§ Mr. Robert Hicks (Cornwall, South-East)
It is not my intention to repeat the various arguments that have been deployed both in favour of and against the Government's proposals for the introduction of a system of commercial management in the royal dockyards. As the House will know, I have remained very dubious. I consider the concept of agency management to be speculative and non proven since there is no comparable economic model on the scale envisaged anywhere in the world. Since the function of the Royal dockyards is to service the Royal Navy, I believe that it is wrong to pursue this particular course of action since it is the defence of the nation and the security of the realm that we are considering. Nevertheless, we must now accept that Parliament has given its approval to the Government's intentions and, indeed, vesting day for the new management structures is only days away. Only time will tell whether my fears are justified.
What is not in dispute, however, is the fact that there will be substantial job opportunity reductions over the next four years in the dockyards. During the past two years, for example, approximately 2,000 jobs have been lost at Devonport, principally through early retirement and voluntary redundancies. I wish to emphasise at this stage that most people recognised that changes were necessary in the organisation and administration of the royal dockyards and that their manpower requirements would decline. Devonport was given an enhanced status by the Government. Nevertheless, I accept that the Royal Navy now has fewer ships, those ships require fewer refits and the refits can be completed in a shorter time. However, it has already been announced that, taking the present employment level at Devonport as being 11,000 people, there will be 2,300 further job losses over the period 18 months to three years ahead and there may be a further 1,500 job opportunities lost after April 1990.
In addition, some 350 civilian jobs have been lost during the past two years in outside departments that serve the naval base and a further 200 are likely to be lost over the next three years. Further, when calculating the job losses in an area, allowance has to be made for the local multiplier effect, which it is estimated could be over 1,000 people in the Plymouth travel-to-work area. That means that in total we will almost certainly see our job opportunities in the Plymouth sub-region decline by over 5,500 by 1990 solely as a consequence of the reduced manpower requirements in Devonport dockyard. That is a pretty depressing outlook.
Sadly the story does not end there. Because of the subdued levels of economic activity that are reflected in the higher than average unemployment levels, Plymouth and east Cornwall already have assisted area status. However, if one considers the level of national financial support for assisted areas, the south-west assisted area is bottom of the league table. We have received a total of £2.2 million of regional aid since November 1984 when the new regional support measures were introduced. Expressed as a payment per head of the population, that works out at £22.89 per head in the region's development area, and £3.99 per head in the region's intermediate area, which includes Plymouth and east Cornwall.
360 It is interesting to note that the comparable figure for Wales, that is to say, the total support provided through regional aid, the Development Board for Rural Wales and the Welsh Development Agency, is £112 million. If one considers Scotland, again taking the aggregate amount of regional aid, the Highlands and Islands Development Board and the Scottish Development Agency, the equivalent figure is £180 million. However, when average weekly earning levels are considered, Scotland's average earnings are 98.8 per cent. of the national average. The comparable Welsh figure is 93.3 per cent., but those for Devon and Cornwall are 86 per cent. and 83.2 per cent. of the national average respectively.
It is right to draw the attention of the House to those two sets of figures of the extent of regional aid and average earnings to remind the Minister of the economic backcloth against which the impact of those job opportunity reductions at Devonport should be perceived.
I turn now to the action that needs to be taken, involving Government, local authorities, the European Community and statutory organisations, such as English Industrial Estates and the Manpower Services Commission to minimise the adverse effects that will undoubtedly be the result, in economic and social terms, of the projected rundown in jobs at Devonport.
I intend to list a package of measures, which merits the Government's consideration, to alleviate the sub-region's difficulties. First, 1 should like to emphasise above all else, the urgency of this matter. It is now two years since my right hon. Friend the Member for Henley (Mr. Heseltine) in his former capacity as Secretary of State for Defence, published his consultative document on the future of the Royal dockyards. The implications for our region were clear then. However, although the impression was given then that initiatives would be forthcoming to minimise that impact, few tangible results have materialised. The commitment made by the former Secretary of State to release the Royal William yard for redevelopment for tourism and commercial and residential purposes is just one example of that inertia.
