HC Deb 05 June 1981 vol 5 cc1261-70

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

2.11 pm
Mr. Peter Fry (Wellingborough)

British Leyland's decision to close its foundry at Wellingborough came not only as a shock to its loyal and hard-working labour force, but as a body blow to employment prospects and morale in the town and surrounding areas. The House is entitled to know the background to this decision.

In my view, this foundry is unique in the BL group. The quality of castings produced has been consistently better than that produced by all the other BL foundries. Wellingborough is the company's only foundry which successfully attained the company's standard DEF 05.21.

Secondly, labour relations in the plant have been and still are excellent. When other parts of the BL empire were stopped by industrial activity, the workers at Wellingborough kept going. Incidentally, I wonder whether that is one of the reasons why BL chose Wellingborough for the chop, knowing that the workers there are not so likely to be as bloody-minded or militant as others in the group.

Thirdly, the foundry has been and still is profitable. The current figures that have been given to me show that it is running at a yearly rate of profit of over £300,000. That may not seem an enormous amount of money, but put in the context of the fact that BL foundries as a whole make a substantial loss, it is a lot for Wellingborough. For example, work is being transferred to the Beans foundry at Tipton. The figures that I have been given suggest that that foundry lost no less than £7 million last year, and is likely to lose £3 million this year.

Fourthly, in competition with independent foundries, Wellingborough has an excellent record of supplying outside firms such as Perkins Engines and Petters Engines. Unfortunately, during the last year or so, it appears that the BL management has not allowed Wellingborough to quote for certain work which has gone elsewhere. I do not doubt that if it had had the chance, Wellingborough's quality and efficiency would have brought it even higher profit.

Yet, despite those four facts, the plant is to be closed by a decision of the BL board. The head of the company in the group controlling Wellingborough visited it recently. He came to the foundries and described the site as a museum. If it is, it has been made a museum by the mismanagement of British Leyland and by the lack of investment over the years. Yet this so-called museum has a record which, if mirrored throughout the BL empire, would not have necessitated the vast input of public money that has been necessary to keep that concern afloat.

Those who are always demanding more public investment in industry should reflect on what it has meant in my constituency—the closing of a place of work to which many have dedicated their lives, displaying moderation, high standards and hard work, which have been flung back in their faces. No wonder they are bitter, and I share their bitterness. The name of BL is a dirty one in my constituency. I for one should like to make it clear to my hon. Friend that I shall never again vote for any more public money to go to such a concern.

Some may ask why the loss of some 600 jobs—not huge in' comparison with other closures in the country—has been so significant and is so badly felt. The answer is a varied one. The Wellingborough and Rushton area has traditionally had two old-established industries—footwear and leather, and clothing. The footwear industry is in severe recession, and 20 per cent. of the jobs in the industry in the county have gone in the last 12 months. Both footwear and clothing have been suffering from foreign competition, much of it unfair competition, and much of it, unfortunately, within the EEC.

How am I to explain to those who have lost or who are losing their jobs because of Italian competition—perhaps due to child labour or other disreputable procedures—that shoes can flood into this country but British clothing exports to Italy are held up by an import 'deposit scheme?

Many of my constituents are out of work or threatened by the inability of this Government or previous Governments to give the protection that is needed to ensure fair trade. The abrogation of responsibility by giving up powers to the European Commission in Brussels has only compounded the problem.

The area has not simply sat back and let events overtake it. Attempts have been made over the years at self-help. Wellingborough entered into an agreement with the GLC to take people and firms that would move. Unfortunately, whereas most of the people remain, not all the firms have survived.

Only in the last week or two the closure of the Alcan double glazing factories in the area was announced, yet the pressure for jobs increases. Although in many parts of the country the school population is dropping fast, that is not so in the Wellingborough area. This year some 1,724 school leavers will come on to the labour market Next year the number will increase to 1,769. In 1983, it will go up to 1,822, and in 1984 the number will increase further still, to 1,855. These figures cause me real concern. In comparison even with nearby towns in the county they show that Wellingborough has a significant increase, whereas the others remain fairly constant.

