Corby Development Area (Hansard, 12 November 1981)

§ Mr. Bill Homewood (Kettering)

My request for this Adjournment debate arose from an exchange of correspondence in September with the Department of the Environment. I was seeking to support a request by Northamptonshire county council that the Minister should receive a delegation from the council to discuss the issue of special investment area status for the south and west of Corby.

The exchange of correspondence terminated with the Under-Secretary of State for the Environment writing to me as follows: I have considered the previous correspondence on the subject most carefully and agree with my predecessor that there would be no benefit in meeting a delegation at present. I do of course fully appreciate the seriousness of the present unemployment position in the Corby area and the need to provide alternative sources of employment. But there can be no question of agreeing to any more special investment areas while the development commission's and COSIRA's functions are being examined by the Government and hence there is little to be gained from a meeting. It was the passage about the Minister appreciating the seriousness of the unemployment in Corby that raised doubts in my mind and led to this debate.

Local opinion in Corby is convinced that the official unemployment statistics seriously understate the unemployment level in the core of the town, in the designated new town development area. There is a strong belief that in that area unemployment is already 28 to 30 per cent. and not the 20.8 per cent. that was recorded in the October figures.

We are keenly aware that between now and Christmas substantial numbers of ex-steel workers will be completing retraining courses, with little prospect of finding permanent employment thereafter. We believe that there will be a substantial increase in unemployment in Corby between now and March 1982.

About two years ago, when I was deploring the tragedy that Corby would experience with the closure of the steel works, the then Secretary of State for Industry intervened to accuse me of talking as if the unemployed of Corby would never find alternative work. Two years have passed, and the vast majority of them have not found alternative work.

There are few of us who concern ourselves with the economic and social future of Corby who do not believe that, in the long run, Corby will extricate itself from its current tragic situation, but it is the length of the long run that worries us. It was Lord Keynes who said that in the long run we will all be dead, and that is what is bothering us about Corby.

The current experience of the Corby people is traumatic. Most people will agree, I think, that a community can be sustained by promises of jam in the future only for a limited period. We as a society are not very well informed about the social consequences of large-scale unemployment, but there can be no doubt that the scale of unemployment that we are experiencing in Corby must have a debilitating effect and that over a period it can lead to complete disintegration of the social structure. That is why I spend much of my time here seeking to ensure that 756 Corby receives every particle of the help to which it is entitled, and that is why I am pressing this case on the Minister tonight.

Despite the responsibility that the Government must carry for Corby's plight, it should never be forgotten that the steel industry there was publicly owned, and that the town was a new town that was created purely and simply to serve that industry.

The Government have been less than helpful in three critical respects. First—and this was the direct responsibility of the Minister's Department—Corby suffered a loss of about £600,000 under the revised block grant formula. It was a savage blow to a community that was well aware of the difficult time through which it had to pass. Indeed, it added to the basic unemployment problem, because the local council, in seeking to placate the Government, cut its own work force by about 20 per cent.

Secondly—and I hope that the Minister will tell me what went wrong here—there was the rate revenue loss that accrued from the closure of the steel works. I was present in the Chamber when the Secretary of State for the Environment appeared to give a categorical assurance that the Government would be prepared to make a substantial contribution to local authorities that suffered rate revenue losses as a result of steel works closures. However, as I understand it, the Corby district council has not received one penny of such compensation. It is suffering from the failure to carry out what appeared at the time to be a specific Government commitment.

Thirdly, there has been no resolution of the problem of the heavy financial commitments that new town local authorities inherited when they took over housing properties from the New Towns Commission. Therefore, there is strong local feeling that the assistance that is being given by various arrangements to attract industry is being extracted from the social fabric of the town by burdensome impositions on the local authority. That has happened to an authority that has done everything in its power to accommodate the Government's public expenditure aspirations.

I mentioned that the council work force had been cut by 20 per cent., and local officials inform me that, pro rata, that cut is the highest in the country. In addition, the council has sought to relieve its burdens by the sale of council houses. That policy is dear to the Government's heart. I am informed that those transactions are taking place at rate of 30 per week and that, pro rata, that is the highest rate in the land.

Corby has sought to help itself and to struggle out of the slough of despond into which the decisions of others have plunged it. The town needs and deserves all the help that it can get. It has an enterprise zone, but it should now receive special area development status and the area should be extended. Help is needed now. Corby cannot afford to wait for further inquiries. I urge the Minister to reconsider the decisions detailed in the letter that I quoted.

§ The Under-Secretary of State for Industry (Mr. John MacGregor)

I welcome this opportunity to reply to the hon. Member for Kettering (Mr. Homewood), and I well remember our debate in February on the particular problems of Corby. The hon. Gentleman has placed me in some difficulty, because the subject of this Adjournment debate is industrial investment to the south and west of 757 Corby and not special development area status. Therefore, I hope that he will forgive me if I make a few remarks about industrial investment to the south and west of Corby—the subject of the debate—before I turn my attention to some of the other issues that he raised.