Of course, I recognise that, through their local authorities, local communities have a responsibility. In recent years the city of Plymouth has promoted several of its own economic initiatives. No doubt that will be confirmed subsequently. Those initiatives include new workshops and workspaces, high tech units, industrial estates, skill training initiatives, promotion, support to companies, business advice and so on. The amount that they have found is probably in excess of £11 million. In addition, there is a £3 million investment at the Plymouth airport to provide better communication links with the rest of the country. Most of these initiatives are showing signs of success.
In east Cornwall the Caradon district council in conjunction with Antony Estates is well advanced with its proposals to redevelop the 22-acre site formerly occupied by the shore base HMS Fisgard at Torpoint. About seven acres are designated for industrial purposes. The Government could immediately help Plymouth city council, Cornwall county council and the Caradon district council in two ways in their endeavours.
First, the Government could release capital receipts for investment purposes. I appreciate that this is not the direct responsibility of my hon. Friend the Minister. But I make no apology for reminding him as a member of the 361 Government that a Government-imposed restriction prevents those three local authorities from making a positive contribution in this way at this time.
Secondly, the Minister has departmental responsibility for this specific and immediate local authority initiative. I refer to applications which local authorities can make for financial assistance under article 15 of the European Regional Development Fund main regulation. As my hon. Friend is aware, Cornwall made two applications in January 1986: one relating to tourism and the other directly to business promotion. The financial aid sought for those two projects totals almost £1 million, but for the past 15 months the Treasury has refused to sanction those applications. That is not good enough. Furthermore, I am certain that the Plymouth city council would take advantage of this source of potential European finance once the Treasury ban was lifted. I hope that the Minister can give the House some information on this particular front when he replies this evening.
I shall mention six areas of assistance which are the prerogative of Government. First, the Minister will not be surprised if I mention the need for the creation of a Devon and Cornwall development agency. That is central and crucial to the region's economic future. I will not repeat the arguments tonight. I have explained in statistical terms that we are a sub-region characterised by higher than average levels of unemployment and significantly lower than average levels of income. We also receive lower levels of regional aid than comparable United Kingdom regions, and lack a variety of job opportunities with a consequential absence of career structures. A regional development agency could do much to redress those inherent weaknesses.
Secondly, English Industrial Estates should become involved and adopt a forward-rolling programme in the Plymouth travel-to-work area. It is suggested that land availability may be a problem in Plymouth. I am not certain of the precise position, but I can tell my hon. Friend the Minister that there is no shortage of land on the Cornish side of the river Tamar at Saltash and Torpoint. Sites are available adjacent to the Saltash bypass which is under construction and that should be a natural growth point. I have already mentioned the potential for industrial development of the Fisgard site at Torpoint.
Thirdly, I want to mention the important subject of training and re-training facilities. Clearly the Manpower Services Commission has a major responsibility in that respect. I hope that additional courses and places will be made available to take account of the changing pattern of employment opportunities in the Plymouth sub-region. There is another essentially local dimension that relates to the dockyard's training scheme. The new contractors are to take over that function, but I gather that the training school will not be fully utilised. That surely provides an opportunity for the Government to demonstrate their commitment by underwriting the cost of the additional training so that excellent facility can be used to the maximum.
Fourthly, the business improvement services scheme which is already established in Cornwall should be expanded and extended to Plymouth. The scheme is very cost effective and should be encouraged.
Fifthly, I want to advocate the establishment of a specific fund for the sub-region to provide finance for small firms. We all know the problems that smaller and often newer companies experience in raising capital for 362 essential investment. The creation of a locally administered fund is essential if sufficient new employment opportunities are to be created significantly to offset the dockyard job losses. There are precedents for that. Special assistance has been made available by the Government in other areas where major closures have taken place largely as a result of Government action. These include Chatham, Swindon, steel and coal closure areas and the Scottish Development Agency area initiatives.
Sixthly, I must mention the question of the area's assisted area status. I believe that I am correct to state that the Plymouth travel-to-work area is the only assisted area that is currently being reviewed. I hope that the Minister will be able to put our minds at rest this evening on that specific issue by confirming our status as an assisted area.
I conclude by again stressing the urgency of the situation, which could rapidly deteriorate. We now have a period of 15 months maximum to introduce a package of measures designed to alleviate the adverse effects resulting from the reduction in manpower requirements of the Plymouth sub-region's largest single employer.
