HC Deb 27 October 1981 vol 10 cc841-8

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

12.8 am

Mr. William McKelvey (Kilmarnock)

I welcome the opportunity to draw attention to the growing unemployment problem in Kilmarnock. Just over a decade ago, Kilmarnock was considered a boom town and industry was diverse. We had heavy and light engineering, carpet weaving, lace making, spinning, knitwear production, pottery and whisky blending; and the shoe trade was prosperous.

Those industries carried names that were known the world over—Saxone, Glenfield and Kennedy, Massey Ferguson, Armitage Shanks and, of course, John Walker, the whisky company. Jobs were plentiful and a loss of production in one or two industries was usually more than compensated for by increases in others. Individuals who found themselves temporarily out of work were able simply to cross the road and to seek work in another industry.

However, in the past few years those giants of Scottish industry have been struggling against the effects of a Western economic slump which has been aided, abetted and accelerated by the Government's slavish addiction to monetarism. Since the Government came to office I have witnessed the loss of more than 4,000 jobs in my constituency and the disappearance of a whole industrial base.

Let me give an account of the decline so that hon. Members may be aware of it. Massey Ferguson, for instance, was perhaps the beginning of the big slide. This was a multinational company that produced combine harvesters—the only company in the United Kingdom that produced them in any quantity. The Government stood by and allowed that company to be uprooted, and the production line was transported to Marquette in France. The matter was raised in the House by my predecessor, and I also raised it, with the support of my hon. Friends the Members for Central Ayrshire (Mr. Lambie) and Dundee, West (Mr. Ross). In Kilmarnock 1,800 jobs were lost and the cost in misery and humiliation is incalculable. At Saxone, the shoe manufacturer, another famous name ruined by years of Italian imports, the cost in jobs to date is about 600 and the cost in terms of human misery again cannot be calculated.

The catalogue goes on. At Armitage Shanks, 100 years of pottery making in Kilmarnock was virtually wiped out when Blue Circle Cement took over the company. The bid was the subject of a Monopolies Commission inquiry, which concluded that it was in the public interest for Blue Circle to take over Armitage Shanks. The management told the workers that they should seize the opportunity because production would continue for some time and their jobs would be secure for years to come. Within six months of Blue Circle taking it over the firm closed and put on to the dole queue 600 men and women, some with 45 year's service, who had spent their working lives in the pottery industry. They were cast on to the dole queue by Blue Circle Cement, and now, as there is no chance of a pottery starting in Kilmarnock in the near future and as that is the only trade these people, most of whom are over 45 years of age, know, they will probably never work again. If one asks them about the ugly face of capitalism, they will be able to say how it has affected them directly.

Spinning and knitwear industries have been virtually forced out of existence by the never-ending flow of cheap imports. The Government are aware of the position, they have been told many times, but we still get the standard stock reply from the Minister that it is being noted and monitored. In the town of Stewarton there were once 40 small knitwear factories, but now there are fewer than 12. Hundreds of jobs have disappeared in the last two years, never to be replaced.

Now we have to add another name to this catalogue of disasters—the famous name of BMK. Two weeks ago it was taken over by the receiver because it was incurring large losses. That firm started in Kilmarnock. It was called Blackwood and Morton of Kilmarnock and became known as BMK—a name synonymous with high quality carpets the world over. It started in 1908 and prospered and grew to be worth millions of pounds in 1974. At that time it employed a maximum of 3,500 people.

In recent years the carpet industry has been in decline, mainly because of the massive influx of imports from North America and from the Continent. The North American carpets are most certainly subsidised and are being brought into this country and sold at a rate cheaper than that at which carpets can be manufactured here. They are being sold to the detriment of our carpet industry. Thousands of jobs have been lost.

I have written to the Minister on several occasions pointing out the difficulties of the carpet industry because of the influx of imports, but I have always had the same standard, stock reply: "We are aware of the points you make. The British Carpet Manufacturers Association has made these points on many occasions, and we are monitoring the situation".