In terms of training opportunities available, the position is even worse. In engineering there were 26 apprenticeships last year and only five this year. In the motor trade there were 12 apprenticeships last year and only one this year. In the building trade there were 48 apprenticeships last year and only five this year.

Of seven people who went on the engineering training board apprenticeship scheme, not one has found a place to continue his apprenticeship. No fewer than 60 young apprentices were made redundant last year in the constituency as a whole. In the recent Manpower Services Commission paper on training initiatives, the Government are still putting responsibility for training apprentices on to the companies. If these now have to close, how can the apprentices be trained? One of the problems is that, of the apprentices who were made redundant, some were in their third year, their last year of training.

Wellingborough can now offer only 20 per cent. of what it could offer in the past for would-be apprentices. In May 1980 33 people were engaged in the youth opportunities programme. In May this year the figure had risen to 191. These statistics show clearly that, whereas the position at the moment may not appear to be as bad as in other parts of the country, it is deteriorating and will get considerably worse.

What are Wellingborough's chances of attracting new industry? Leaving aside the recession, which is bad enough, we have nearby the large developments at Northampton, Peterborough and Milton Keynes, all attracting new firms. Corby receives tremendous help from the EEC and an enterprise zone will be created. What hope can there be for Wellingborough without some assistance to help it to compete with those areas?

The chief executive of Wellingborough council wrote to me as follows: With the decline of the footwear and clothing industries, this closure"— of the foundry would virtually mark the end of the end of the town's traditional industries. There is also news of other closures … With the unusually high number of school leavers … and the Foundry closure, an overall unemployment rate of about 15% is projected by September. The rate for men is expected to be as high as 17½⁑. I believe that he has underestimated the effect on male unemployment.

What can be done? First, is the closure inevitable and essential? I accept that some cut in the productive capacity of the BL foundry is needed, but why at Wellingborough? Will the Department of Industry satisfy itself that BL is making the right decision? After all, BL could not do anything without the public money that is injected into it. Secondly, I should like to see whether the foundry could be retained in production. Is there any possibility that some operations could be continued on a co-operative or new limited company basis? I am asking that a feasibility study be done to see whether Wellingborough's high standards of work and expertise can continue to attract outside work.

I have obtained a promise from BL's management that no capital plant will be moved until September. It will also consider any scheme for the future of the site and the plant. If any viable scheme can be put together I hope that Government assistance, perhaps through the NEB, will be available. More help is needed. Again, I shall refer to the council's letter. The chief executive wrote: The Council would also like to have your support in seeking special help through an approach to the Secretary of State for Industry for Assisted Area status to help them in attracting new jobs in competition with Northampton, Peterborough and Corby. They also feel there is a need for special help for the unemployed in the town generally with retraining and rehabilitation facilities. However, retraining schemes alone are not enough. It is essential that those who have been trained should be able to find jobs. Recently, some young people have experienced frustration in that respect.

I hope that I have said enough to show that the problems of this patch of Britain deserve the Government's consideration. I stress that those who are suffering are not those who usually hit the headlines. They do not usually take any extreme action. If moderation in pay demands, good labour relations, hard work and good standards are supposed to be rewarded, my constituents want to know why so many of them are suffering. I have little faith that we shall get much change from BL's management. I had little faith in its predecessors and that lack of faith has, unfortunately, been only too well justified. BL has not lived up to its responsibilities to its work force at Wellingborough. As the Government stand behind BL, it is their job to pick up those responsibilities and to show that they are more responsive.

Does my hon. Friend want my constituents to join those traditionally militant groups in other parts of the country who cause trouble? I hope not. If that, and the creation of a new depressed area is to be avoided, he must offer some hope and some sign that the Government understand and will try to help. No one—let alone myself—expects the Government to wave a magic wand and to create wonderful new opportunities overnight.