We all, of course, have an obligation to create art environment conducive to attracting suitable new industry to our areas and an obligation to stimulate existing business activities. I do not exaggerate however when state that it is the very economic and social structure of Plymouth and east Cornwall that is at stake. That is the extent of the problem and challenge that all of us who live and work in the Plymouth and east Cornwall area currently face.
§ Dr. David Owen (Plymouth, Devonport)
At 5.49 am, many families in Plymouth and the surrounding area are getting up and starting to go to Devonport dockyard. It seems not inappropriate, given the problems that they will face, that I should be here to draw the Government's attention to the devastating effect of their policies on the city and the sub-region.
The hon. Member for Cornwall, South-East (Mr. Hicks) has made a sound case, and I did not disagree with one word of what he said. His estimate of 5,500 job opportunities being lost by 1990 is realistic. It may even prove to be slightly optimistic. If we add the likely knock-on effect, we are talking of 7,000 to 8,000 job opportunities being lost in five to six years.
The effect will be massive because the job losses are concentrated on male industrial employment—the very job opportunities which are immensely hard to replace. matters were gloomy enough as a result of the damage that the Government have wrought on the Plymouth travel-to-work area because of what is happening at Devonport dockyard, but we have had to cope with the further blow of the closure of Texas Instruments.
I understand the downturn in the world economy which made Texas Instruments' decision inevitable. I pay tribute to the company, which has contributed a good deal to the city. We must not be frightened of attracting high technology firms just because of that unfortunate experience. The city has gone through this before with Rank Radio, only to see the losses there replaced by Toshiba investment. We also look forward to the opening of the Plessey factory soon.
The city council has done a good deal on an all-party basis to attract industry, and it is set to do more. Just to stand still, it is ncessary to attract three or four major new 363 factories each year. Now, to stand still during the next five years, that capacity to attract new investment to the city and its immediate surrounds will have to be substantially increased.
With the best will in the world and the greatest local endeavour, that cannot be done without more help and without the Government facing up to the consequences of their decisions, co-ordinating governmental activities and giving Plymouth and the surrounding area a chance to replace the jobs that are to be lost.
The hon. Gentleman is right: there was hope two years ago when the right hon. Member for Henley (Mr. Heseltine) announced his intention to accompany what is to happen at Devonport with a series of Government actions which would anticipate the misery that was to be visited on the city in terms of job opportunities. It is fair to say that precisely nothing has come from the Government in terms of special help to offset the devastation of what is to happen to the dockyard. Not one jot extra has come to Plymouth.
The Royal William yard has been mentioned. I always thought that a certain flamboyance was not unassociated with the right hon. Member for Henley when he announced that great venture. The city council responded and was ready to co-operate until it became clear that it was being asked to take over the massive costs of retaining a historic building which, we all agree, must be retained, but with none of the supporting finance which was vital.
That project was dangled before the city, only to be shown to be a rotten apple as soon as we examined it. If that prospect is to be revived, it must be accompanied by substantial financial assistance, and the Department of the Environment should not find it too difficult to do that. It is a magnificent building that must be retained on historic grounds, but it cannot be retained by the city council alone. The potential is there, but there must be an injection of new money to make it viable.
We have been urging the Government, even within the limitations of their miserable regional policies, to take extra measures, and one that is open to Ministers to take would be to declare parts of Plymouth—and the badly affected, rather rundown area of Cattdown, which could be revived, especially the port on the Plym—some parts of Cornwall around Saltash, and even some parts of Devon, on the outskirts of the city, an enterprise zone with the advantages of being such a zone.
The Government have introduced an enterprise zone regional policy, and while there are serious criticisms of some parts of that policy, it would have given us extra help to attract industry. I have been pushing this case since the enterprise zones were announced, but without success. Indeed, there has not seemed to be the remotest possibility of the Government agreeing, though I hope tonight the Minister will prove me wrong.
Given the antipathy of the Government to the creation of new development agencies, it seems unlikely that they will do what I have no doubt must be done, which is to recognise the case for a far south-west development agency based in Cornwall. I do not believe one can argue a purely constituency case on this issue.