In January and February this year, the figures showed an increase in imports of American carpets of 40 per cent. and an incredible jump in Belgian imports of 96 per cent. The cost, of course, has been borne by our industries here, and in particular BMK in Kilmarnock, which is now in the hands of the receiver, who is desperately trying to find a buyer for a firm which had shown a loss in the previous six months of over£1.3 million.

I have already been to the Minister and to the Secretary of State for Scotland to plead the case for BMK. I have to register some disappointment with the replies, because the industry needs help now and simply cannot wait. If we wait and yet another famous name, BMK, disappears from Kilmarnock and the Ayrshire scene, we shall have a leap in unemployment from the present wholly unacceptable figure of 18 per cent. to about 22 per cent. That will mean about 28 per cent. in male unemployment.

We are inclined to bandy unemployment figures about the House without ever really considering what they mean in terms of human misery and degradation. We have to consider what would happen to a family unit employed in BMK—perhaps the husband and the wife and in some cases also a son or a daughter. There is a possibility of their being thrown on to the dole queue, because 147 people were paid off last week. The receiver has intimated to the work force that the position will be monitored on a week-by-week basis in order to trim the work force. The 147 have been added to the growing dole queues in Kilmarnock, and among them there are family units. One can imagine the domestic pressures, with the awful feeling that the breadwinner may be facing a life on the dole for many years to come.

If there is any upturn in the economy, it is certainly not happening in Scotland, and it is most certainly not happening in Kilmarnock and in Ayrshire. It is right, therefore, that the Minister should be questioned publicly and given the opportunity publicly to reply to some of the questions that I want to ask him.

The receiver would welcome and could certainly use £1 million of cash, to be injected into BMK right now. If he had that £1 million underpinning the present losses, he would have the confidence to go forward and to look for new orders. He was prepared only last week to accept two new orders, although he confessed to me that in the future he might not have that confidence. If he does not find a buyer by the middle of November, he fears that the operation of the factory as a viable unit might end some time in March. He would not then be in a position to offer potential buyers the goodwill that BMK has enjoyed for the last 70 years. But if the receiver had that £1 million he would be able to underpin the loss and have the confidence to go for orders and could keep BMK as a viable unit, with the chance of attracting a buyer from somewhere in the world.

Secondly, a task force needs to be installed now in BMK, through an office in Kilmarnock, to look after the interests of BMK and to try to assist the receiver to make the firm viable and thus attract a new buyer. That agency should be manned by the Scottish economic planning department or by the Scottish Development Agency and be on site to deal not only with the problems of BMK but to set the ground rules for bringing in a brand new industry. That is what Kilmarnock needs, because all the traditional industries are dying. The Government could invest money in a brand new expanding industry and direct a new employer into the area to provide thousands of new jobs quickly.

However, there was a ray of sunshine in this sad tale. It was contained in the Kilmarnock Standard and it relates to the Minister's visit last week to the Kilmarnock area to open an extension of Smith Brothers (Kilmarnock) Ltd., which is a printing firm. We welcomed the Minister's presence in Kilmarnock to open a factory. Indeed, the Minister would be welcome every week if he could produce an extension of any factory or enterprise, irrespective of the size. I shall quote the Minister's words, as reported by the Kilmarnock Standard: We're all terribly concerned with unemployment, but there is no good 'greetin' about it; we've got to do something about it. I am giving the Minister the opportunity to do something positive and say, "We are ready. If BMK comes up with a viability proposal, the coffers of the Treasury will be opened and there is an unlimited supply of cash to assist the new buyer in making a viable industry even more viable."

The awful truth is that Kilmarnock has 18 per cent. unemployment now, without taking BMK into account. What does that mean in human terms? It means 4,600 men, 1,763 women and?perhaps the saddest and most tragic of all—1,400 youngsters between the ages of 16 and 19, with little or no hope for the future. The people of Kilmarnock, who are a hard-working and thriving industrial community, are not prepared to stand by and be reduced to some kind of depressed, broken and undignified flotsam on the industrial scene. They deserve a brighter future for themselves and for the future generations, their children and their grandchildren.

