HC Deb 05 February 1986 vol 91 cc406-14

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

11.44 pm
Mr. Donald Coleman (Neath)

I am grateful for the opportunity to draw the attention of the House and of the Government to the worsening economic situation in west Glamorgan. It is giving increasing anxiety both to those who live in the county and to those who represent it nationally and locally. I hope to put on record some of the worries being expressed about the west Glamorgan economy. Having done so, I hope that the Government will be galvanised into action to produce solutions to our problems.

I remind the House of the industrial importance of west Glamorgan which is underlined by the companies and corporations identified with it. They include the British Steel Corporation, the National Coal Board, British Petroleum Oil, British Petroleum Chemicals, British Aluminium, the Metal Box Company, the Ford Motor Company, and Cam Gears, all of which have national and international reputations. In 1979, when the Prime Minister formed her first Administration, they employed thousands of people in the county. Today, the position of those industrial giants is dramatically different. They have drastically cut their work forces. Instead of employing thousands, in most cases they employ only hundreds while some have closed altogether.

Before 1979 my parliamentary colleagues in west Glamorgan and I could take consolation from the fact that there was security of employment for our people with those employers, while redundancies were taking place in less substantial industrial undertakings and unemployment was rising. The fear of massive unemployment that exists in the county today did not enter into our thinking then. Unfortunately, today we do not have such a comforting position. All too often we hear of cuts and closures resulting in redundancies and miseries.

To set our fears and anxieties in perspective, I shall quote from a letter written to the county's Members of Parliament on behalf of the county council by Mr. Rush, the clerk of the council, and dated 14 January 1986. He writes: Without mentioning any confidential information and looking only at press reports, local industry is shown to be under great pressure with difficulty to keep employment levels static. Since the beginning of October 1985 there have been reports of short time at Ford Motor Co., Metal Box (300 laid off until'86) and B.S.C. Port Talbot's two weeks break at Christmas. Redundancies have been announced at Morganite, INCO, Unit-Inspection, Roadline, and Lucas Electrical at Ystradgynlais. N.C.B. have closed their Aberpergwm mine (following N.C.B. Treforgan in July) and Addis have announced the closure of their Fforestfach factory. Also, the major redundancies of 750 at B.P. Llandarcy announced earlier in the year have still to take effect. That letter shows clearly the gale of unemployment which is blowing through west Glamorgan. Those difficulties show that not one of the parliamentary constituencies is unaffected.

The county clerk also quoted the figures for benefit claimants for December 1985, issued by the Department of Employment. Male unemployment stood at 17,782 and female unemployment at 7,212, giving a total of 24,994. The recently published figures for January 1986 show that the position has become worse, not better, with 19,418 male benefit claimants and 7,212 females, giving a total of 27,282.

In fairness, I should say that there have been some welcome developments, such as the further expansion of Slima Wales, which will employ 130 more people at its Ystalyfera factory in my constituency, and the rapid take-up of space at the factories of the Welsh Development Agency on the Baglan industrial park. There is also the useful work of the Neath development partnership and the west Glamorgan enterprise trust. Unfortunately, those successes will not go far towards balancing recent losses, and they are mostly projections of additional jobs over a three-year period.

As if to emphasise this "having to run to keep up with ourselves" in west Glamorgan, within days of our receiving the letter from the county council to which I referred there came the shattering announcement from the Metal Box Company that a huge cut in employment was to take place at the company's Neath factory, with some redundancies coming as early as April this year and the remainder occuring in the spring of 1987. The result will be that the factory which employed some 2,000 people in 1979 will be providing work for only some 500 people when this announced redundancy is completed. We are told that this redundancy is because of changes in technology, foreign competition and the fluctuations in the value of sterling. Nowhere is there any complaint about the behaviour of the work force. In fact, the company has always expressed itself happy at the co-operation that it has received in these difficult times from the workers at the factory.

I turn to an aspect of these redundancies and plant closures to which not enough attention is paid, especially by the Government—the loss of revenue to the local authorities when that action takes place. I believe that the Government should take greater account of the effect of factory closures on the local economies, especially in the case of west Glamorgan. I shall give a few examples of the loss of revenue to local authorities which show up their position.

The Lliw Valley borough council tells me that the number of non-domestic properties in the borough with a void rating was listed in September 1981 as 36,700. By 30 September 1985, there had been a dramatic increase to 162,000. Neath borough council has told me that in March 1985 at BP Llandarcy the rateable value was reduced from £622,850 to £531,300. The rundown in the refinery will mean a significant loss in rateable value which could fall to some £400,000 by 1 April 1986. The rateable value of Metal Box, which is at present £125,500, is likely to fall to £75,000 as a result of the company's contraction of its operations in Neath. There are other examples in Neath, but time does not allow me to quote them.

