§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]
1.25 am§ Mr. Stephen Ross (Isle of Wight)I am glad to have this opportunity to raise the subject of the Isle of Wight's economy. I have worked and lived there for about 30 years and I have never been more concerned about its future well-being than I am today.
We have just heard a debate on the steel industry. Several hon. Members who took part represented the West Midlands and the North-East. However, of all the regions in Great Britain, only Wales has had a marginally higher proportionate fall in manufacturing employment than the Isle of Wight. Even the decline in the West Midlands is less than that which has taken place in my constituency. Apart from those who spend their retirement years with us—I do not discount in any way their most valuable contribution to our local economy—we largely depend for our livelihoods on three main sources: the manufacturing, construction and service industries-agriculture, including horticulture, and the tourist trade.
Agriculture is doing passably well, but our efficient, hard-working glasshouse producers, most of whom came to the island only in the 1950s and 1960s, have had a torrid time, and that is still continuing, principally because of the high cost of fuel—largely oil—extortionate interest rates, and unfair competition from the Dutch. Some producers have already gone out of business; others survive by their very boot straps.
The tourist trade is in the doldrums. I am told that the number of visitors has fallen by about 10 per cent. per annum since 1979. That industry desperately needs new investment and a longer season. Most serious of all is the decline in our manufacturing industries, all of which are modern and employ some of the most skilled craftsmen and women to be found anywhere in the United Kingdom. A substantial number of those firms were attracted to our shores in the late 1950s and early 1960s with the aid of Government grants, following the sudden demise of Saunders Roe—a famous name in the aircraft world—which now trades as the British Hovercraft Corporation, a subsidiary of the Westland Group. The cancellation of a rocket plane brought with it many redundancies, the realisation that we had too many eggs in one basket, and ultimately, Government aid.
With that aid, some famous names came to the island such as Plessey, Ronson, Millway Engineering—now part of Thorn EMI—Trucast, and Temperature, which is part of the Norcross group. They are some of the firms that came to the island at that time and that generally prospered until recently. The famous old naval shipyard of J. S. White, which is, I believe, the oldest shipyard in the United Kingdom, built destroyers until the early 1950s. I believe that one of its ships went to the Falkland Islands. However, it was acquired by the Karrier Corporation of America, and was transformed into a heavy engineering company, specialising in compressors for the oil industry. It was taken over in the late 1970s by United Technology, and later became part of the Elliot Turbomachinery empire. Today, it no longer exists. Indeed, 12½ acres have been closed, and its fine work force of more than 800 has been spread throughout the world. However, many of its old employees remain on the Isle of Wight, without work. 259 There have not been any other closures of that magnitude. It was traumatic, because it affected the whole area. Small firms would use its facilities for all sorts of things. Unfortunately, the British Hovercraft Corporation has reduced numbers from 2,200 to 1,500 and has a virtually empty order book. If only the Navy appreciated the true value of the hovercraft, the tale might be different.
Plessey's has had to start laying off men as it cannot hold on to its full work force any longer, despite the imminent expectation of a major NATO order. It employs about 1,200 people, but 25 people or more have already been made redundant. Temperature is shedding 80 workers, due to the lack of work from British Rail for underfloor heating and thermostatic controls. The Government could certainly help. The Thorn factory at Carisbrooke shut its door last week, with the loss of 230 jobs, mainly female. Fortunately, it took back 50 workers this week for a limited six-month period.
Brittan Norman, of which I am a non-executive director, is facing further redundancies as orders for the Islander dry up, despite frantic attempts to secure new contracts and approaches to the Department of Industry for financial assistance for research and development of a variation. Even the extraordinarily inventive Cowes Laundry is closing. It used to keep two launches in the harbour to serve the liners and tankers berthing at Southampton and Fawley. The boat building industry has been depleted. It is hit by low-wage competition from overseas, although it has had some remarkable successes. It is laying off people at the moment.
The latest blow is the threatened loss of 18 jobs at the famous Niton radio station which faces the English Channel. The radio station is to be automated. Apparently rescues around the coast are to be directed solely from Burnham in Somerset and Stonehaven in Scotland.