The people of Wellingborough deserve what help can be provided. It is my duty and responsibility to ask for it. If they do not get help and there is no assistance through the traditional footwear and clothing industries, no extra opportunities created for those out of work and those coming on to the labour market, it will be felt that the traditional good qualities of the area have gone unrecognised.

My constituents are looking to the Government for hope for the better future that their past record deserves.

2.25 pm
The Under-Secretary of State for Industry (Mr. Michael Marshall)

I first pay tribute to my hon. Friend the Member for Wellingborough (Mr. Fry) for the way in which he marshalled his arguments. The House is aware of his assidious work on behalf of his constituency. It is typical of him that he has seized an early opportunity to raise this subject. He has other meetings planned. I am not sure how far he has gone public on those, but this is part of a continuing process in seeking to explore these matters. He will be aware that my hon. Friend the Minister of State has heard his remarks, which are relevant to the additional discussions that my hon. Friend has in mind.

In raising this important issue for his constituency my hon. Friend raises issues that are of great significance in the wider context of British Leyland. He has sought to emphasise the fact that the foundry closure at Wellingborough cannot be taken in isolation. It raises questions of the foundry capacity of BL, which in turn is related to the wider considerations of the market and the future of British Leyland. I shall deal with the matter in detail because it is important that my hon. Friend is satisfied that it is seen as part of a coherent policy on the part of BL. I share the regret that this closure is seen as necessary. I do not say that idly, because my hon. Friend knows of my sincere interest in the activity having been involved in working foundries in years past. I know of the importance that the foundry has had in his constituency and in a wider industrial context.

It is true that what we have seen is the consequence of policies which have been adopted in the past and which have used public money to protect industries from the wider realities of the industrial situation. Overall, there is no question that this part of the industry has become inefficient and uncompetitive. It is suffering from high prices, problems with quality and productivity and is too burdened with fixed costs and manpower. There are many reasons for what has happened, but it is clear that this company, perhaps above all others, is like a litmus test of the degree to which we seek a more competitive industrial base. That inevitably means that a number of painful decisions must be taken. In the wider context, it is the only course that will enable our industries to offer more secure employment in the long term.

In British Leyland's case, the remedies involve the contraction and closure of certain activities as well as increased investment in plant and machinery to enable the company efficiently to manufacture products which can compete in the market place. The Government have shown themselves able and willing to help in the transition to higher productivity and greater competitiveness. My hon. Friend will be aware of the statement by my right hon. Friend the Secretary of State for Industry on 26 January, when it was agreed that the Government would provide BL with £990 million between 1981 and 1983. That is a massive sum and will be used, as I have described, both for new investment and to facilitate the necessary restructuring.

Of course, the Government have not agreed to funding on that scale without good reason. There has been a marked improvement in BL's performance over the past year or so in several important spheres. For example, productivity improved by about 10 per cent. over the company as a whole in 1980, and productivity on the Metro lines, taking the benefit of the new investment there, is more than comparable with that achieved by BL's European competitors.

There are other tangible aspects of the new sense of realism among the BL work force. For three years running workers have accepted wage increases well below the prevailing rate of inflation.

It being half-past Two 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. Berry.]

Mr. Marshall

The work force has settled down to long periods of steady work, unmarked by the disruption of strike action. In 1980 less than 2 per cent. of working time was lost due to strike action across BL as a whole and there were areas where virtually no strikes occurred, and during that time investment in the company has not stood still.

New plants have been built and commissioned for the Metro at Longbridge and for the T45 truck range at Leyland. In recent months the Metro has achieved a market share of 9 to 10 per cent., with an average of over 8 per cent. so far this year. Its influence has been felt throughout the range, with the share of the market running at about 25 per cent. above the 1980 figure.

On the truck side, despite the depressing effect of a market in severe recession, the T45 truck has halted the decline in BL's share of the market. There are three models in the T45 range, with a total of 9 or 10 derivatives. Both the T45 and the Metro have been well received abroad, and initial demand from Europe for the Metro in particular is encouraging.

