§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
§ 11.2 pm
§ Mr. Keith Raffan (Delyn)
The announcement by Courtaulds on 19 April that it proposed to close the Greenfield plant was a devastating blow to my constituency. It marked a further stage in the 15-year-long erosion of the area's manufacturing base, which has produced what can be described without exaggeration as a blitzed local economy. The lastest proposal will add a further 595 redundancies to the 200 announced by Courtaulds last autumn, and the knock-on effect on local businesses and subcontractors will add at least a further 100.
When I met Sir Christopher Hogg, chairman of Courtaulds, earlier this week he informed me that the future of the Deeside mill—the one remaining Courtaulds plant in my constituency, which employs 164 people—was "hanging by a thread." In effect, therefore, we are talking not about a possible 600 redundancies in my constituency but about 1,000, and probably considerably more.
527 The most hard hit town is Holywell. If these redundancies take place, they will add 30 per cent. to existing unemployment in a town in which the ratio of unemployed people to vacancies is already 40 to one.
Since 1973, 5,084 Courtaulds jobs have been lost in my constituency. In addition, 2,200 of my constituents lost their jobs in British Steel at Shotton in 1980. The total number of jobs lost in the past 12 years is 7,300—a quarter of the jobs in my constituency, out of a total labour force of 28,500.
The severity of the problems that Delyn faces can be highlighted by comparison with Wrexham, which also faces the closure of its Courtaulds plant. Wrexham is much better able to absorb the blow. It is a bigger borough, has greater resources, a more longstanding experience in attracting industry and a more favourable geographical location. Last year, 1,500 new jobs were created in Wrexham with the arrival of Sharp, Brother, Laura Ashley and Metal Box.
I think that I have said enough to illustrate the size and dimension of the problems facing my constituency. These problems have been recognised already by the Government with the designation of the Delyn enterprise zone and with Delyn's retention of the highest level of development area status. The feeling before Courtaulds' announcement was that the enterprise zone was about to take off—that substantial financial support that had been received from the Government was about to contrbute to a significant improvement in employment opportunities. Just as we were about to take two steps forward, we have suddenly been thrust four steps back. Now, more needs to be done urgently.
I should declare an interest as a shareholder in Courtaulds since last week. I own one share which I bought for £1.87. That is the only share that I own in a British company. I bought that share because I was fed up with meeting senior management at Courtaulds who always said to me, "We have to look after the interests of our shareholders." I thought that when I met the chairman earlier this week, this would enable me to say to him, "I totally agree with you, Sir Christopher. You have to look after the interests of your shareholders. I am one of them."
The first thing that I ask the Government to do, through the Under-Secretary of State, is to put pressure on Courtaulds. If it will not reverse the proposed closure and phase in the redundancies, it must at least recognise its social responsibilities to Delyn. Courtaulds must discharge its moral obligations to the community. For more than 50 years, the company has dominated the local labour supply, and so had a distorting effect on the local economy. This maginifies the impact of the latest redundancies.
The local labour force, for relatively low rates of pay, has given great service to the company. Indeed, the deputy chairman of Courtaulds, Dr. Wooding, described the work force to me last week as first-class, hard-working, highly motivated and extremely flexible. Dr. Wooding went further, and said that he was prepared personally to recommend the work force to any company thinking of coming into the area.
Courtaulds cannot just up and walk away from a work force and a community that have served it so well. The failure at Greenfield has been the failure not of the work force but of senior, London-based management. The work force at Greenfield has exceeded its production targets. It 528 has increased its share of the western European market for viscose fibre. Yet the London-based senior management have chosen to close Greenfield in preference to Grimsby, although it is Grimsby which has supplied predominantly the market that has been lost—the so-called deep sea or far east market.
As the Prime Minister said in Clwyd last Friday,Where you have a factory dependent on one product, then I think management does have a duty to develop different products. Products do change. We do need new ones. It ought to be part of the work of successful management.Indeed, it should be. Any one can asset strip. Management, if it is to be described as successful, has to do more, much more, than that.