The greatest tragedy, and the one over which we have apparently no control, is the closure of the Ronson factory outside Newport. After two receiverships, the number of employees at this always profitable factory have been reduced from about 400 to 80. The factory was closed at one stage. There is a ready market for its products and the most likely purchaser is almost certain to close it down and remove it, lock, stock and barrel to the North-East, due to the availability of British Steel fund loans, Tyne and Wear assistance and ICFC co-ordination. A figure approaching £1 million is involved. We on the island must sit by and watch it happen. We are not an assisted area and therefore have no source of funds to match what the North-East can offer. Yet everyone, including the prospective purchaser, agrees that the productivity in the Isle of Wight factory is the highest anywhere, as it was when Ronson International was a world-wide business. The factory will produce three and a half lighters for the one and a half produced elsewhere.
This position makes us angry and it hurts. As an offshore island we are vulnerable to present conditions. We are not sitting down and doing nothing about it. With help from private industry and the county council, we have established an enterprise agency, which I have the honour to chair. A small amount of county council funds has been made available to help worthwhile causes. Our resources for the current year are only £150,000 and we may not be able to repeat that next year. The product of a penny rate in the Isle of Wight county is just over £130,000, and that is why we can do so little.
260 We have appointed an outstanding entrepreneur, Mr. Alan Curtis—I am sure the Government will approve of that—to help promote the island and seek new investment, but it is an uphill struggle. I am conscious of the fact that when I go abroad few people know about the Isle of Wight. I am always hearing about the Isle of Man and Ireland, but the products of the Isle of Wight receive little publicity.
For those reasons, on 13 September we submitted a detailed case to the Department of Industry asking for assisted area status. We gave our current unemployment figures and our woeful predictions for the future. I can now bring the Minister up to date. As at mid-November, the percentage of unemployed people on the Isle of Wight was 14.9. That was taken on the new basis. The average for the United Kingdom is 13 per cent. There were 4,520 males and 1,724 women out of work. That figure is, regrettably, substantially higher today.
A report made by one of our officers to the appropriate committee the other day said that it was difficult to estimate what the level of unemployment would have been but for the change in the method of counting, but it could have been an additional 250 to 300.
The rise in unemployment would have been greater but for the fall in the number of young people claiming benefit as a result of an increase of 70 in the number of participants in the youth opportunities programme. There are 666 taking part compared with 586 in 1981. That conceals a further increase in adult unemployment.
The figures take no account of 80 redundancies at Temperature, 25 at Plessey, the closure of Thorn EMI, the closure of a construction company with the loss of 25 jobs and even the loss of 18 jobs at a local cinema. There have been 378 jobs lost since November. In Ryde male unemployment stands at 25½ per cent. In Ventnor it is 33.3 per cent. Those are rises of 9 per cent. and 13.2 per cent. respectively over the same period last year, taken on the old basis.
Those are startling figures. They will be higher today. By common consent, it is agreed that our case was well argued. We were therefore bitterly disappointed to hear the response of the Minister of State, Department of Industry on 12 November. What upset us most was the refusal even to see a delegation from the county council which I had the honour to lead. Some of the comments in the Minister's letter show how necessary is a personal presentation to back up our written report.
Severance by sea is a severe handicap to manufacturing industry and tourism. The cost of taking a car with passengers to the Isle of Wight in mid-season is £30 or more. Medium-sized lorries cost more than double that amount. When times are hard, these factors count heavily. Our problems are not simply cyclical. We do not derive much advantage from our claimed proximity to London and European markets when one considers the ferry costs. For the letter to state that assisted area status would give the island an overwhelming lead in the competition for new industrial investment and that it would be unfair to our Hampshire neighbours is poppycock. I put that point to representatives of Hampshire borough and district councils when they met at the House a few weeks ago. None feared that we would gain an unfair advantage if given financial help.
