic, indeed the only, major firm in the area goes bankrupt.

When the latest employment figures were published the change was dramatic. On 13 March 1980, 214 males and 148 females were unemployed—just 362 people. By 12 March 1981, the figures had risen to 868 males and 288 females—a total of 1,156. There is little prospect of those engineers finding other employment in the area.

Originally, when Fodens seemed to be doing extremely well, other firms in the area made concentrated efforts to reach agreement with Fodens to develop for the future. Many people would have liked to see Rolls-Royce and Fodens join together to make a more sensible unit, but Fodens issued leaflets which said: Your Board's advice. The offers are completely unacceptable. Take no action. Keep your company independent. The truth was that it was not possible for the company to remain independent. It should have been prepared to come to some sort of agreement with Rolls-Royce because that would have helped Sandbach. It would have produced a better unit for the products and the spread of the products.

Today, with the closure of Fodens, the unemployment situation having been dramatically changed and ERF working a variety of two- or three-day weeks, Sandbach has been transformed. Many men and women are deeply concerned. Men in their fifties believe that they will never work again. Men are trying to find employment anywhere in the area, but they have discovered that south in the Potteries the jobs have disappeared and north in Crewe there are increasing problems.

Crewe has gone from 4 per cent. total unemployed on 17 March 1980 to 8.3 per cent. of the work force unemployed on 12 March 1981. That means that people who would normally have been able to consider work in engineering firms in the centre of my constituency—Rolls-Royce or the British Rail engineering works—do not have that alternative. All those factors have combined to create an atmosphere of great depression in Sandbach.

What future does the Minister foresee for the town? It is extraordinary that the Government are taking both Sandbach and Crewe out of the assisted area, so that they will lose support from the middle of this year. They will not be offered the sort of encouragement that firms seeking to develop would look for. Although Crewe has put an enormous amount of money into developing an industrial estate, it will not provide enough jobs for Crewe and Sandbach combined.

Congleton borough council plans to develop an industrial estate. Congleton will be faced with great difficulties when it tries to encourage people to set up there because there are no incentives and little hope of anyone obtaining support to enable them to offer employment to my constituents.

I could go on at length about what has happened to Sandbach. There have been difficulties over the payment of redundancy pay. The receiver has been helpful, but there are many people receiving social security benefits who have no employment and little hope.

Even the engineering training board is not certain that it will continue to get money from the Government to train apprentices. A sensible unit has been set up in what is now Sandbach Engineering, and was previously Fodens, but there is no long-term guarantee from the Government that they intend to continue giving money to the company.

All those factors are so important that I want the Minister to tell us what future he envisages. Sandbach has always been a stable, hard-working and balanced community. The general level of wages is not out of line and, indeed, is lower than levels in some other places.

The employment in Fodens and ERF has been destroyed by Government policies, including the high level of the pound, the considerable difficulty that both firms faced in overseas markets and the problems of cutbacks in defence contracts, because both firms were capable of building good vehicles that had been used by the Armed Forces. The Government should take a degree of responsibility for those elements, and I want to know what they intend to do to create jobs. It will not be good enough for the Minister to say that there ought to be enough ways of absorbing the engineers in the area.

I have waited a number of weeks to raise this subject on the Floor of the House, and I am sorry that the Minister finds it necessary to draw my attention to the time that is passing. The time that is passing for my constituents is time that they want to spend in full employment. Until the Government are prepared to change their policies my constituents will find it exceedingly difficult to see any future for themselves or their children. I hope that the Minister will have time to answer the questions that I have put.

10.17 pm
The Under-Secretary of State for Employment (Mr. Peter Morrison)

The hon. Member for Crewe (Mrs. Dunwoody) is an adopted daughter of Cheshire, just as I am an adopted son. I drive up the M1 and the M6 through her constituency—often through Sandbach—on the way to my constituency, the City of Chester. Like her, I know Cheshire well. She knows her constituency better than I do, but I know parts of it, because I drive through it.

Sandbach falls within the Crewe travel-to-work area, where unemployment is 8.3 per cent. I do not dispute that that is a high level, but the hon. Lady was present for the previous debate on the problems of the Northern region and she heard her hon. Friends complaining about the employment prospects in that region. She will accept that the problems of Cheshire are not as great as those in the Northern region or even in the North-West generally—especially on Merseyside and in certain parts of Lancashire—or in the West Midlands.

Many of the hon. Lady's hon. Friends from other parts of the country are always crying for more. They want Government assistance and money. The hon. Lady has been a Member of the House longer than I have and she knows that over the years Governments have given way to cries of "We want more". They have reflated just at the moment when economic policy has been about to work. They have pushed money into the system. That has led, over a period, to higher inflation, which, in turn, has led to fewer job opportunities.

I believe that under this Government we are beginning to see the light at the end of the tunnel. There is a sign that we are on the upturn. Inflation is falling. Pay settlements are far more moderate than they have been in the past. The number of strikes in the last six months of 1980 was the lowest since the war. The number of days lost was the lowest since 1966.

Mrs. Dunwoody

What about Sandbach?

Mr. Morrison

I am coming to Sandbach. The hon. Lady made her points; I shall make mine.

Many firms are finding new markets. Many are more competitive. There has been the recent announcement of agreement reached on one of the largest export orders won by the United Kingdom—the sale to Hong Kong of a large coal-fired power station worth at least £550 million. That will help the North-West and, in turn, Sandbach.