As my right hon. Friend the Secretary of State for Wales said on 8 Marchthere is a distressing tendency appearing among some companies to believe that a great industrial group should with the help of substantial Government contracts"——and I might add, Government grants—prove itself a successful financial institution rather than risk its resources in innovative research and development or the agressive marketing of new products.Courtaulds' management has conceded—indeed, Sir Christopher did so personally to me—that it saw long ago what was coming. The company should and could have diversified. If the Japanese had been in charge at Greenfield, they would have done so.
The Greenfield site is ideal for diversification. It has a superb work force and an endless supply of cheap water, and it generates its own steam and electricity. The No. 1 site, which is currently derelict, could be cleared in six months, and so could be let to another company which could share with Courtaulds the overheads on the site.
There has been no such imaginative approach by Courtaulds. Like GEC, the company has been content to shed labour while increasing its cash mountain. Indeed, Courtaulds made £128 million profit last year. Despite that massive profit, it is now ready to shed 800 employees at Greenfield, with a loss to the Treasury and a cost to the taxpayer of £7,000 per employee a year.
It would be wrong and immoral if the taxpayer were expected to pick up the tab for these redundancies while the shareholder got off scot free probably with an increased dividend. That would indeed be the totally unacceptable face of capitalism.
Courtaulds senior management must accept the diminution of their profits and the shareholders must be prepared to give up an extra dividend so that the company can discharge its obligations to the people of Delyn. My constituency has yet to see any evidence that Courtaulds recognises its responsibility and accepts its obligations. We have yet to have evidence of its good faith.
Dr. Wooding, the deputy chairman, is to visit Delyn shortly for detailed discussions with the chief executive and myself. We look for and expect during those meetings a change in attitude from the company. We have many points to raise with the deputy chairman. The first relates to the future of the No. 1 site, the transfer of which I helped to instigate earlier this year. Negotiations are currently running into some difficulty. It is important that if vital infrastructure is not to be transferred to the borough council its continued use must be guaranteed.
The chief executive and I want general discussions about the No. 2 site. If the redundancies are to go ahead, we should like first option on that site and Dr. Wooding has indicated to us that the company will give the borough 529 council first option. The third point is that the site must be left clean. Greenfield has been a chemical site for 50 years. There is extensive and serious contamination of both land and buildings. They must be cleared of asbestos and toxic waste. There is a 10-acre licensed tip bordering the site and the Dee estuary. To maintain it let alone to clear it, will cost a great deal. It is a potential hazard. If it is not properly maintained, there is a danger of toxic waste seeping into the Dee estuary.
Courtaulds must pay for the maintenance or clearance of that tip. The shareholder not the taxpayer must bear that burden. The company cannot walk away and abdicate responsibility as it did at Castle works in 1977. It left a burning toxic tip there which Dr. Wooding described last week as "frightening." A NATO-sponsored study tour of environmental scientists examining serious contamination problems visited the tip last year. When a Dutch member of the group was told that it was a Courtaulds tip he asked whether Courtaulds was a common Welsh name. When he was told that it was not, the penny suddenly dropped and he said, "You do not mean The Courtaulds, the distinguished British company?" He could not believe that the company had been able to walk away from such a serious contamination problem. He said that no company in the Netherlands would have been allowed to do so.
The borough council is having to undertake a £50,000 survey simply to find out how to deal with the tip. The borough surveyor estimates that it will cost over £1 million to clear it. That cannot be allowed to happen again. Courtaulds must leave a clean site at Greenfield.
If the closure goes ahead, Courtaulds has said that it intends to sell plant from the site. In 1979–81 it undertook a £9 million modernisation for which it received I believe—I should be grateful if my hon. Friend will confirm this—£3 million in regional development grant. That was to create the most technologically advanced viscose fibre plant in the world.
Again, it would be unfair and immoral if that plant, partly paid for by the taxpayer, were sold to benefit the shareholders. A proportion of the proceeds must go to the Government for the benefit of the community and to bring jobs to my constituency.
As I said earlier, Courtaulds has dominated the local labour market for 50 years. We look to the company to help bring new companies and jobs to the area. I emphasise that we want it to do that through the Delyn enterprise agency and not through the Deeside enterprise trust which concentrates on the Deeside-Shotton area. We should like to see the company emulate the good example of Pilkingtons in St. Helens by seconding a high flier with two full-time assistants from the company to help run the agency. We look to the company for a substantial financial contribution towards the agency's running costs. One month's losses of £500,000 would be a good figure from which to work upwards.