If the centre of gravity, so to speak, of such an agency were not in the county that was most affected by low wages and unemployment, it would not carry conviction, and the city of Plymouth must be sufficiently broad-minded to 364 recognise that the location of the headquarters should be in Cornwall. It must embrace Plymouth, plus probably the whole or a substantial part of Devon, so that the two shire counties, and that great borough—hopefully with more of its rights restored to it—would be the focus for such a region.
It is senseless to continue with the south-west economic region as we have it at present, with parts of Bristol being closer to London than parts of Cornwall are close to Bristol. The whole region needs to be re-thought. At least the European Community recognises Devon and Cornwall as a sub-region for statistical and other purposes and has accepted that it has indigenous problems which are unrelated to the rest of the south-west region. We have seen that with the decline of the Cornish tin industry, with the difficulties of the fishing industry and with the problems of milk farming in terms of that industry being productive.
While there is no hope of the Government creating a development agency, they would be well advised to participate in the exercise which the Alliance has started in the south-west region on the specifics and mechanics of a development agency. I will send our proposals to the Minister, and I look forward to receiving his comments on them.
Other problems need tackling. The airport has been extended and that has represented a remarkable partnership between Brymon Airways and the council, and the council is to be congratulated for investing in that. In that and in other matters the council has done as much as one could reasonably expect from a district council, as it now is following the lamentable reorganisation of local government. That reorganisation was a body blow inflicted on the city of Plymouth by the right hon. Member for Henley in the early 1970s in a former ministerial incarnation.
To attract new industry, it would be a great help in selling the city's wares if we could point to a highly skilled work force. We shall have that in the short term because people will have been able to utilise the training that they have been given in the Devonport dockyard. But it will have to be replenished by the Manpower Services Commission recognising that the dockyard apprentice training school is a precious resource that will be under-utilised by Brown and Root. It is unreasonable to expect Brown and Root to take on a commitment to train more than can be justified on a likely future work load of the dockyard. But it would be reasonable for the MSC to undertake to contract out an extra 70 to 100 places in the dockyard apprentice training school to use that as a skill training resource and to give us at least the skill capacity to absorb new investment.
Devon, Cornwall and Plymouth have hesitantly, but at long last, started to collaborate to market the city's wares. A major Government grant is necessary to give that limited, but nevertheless important, grouping some of the financial support necessary for them to go out into the world markets of the United States, France, Italy the Scandinavian countries and Japan, to seek the new inward investment which the city of Plymouth must win. It is difficult to do so in competition with the Welsh and Scottish development agencies with a substantial supported export capacity and overseas marketing capacity. This modest claim is compatible with at least some aspects of the Government's regional framework.
365 There is no doubt that understanding the importance of the polytechnic and the role that it has played and continues to play in the sub-region is extremely important. I am worried about the cuts affecting higher education. I hope that it will be well understood in the Department of Education and Science, and through it the MSC and the Government machine generally, that the polytechnic needs to be built up. A good deal more imagination needs to be shown by the Government in helping through the royal naval engineering school at Manadon and the polytechnic. Perhaps there could he help for the research establishments—they are now under the constraints imposed on almost all the research councils—to build up the experience and expertise of Plymouth in all the maritime sciences. That would be easy to do because the marine biology laboratory has a worldwide reputation.
Those are positive suggestions, but there is one absolute fundamental—the still dominant position of the Ministry of Defence and the Property Services Agency in relation to land. I believe that another foolish decision was taken by the Ministry of Defence in holding on to Mountbatten land. It was a perfect site for a tourist development. It is folly that, when the Ministry of Defence is straining to live within its present budget the Royal Air Force, presumably predominantly, and the other armed services have been able to keep their hands on Mountbatten. I blame Ministers for not overriding the well-known instinct of the Ministry of Defence to hold what it has. Mountbatten was a prime site. If ever there was a case for allowing commercial market forces to operate to build up a tourist facility for Plymouth, it was to release Mountbatten and put it on the market. Despite that decision I hope that the Ministry of Defence will reconsider.
We must also consider the whole of the massive sea front that the dockyard has traditionally held right up the Tamar. A fundamental aspect of the new-style dockyard must be the rationalisation of its land. I already begin to detect all the old arguments about why the dockyard must hold on to what it has. We have precious little prime industrial site on deep-water moorings and some of that dockyard land must be made available, and fast, for industrial development.