The great prize for us would be qualifying for EC loans and grants. We look with envy upon places such as Cardiff and Rhyl when there is a desperate need for up to date facilities at Cowes to retain the prestigious Admiral's Cup 261 and to provide an all-purpose leisure centre at Shanklin. Cowes is in trouble. I have been visited by many people connected with the yachting industry and also by traders who want to see facilities improved. We want to remain the premier yachting port of the world. We fear, however, that the Admiral's Cup, which is of great importance, will be lost to us if modern facilities are not provided.
Our sewerage system is a disgrace. This year, probably for the first time in living memory, East Cowes and West Cowes will even lose the chain ferry for up to two months. There is only one left. It is due for refit sometime in March. The islanders are resilient people. We shall fight back. Too many skilled men and women are now idle or travelling long distances to work on the mainland, some to Marconi and other places in Southampton. They are entitled to something better and nearer at hand. What future exists for about 17,000 school children mostly born and bred on the island? A shot in the arm from the Government could work wonders. It would encourage us to seek with even greater zeal our own solutions.
We cannot achieve what we seek on our own when the odds are stacked against us. The Ronson example is typical of our inability to attract new industry in the face of tempting offers from elsewhere. The Welsh Development Agency, for instance, carries advertisements week after week. At the county council meeting yesterday morning, I asked for and obtained unanimous all-party support for a resolution asking the Secretary of State, the Minister of State or the Under-Secretary of State to think again about the refusal to see a small, representative delegation. If, through this debate, I can obtain that concession, it will have been worthwhile.
§ The Under-Secretary of State for Industry (Mr. John MacGregor)I congratulate the hon. Member for Isle of Wight (Mr. Ross) on obtaining this opportunity to debate the economic problems of his constituency. I am grateful for the opportunity to respond to the points that he has made about assisted area status. I appreciate that the island has difficulties because of its location. I shall come to that later in my speech. I also recognise that its economic situation has deteriorated in the course of the world-wide recession, particularly with the loss of two of the largest manufacturing companies on the island.
One should not over-emphasise those difficulties relative to other parts of the country. The industrial structure of the island is now better balanced than it was in the 1950s when the economy was heavily dependent on Government contracts and when, for a short period, it was a development district attracting financial incentives.
The hon. Member has mentioned a number of the redundancies and closures that have taken place on the island. In the recession, companies are ensuring their longterm viability and competitiveness by rationalising their productive capacity. I accept that it is extremely distressing for those who lose their jobs, but to some extent it is part of the price that we are paying for failing to have been sufficiently competitive, adaptable and innovative overall as a nation in recent years, and before 1979. It is no good asking the world to stand still. We have to adapt now.
The Thorn-EMI closure is one aspect of this. I understand that the company has attributed the closure to 262 new technology requiring rationalisation of operations as well as falling demand, perhaps partly because of the changing technology and hence changing product demand, as well as the world recession.
The hon. Gentleman also referred to Ronson Products. I shall look into that matter and write to him about it. As I understand it, part of the reason for this has been that smokers have changed to cheaper and in some cases disposable lighters.
The world recession has hit the manufacturing sector particularly severely, and the island is at least fortunate in that it is less dependent on the manufacturing sector than many other parts of the United Kingdom.
That leads me to the hon. Gentleman's plea for assisted area status for the Isle of Wight. I know that in September he sent my right hon. Friend the Secretary of State a submission on behalf of the county council requesting assisted area status for the island, and the hon. Member has repeated that request this morning.
I think it would be helpful if—as I usually do on these occasions—I were briefly to remind the House of the statutory criteria against which decisions on assisted area status have to be taken. The Industry Act 1972 specifies that the Secretary of State, in designating an assisted area, shall have regard to
all the circumstances, actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies".In practice, this means that the rate of unemployment is a very important consideration, although it is not the only one. The nature of the industrial problems facing the area must also be considered, as must its location relative to the rest of the country. The sheer distance of some areas from resources and markets can be an important factor in an area's problems. The "traditional" assisted areas that are all remote from London and the South-East clearly demonstrate this point.inally, we must have regard to
the objectives of regional policies",which can be effective only by attracting investment to the areas of greatest need, a point that should be emphasised. When we came to office, 44 per cent. of the working population was in assisted areas. The aid was being spread too thin and was clearly proving ineffective. We therefore introduced a programme of phased reductions in the assisted area coverage, to some 27 per cent. now.As the hon. Member will know, the final phase was effective from August of this year. Having corrected these anomalies, we attach great importance to the stability of the programme. My right hon. Friend the Secretary of State made it clear to the House in his statement on the assisted areas review that we undertook this summer that there will be no further changes in the assisted areas during the lifetime of this Parliament except in the most exceptional circumstances.
