HC Deb 22 February 1984 vol 54 cc949-56

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

12.19 am
Mr. Robert Parry (Liverpool, Riverside)

I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to raise the subject of the loss of jobs at the British American Tobacco factory at Liverpool in this Adjournment debate, and to raise also the issue of further unemployment and job losses in Liverpool and on Merseyside generally. There may be many Members who are not very much concerned with unemployment in areas such as Merseyside. I was surprised this evening when I saw a number of hon. Members on both sides of the Chamber who appeared to have been enjoying themselves at dinner. They were wearing bow ties and at one time I thought that the House was being invaded by penguins.

I had the good fortune last April to initiate a similar debate on mass unemployment in Liverpool. Since that debate we have, unfortunately, seen large job losses at various factories in the area. At the end of last year we saw the closure of the Huntley and Palmer biscuit factory at Knowsley, that company now being part of the Nabisco group. There was the loss of 2,000 jobs at the United Biscuits factory, which was formerly Crawfords.

In my constituency, the BAT company has announced the axing of 1,100 jobs. Like most of the multinational and transnational companies that have pulled out of Merseyside over the past few years, its industrial relations and productivity records have been good. It has that in common with other firms that were in Liverpool for well over 100 years, such as Tate and Lyle and Dunlop.

This latest blow to the workers in the tobacco industry is due solely to the greed of companies that wish to maximise their profits at the expense of the work force. It has made large profits for the industry over many decades and now it is being thrown onto the scrap heap and on the dole with no chance of finding alternative employment.

BAT is largely an exporting company and 75 per cent. of its products were exported last year. Far from sales falling, output has almost doubled. Between 1977 and 1983, sales have risen from 12.9 billion cigarettes to 25.5 billion. Contrary to press reports, BAT (UK Exports) made a profit of £25 million last year. That profit was preceded by profits of £27.1 million in 1982 and £29.8 million in 1981. This is a subsidiary of BAT Industries, which is the world's largest transnational tobacco company. Last year it made the massive profit of £856 million. As I said in my application under Standing Order No. 10, this is an example of the brutal, vicious and dirty face of the capitalism of multinationals and transnationals, which use markets and workers to make profits. When they feel that it is in their interests to move out of a city or region, they will move. The doubling of production from 1979 to 1983 was achieved by a labour force that has remained constant, yet the company now intends to make 70 per cent. of the work force unemployed over the next 15 months. There will also be job losses at the Southampton factory.

I raised these issues last week with the chairman of BAC, who listened to my representations and those of my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) and responded by saying that the company must look after the interests of its shareholders. This is the uncaring and cold face of capitalism. For many years that has been the blight of Merseyside and other regions. The Order Paper contains two early-day motions—No. 463, tabled by me and supported by 117 right hon. and hon. Members and No. 443, supported by 37 hon. Members.

I ask the Leader of the House whether he will arrange for an urgent debate on the future of the tobacco industry. In spite of the anti-smoking lobby in the House, many hon. Members recognise the large number of people who are directly employed by that industry. According to an official estimate, 30,000 people, including 4,500 in Northern Ireland, are employed in the tobacco industry. Most of the factories are located in areas of high unemployment such as Glasgow, Newcastle, south Wales, Liverpool and Northern Ireland. Two reports by the economic consultants, PEIDA, show clearly that for every job in the industry, there are six or seven dependent jobs in wholesaling, retailing, supply and services. In 1980, 264,000 jobs were involved.

I hope the Under-Secretary of State will remind his right hon. Friend the Chancellor of the Exchequer, when writing his Budget, not to kill the goose that lays the golden eggs. In 1983, almost £3¼ billion was raised in the excise duty on cigarettes and almost £80 million on pipe tobacco. Some of the few pleasures left to the working man is his pint of beer, his smoke or his pipe of tobacco. The Government must be aware of the law of diminishing returns.

Earlier, we were debating the important subject of the young unemployed. With the loss of all these jobs, thousands more young people will be thrown on the dole. Already in certain parts of Merseyside youth unemployment is between 80 per cent. and 90 per cent. Thousands of young people are roaming the streets, getting into trouble through despair and frustration. In one square mile of my constituency where the BAT factory is situated more than 5,000 jobs have been lost in less than two years. One company, Tillitsons, next to the BAT factory closed a couple of years ago with the loss of 500 jobs. The refinery, Tate and Lyle, closed with a loss of almost 2,000 jobs. The CBS engineering company closed with a loss of about 400 jobs. On Merseyside, since 1979 more than 30,000 jobs have disappeared. Those figures are horrendous in anyone's imagination.