I shall deal later with Corby. Although the hon. Gentleman concentrated on the difficult problems—as he sees them—that continue to exist, there have been some encouraging developments since February, which could be important to the nearby areas, including those south and west of Corby.

I deal first with the main subject of the debate—the problems faced by the other parts of the hon. Gentleman's constituency, and in particular the Kettering travel-to-work area, which includes Desborough. I wish to put one or two points about the south and west of Corby on the record.

I recognise that the closure of the steel-making plant and a general decline of the area's traditional industries, particularly footwear, have led to a relative decline in the prosperity of that area. Indeed, I recall that the problems of Desborough in particular were brought to the attention of my predecessor through correspondence last year with the district council, which culminated in a meeting between the Department's regional director and the district council.

The hon. Gentleman made a request about special investment area status. In any discussion of the problems of a particular area, it is, of course, essential to set the difficulties in the regional and the national context. Traditionally, unemployment in the Kettering area has been below the rate for both the East Midlands and Great Britain. In the past two years there has been a weakening of this position, and we now find unemployment in the Kettering travel-to-work area standing at 12.3 per cent. which is very slightly above the British average of 12.2 per cent, and rather more above the East Midlands average of 10.9 per cent. However, I suggest to the hon. Gentleman that, although such unemployment levels are high—no one wants any increase in unemployment levels if that can be avoided—and are also high in many other parts of the country, they do not point to a particularly severe problem in that part of his constituency or to a problem that cannot be coped with.

Had the hon. Gentleman raised other matters relevant to that part of the area I should have dealt with them and explained what the Government were trying to do to help.

I shall deal with what the Government are doing in terms of positive aid. However, it is necessary to restate two points. A large part of the increased unemployment in many parts of the country is caused by the fact that the Government have to deal with a severe economic decline all over the country, which has continued for many years. We have to try to pull that round and to deal with overmanning and uncompetitiveness during a general world recession.

The restructuring, therefore, is taking place in difficult circumstances.

Inevitably, it is a painful process in many parts of the country. It is particularly painful in areas such as Corby where restructuring is taking place on a dramatic scale. Whatever we do, we cannot expect quick and immediate results when an industry has gone out of existence. We 758 cannot find new jobs and new industries overnight. The process takes time. It is necessary to go through the exercise if Corby is to have a sensible economic base.

I shall concentrate on specific Government assistance, but it is important to emphasise that the process of dealing with declining industries, uncompetitiveness and restructuring is a matter for management and work forces as well as for the Government.

The hon. Gentleman mentioned the special investment area application by Northamptonshire county council. Other areas have made similar requests. Some have made such requests in my part of the country. It is a fair response at this stage to say that the Government are still considering their recent review of the Development Commission and COSIRA. That review encompasses the geographical coverage of the commission's operations. It would be inappropriate to approve any new special investment area applications or to extend existing areas before the outcome of the review is known. We should take broad decisions on the review. Large parts of the area in question are already designated by the Development Commission as pockets of need and already qualify as priority areas for assistance from COSIRA.

I feel compelled to mention another matter, which the hon. Gentleman did not mention. I have communications problems in my area and communications are important to industrial investment south and west of Corby. The Corby-Kettering area has the great advantage of lying on the proposed route of the A1-M1 link road. This remains one of the Government's highest road priorities, not only because it will help to provide a high standard route for industrial traffic between the West Midlands and the East Coast ports but because, with the proposed Kettering northern by pass, it will be an important help to the Corby and Kettering areas by improving access. A significant factor in the Government's decision to stick to their preferred "green route" rather than adopt an alternative strategy was that it would bring earlier help to the area.

While the preparation of such a complex and expensive scheme is inevitably lengthy, my right hon. Friend the Secretary of State for Transport is aware of the urgency. He hopes to publish draft orders under the Highways Act 1980 early next year. The hon. Gentleman will recognise—and I have similar problems in my constituency—that this will have to be followed by a public inquiry as part of the normal democratic process. It is relevant to raise that matter, because it shows that hopeful signs are developing in areas of Government activity that bear on future industrial investment south of Corby. It is important to bear that in mind.

A number of the points raised by the hon. Gentleman on block grant, rate support grant, new towns and the sale of council houses are not matters for me but for my hon. Friends in the Department of the Environment. It would be wrong for me to refer in detail to those points in relation to Corby in this Adjournment debate. However, I understand that in due course Corby district council should receive compensation for the rate revenue loss due to the closure of the steel works. I shall draw the hon. Gentleman's remarks to the attention of my right hon. and hon. Friends in the Department of the Environment.

As the hon. Gentleman has widened the debate to include Corby, it gives me the opportunity to say one or two things about the town. I shall bring up to date the progress that has been made there since Corby was debated in an Adjournment debate on 20 February. The hon. 759 Gentleman said that he was optimistic in the long run. I hope that he is right, and I share his view. He spoke eloquently of the present-day problems. I understand why he keeps raising them in the House. He is right to do so, but I hope he will acknowledge that a battery of Government weapons are continuing to be brought to bear on the problem of dealing with the closure of the steel works and restructuring the economy, and that real progress is being made. That is important, and I hope that he and his local community will take some credit for it.