I ask the Under-Secretary of State to take on board this effect on the county's economy. We hear all too often from Conservative Members how rates deter investment, but what I have just said shows that closures seriously affect the revenues of local authorities. There is, therefore, a much closer identity of interest between local authorities and industry than the Conservative party cares to recognise.

I turn to a consideration of the Swansea enterprise zone and its effect on the economy of west Glamorgan. The enterprise zone is sited on a location that was once the metallurgical centre of the world, giving employment to thousands of people. It is to the credit of Swansea city council that it took the initiative to clear the dereliction of a past industrial era and convert it into a place of employment for today. That was the intention but, unfortunately, instead of becoming a new centre for manufacturing, it seems to be becoming a place where retail outlets and warehouses are established, neither of which gives any significant employment.

The effect of this is being felt by businesses in the Swansea city centre, the other local shopping centres in the city and the shopping centres in the surrounding boroughs. My hon. Friend the Member for Swansea, East (Mr. Anderson) has confirmed to me that the enterprise zone is having an adverse effect on local shopping centres in his constituency. He has told me of the difficulties of businesses in Morriston. I have received complaints about the adverse effects of the zone upon businesses in Pontardawe and Neath.

It seems that the Government grants which are forthcoming for the enterprise zone are not producing the jobs that their huge investment should be bringing about. It comes as something of a surprise to find a hotel and a public house being built in an enterprise zone, but that is what is happening.

I ask the Minister to examine more closely what is happening in the enterprise zone. I ask him also to insist that real manufacturing jobs must be created in it and that the zone does not become the means of destroying the city and town centres in the county. thereby creating even more unemployment and economic problems. I shall digress for a moment to say that one thing that I can see flowing from the Government's Sunday trading Bill, if it becomes law, is the huge retail outlets in the enterprise zone becoming very rich while the town and city centre businesses close down, causing more and more unmployment.

What is demanded to put things right in west Glamorgan? There is general agreement in west Glamorgan that the entire county should be designated as a special development area so that we may have the grants and inducements that will bring the investment that is needed. The Government must understand that their legislation which created west Glamorgan brought together as a county localities which have always been dependent upon one another for employment.

Ministers have had it urged upon them time and time again by the Members who represent the county and by those in local government that west Glamorgan must have special development areas designation. I urge the Minister to understand that we see no other way in which we can revive the county's prosperity. West Glamorgan had thousands more jobs when inducements were available before 1979 than it has today under present policies. Clearly that is the proof of our case.

Communications are essential to any economy, and it is a vital factor to the communities of west Glamorgan. Perhaps the Minister will be able to help me by responding to my questions on three road schemes. First, can he tell me what progress has been made on the replacement of the stretch of the A365 trunk road between Glynneath and Aberdulais? We have waited a long time for the completion of this vital link between west Glamorgan and the midlands. Can the Minister say something about the stretch of the M4 from Baglan to Lon Las? What is the up-to-date position of the Swansea valley road between Pontardawe and Clydach? There are rumours circulating that British Rail intends stopping the 125 Inter-city service at Cardiff and running feeder trains to the west. Such a proposition would be a disaster to west Glamorgan and I hope that the Minister will make it clear to British Rail that that is not acceptable. In any event, British Rail can be assured of the strongest resistance to such a proposal both inside and outside the House.

The economy of west Glamorgan is taking a severe shaking. It is the Government's duty to recognise that and to change their policy. They must put aside any pride about giving up failed policies. The people of west Glamorgan look for a change and they have a right to do so. I have put the case tonight as others have previously, and I hope on this occasion the Minister has listened and will act.

11.59 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts)

The hon. Member for Neath (Mr. Coleman) has highlighted the specific economic problems of west Glamorgan. I am glad of this opportunity to describe how the Government are tackling them.

I shall deal first with the recent announcement by Metal Box. Of course, like the hon. Gentleman, I know that the 421 redundancies to take place over the next 15 months will obviously be a blow to the area. At the end of the day those decisions are for the commercial judgement of the company, since it is only the company which is in a position to determine the future of the plant in the light of all the circumstances facing it. However, I can say that officials of our Industry Department have been and will remain in close touch with the company to help in any way they reasonably can; and the Manpower Services Commission will, of course, be standing by to offer its full range of services. I know that Metal Box is considering what it can do to help redundant workers and will be offering counselling and advice. I hope that the company will follow the excellent example set by British Petroleum which accepted its responsibilities to an area which had served it well in the past.