Those two models were made possible by the years of funding for BL since 1945, involving, as we must recall, extremely large sums of money. The further funding that we have approved for BL will continue that trend. For example, there is to be the launch of the Triumph Acclaim, the result of the collaboration with Honda, in the autumn, and the development of the LC10 medium-sized family car to be introduced at the end of 1983.

The Government have recently given approval to the new Jaguar XJ40 programme. Expansion at Solihull on the Range Rover and Land Rover facilities continues, as do all the other aspects of capital expenditure that are necessary in a company the size of BL.

My hon. Friend may ask how that broad framework is to affect Wellingborough. Because of the seriousness with which my hon. Friend approached the subject it has been right for me to put my reply in the wider context, and my hon. Friend will appreciate the significance of my taking the opportunity to review the state of BL, about which there is great interest.

Investment in BL had to be accompanied by closures to achieve the necessary rev italisation of the company. It would make no sense—indeed it would be counterproductive—to provide public money for investment without allowing it to be used for restructuring if, as in BL's case, that is essential for the restoration of the company's competitiveness. In the longer term, that strategy will enable the company to become competitive and hence will remove the burden of funding from the taxpayer as well as offer the best chance of secure employment and growth in the future.

I must refer to the future. Greater productivity, better products, and better utilisation of capacity are all necessary if BL is to achieve profitability. Indeed, they are all integral parts of the company's 1981 corporate plan, which mapped out the route to viability and on the basis of which Government funding was provided. However, having taken the strategic funding decision, and while monitoring the company's performance, the Government do not involve themselves in the management of BL. That is the task of the BL board and those whom it appoints. If the BL management and the board need to make adjustments to the detail of the plan to remain on route to the ultimate objective—profitability and independence of Government funding—they must do so, however difficult the decision involved.

It was on that basis that BL decided that further closures were necessary to keep the company on course. I know that these decisions are painful, following as they do the demanning and closures already undergone in BL. It is, after all, hard on the employees of BL to have to envisage further redundancies after the 58,000 that have occurred over the past three years. Speaking this afternoon, I, as much as anyone, would wish that further redundancies and closures were not necessary, but the BL board shares the Government's objective of removing BL from its existing dependence on the taxpayer, and it has concluded that further closures are necessary for the achievement of that objective. We should get nowhere if we challenged that decision. We cannot dodge decisions of that kind, taken in pursuit of necessary objectives.

It is sometimes argued that Government money should be used to retain jobs, although my hon. Friend did not make that the burden of his argument. I have explained the use to which the existing funding of BL is to be put. It would be no solution to divert that or to pump in more money to retain jobs. Those jobs would simply be bought at the expense of higher inflation and unemployment. The Government's job remains, first and foremost, to bring down the level of inflation in order to make our industry competitve in world markets. The Government's role is not to buy jobs, but to enable jobs to be created that will pay for themselves.

There will have to be a period of adjustment for BL before it can achieve profitability and remove its dependence on the taxpayer. We are therefore unable-indeed, we think that it would be wrong—to subsidise uneconomic activity. That would not be in the longer-term interests of taxpayers or of industry as a whole. We recognise, however, that hardship can be caused during such a period of transition, although we believe that there is no realistic alternative to the strategy that I have described, we recognise that the achievement of a successful and competitive industrial sector in the longer term may appear insufficient comfort to those adversely affected in the short term. I therefore appreciate that, although commercially important for the future of BL and the majority of its employees, the closure of the foundry at Wellingborough will have harsh effects on the town and its inhabitants. My hon. Friend therefore rightly points out the wider effects on Wellingborough of the loss of one of its major employers. Such effects have to be placed fully in the local industrial context. It would therefore, I think, be helpful if I consider the recent history of Wellingborough as seen from the Department of Industry and in response to a number of the points that my hon. Friend raised.