The very least that we could get out of this debate is a commitment for an open study involving the city council, Devon council and if necessary, Cornwall. It is important that the city council, independent outside experts and the Minister of Defence should re-examine, in public, every part of Government land held in the city of Plymouth and whether it could he made available. That study could consider whether the land has the capacity for the development of tourism—increasingly important in the region—or whether it could be made available for industrial sites.
It is no use for that study to be undertaken privately in Whitehall, and it is no use the Ministry of Defence privately putting forward arguments as why it will not part with the land. We want an open, public inquiry, preferably with an independent chairman, in which the Minister must justify holding on to all the land. It represents the crucial key to unlock the city in the decades ahead.
The decision about Devonport has been an appalling blow for the city—I do not believe that Ministers understand how bad it is. Very well, the Ministry has the power—there is no use arguing the case—it will carry through its decision. However, I believe that agency 366 management is fundamentally flawed and that that decision will be reversed. I believe that it will be necessary to bring this great industry together to unify and integrate the assets controlled by the Ministry of Defence. It will also be necessary to unify the work force and management that has been put out to agency management. This is for after the election. It is the minimum price—a Government-controlled PLC, operating at Devonport as an integrated, unified industrial enterprise.
I believe that it is of fundamental importance that the Government recognise the need for a development agency for Devon, Cornwall and Plymouth. It is critical that in the Government's reappraisal of what needs to be done for the city of Plymouth a greater understanding is given to how much the city has focused its cultural and social, let alone its industrial and economic life, around the Royal Navy. There is a great responsibility, in moral and historic terms, to recognise that that orientation of the city has been fundamentally changed.
Had that change been undertaken with understanding and sympathy, that transition could have occurred without the trauma, heartbreak and personal grief that now looks inevitable. If that transition were handled with sympathy and care future generations might even say that the undue dependence of the city on the dockyard was ended for the city's long-term good. There is no sign to show that the Government have anticipated the industrial damage that will be done, no sign of the Government responding to alleviate some of the damage that is being inflicted by one arm of Government, the Ministry of Defence, on the economy of the city and the sub-region.
If this debate has done anything I hope that it will concentrate Minister's minds on the fact that they have not lived up to the commitments that they undertook and the general atmosphere that they generated two years ago when the impression was given to the city that it would be helped to overcome the devastating effects of the rundown of the Devonport dockyard.
§ Mr. Martin O'Neill (Clackmannan)
The debate illustrates one of the fundamental weaknesses of our system of government. The Ministry of Defence is responsible for about £9 billion worth of procurement and it takes decisions of an industrial nature to the exclusion of, and without any consideration of, the social consequences. In many respects, it leaves it to the Department of Trade and Industry to pick up the pieces. I have a certain sympathy with the Minister of State, Department of Trade and Industry for having to clear up the mess that the privatisation by the Ministry will create in Plymouth and south-east Cornwall.
§ Mr. O'Neill
Indeed. Many of the arguments that have been advanced on behalf of Plymouth and the surrounding area can be advanced for Rosyth. The impact of privatisation will lead to a reduction in the labour force, which will have an impact on the economy of Fife. The Scottish dockyard may have the advantage of the services of the Industry Department within the Scottish Office, the Scottish Development Agency and Locate in Scotland, but with all these estimable institutions we still have unacceptably high unemployment in Scotland.
I wish to concentrate on the plight of Plymouth. The House has a responsibility to those who live in the area, 367 not least because the Devonport dockyard is the largest employer and is the hub of the industrial economy, such as it is, in that part of Britain. The job loss figures given by the hon. Member for Cornwall, South-East (Mr. Hicks) have been confirmed by the right hon. Member for Plymouth, Devonport (Dr. Owen). We are talking of 5,500 jobs, and probably nearer 8,000 when account is taken of the multiplier effect. Job losses of that scale would have a devastating effect on any economy, but the dockyard in Plymouth is the major industrial employer and the major trainer of labour. Within a few years it is likely that skills will not be applied. Skills will be lost or not acquired because of the rundown in the training function and the training centre within the dockyard. The impact of privatisation will be considerable on those employed directly within the dockyard and on small privately owned firms which hitherto have worked in partnership with the publicly owned dockyard. The prospects of work for the dockyard are, to say the least, somewhat gloomy.