I have pledged to fight for their rights, and I shall continue to do so in any fashion and down any avenue that I think will assist them in their struggle to achieve a just solution for Kilmarnock and for the whole of Scotland, and in particular Ayrshire. I hope that the Minister has taken some cognisance of what I have said. He knows my opinion, because we have gone over the ground, particularly at our last few meetings, at some length.

If what I have said tonight falls upon deaf ears, I intend to go further. I have written to the Prime Minister, and she has agreed to meet me on Wednesday. I shall press her for the kind of changes that I hope that the Minister will agree to tonight.

12.24 am
The Under-Secretary of State for Scotland (Mr. Alexander Fletcher):

I am sure that all who hear the hon. Member for Kilmarnock (Mr. McKelvey) on this subject—I realise that not many hon. Members are present?agree that he has a deep concern for the problems of his constituency. I accept entirely his determination to fight for Kilmarnock and employment there. Although at times he may find this difficult to believe, I can assure him that my right hon. Friend and I are equally determined to fight to improve employment prospects in Kilmarnock and elsewhere in Scotland. Therefore, we welcome the opportunity that the hon. Gentleman has given the House tonight to consider employment in the Kilmarnock area. The area has had more than its share of closures and redundancies in recent years. Some were listed by the hon. Gentleman—Glenfield and Kennedy, Massey Ferguson and Monsanto. As he said, unemployment is currently running at just under 18 per cent. Understandably, therefore, there is grave apprehension about the future.

The hon. Gentleman referred in particular to BMK, which is now in receivership. Only this morning I met the hon. Gentleman and shop stewards from the company, and the provost and chief executive from the district, to discuss the problem. We had quite a helpful discussion.

The hon. Gentleman mentioned the Massey Ferguson company. He said that the Government had stood back and done nothing to try to help. He would want to be reminded that far from that being so, I went to Toronto to see the president of the company because we were dissatisfied with some of the explanations that were coming forward regarding the Kilmarnock closure. We had many meetings with the company in Scotland and in London. The hard truth of the matter as far as Massey Ferguson is concerned is simply that no amount of Government assistance would have persuaded the company to stay in Kilmarnock, for the very simple reason that it was closing factories all over the world, in North America and South America and in Canada, the headquarters.

Mr. David Lambie (Central Ayrshire)

And opening one in France.

Mr. Fletcher

It did not open a factory in France. It transferred some production to that factory from Kilmarnock. It was doing the same in North and South America. It was closing factories there as well.

The particular matter of concern tonight is the carpet industry. In Scotland and elsewhere in the United Kingdom it has suffered severely from the effects of the recession. Companies have undertaken substantial rationalisation in order to remain competitive in a very challenging market. We have seen a particular threat from cheap imports from the United States, but the recent movement in sterling in relation to the dollar, bringing the pound to what we consider is a more realistic level, has helped to remove at least part of that threat. But the industry is still experiencing very difficult conditions, and BMK in Kilmarnock is no exception.

On the question of imports, however, the figures that I have reveal that in 1980 22 per cent. of United Kingdom consumption was imported and of that figure just over 5½ per cent. was imported from Belgium. These are significant figures but, nevertheless, they must be seen in perspective with the total United Kingdom market and the amount that was imported as distinct from the amount that was supplied from British manufacturers.

Mr. McKelvey

It is a shrinking market.

Mr. Fletcher

I take that point.

I want to deal in particular with BMK and with the charge which the hon. Gentleman repeated tonight?that the Government are standing back and have taken no action nor got themselves involved in trying to help the company to try to resolve the threat of closure which hangs over the company and the thousand or so jobs in Kilmarnock alone.

