HC Deb 08 April 1982 vol 21 cc1125-7

On resuming—

2.15 pm
Mr. Arthur Davidson (Accrington)

I thank the hon. Member for Ealing, North (Mr. Greenway) for giving me time from his debate to press on the Government the problems in my constituency resulting from the collapse of the Platt Saco Lowell group. The hon. Gentleman's gesture is in the best inter-party traditions. My constituents, too, will be grateful to him.

The Minister is well aware of the background to the collapse of the group. I am grateful to the Minister of State for seeing me. I pressed on him the need for urgent Government action to help Accrington. Yesterday 900 jobs were lost in an area where unemployment stands at 14 per cent. I shudder to think what the rate will be when those job losses are added on.

Under one name or another the company has existed in Accrington for about 100 years. The Government should be proud of it. It has excellent labour relations. I cannot sufficiently praise the works convener, Peter McCloughlin, and the works committee for the way in which they have co-operated with the management to try to make the company viable and successful.

Unfortunately, the company went into receivership. The receiver has done everything that he can to make sure that the sale to the only bidder, the United States Hollingsworth company, goes through. I am happy to say that on 19 April Hollingsworth will engage further workers. I hope that the number will be more than the 400 engaged originally, but there are rumours that it could be less.

There is an overwhelming need now for development area status for north-east Lancashire. Although I do not expect a definite answer, I hope that the Minister will give me encouragement. Loyal, decent and hard-working people are talking seriously about Accrington being a ghost town. There are rumours that two of the few remaining engineering companies are about to lay off workers, which would make unemployment horrific.

I am grateful to the Minister for helping the Hollingsworth deal. There were complications with American anti-trust laws. The hon. Gentleman kept his word to ease the way. I now ask for a commitment that he will do all that he can to encourage jobs to come to Accrington.

The human problems resulting from such collapses are immense. Workers who agreed to voluntary redundancy now have cheques bouncing as a result of the firm going into receivership. Their payments are in jeopardy. The sums may amount to thousands of pounds. I hope that the Minister can ensure that workers who may have kept their cheques for a couple of days longer than they should have done are not put in jeopardy.

I hope that in this short time I have covered the main points. Development area status is urgently needed for Accrington and north-east Lancashire. If development area status is not granted shortly, a sense of despair, defeat and despondency will become a reality in a proud area. I am grateful to the Minister for being here. I hope that there will be a glimmer of good news in what he says.

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

As the hon. and learned Member for Accrington (Mr. Davidson) will know, had there been a full debate I should have gone into the background in some detail and made many more points than I am able to do in this shortened debate. He will know the background.

I share the hon. and learned Member's concern at the receivership of Stone-Platt Industries, and am fully aware of the distressing implications this has for those closely involved in the activities of the group and its subsidiaries. I must emphasise, however, that the decision of 18 March to call in the receiver was most definitely a matter for the financial organisations concerned. It represented their commercial judgment and was not one in which the Government felt able to intervene directly.

When Stone-Platt's banks rejected the programme of disposals proposed by the board, aimed at reducing borrowing facilities and eliminating the principal causes of the group's losses in recent years, the board requested Midland Bank, as lead bank, to appoint a receiver and manager under the terms of the bank's security.

Before its receivership, Stone-Platt had, during the past year, been through a period of contraction and rationalisation. Generally, its operations had been brought on to an even keel, with the exception of its textile machinery interests. The then chairman said in the press announcement immediately the receivership decision was announced that the board's decisions would have eliminated the principal cause of the group's losses in recent years—the Platt Saco Lowell division to which the hon. and learned Gentleman referred. As he will know, the declining performance of that and other United Kingdom companies in the textile machinery sector is attributable to several factors. I shall single out just two.

First, there has been a decline over a number of years—not just the last two—in the United Kingdom share of the world textile machinery market. Platt Saco Lowell has participated in that decline. The trend has been wrong for some time. Secondly, there has been the impact of the worldwide recession on the textile machinery market overseas as well as at home. It is perhaps significant that in 1980 Platt Saco Lowell had total sales of £60 million—down on the previous year—almost 100 per cent. of which was in exports. The world market, therefore, is extremely important. That is the background.

The United Kingdom textile machinery industry has declined markedly for the past decade. I give those details only to emphasise that the difficulties experienced by the industry have not suddenly materialised during the past two or three years. They will face potential purchasers of the textile machinery division of Stone-Platt either in part or in whole.

In this climate, Platt Saco Lowell's problems have grown, despite its having received considerable sums of public money, under various schemes of Government assistence, for both capital investment and product development. The decision by the receiver to announce last week and yesterday redundancies affecting the Accrington work force was sad—all the more so given the company's long and honourable record as one of Accrington's biggest employers. I fully appreciate the distressing circumstances, which the hon. and learned Gentleman mentioned, for all those concerned. I extend my sympathy to them.

The hon. and learned Member for Accrington's concern was evident when he called upon my hon. Friend the Minister of State for Industry and Information Technology on 29 March to discuss the implications for Platt Saco Lowell of the Stone-Platt receivership. At that meeting my hon. Friend gave an assurance that the Department of Industry would co-operate with the joint receivers and would consider as speedily as possible any proposals for financial support, under the standard criteria of the various schemes of assistance, for industrial projects including those involving parts of the Stone-Platt business. That pledge remains.

As the hon. and learned Gentleman said, the sale of some parts of Platt Saco Lowell, including the Accrington and Helmshore works, was announced yesterday by the joint receivers. The assets form the basis of a new company, PSL(UK) Ltd, which will open for business on 19 April. It is a subsidiary of Hollingsworth and will actively consider what staffing levels will be required. Employment will be offered to selected former employees next week.

I understand that Mr. Smalley, a director, has been meeting shop stewards at Accrington this morning. I am advised that that was the only deal open to the receivers that offered the prospect of continued production and employment at Accrington.

Mr. Arthur Davidson

I accept that.

Mr. MacGregor

The hon. and learned Gentleman referred briefly to the action that the Government have taken. The sale was subject to clearance in the United States on the anti-trust aspects and we have been acting through our embassy in Washington to achieve prompt clearance. I can also give him an assurance that if any proposals are put to us for the kind of financial assistance under the existing schemes to which my hon. Friend referred we shall look at them speedily. Indeed, we reminded the company of that situation only last night.

Finally, I shall deal with the question of Accrington's assisted area status. On 18 March my right hon. Friend the Secretary of State met a deputation from the North-East Lancashire Development Association to discuss the association's case for development area status throughout North-East Lancashire. There was a useful exchange of views at that meeting, and my right hon. Friend will be writing to the chairman of the association when he has had time to give careful consideration to the association's case. In doing so he will of course take full account of the situation in the individual travel-to-work areas within the association's area, including Accrington.

I have to tell the hon. Gentleman that as of last month the unemployment level in Accrington was 13.9 per cent., with an intermediate area of average of 15 per cent. I cannot predict at this moment what levels of unemployment will be reached as a result of yesterday's announcement because we do not know how many jobs will be created by the new company. Equally, we do not know how many of those made redundant will register—it is always less than the full force. Nevertheless, I have noted what the hon. Gentleman has said today about the position and I shall keep a watchful eye on it.

I hope that I have been able to indicate the Government's position, and our concern and willingness to look at the various points that the hon. and learned Gentleman has raised.