I look to my hon. Friend the Minister for an assurance that the Government will exert maximum pressure on Courtaulds to ensure that it discharges its obligations and to emphasise to it that it cannot and will not be allowed to escape from them. The proposed closure is the result not of a failure of the work force but of the senior managenemt, and it must be paid for by shareholders not taxpayers.
On direct Government help, two reports have been produced—"A Development Strategy for Courtaulds, Greenfield Plant" by Delyn borough council and "Action 530 Response to Major Textile Job Losses" by Clwyd county council. I pay tribute to Delyn borough council on their excellent document, which it has produced so speedily. It gives a good background to the situation and proposes specific measures which focus on Delyn's needs. By contrast, the county council document is sadly disappointing. It focuses almost exclusively on Wrexham and Deeside industrial park. Indeed, there are only two passing references to Delyn in a 19 page report, and the first of them is inaccurate. The introduction says that the report:has been prepared in consultation with Delyn borough council".No such consultation took place. The chief executive of Delyn has yet to receive a copy of the document. When I met the chief executive of Clwyd county council last week, he assured me that the council would give every possible backup to the borough council. I hope that the liaison will improve markedly in the next few weeks. The county's report is totally inadequate. It is no answer to Delyn's needs and shows no recognition of the intense local impact of the unemployment problem that has been created, or of the particular needs of Holywell and Flint.
Delyn looks to Clwyd county council not for a second Dee crossing costing £25 million, which the county is pushing, but for something more modest and more practical—a coherent integrated road strategy for the area, to create a link between the A55 and the A548 coast road and an acceleration of improvements to the A548. The borough council has pressed for some time for such an integrated road network to be drawn up. Unfortunately, the county has yet to respond.
Delyn council's strategy is more hard-headed and economically realistic than the county's. It focuses directly on Delyn. Its proposals for No.1 site alone:would directly create development potential for up to 604 jobs at a minute fraction of the cost of more general initiatives such as the dualling of the A55".It outlines where substantial public investment, where Government finance is needed—for demolition and site clearance, for the renewal and upgrading of existing service infrastructure, for the refurbishment of retained buildings and for the accelerated improvement of road communications, including improved access to No. 2 site from the A548, should the council take it over.
Substantial public investment is necessary to prime the pump, to ensure private investment for the redevelopment of the site. One other important measure is necessary to ensure private investment—extension of the enterprise zone to include the Courtaulds Greenfield site. The financial advantages of an enterprise zone, especially the 100 per cent. capital allowance for new buildings, is essential to attract substantial private investment.
I ask my hon. Friend the Minister for an assurance that the Government's response to this serious situation will be based on Delyn's development strategy, not on the county's wholly inadequate one.
I have said enough to illustrate the seriousness of the situation. I look forward to my hon. Friend's reply. I hope that he will be able to show the Government's readiness to exert maximum pressure on Courtaulds to discharge its obligations and responsibilities to my constituency. I also hope that he will be able to show the willingness of the Welsh Office to respond favourably to applications from the borough council for direct financial help to my 531 constituency so that, together, we can give hope to the people I represent, especially those who, in Courtaulds words, are:a workforce second to none.
§ The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts)
It is characteristic of the concern of my hon. Friend the Member for Delyn (Mr. Raffan) for his constituents that he has secured this evening's debate on the important subject of the proposed closure of the Courtaulds plant at Greenfield, Clwyd, announced by the company on Friday 19 April. Of course, this announcement, coupled with the proposed closure of another Courtaulds plant at Wrexham, is a nasty blow to north-east Wales, to the work forces and their families.
Clwyd has a well-deserved reputation for resilience, but the loss of more than 1,000 jobs now is an unwelcome setback to the county's economic recovery. The community's dismay is not lessened by the fact that these closure announcements were made by an employer that has had a long association with the area.