As the hon. Gentleman knows, the principal advantage brought to Corby by development area status has been eligibility for both regional development grant and selective financial assistance under section 7 of the Industry Act 1972. To date, over 130 firms have approached the regional office of the Department for such selective assistance—as distinct from regional development grant, which is automatic within the area to which it applies—and applications are now running at a rate of about 6–5 per month. Of course, only a proportion of those projects come to fruition, but so far 30 projects have received firm offers of grant totalling £3.606 million and they are expected to provide about 2,200 job opportunities in due course. Applications for selective assistance which have been received, but where no offer has yet been made, could provide a further 1,250 jobs. At a time of deep world recession and low levels of investment everywhere—not only in the United Kingdom—this is a considerable response on the part of industry.

Section 7 is, of course, not the only source of finance available to firms in Corby. European Coal and Steel Community loans are also available and being widely taken up. About £1.07 million of foreign currency and sterling loans have already been dispersed, and commitments of a further £6.26 million have been made.

That financial assistance is fully supported by the factory building activities of the Commission for the New Towns and the district council. I understand that the commission is planning to invest £7.9 million in Corby in 1981–82, following an investment of £8.8 million in 1980–81. I am giving those figures to place them on the record. I do not expect the hon. Gentleman to follow them all, as there are rather a lot of figures.

The commission is completing the infrastructure for a 100-acre extension to its industrial estate at Earlstrees. During 1980–81 it constructed 365,000 sq. ft.—24 units—of advance factory space and is planning a further 200,000 sq. ft.—29 units—during the current financial year. The commission is also making available for industrial development 120 acres at Weldon and has sold 5 acres to ABR Chemical Ltd. Infrastructure works are now well advanced, and some advance factories are also to be provided. The Earlstrees and Weldon industrial sites together comprise the enterprise zone.

In addition, the commission and the district council are in the process of developing a 77-acre industrial site at Oakley Hay. Finance for infrastructure development is being provided largely by the district council. I understand that the first parcel of 7 acres has been sold to Oxford University Press for use as a distribution centre. The Prudential Insurance Company has also financed the development of 19 nursery factory units on the estate.

BSC (Industry) Ltd. has also been active both in the provision of advice and assistance as part of the general development effort and in the conversion of redundant space in the steelworks to small workshops. I understand 760 that it has recently made a start on the conversion of an initial batch of six units. I have seen for myself in other parts of the country how such work can help to regenerate small business.

As well as providing assistance to firms through ECSC loans, the European Community has strongly supported the local effort in Corby through the European regional development fund. To date, about £3–4 million has been allocated in assistance to projects related to the provision of industrial estates, roads, water and sewerage in Corby.

However, perhaps the most important new development since we last debated the subject has been the designation of the enterprise zone. When the formal designation took place on 22 June, Crosby became the site of England's first enterprise zone. I have heard almost envious statements made about the progress in Crosby and the fact that it was the first area to get off the ground.

When enterprise zone status was offered to Corby, the land in question had already been opened up and sites prepared. About 300,000 sq. ft. of speculative factories were under construction and more planned, the first new companies being already on site. Sites of up to 40 acres for industry are available, and sites suitable for office development and distribution are being prepared. Nearly one-third of the area is now committed or the subject of continuing negotiations. Twelve companies have set up in the zone, and Corby can boast one of the major success stories so far in any of the enterprise zones—the £25 million investment by Associated British Foods in a new flour mill, which will create 110 new jobs.

What does all the progress add up to? I recognise the severe impact of the steel closure on that part of the hon. Gentleman's constituency, but in difficult economic times it is bound to take time to restructure. The story so far in that environment has been one of considerable success. Although unemployment remains unacceptably high in Corby, it is now declining. In August it stood at 22.3 per cent. and it is now 20.8 per cent. Compared with other parts of the country, there has been a downward movement—although only gentle—during the year. As I said, we always knew that it would take time. However, the achievement so far in Corby reflects favourably on all concerned.

I have been interested to see the range of firms coming to Corby in the past year. They cover many different sectors of industry and commerce and include a substantial number of small firms.

Corby's problems have by no means gone away and there is no room for complacency, but there is room, as the hon. Gentleman hinted, for a great deal more optimism than was appropriate some time ago. To date, the progress justifies my stanace in February that Corby had advantages over the existing special development areas, so the case had not been made out for a further upgrading.

I hope that the situation will continue to improve. The hon. Gentleman said that it might deteriorate between now and March. We have always stated that we would watch for evidence of permanent change relative to other areas, and we shall continue to do so. However, we should acknowledge that considerable progress has been made this year and that a considerable number of batteries of Government aid have been brought to bear on the problem.

I am encouraged by the progress made in Corby. The hon. Gentleman raised other matters affecting other parts of his constituency. I have dealt with those. I am convinced that the combination of all those factors and the 761 Government's economic policies will prove sufficient to enable industry throughout the hon. Gentleman's 762 constituency to survive current difficulties and emerge fit and ready to grow and flourish as we emerge from the recession into a new period of soundly based prosperity.