In the 1960s Wellingborough was considered to be one of the growth points of the East Midlands. At a time when the various new towns such as Peterborough, Corby and Milton Keynes were coming into being, Wellingborough chose to become an expanding town through an overspill agreement in 1967 with the GLC, to which my hon. Friend referred. The idea was to provide both homes and jobs for Londoners who wished to start a new life away from the city. I think that my hon. Friend will agree that as an expanding town Wellingborough has chalked up a number of considerable successes. It has not expanded at the rate originally and perhaps optimistically envisaged, but it has succeeded in providing new employment opportunities in pace with its expansion. A measure of that success is that up to March 1980 Wellingborough had an unemployment rate consistently below the regional average. This has, of course, been achieved by attracting over the years a wide variety of new firms, often from London.

The industrial expansion that has accompanied Wellingborough's population expansion has been of tremendous benefit and it has diversified the industrial base. From a town, like so many in the East Midlands, dependent formerly on iron ore, and lately on the clothing and boot and shoe industries, Wellingborough has become the source of a diversity of products ranging from printed matter, plastics, telephone engineering, motor engineering, garment making, large-scale meat processing, joinery and furniture to upholstery. I recognise that it is still substantially dependent upon clothing and footwear, but a healthy diverse industrial base so essential to the future of the town exists.

Like the rest of the country, Wellingborough has suffered from the present recession. Over the past two years there have been substantial job losses in these traditional clothing and footwear industries. I also appreciate that the footwear industry has been especially affected by what some would describe as unfair import competition and high tariff barriers to our own exports to many parts of the world—problems that my hon. Friend has on many occasions brought before the House in his capacity as chairman of the all-party footwear group.

More recently, the newer firms in Wellingborough have been forced to reduce their labour force. The result has been a reversal of the town's traditional position of below-average unemployment for the region to the present level of 10.6 per cent. for April—slightly above the national average. The closure of the BL foundry will probably bring this rate up to 12.5 per cent.

There are, of course—I make this comparison in no idle sense—other hon. Members who would regard such an unemployment rate as reasonable in relation to the recession that we see affecting many other constituencies, areas that face long and deep problems of structural decline—problems that I am glad Wellingborough does not face. But we would be quite wrong to ignore Wellingborough's difficulties simply because there are other areas that are worse off.

The Government recognise their duty to ensure through their policies that all parts of the country benefit from the regeneration of industry that we seek and the prosperity that it will bring.

My hon. Friend asked for signs of hope. I should like to outline one or two of the matters that are relevant in looking at the question of Government assistance.

The people of Wellingborough and my hon. Friend will certainly ask what the Government are doing to help with their problems. Firms in Wellingborough, as my hon. Friend knows, are eligible for, and, indeed, have taken advantage of, assistance under section 8 of the Industry Act 1972. It is perhaps interesting to note what has happened in that regard since the present Government took office. Thirty-two projects in Wellingborough have received £452,000 of assistance towards projects costing a total of £2.9 million. In some ways, that is a reflection of the healthy level of investment that has been maintained in Wellingborough in the recent past, and certainly of the help that the Government have been able to give to enable projects which would not have gone ahead otherwise to do so. That is the important significance of aid under that part of the Industry Act.

Small firms in Wellingborough benefit from wide-ranging efforts to help small firms generally throughout the country. Entrepreneurs can call on the advisory and counselling services of our small firms service, and I am encouraged by the interest that firms in the area have shown in this, with from 10 to 15 inquiries a week at present.

Certainly small firms will also benefit from the many measures that we have introduced over the last two years. I should like to draw attention to two from this year's Budget—the business start-up scheme, in which an investor in a small firm will be able to obtain tax relief on up to £10,000 invested in any one year, and the loan guarantee scheme, in which the Government will guarantee up to 80 per cent. of certain loans from the clearing banks to help finance new businesses with no track record yet behind them.

The area has also benefited from the Government's various special employment measures. At the end of April, 263 employees were supported under the temporary short-time working compensation scheme and 208 were receiving assistance under the job release scheme. Over the year up to April about 260 people joined youth opportunity schemes in Wellingborough. I think that my hon. Friend will agree that this is an important contribution to the problems of unemployment that the town faces, and, in particular, that he will recognise the value of youth opportunity schemes in a town with a growing proportion of young people in its population.