It is in the light of these factors that we must consider the specific question of assisted area status for the Isle of Wight. I know that the hon. Member mentioned individual towns in his constituency, but he will know for reasons that we have frequently spelt out—as we have all Governments—that travel-to-work areas are the basis for assisted area status.
I accept that the island's unemployment level continues to rise, but this is a reflection of the problems facing the whole of the country in the face of the world-wide 263 recession. Britain's particular problems of a general decline in competitiveness over many years has made it so much more difficult to combat the recession.
Nevertheless, as the county council recognised in its submission, the island's average unemployment rate has remained at or around the national average for the past three years. I am aware that in the winter months it is usually above the United Kingdom average, as it is now. However, in the summer months it is below that average rate, as one would expect from a county which, as the hon. Gentleman has fairly said, is considerably dependent on tourism. However, it is significant that even now in December the provisional unemployment figure of 14.9 per cent. is well below the intermediate area average—intermediate area status is the lowest level of assisted area status—which stands at 15.8 per cent., on the same basis as the 14.9 per cent.
As I have said, unemployment is not the only factor. Location is another important consideration, and one on which the hon. Gentleman focused some of his comments tonight. The Isle of Wight is in a quite different position from any of the current assisted areas. I accept that severance by sea causes particular problems and affects travelling and transportation costs. However, the degree of isolation and the additional costs involved are comparable with many other non-assisted areas of Britain. Therefore, one must take into account other factors such as the relative level of unemployment.
We must also consider the nature of the island's problems. An important question is whether the area is undergoing a difficult period mainly as a result of short-term recessional problems, or whether it is undergoing a profound structural change. That is always the most difficult question to answer, and I have often said that to some extent it is more an art than a science. However, in my view, the island's problem is primarily recessional. I do not see it as a problem on the scale or nature of those faced by the assisted areas which now have development or special development area status.
Finally, it is necessary to put the question of assisted area status in the regional and national context. At a time when recessional unemployment is particularly high, and when parts of the West Midlands are suffering unemployment rates far higher than those of the Isle of Wight, higher even than those of some assisted areas, the problems of the island are not unique. I need hardly remind the House that unemployment in Telford new town now stands at 19.7 per cent., in Wolverhampton at 16.9 per cent. and in Birmingham at 16.2 per cent. Yet we have resisted the idea of assisted area status for those travel-to-work areas.
In the national context, it is important for the hon. Gentleman and his county council to consider what I have sometimes described as the domino effect. I know that in the submission that I have here the county council has stated that Isle of Wight rates
although marginally below the average for Assisted Areas at present, are within the range for such areas.It went on to say later:The small size of the Isle of Wight would not dilute Government Assisted Area Policy and its uniqueness as an offshore Island county would not create a precedent for designating other areas.I can assure the hon. Gentleman that, having received many deputations from other parts of Britain, there are many other non-assisted areas which would plead special reasons for their being considered to be assisted. I do not 264 think that they would accept that the small size of the Isle of Wight would in any sense prevent them from claiming assisted area status if it were granted to the Isle of Wight. Given the relative levels of unemployment, the hon. Gentleman must accept that many other assisted areas would claim that they should achieve such a status, too. At the very least, it is questionable whether as a result of that the Isle of Wight would be better off.Therefore, I am clear about the conclusion that I must draw on the question of assisted area status for the Isle of Wight. I fully accept that the island is suffering from the current recession, but in national terms the island's problems are well down the league table. The traditional assisted areas are suffering from far higher levels of unemployment. In addition, they have on the whole more serious locational problems than the Isle of Wight. I must have regard to the effectiveness of regional policy throughout the areas of greatest need and, therefore, I am not persuaded that the granting of assisted area status to the Isle of Wight would help the county in relative terms. On the other hand, it would undermine the effectiveness and concentration of regional policy on the areas of greatest need.