We are also here tonight to discuss the more general economic position of west Glamorgan. It is always easy to say that more should be spent and more should be done than is the case already. But the hon. Gentleman must also be aware that the Government have always seen their task as being to give assistance to attract real new jobs that offer each area a sustained and long-term future, to invest in worthwhile training programmes which help to meet industry's needs and at the same time to contain inflation as well as encourage investment and profitability. We must therefore look at west Glamorgan in relation to what we are doing on some of those points.

Let us look first at the assistance available to industry. As a result of the Government's comprehensive review of regional industrial policy in 1984, the whole of the county of west Glamorgan remains eligible for support. The area of greatest need within the county—the Neath and Port Talbot travel-to-work area — is a development area which has the maximum priority for regional assistance. The Swansea travel-to-work area has intermediate area status and is eligible for regional selective assistance; the whole area also enjoys the advantages of access provided by the M4 and benefits from the activities of the Welsh Development Agency, the Wales Tourist Board and the Manpower Services Commission.

I know that the county council and the hon. Member for Neath are pressing that the whole of the west Glamorgan area be given development area status. A key element in the new system is that it is comprehensive and coherent—that is to say, a change in one area cannot be made without repercussions for others. Any change in west Glamorgan could, therefore, have knock-on effects elsewhere in Great Britain which could seriously undermine the balance and effectiveness of the policy as a whole. It is still too early to judge precisely how well the new system is working, but we shall consider carefully the possible need for any future changes which may appear necessary.

Projects currently being undertaken by companies in the county and for which offers of regional selective assistance have been accepted since 1 January 1984, forecast the creation of nearly 1,800 new jobs and safeguard 2,271 existing jobs. The projects involved include those being undertaken by Corgi Toys, Diversified Products, Spontex, Manoradd and by the Slimma Group mentioned by the hon. Gentleman. The hon. Gentleman may also be aware of the new investment being undertaken by Borg-Warner Ltd. and David S. Smith Ltd. which will strengthen their respective undertakings in the county. In addition, during last year in the hon. Member's own constituency, new style regional development grants totalling some £485,000 and providing 169 jobs have been offered.

The WDA has been making its own contribution to the area. Since May 1979 85 advance factories have been completed in the county providing 608,000 sq ft of floorspace. Last year 22 agency factories were allocated to companies expecting to create over 600 new jobs. During 1985 there was considerable interest in the Baglan Industrial Park, as the hon. Gentleman said, and six advance factories were allocated to companies expecting to create 245 new jobs. The WDA's annual property review last autumn identified a need for further development at Baglan and the agency's plan for additional factory building in 1986–87 will be announced at the same time as its budget is published in the Supply Estimates. The agency has also made a tremendous contribution to the reclamation of derelict land in the area. It is also encouraging new and high technology. It is collaborating with University College, Swansea, in the development of the innovation centre on the Singleton campus. This initiative has the potential to do much to help generate high technology development in the area.

The Government are often attacked on the ground that they do not give adequate weight to worth while capital schemes and public sector investment. This is not so. In Wales, since 1979, there have been high levels of investment in factory building. Over £300 million has been spent by the various agencies — through hospital construction, worth £250 million since 1979; to road building, worth over £600 million since the same year. This argument can carry no weight in west Glamorgan, either. With local authority expenditure, the combined capital spending by the four districts and west Glamorgan county council is budgeted in 1985–86 at about £62 million, about £16 million more than in 1984–85 and £28 million more than in 1981–82. Capital spending since 1981–82 has therefore comfortably outstripped the rise in inflation and the average increase for Wales as a whole, In the same period the position in Neath is that gross capital spending is forecast for this financial year to be 154 per cent. greater than the amount spent in 1981–82.

For the forthcoming year capital allocations to local authorities in Wales were increased by £60 million, 23 per cent. more than authorities received for the current year. Within this increase west Glamorgan's share of the total resources has also risen. The capital allocation for housing in the area has risen by 24 per cent. while overall allocations have increased by 25 per cent.

I would also like to mention the effect of next year's rate support grant settlement on the authorities in the county area. The settlement is a good one for Wales, and particularly good for west Glamorgan. Overall increases in provision and grant exceed the forecast rate of inflation. If west Glamorgan county council increases its spending by 5 per cent. next year, which is in line with the settlement, then its rate precept need go up only by 2.1 per cent.—less than half the projected rate of inflation. In Neath the situation is even better. Rates could fall by as much as 8 per cent. I hope that both authorities will continue to budget as responsibly next year as they have done recently. They know the considerable benefits to industry and business that come in the wake of realistic rates.