I also remind my hon. Friend that the Government have provided a substantial amount of non-industrial aid to the town by grants under the urban programme with £95,300 for two projects to be undertaken by voluntary organisations—one in support of the welfare services, and the other to provide work experience for psychiatric patients. But such assistance, valuable though it is in individual cases, will not solve the problems of Wellingborough. As I hope my hon. Friend will agree, the answer must lie in the pursuit of general economic policies that are appropriate and relevant in making progress across the whole framework of our industry.

I believe that the indications are clear that we are now at the bottom of the recession and that we must look ahead to the upturn and see how we are placed to take advantage of it. On this score I am, perhaps, more optimistic about Wellingborough's future, because I think that during the expansion of the 1960s and 1970s Wellingborough has moved away from total reliance on its traditional industries to a more diversified industrial base. The modern high-technology industries, which will benefit most from the upturn, are already there. In this respect I am glad to note that there are important signs of confidence in Wellingborough's industrial future. For example, I understand that Portal Construction is about to build 17 small factory units on the Finedon Road industrial estate, which is a welcome development.

My hon. Friend asked a number of other specific questions on which I should like to touch briefly. He talked about a feasibility study on the re-use of the BL foundry. I take careful note of what he said. It would be wrong for me to encourage him to think that the NEB could perhaps automatically assume responsibility for it. This would, on the face of it, be going somewhat wide of the guidelines issued for the NEB, which limit the NEB to making investments in connection with its existing portfolio, looking to the development of companies, or exploiting advanced technologies and, indeed, looking to work in industrial undertakings in the English assisted areas and small firms.

My hon. Friend referred to what he described as unfair competition from nearby new towns, and he highlighted Corby. I am sure that he would be the first to accept that with an unemployment rate of 21.2 per cent. as a result of the steel closure, Corby's problems are on an altogether different plane from those of other towns in the East Midlands. Corby was essentially a one-industry town, and the Government accepted the need to attract as rapidly as possible a wide range of new industries to regenerate its industrial base. To facilitate this, Corby was made a development area—a decision fully in line with the Government's policy of concentrating aid on the areas of greatest need.

Naturally, we shall consider any relevant aspects of the criteria that might affect the future of Wellingborough in regard to assisted area status, but my hon. Friend will know that the criteria have to concentrate on bringing aid to those in greatest need, and comparisons inevitably have to be drawn.

The new towns near Wellingborough are not without their own unemployment problems, with Peterborough at 10.4 per cent. and Milton Keynes at 12.9 per cent. They face many of Wellingborough's problems on a larger scale. The rate of expansion has been perhaps that much greater, the need for new industry correspondingly greater, and a number of problems—particularly a high proportion of young people—have been correspondingly more difficult. That is why it has been necessary over the years to devote substantial resources to ensure the healthy growth of these towns.

On the specific question of youth unemployment in Wellingborough, my hon. Friend will be in touch, but it may be useful to remind him that the local jobcentre manager has already been in touch with BL and self-registration forms have been issued to those being made redundant. An employment adviser is visiting the -factory on 8 June to interview the workers affected and to advise them about alternative employment and the training facilities available in the area. The jobcentre also plans to canvass local employers on behalf of those being made redundant.

Wellingborough has at present a historically high level of unemployment. There is no doubt that the closure of the foundry will worsen that position. But it is, I trust, only a temporary setback. Wellingborough has the diversity of industry to take advantage of the coming upturn. I believe that when we reap the benefits of our economic policies my hon. Friend will find the town of Wellingborough carried back with the rising tide to its former levels of prosperity and employment. When it does, it will have been helped in no small measure by the interest, concern and diligence with which my hon. Friend has approached this subject.

Question put and agreed to.

Adjourned accordingly at twelve minutes to Three o'clock.