The inner city of Liverpool is slowly dying on it feet while the Government look on and take no part, doing nothing to alleviate the loss of jobs. I am not referring to the Government's gimmicks or cosmetic measures, although I presume that the Under-Secretary of State will raise those matters when replying. The international garden festival, the Merseyside Development Corporation or the enterprise zone will produce very few jobs. I do not believe that the freeport will provide many jobs. It may stop the loss of jobs from the docklands area. The Government's policies and measures have done nothing to staunch the massive loss of jobs from Liverpool.

The heart of my constituency is being ripped out, and the community is being slowly destroyed. I ask the Under-Secretary of State to bring this message to his right hon. Friend the Secretary of State and to note the social consequences of mass unemployment in inner areas of our cities. Young and old people have died. Some have committed suicide or suffered illness due to despair and worry at their unemployment. Just a couple of weeks ago, an 18-year-old man took his life—this was reported in the local newspaper, the Liverpool Echo — leaving a message that he was doing so because he had no hope of ever getting a job. We have seen broken marriages, young people driven to drink, drugs or solvent abuse, and crime as a result of high unemployment. The former Home Secretary admitted in the House that rising crime was linked with high unemployment.

The tragedy of BAT is that 60 per cent. of the jobs involved are done by women. Some of the women are single parents. I believe that most of the women are working to keep a husband who has already lost his job. The women are the only breadwinners.

In 1981 my constituency had the highest male unemployment rate, according to the official census, of 37.6 per cent. The projected job losses at BAT and the 700 job losses that have already been announced by the Scotts bakery in Bootle, the neighbouring constituency to mine, will, I guess, increase unemployment to 40 per cent. In the northern part of Liverpool I would say that the unemployment rate is between 55 per cent. and 60 per cent.

When I raised the subject of BAT under Standing Order No. 10 last week, the hon. Member for Weston-super-Mare (Mr. Wiggin) suggested that I was abusing the procedures of the House by raising local questions. I understand that the unemployment rate in his constituency is about 8 per cent. or 9 per cent. Anyone who knows anything about the workings of the House will be aware that the hon. Gentleman is a silly twit to make such silly remarks about matters as serious as mass unemployment.

The Toxteth riots in 1981 were sparked off partly because of high unemployment, particularly among young people. If unemployment continues to rise there will be much more social unrest on our streets. I hope that the Minister will not use empty rhetoric or make excuses as to why the Government cannot intervene in commercial decisions taken by companies. I hope that he will tell his right hon. Friends in the Cabinet, and the Prime Minister, whom I hope to meet in the near future to discuss BAT, that Liverpool has had enough erosion of its industrial base and dismantling of its manufacturing capacity. Will he tell the Government that enough is enough is enough?

12.33 am
Mr. Eddie Loyden (Liverpool, Garston)

I am grateful for the opportunity given by my hon. Friend the Member for Liverpool, Riverside (Mr. Parry) for me to support him in this short debate about BAT.

Many hon. Members may think that they have heard enough about Liverpool and Merseyside. I want the Minister to know that, following the general election in June last year, Labour Members gave a pledge that Merseyside unemployment would be on the agenda of the House while that unemployment remained at its present level. None of the Government's attempts to disguise or ignore the problem will deter Labour Members representing Liverpool from raising the subject of mass unemployment on Merseyside and many of the other industrial conurbations. Mr. Deputy Speaker, you have sat through a number of Adjournment debates during which that subject has been raised.

My hon. Friend has brought to the attention of the House the fact that there will be 1,100 jobs lost at the British American Tobacco company which will be in addition to the already long list of redundancies and closures on Merseyside.

BAT established itself in Liverpool at the turn of the century, along with Tate and Lyle, Distillers and a whole string of factories that lined Commercial and Vauxhall roads—the area in which I and my hon. Friend were born. Those factories were the lifeblood of the local community. All but the BAT factory have gone, and with them every job. BAT is all that remains in that vast industrial conurbation. Now we are told that BAT has declared 1,100 redundancies. As those factories have made their exodus from Merseyside, there has been a virtual collapse of private sector industry, and they have left behind desolation and despair among the local community.