Last week's Jane's Defence Weekly contained a report on the private dockyard in the form of Tyne Shiprepair and Plymouth, Devonport and the outfitting and refitting of Arethusa and Euryalus. I raise the issue because it demonstrates one of the fundamental flaws in the Government's approach to employment creation and industrial policy. The Government seem concerned to reshuffle unemployed people around the country so that there is a temporary remission for Tyneside.
The refitting of the Euryalus was directed to Tyne Shiprepair, which has had the effect of reducing the work load of Devonport. It was a complex scheme for the refitting of two frigates. The Devonport work was completed in about 38 weeks, whereas the Tyne Shiprepair work took about 11 weeks longer. Jane's Defence Weekly apportioned part of the blame to the Ministry of Defence. It has been suggested that about 20 per cent. more work was involved in the Tyne Shiprepair job and that it may well have been carried out at a lower price. Of course, that matter is not open to us. The steel shutters immediately fall when we talk about price. We enter an area of confidentiality that confuses the question whether the privatisation exercise or agency management will be successful. As far as one can see, the Devonport dockyard appears to come out of the latest scheme comparatively favourably.
The continuation of the Devonport dockyard is, certainly at the moment, beyond question. Many of us are concerned about the climate that will prevail in the dockyard over the coming weeks and months. We shall see agency management in the period up to the general election and a change in the system of management of the dockyard. Certainly there is the widespread suspicion on the part of Brown and Root of the former owner, Halliburton, and its associations with the Libyan Government. In the Secretary of State's latest letter to the unions he does not rule out the possibility of an American director.
When one considers the impact of an agency management on Plymouth and the surrounding area, one must take account of the climate of opinion and morale within the dockyard. We must make sure that that once proud yard does not become too depressed. I am certain that the quality of work will be sustained, but morale manifests 368 itself in a variety of ways in industrial establishments. The Government must bear a responsibility for the depressing effect that will certainly be felt thoughout the sub-region.
Local councillors have shown their support for various initiatives that have already been taken by Plymouth city council. It is significant that Plymouth city council—a Conservative council—has been at the forefront of the campaign to secure economic regeneration for the area. The most successful parts of regional policy elsewhere in the country have been listed. Given the present climate in which we live, I suspect that any gains that come to Plymouth and the surrounding areas—I wish them well—will more probably than not come at the expense of other parts of the county. My understanding-perhaps the Minister will confirm it—is that the regional review procedures have been completed. I understand that there is not likely to be any change in development area status for any area or another review of the boundaries for some time to come.
It will take a change of Government to bring about a change of priorities. Certainly, when the Labour party come to power, we shall overturn the agency management scheme and restore full public ownership of the dockyard. We recognise that that is the first step. We recognise, too, that other forms of assistance for the disadvantaged areas of the country will have to be introduced. A regional development agency would be a step in the right direction.
§ Dr. Owen
This is not a trick question; I know that the hon. Gentleman is genuinely interested in the problem. He referred to public ownership. Does he mean that the dockyard will be returned to the Civil Service, or does he envisage some of the newer types of public ownership that have been discussed recently by the Labour party?
§ Mr. O'Neill
The right hon. Gentleman has followed this debate as closely as I have over the years. He knows that the Labour party's commitment is to a Government-owned plc. That is the preferred option. It would provide a degree of financial control and financial discipline. That has been one of the difficulties. I know that the right hon. Gentleman, in his previous incarnation as a Minister, instituted review schemes. Had it not been for the general election in 1970, other systems might have been established.
The Labour party would establish a Government-owned plc. That would provide opportunities for improvements in both management and efficiency and for the maximisation of the opportunities that such a massive industrial undertaking affords. We should support local authority initiatives. Local regional assistance can lead to too much bureaucracy. Appropriate agencies can work in conjunction with Departments that have responsibility for Wales and Scotland, but that does not mean that there have to be similar arrangements for every region. We should fully support Plymouth city council and would seek to back its initiatives, which enjoy the overwhelming support of all sections of the community. The Conservative majority group on Plymouth city council is at one with its traditional political opponents in seeking to minimise the damage that this hare-brained scheme of agency management will inflict on the community.