I accept the points that the hon. Lady makes about Fodens. She said that she wished to raise the employment prospects in Sandbach. I hope that she will look forward and not backwards. If we look backwards to 1850, there was no railway station in her constituency of Crewe. Yet, after 1855, when the railway station was built the employment prospects in her constituency, within 20 years, had become magnificent. It was a major, flourishing metropolis. The progress in those days—because the railways were not nationalised—was achieved thanks to private enterprise, the London North Western Railway.

As the hon. Lady knows, although she did not remind the House, a number of projects in the Crewe travel-to-work area have recently been announced. If they come to fruition, they will bring work to those living in the Sandbach area. Data Recording Instruments Ltd. is expanding—

Mrs. Dunwoody

It is at Winsford.

Mr. Morrison

It will bring prospects to the area.

Mrs. Dunwoody

Will the hon. Gentleman give way?

Mr. Morrison

No. I shall not give way. I listened with great interest to what she said.

Mrs. Dunwoody

Then answer.

Mr. Morrison

Data Recording Instruments Ltd. of Crewe is expanding and, together with Control Data Corporation of America, is establishing a new cornpany, United Peripherals Ltd., to manufacture computer equipment. This is expected to create 450 new jobs. The hon. Lady may not like good news, but it is true.

Bel-Tyne Co. Ltd. has opened a 12,000 sq ft machine tool manufacturing operation at Crewe Gates Farm, which will employ 60 people. Paccar, the American group, has purchased Fodens of Sandbach and renamed the business Sandbach Engineering, retaining 350 of the former workers. The new owners, I understand, are examining the prospects for new engineering products to be made at Sandbach works. That is the future.

The hon. Lady can look backwards. I assure her that if she understands the Cheshire people, as I understand them, she will know that they are looking forward. I hope that after a while, when she thinks about it, she will look forward, too.

Despite the fact that the Government are following a good housekeeping policy, we have given financial assistance since May 1979 worth £778,000 under section 7 of the Industry Act for 10 projects in the Crewe travel-to-work area involving a total estimated investment of nearly £12 million. That comes from the Government who the hon. Lady claims do not care. The fact is that the Government, as well as following a good housekeeping policy, do care. I do not expect the hon. Lady, as a Member of the Labour Party, to agree, but, at the end of the day, employment prospects in Sandbach will depend—

Mrs. Dunwoody

They are very poor.

Mr. Morrison

—on the vitality and competitiveness of industry and commerce in the area and on the degree of co-operation between managements and work force.

Mr. John Bruce-Gardyne (Knutsford)

As my constituency virtually surrounds Sandbach I naturally share the hon. Lady's concern about the employment prospects in the town and its surrounding area. The hon. Lady has enumerated several items of Government help and support. Is it not true also that the local authorities have a vital part to play, and that by setting a modest rise in the rate burden Cheshire has made a major contribution to the encouragement of new industry while others are raising rates to a grotesque level?

Mrs. Dunwoody

On a point of order, Mr. Deputy Speaker. Would it be possible for the Minister to continue this debate later? This is my Adjournment debate, and I think it is normal for hon. Members to ask when they wish to intervene. Time has been wasted.

Mr. Bruce-Gardyne

I asked the hon. Lady's permission, as she knows.

Mr. Morrison

My hon. Friend anticipated what I was about to say. I was about to say that it depends not just on the personalities and the vitality of the particular community but on how local government is run.

As my hon. Friend aptly remarked, the way to attract industry and investors is to run local government as tightly as possible, given that it must provide the right services. The Cheshire county council's rate increase this year has been pegged to 3 per cent. By any stretch of the imagination that is a significant victory for the Conservative-controlled county council. I know that the hon. Lady feels just as strongly as I do about unemployment in Sandbach, and I am sure that she will agree that future investors—industrialists looking for factories and factory sites—will be more likely to look in Sandbach or Crewe than in other parts of the country where there may be a Labour-controlled council.

I reminded the hon. Lady that in Cheshire the Labour Party does not intend to follow entirely the same policy on rates.

Mrs. Dunwoody

What about Sandbach?

Mr. Morrison

I am telling the hon. Lady about Sandbach. I hope that she will be able to dissociate herself from the Labour Party's manifesto in Cheshire which says: we do not pretend that we can provide the services we think are wanted by the people of Cheshire without setting adequate rate levies. That means substantial increases in rates.

That will harm not only householders in Cheshire, but potential industrialists. It will mean that fewer jobs will be available for her constituents. That is what will happen. [Interruption.] The hon. Lady may intervene from a sedentary position, but what I say is true.

The crucial need is to tackle the root causes of rising unemployment. The main one—the current recession—is partly due to the upsurge in oil prices and is therefore largely outside this country's control, but the fact remains that this Government care and are doing something to help.

In Sandbach, about 60 to 70 opportunities are provided under the youth opportunities programme. In the past, a high proportion of trainees involved in work experience on employers' premises have been offered permanent jobs. The hon. Lady may not like that, but it is true. Opportunities are also available on project-based work experience and community project schemes in the area. I take this opportunity publicly to acknowledge the great help given by the local authorities in Cheshire and Congleton in sponsoring schemes.

The hon. Lady talked about training. That is a matter for which I am responsible, and about which I am very concerned. Training can help many to improve their individual employment prospects. Within daily travelling distance of Sandbach there are still centres at Runcorn and Hanley, and the Manpower Services Commission's training services division aims to offer almost 500 training places for adults in its Warrington district in 1981–82, and make available 1,300 opportunities—

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.