Much that is good and hopeful has happened since that bleak Friday. On Monday 22 April my right hon. Friend the Secretary of State received a deputation from Delyn borough council led by my hon. Friend; and he has also met the hon. Member for Wrexham (Dr. Marek). On Friday last my right hon. Friend the Prime Minister met representatives of Clwyd county council, Delyn borough council and Wrexham Maelor borough council at the start of her visit to north-east Wales, and I had the honour of being with her on that occasion. Later in the day she met representatives of the Wrexham plant work force. She has also met my hon. Friend; and she will be meeting the hon. Member for Wrexham shortly. In the meantime, she has been active in other ways in this context. A senior Welsh Office official was also in north Wales last week, together with a representative from the Welsh Development Agency, to pursue discussions with the local authorities. I recount all this to show that the Government are totally aware of the situation and fully understand the different viewpoints of the bodies concerned and the different representations that are being made by different authorities. It would not be right for me to discuss the merits of the cases put forward tonight; suffice it to say that the cases advanced are receiving active consideration.
However, I am very pleased to be able to tell the House that, in response to a request from Delyn borough council, my right hon. Friend the Secretary of State has today approved an adjustment within the council's existing total capital expenditure allocation under which a larger amount—some £500,000—will receive urban aid support. The implication of this adjustment will be to ensure that Delyn can proceed this year with an industrial unit construction programme costing £3·7 million, which will create over 800 job opportunities within the enterprise zone.
I think that it is important to see these closures in their historical context and to make it absolutely clear that they are in no way consequential upon the Government's policies. Courtaulds has run down its operations in northeast Wales—and elsewhere—over many years. As my right hon. Friend reminded the House on 22 April, at column 610 of Hansard for that date, the Castle works at Flint was closed in 1977 with the loss of 1,500 jobs. There 532 have also been substantial reductions in employment at Greenfield and at Wrexham before the present closure decisions. There has also been a very substantial reduction in employment at the Deeside mill.
Of course we are very disappointed that these closures are likely to occur, not only because of the job losses that will result but because there was also a substantial investment of taxpayers' money in these plants. Regional development grant of £2.1 million and selective assistance of £0.7 million have been paid to Courtaulds for its modernisation programme at Greenfield and close to £2 million has been paid in grant at Wrexham. But I have to say to the House that it is not for the Government to try to second guess the commercial judgments that had to be made. Courtaulds—like any other company—has to consider the commercial realities of the market place in which it has to survive, and to make its decisions accordingly.
I know that Delyn borough council and my hon. Friend are making representations to Courtaulds both about the closures and the consequences—including the part that Courtaulds might play—and so are Wrexham borough council and the hon. Member for Wrexham. I very well understand my hon. Friend's concern about the future of the Greenfield site; and I know too of the discussions that have been taking place between the council and Courtaulds over the No. 1 site at Greenfield; discussions which were of course under way before the most recent closure decisions were announced. I am aware that some difficulties have arisen over the transaction on the No. 1 site, but I understand that Dr. Wooding, the deputy chairman of Courtaulds, intends to visit the area in the near future with a view to seeking a resolution of these problems.
I can assure my hon. Friend that we at the Welsh Office will be watching very carefully to see how Courtaulds responds to the representations that are being made to it. My right hon. Friend the Prime Minister has written to the chairman about the representations that were made to her in north-east Wales last Friday. My right hon. Friend the Secretary of State has already indicated to the chairman that he hopes that Courtaulds will respond positively to the proposals on future use and clearance of the land and to the suggestion that resources be put into the regeneration of the local communities, possibly, as my hon. Friend suggested, through the Delyn enterprise agency. I, too, would urge Courtaulds to do all that it can to assist and accommodate the requests that are being made, bearing in mind its long association with north-east Wales and the loyalty that has been shown to the company over a long period.
Against that background, it is right to look at north-east Wales to see what is being done. My hon. Friend is well aware that Shotton, Flint, Rhyl and Wrexham now have, and have had, the highest assisted area status and thus the highest possible level of regional industrial assistance. The Government's role has been that of a constant and continuing provider of financial incentives to development.
In recent years Clwyd has attained a high reputation for attracting inward investors and diversifying its economic base, It is notable that the last two major investment decisions by Japanese companies were to locate in Clwyd. The Sharp video recorder project and the Brother typewriter project are both at Wrexham. In addition, decisions to invest in Clwyd have been made by Metal 533 Box, Squibb Surgicare, F. W. Bender, Deeside Aluminium, British Tissues, Kelloggs, Continental Can, Optical Fibres, United Paper Mills, Kimberley Clark. Warwick Chemicals, Hoya and Laura Ashley.