Almost everyone in Merseyside is now aware that the Government intend to do absolutely nothing about the domino effect that factory closures and redundancies have had on the area, Liverpool in particular. The effect on young people and families is not understood by the Government. Otherwise they would be adopting an entirely different attitude towards unemployment. That problem has now been with us for many years, yet the same old record is played — that we must be more competitive, compete effectively in world markets, and so on. While that has happened, whole cities have lost their industrial base and become industrial wastelands.

It is not my intention to scaremonger, but we have now reached the point where the situation on Meseyside is akin to a time bomb. Not only are we caught in the crossfire of unemployment and attacks on the local authority, thus depriving it of resources to ameliorate some of the problems that exist, but members of that authority will be charged as criminals for providing 1,000 jobs and building 1,000 houses, when there are 20,000 on the housing waiting list. That picture can now be painted of Merseyside which, since the Government have been in power, has lost 34,000 jobs. That is the Tory Government's record. That is the effect they have had on Liverpool's industry and jobs.

So long as that continues, every Member of Parliament from the area will raise Liverpool's unemployment, and the desolation and decline of its industry. In the near future, the same will happen in other parts of the country.

It is only fair to warn the Government that the problems of Liverpool have now reached such proportions that they must act before something desperate happens.

12.38 am
The Under-Secretary of State for Trade and Industry (Mr. David Trippier)

Let me say at once, as the hon. Members for Liverpool, Riverside (Mr. Parry) and for Liverpool, Garston (Mr. Loyden) know, that I am very much aware of the several difficulties which burden the north-west, and paricularly Liverpool. I too was saddened to hear of BAT's decision to reduce so considerably its work force at its Commercial road and Seaview road factories.

But most of the principal manufacturers of cigarettes, cigars and smoking tobacco in this country are currently undergoing major rationalisation measures. As the House is aware, Carreras Rothman announced only a few weeks ago its intention to cease cigarette production at its Basildon factory. Imperial Tobacco is shedding jobs at Glasgow, Stirling and Bristol, and Gallaher is to close its factory at Middleton near Manchester.

The basic factor behind all those job losses is, of course, declining output. Between 1978, when BAT entered the United Kingdom market in earnest for the first time, and early 1984 when the company announced its intention to withdraw from direct United Kingdom sales, the United Kingdom market declined by 20 per cent. With the benefit of hindsight, it is now clear that BAT could hardly have chosen a less auspicious moment to try to break into this already extremely competitive market. Nevertheless, the company achieved a creditable initial market share, at the expense of other United Kingdom manufacturers.

However, fierce price competition continues to be a prime feature of the United Kingdom cigarette market. I understand that when BAT announced its plans to withdraw from direct United Kingdom sales, it calculated its accumulated trading loss in the United Kingdom market as over £53 million.

Clearly, no company can sensibly continue to operate in a market where it does not foresee profitability within a reasonable time. That essentially is a commercial decision that only BAT could make. The Government would not wish to intervene in such circumstances.

In referring to the decline in the United Kingdom market for tobacco products, I should say that in the decade to 1982 the proportion of female smokers fell by about one fifth and that of male smokers by about one quarter. That continuing long-term trend is reflected in many other developed countries.

Despite those constraints on its United Kingdom and indeed on some of its export sales also, the United Kingdom tobacco industry remains remarkably successful. Job losses in the United Kingdom would have been far more serious than has been the case, if it had not been for the companies' ability to meet and beat foreign competition, both at home and abroad. United Kingdom producers supply a highly creditable 98 per cent. of the home market for cigarettes. As for exports, the United Kingdom was in 1982 the world's third largest exporter of cigarettes and exported about one third by volume of its production.

That excellent record has not, however, been achieved easily. In order to maintain their position in their chosen markets, the companies concerned have had to become and remain among the most efficient cigarette producers in the world. Increases in productivity over recent years have been dramatic. The industry has a good record of innovation and of keeping up with the latest technological developments. It is essential that the companies should continue to do that. Failure in that respect would inevitably result in still greater acceleration of job losses.

I stress that the industry has been highly efficient. Nevertheless, with shrinking markets and the necessity to remain competitive, it is faced with an extremely difficult situation, which can be met only by continued improvements in productivity, with the regrettable consequence of a reduced labour force.

Mr. Parry


Mr. Trippier

With great respect, I have little time, because the hon. Gentleman and I allowed the hon. Member for Garston to speak.