For those reasons, as my hon. Friend the Minister of State made clear in his letter to the hon. Gentleman on 12 November, from which the hon. Gentleman has quoted, we cannot agree to the Isle of Wight becoming an assisted area at present unless there is clear evidence of persistent and long-term structural decline leading to a much higher degree of permanent unemployment relative to other parts of the country. I do not believe that that evidence is present at the moment.
As I said, my right hon. Friend the Secretary of State made it clear when he announced the last review of assisted area status in the summer that we believed that it was important not to make further major changes in assisted area status or regional policy in the lifetime of this Parliament because of industry's need for continuity and stability in long-term planning. It would not be fruitful to meet a delegation at this time.
The hon. Gentleman quoted a sentence from my hon. Friend the Minister of State's letter to him about areas with comparable circumstances claiming assisted area status. The hon. Gentleman referred to Hampshire. That is not the best analogy. We were thinking of other travel-to-work areas with levels of unemployment and locational circumstances similar to those of the Isle of Wight.
The rejection of the island's case for assisted area status should not be regarded as a crucial element in the Government's policy. Often by overemphasis on assisted area status other aspects of assistance are overlooked. The Government have taken various steps to assist industry from which the island should benefit.
The hon. Gentleman mentioned tourism. In August the Secretary of State for Trade announced that the selective financial assistance for tourism, operated by the English tourist board under section 4 of the Development of Tourism Act, would no longer be confined to assisted areas. The funds may now be used to generate tourism investment wherever the best projects exist. I am delighted to say that the island has been quick to reap the benefits of this change. Indeed, the first grant to be made outside an assisted area was a grant of £30,000 towards improvements at the Sandringham hotel in Sandown. The island has also benefited from the grant in the current 265 financial year or £73,000 to the Southern tourist board for promotion and publicity of the tourist attractions of the area.
I should also remind the hon. Gentleman and the county of the extent of industrial support available to firms on the island. This takes the form of aid under section 8 of the Industrial Development Act to assist with new investment in the national interest that would not otherwise take place. Since May 1979, there have been six offers of assistance to companies on the island. In addition, grants are available under he support for Innovation schemes on which the Government have committed £140 million. Already six firms on the island have benefited from the schemes with about £200,000 of assistance.
There is often a lack of awareness of such schemes and of the assistance available to small firms. I hope that the hon. Gentleman will do all that he can to promote such schemes on the island and to ensure as big a take-up as possible.
I appreciate the fact that the hon. Gentleman's immediate anxiety must be for those of his constituents who are currently unemployed. In order to provide support and training for those people, the Government have introduced a variety of employment schemes. They include the youth opportunities programme under which 266 666 people on the island are assisted; work experience in employers' premises under which 342 are assisted; community projects under which 56 are assisted; the youth training scheme under which 149 are assisted; short training courses, where the number is 119; and the young workers scheme under which 347 are assisted and which is important for small firms. I could go on. These schemes should show the extent of Government support, particularly to the young. They should help to ensure that the island has a work force that is better placed to take advantage of the opportunities when the economic upturn comes.
I am sorry that I have not been able to accept the hon. Gentleman's arguments for assisted area status which he has so forcefully presented. I am sure that he will understand that the Government must have regard to the areas of greatest need. I hope that the hon. Gentleman will recognise the many other ways in which the Government are assisting, only some of which I have been able to mention, including the provision of premises for small firms through the Development Commission. I hope that the hon. Gentleman will do all that he can to draw the other schemes to the attention of firms in his constituency to help solve the problems to which he has rightly drawn attention.
§ Question put and agreed to.
§ Adjourned accordingly at six minutes to Two o'clock.