All these developments, coupled with yesterday's announcement by Data Magnetic that it is to start Europe's first plant manufacturing thin-film computer disks on Deeside, point to an area that can look forward to the future with the confidence tht it will continue to attract companies in a wide range of new industries.
Since January 1983, there have been 32 acceptances of regional selective assistance in the Shotton, Flint and Rhyl travel-to-work areas, related to an investment of over £9 million, with 1,600 new jobs and 400 jobs safeguarded. In the same period, in the Wrexham travel-to-work area, there have been 33 acceptances of regional selective assistance, with just under 1,400 new jobs, 1,200 jobs safeguarded and an investment of £7 million. In total, this amounts to an investment by private companies in the two areas over the last two years of some £16 million, promising over 3,000 new jobs. This is no mean achievement.
The Welsh Development Agency has been particularly active in providing the infrastructure to enable industrial development to proceed in Clwyd, and its achievements are worth putting on record. Since 1979, the agency has completed 203 units totalling 1.3 million sq ft in the county. In 1983, 58 units were allocated. In 1984, a further 50 units were allocated. These allocations promised over 1,800 new jobs. Some 59 units are still available for letting.
When we look at this countywide activity on a travel to-work area basis we find that in the Shotton, Flint and Rhyl travel-to-work area 145 Welsh Development Agency advance factories have been completed since 1979. Twenty-eight units are still available for letting. In the Wrexham travel-to-work area, 57 WDA units have been completed since 1979. Twenty-five units are still available for letting.
Delyn is of course unique in north-east Wales in that it has the benefit of an enterprise zone. Since its designation in 1983, 40 per cent. of the enterprise zone has been developed and 22 new establishments have been attracted to it. It has resulted so far in a net increase of employment of about 300 jobs and I know that the local authority hopes to make further positive announcements in the near future.
The Welsh Office has made very considerable commitments to the zone since 1981–82 totalling £6.3 million. Of this, £1.6 million has been allocated for the current year through the urban programme and capital allocations. Additionally, Delyn borough council has received £750,000 to compensate for the loss of rate revenue in the zone. The WDA has completed 38 units on 534 the Manor industrial estate there, and the agency has financed three substantial reclamation schemes at a total cost of nearly £2 million.
All that would seem to me to be a highly creditable record of involvement in providing land and factory building in advance of demand by would-be developers and employers. I am sure that the Welsh Development Agency will maintain its record.
The EEC has also been helpful to Clwyd. The total identifiable EEC aid to the county is in excess of £175 million since 1975. Within this, over £36 million of ERDF quota aid has been committed to the county since 1975, of which about £850,000 has been made available for schemes within the Delyn enterprise zone alone.
I could mention other support measures if time were not against me. They all add up to a substantial input of public money into the area.
I shall draw to a conclusion by paying tribute to the local authorities in north-east Wales, which have striven energetically over the years to encourage economic regeneration in their areas. They have "sold" the attractions of their areas responsibly and effectively, and they have substantial successes to show for it. I know that no one is more anxious than they are that positive steps should be taken to continue with the task of creating new job opportunities. Within the past few days Clwyd county council and Delyn borough council have put forward proposals to tackle their latest problems. They have rightly emphasised that they are looking essentially for a re-ordering of existing priorities and resources. However, they are calling also for the expenditure of additional public money. My hon. Friend would not expect me to say any more this evening than that the proposals are being considered. We shall examine them as quickly and as sympathetically as possible to ascertain what can be done.
It is sad that these major closures in north-east Wales should be the subject of debate in the House, bringing almost to an end, though not completely, the long-standing relationship between Courtaulds and the people of north-east Wales. Although the closures announcements were not entirely unexpected, they are a considerable blow. They represent the culmination of a series of cuts by the company over the years. The decisions were for the company to take and I am sure that they were as painful to the management as to the work force. It is not for the Government to try to second guess companies which have to survive in the market place and respond to changing demand for their products.
There are encouraging signs, and I know that they are recognised. The effort to build on the successes achieved in Clwyd and Delyn must and will continue.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-eight minutes to Twelve o'clock.