The Labour party has welcomed this opportunity to refer to the serious problems that will face this part of the south-west. The Government's palliatives are not commensurate with the amount of damage that will 369 probably be inflicted. It is difficult for such a fragile economy to sustain the loss of 8,000 jobs in a relatively short period. The only realistic prospect of solving these difficulties would be the return to power of a Labour Government at the earliest opportunity. In the first instance, a Labour Government would put an end to agency management. They would also seek to restore morale in the dockyard's work force and to provide the kind of training and infrastructure that the area requires. They would work with the agencies and organisations in the area that are seeking to secure prosperity once again for this part of England.
As a Scot, I know that London must seem remote because of its distance from that part of the south-west. It is just as remote from the people in the south-west as it is from those who live north of the Tweed. I have every sympathy with that part of England. I say to those who will be reading reports of this debate outside the House—the galleries are not exactly packed at the moment—that, as with other parts of the country such as Scotland and Wales, the only way to support and protect depressed areas is to elect Labour Members of Parliament so that we can carry out the process of industrial and social construction which this hare-brained scheme has highlighted in this part of England.
§ The Minister of State, Department of Trade and Industry (Mr. Giles Shaw)
I congratulate my hon. Friend the Member for Cornwall, South-East (Mr. Hicks) on raising this issue. The debate has been well attended, with the right hon. Member for Plymouth, Devonport (Dr. Owen) showing his commitment to the region. The hon. Member for Clackmannan (Mr. O'Neill) spoke about the return of a Labour Government, which was not the answer that my hon. Friend the Member for Cornwall, South-East was looking for. The presence throughout the debate of my hon. Friend the Under-Secretary of State for Defence is an indication of the genuine concern that the Government feel about this issue. They believe that it is important, that it should be looked at with great care and that solutions should be found.
My hon. Friend the Member for Cornwall, South-East will not he surprised to hear that it is difficult for me to share his views on the changes in policy which have led to the decisions that have been taken on the dockyards. He has heard from several of my hon. Friends that we believe that his worries about this change of policy are unfounded. The Government believe that either of the other options that were considered for the dockyards—a trading fund, or a Government-owned plc, which is the option that is favoured by the hon. Member for Clackmannan—promised less for the Royal Navy, the taxpayer and the employees in the regions in which the dockyards are located.
My hon. Friend the Member for Cornwall, South-East will know that over the past 15 years or more successive Governments have been concerned about the system under which the dockyards have operated, and a number of studies have been carried out. We have never pretended that all of the studies have reached the same conclusion, and much less have we suggested that they have argued for the policy that we have now decided to follow. There has been general agreement that there should be significant changes. Despite the fact that the studies that were carried 370 out by my hon. Friend the Member for Ashford (Mr. Speed) found that there was a crisis in the dockyards, the system has remained largely unchanged for a long time.
That was the background against which the 1985 review took place. The aims were simply to get the best value for the part of the defence budget that is spent on refitting and repairing the naval vessels; to improve the efficiency of the two dockyards; to maximise the degree of competition between the dockyards and the ship repair industry; to separate the customer—the Navy—from the supplier—the dockyards; and to introduce new work into the dockyards to offset job losses that would otherwise result from the decline of the naval refit and repair programme.
That is the context in which my hon. Friend raised these issues. They have been debated on a number of occasions in the House, and our view remains that the aims that we set ourselves will best be met by introducing commercial management.
As the subject of the debate is regional policy, I shall say something about the background to the Navy Board's comments on job losses. The ship work programme is declining. Over the next seven years the impact of the overall reduction in load will be on Devonport. There are several reasons for the decline, including the fact that the more modern warships and nuclear powered submarines require less regular refit and repair work to be carried out.
However, two matters are certain. First, the decline has nothing to do with commercial management; it would have occurred under any form of management. Secondly, there is no truth in the story engendered by Opposition Members that we have encouraged the engineering standards to be lowered. My right hon. Friend the Secretary of State has estimated that if dockyards had been retained under more direct managment, for example, with nothing but naval work on which to rely, there would have been a reduction in the work force at Devonport alone of some 5,000 over the next seven years, and some 4,500 of that number would have occurred in the first four years.