That is not the case, as I shall illustrate. In June 1981 the company discussed its trading position with the Scottish Development Agency. As a consequence, BMK asked the agency to engage in a study. It employed the agency in a consultative capacity to look at its trading problems and to see what steps might be taken to get the company out of its difficulties. My officials in the Scottish economic planning department became involved with the company last month when the SDA reported the extent of the expected losses and recommended the closure of less profitable areas of the company's activities. This action?which was recommended by the SDA—coupled with other economies, including, I am afraid, a substantial number of redundancies, could conceivably have improved the position, but it depended on the company obtaining new borrowing facilities at a time when it was already heavily in debt to the bank. The company's bankers were not satisfied that the proposals made by the company would succeed. Therefore, the management tried to find alternative sources of funding to restructure the company and to resolve the problem. However, they were not forthcoming and, as a result—as the hon. Gentleman knows?BMK asked the bank to appoint a receiver.

The hon. Gentleman expressed a wish that the company had had £1 million. I do not doubt his sincerity. However, in recent years BMK has received a substantial amount of financial support from Government funds both to facilitate investment and to avert redundancies. As it happens, the most significant amount was made available to the company during the two years ending July 1981. The Government made a sum in excess of £1 million available to the company. It was not a loan but a grant to help to avert redundancies at Kilmarnock and at the Hillington factory. As the hon. Gentleman will know, that involved short-time working compensation. That underlines the fact that the Government have made substantial amounts of taxpayers' money available to the company, but that has not helped. In the year to 30 June 1980, the company incurred a loss of £479,000. In the six months to 31 December 1980 the company made a further loss of £1.3 million. Therefore, the loss for the full year to June 1981 will obviously be substantial, given the £1.3 million loss in six months and the company's inability to find fresh funding to enable it to restructure and to find a new line of attack on its problems.

The current position is that on 15 October Deloitte, Haskin and Sells, chartered accountants, were appointed receivers to the company. They decided to continue trading while negotiations took place with potential buyers for all or part of the company's operations. No deadline has been set and no decisions have been taken on closure. These matters remain open while?as I have often told the hon. Gentleman?the receivers carry out their task not only of managing the company in the interim period, but of endeavouring to find a buyer for all or part of the business.

The Scottish economic planning department is in close touch with the receivers and stands ready to consider urgently the availability of selective financial assistance under the Industry Act 1972 for any viable investment proposal that may arise to safeguard employment in the company, particularly in Kilmarnock.

That is the extent of the assistance that has been made available to the company. I hope that the hon. Gentleman will agree that it is substantial. That is the action that has been taken since the company?during the summer?asked the Government and the Government's agency, the SDA, to assist in trying to find a plan to get it out of its difficulties. The receiver is busily trying to see what can be done to save the business, or part of it.

This morning the hon. Member for Kilmarnock asked me to arrange a meeting with the receiver because he thought there might be a misunderstanding in the meetings taking place between him and the receiver and between my officials and the receiver. I undertook to see the receiver as soon as possible. I have made an appointment to see him on Friday morning. I shall take the opportunity next week to bring the hon. Gentleman up to date with that meeting and whatever arises from it. He will then be in full possession of the facts.

There is no doubt that the hon. Gentleman is deeply concerned about BMK and unemployment in Kilmarnock. I say without hesitation that the Government are equally concerned.

Mr. Lambie

What are they doing about it?

Mr. Fletcher

Perhaps the hon. Gentleman did not listen to what I said. An appeal has been made to give the company £1 million. I have said that in the period ending July this year the Government made taxpayers' money in excess of £1 million available to the company. After that money ran out the company found that its trading position had worsened. Whether the money is found for short-time working compensation or anything else, it is still cash that assists the company's liquidity. The company also received a number of offers from the Scottish Office of funds to facilitate investment. It took up some of them in the last few years. It is for the company to decide whether to take up offers of selective financial assistance for investment. When all these matters are taken into account we can say that we are not making polite noises about the Government's action and concern. We are deeply involved and committed. We shall continue to do everything that we can to help any viable proposition from the company and to assist the area to find new jobs and new industries, so that, when the upturn in the economy comes to Scotland, the area will be as ready as possible to take advantage of it.

The Question having been proposed after 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 twenty-three minutes to One o'clock.