There is often some misunderstanding over the effect of factory closures on loss of rates. Rate support grant is an equalisation grant. Broadly speaking, this means that losses in rateable value are compensated for by increases in block grant, so if a factory closes the authority should in normal circumstances, receive an increase in block grant as a result.

Within west Glamorgan, as the hon. Gentleman readily acknowledged, the importance of good road communications in assisting efforts to promote economic activity and improve job prospects is fully recognised and £25 million has been spent on improving the motorways and trunk roads in the county since 1979. The virtual completion of the M4 between the Severn bridge and Pont Abraham gives west Glamorgan direct access to the national motorway network. But we are keen to press ahead with two major road improvement schemes in west Glamorgan. Preparation work on the A465 Glyn Neath-Aberdulais improvement is already well in hand; subject to the satisfactory completion of statutory procedures and engineering design, we expect to have this £26 million scheme ready to start between 1988 and 1990. The other major scheme provisionally planned to start in this period is the Baglan-Lon Las section of the M4. If opportunity presents itself, some work on this £90 million project could be put in hand before 1988.

I must also draw attention to the importance of west Glamorgan county council's own road improvement programme. It already has £13 million worth of major projects under way, comprising the A483 north dock interchange in Swansea, the A484 Loughor bridge replacement and the A4067 Ynsforgan to Glais improvement. My Department has been glad to support these schemes by meeting 50 per cent. of their cost through transport supplementary grant. Moreover, we have also accepted for transport supplementary grant purposes a further two schemes with a combined cost of £12 million which are due to start in 1986–87. First, there is the section of the A4067 improvement between Glais and Pontardawe. Second, there is the Neath urban inner city bypass which forms an integral part of the Neath redevelopment scheme. Our commitment to the trunk road programme and our support for the county road programme should leave no one in doubt as to the importance we attach to providing a road infrastructure appropriate to the needs of west Glamorgan.

A further significant contribution to the employment opportunities in the county has been the successful development of the Swansea enterprise zone. The latest progress report indicates that between designation and June last year 137 firms have taken premises on the zone, bringing with them over 1,600 jobs, of which 750 were new ones. A further 154 jobs are expected to result from firm commitments to the zone. Although just over the border from the hon. Member's constituency, I have no doubt that many of his constituents have benefited from our contribution to the zone, which to date includes £7.5 million from urban programme and special capital allocations, plus a further £5.4 million as compensation for the rate revenue forgone from premises within the zone.

The hon. Gentleman and others have criticised the amount of retailing that is allowed in the zone. After listening to the arguments we agreed that the limit on the requirement for retail developments to seek planning consent should be reduced from 45,000 to 25,000 sq ft. The new limit was introduced only in April 1985 and the city council is currently assessing its effectiveness. We shall, of course, be prepared to consider evidence from the council on the adequacy of the present limit.

Assistance aimed specifically at preparing young people for work and supporting those looking for work is particularly important and is being directed through the various schemes run by the Manpower Services Commission. In that context I must mention the package of measures which is aimed directly at the problems facing long-term unemployed people, because the hon. Member's constituency has a special part to play in this.

The measures were announced in November and as part of them in pilot areas — which include the Neath and Port Talbot travel-to-work area—people who have been unemployed for more than one year can receive a "job-start" payment of £20 per week for six months if they accept a job at under £80 per week. This arrangement is backed by a programme of counselling interviews which could lead to the offer of a job, a place on the community programme, entry to the enterprise allowance scheme, a place on a relevant MSC training course or membership of a local job club. Although it is still early days, the first signs of the pilot study are encouraging.

Our contribution either to firms which want assistance to move to the area or to protect the jobs they have already created, or to individuals who are seeking work, can be successful only if there is a matching contribution from local communities, local authorities and from the private sector. In west Glamorgan, this contribution has been demonstrated by the energy of the local enterprise agency movement, by the success of the enterprise zone at Swansea, by urban programme schemes and by the partnership with the private sector through urban development grant projects. The Government attach considerable importance to the promotion of small businesses and are now doing much to encourage their expansion as part of our overall policy of expanding economic growth. We believe—

The Question having been proposed after Ten o'clock on Wednesday evening 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 fourteen minutes past Twelve o'clock.