Our tobacco industry has given sterling service in providing much-needed employment in areas of particularly high unemployment such as Newcastle, Northern Ireland, south Wales and indeed Merseyside. It still does so. It is to be hoped that BAT's efforts to maintain some production at its Liverpool plant will be successful.

To say that the Government simply stand aside in the face of Merseyside's economic problems is obvious nonsense. The Government provide substantial support for local businesses, but companies must be competitive and able to sell their products. That is the only basis for long-term prosperity. My own Department provides a wide range of assistance to companies for the introduction of new products, to help introduce new techniques and support for investment, especially in manufacturing industry. With the opening of the new Department of Trade and Industry office in Liverpool, liaison between the Department and local companies will be further improved. In the Merseyside special development area, assistance from the Department through regional development grant and selective financial assistance has averaged about £110 million a year over each of the past three years.

Overall, the Government's support for Merseyside is huge; over the past three years the Department of the Environment has supported capital expenditure by local authorities and other bodies totalling £650 million. Expenditure this year alone will be £250 million, of which £40 million has been found for special initiatives on Merseyside. A further £380 million is available through the rate support grant.

Other Departments make substantial contributions, and £134 million has been made available to the Mersey Docks and Harbour Company under the Ports (Financial Assistance) Act 1981. This assistance will help to streamline the company and its operations. 1983 saw a profit for the first time since the mid-1970s. Industrial relations have improved and the port should be able to look forward with more confidence. This should be further enhanced with the designation of Liverpool as one of the freeport sites, the announcement of which I know has been welcomed on Merseyside.

In the current year the youth training scheme will be making available places for 17,500 young people at a cost of £44 million and the community programme aims to provide 6,600 temporary jobs for the longer-term unemployed, costing about £20 million. With adult retraining schemes, young workers schemes and the costs of running the MSC's activities is included expenditure in Merseyside through Department of Employment programmes, which will run to about £110 million in 1983–84. This is the highest concentration of aid to any sub-region in the country. It is not cosmetic.

Mr. Parry

How many jobs have been saved?

Mr. Trippier

The Government are, of course, extremely concerned about the loss of jobs on Merseyside. That is why we have ensured that the area has continued to benefit from special development area status, with the assistance that it brings in attracting and promoting new industry and in the creation of new jobs.

In addition, hon. Members will be aware of the announcement on 18 January that the European Community is to provide the United Kingdom with £89 million of aid from a second series of measures under the non-quota section of the European regional development fund. Liverpool, as a shipbuilding closure area, will be eligible for that aid. This represents a valuable contribution by the Community towards overcoming the worst effects of the decline in the steel, shipbuilding and textile areas. The aid will be available over a five-year period once the Commission has approved the special programmes, showing how these industries can be rationalised, which member states are required by the regulations to produce.

Mr. Parry

On a point of order, Mr. Deputy Speaker. I asked about jobs on Merseyside and the tobacco industry, not about the EEC.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

This is an adjournment debate. That is not a point of order.

Mr. Trippier

The hon. Gentleman should listen more carefully to what I am saying. I referred specifically to the fact that Liverpool, as a shipbuilding closure area, will be eligible for aid from the EC.

Mr. Michael Cocks (Bristol, South)


Mr. Trippier

The right hon. Gentleman says, "Marvellous." The news has, in fact, been widely welcomed on Merseyside. I am not aware that the right hon. Gentleman represents a constituency in that area.

We are seriously concerned that regional industrial incentives may in the past have gone to projects that merely shuffled jobs around the country. That is not the answer. It is also true that, whereas in the past a target for regional incentives was the large internationally mobile project, there is now less of this type of investment available.

The economy of Merseyside is sharing in this improvement, notwithstanding the announcement by BAT. Plessey Telecommunications Ltd. is investing significantly at its Edge Lane factory, and is also heavily involved in establishing the adjoining Wavertree technology park. Capital investment also being undertaken by Valor Newhome Ltd. at Prescot, Viota Foods at Bromborough and Lever Brothers at Port Sunlight will total £82 million. These are jobs. Vauxhall at Ellesmere Port will introduce a second shift in April. The Arrowcroft Group, in partnership with the Merseyside Devlopment Coporation, plans to build a major residential, commercial and leisure complex on the site of the disused Albert dock. There are—

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 eleven minutes to One o'clock