Devonport Management Ltd, with which my right hon. Friend signed a contract in respect of Devonport on 24 February, has estimated job losses totalling about 2,300 by 1990. The company hopes to balance the reductions by an extensive retraining programme, by natural wastage, voluntary redundancies and early retirements. However, in 1987 selective recruitment will be necessary and the company estimates that 125 to 150 apprentices will be recruited. Devonport Management Ltd. intends to develop locally the skilled human resources required for the future success of the dockyard.
Neither my hon. Friend and Member for Cornwall, South-East nor the right hon. Member for Devonport or anybody else would welcome any reduction in the local labour force. However, I hope that my hon. Friend will accept that by developing new commercial activities based on the considerable expertise and capacity at Devonport the new management should, with co-operation and good will on both sides, be better placed to exploit the opportunities that clearly must exist for growth in the enterprise.
My hon. Friend raised a number of issues about the consequences of regional policy on what is now happening. I shall deal first with assisted or intermediate area status for Plymouth. In November 1984 my Department granted the Plymouth travel-to-work area 371 intermediate status in recognition of Plymouth's importance as the principal industrial centre in the extreme south-west and because of the need to encourage employment and economic growth.
The Government are presently considering the submission prepared by Plymouth city council for the travel-to-work area status to be retained after November 1987. The hon. Member for Clackmannan raised this issue. It is peculiar to Plymouth because the arrangement that was made by the European Commission at the time was for three years only. Hence, there is this review of the Plymouth position. The hon. Member was quite right when he said that there was no other review currently in progress which affects the assisted area plan.
The proposal by Plymouth will be urgently considered by my Department and I can assure my hon. Friend the Member for Cornwall, South-East that it will be forwarded to the European Commission whose agreement we obviously require in order to continue the intermediate area status for Plymouth. The present agreement expires in November and we intend to ensure that action is taken as soon as possible. I can tell my hon. Friend and the right hon. Member for Devonport that I fully support in principle the case that the council has made for the continuation of Plymouth's intermediate area status. I hope that the case will be referred to the Commission at the end of this month or in early April.
My hon. Friend the Member for Cornwall, South-East was critical of the amounts being spent on regional assistance in the south-west in general and in Plymouth in particular. I understand the feelings of all hon. Members who represent areas, whether assisted or not, that are clearly deprived who believe that insufficient funds are being made available. However, since 1984 regional selective assistance of over £2.6 million has been paid by my Department for projects worth £21 million that are expected to create or safeguard more than 1,000 jobs in the Plymouth area alone.
Plymouth currently enjoys assisted area status and has obviously benefited from ERDF assistance with the development of industrial areas and new initiatives. Plymouth also receives urban programme support for new projects from the Department of the Environment and the 1987–88 allocation is £360,000. Of course, regional assistance spreads beyond that in the south-west and I know that my hon. Friend fully recognises that.
The amount of regional assistance to the south-west since 1979 is about £33 million with which 11,898 jobs have been created and a further 1,700 safeguarded. About £78 million of regional development grant has been expended in the south-west alone. That has created a further 3,150 jobs. While understanding my hon. Friend's view that more could be done, I must tell him that substantial sums to generate activity in the south-west in general and in Plymouth in particular have been spent during the Government's term of office.
I turn to the development of an agency for Devon and Cornwall. The right hon. Member for Devonport raised this matter—not for the first time in my presence—which he studies so keenly. I do not presently support the view that an agency could be the right solution for that part of the country. A combined effort must be made by the major counties of Devon and Cornwall to produce the necessary initiative to attract more investment to the far 372 south-west. I fully support the recent development of the Devon and Cornwall development bureau and I hope that it will be widely supported in that region.
It has not been easy to get the degree of joint commitment and collaboration that is fundamental and essential for an active regional development organisation. We have increased grants to the development bureau to £320,000 for the promotion of inward investment in the south-west. I trust that it will be encouraged by this modest gesture to obtain a broader basis of support and to develop more joint policies which could attract investment. But it is a late development.
The right hon. Member for Devonport, supported by my hon. Friend the Member for Cornwall, South-East, said that the area deserves the special focus and urgent treatment that is implied in the change for the dockyard. My hon. Friend listed six issues. The question of the article 15 application has been of concern to him for some time, and I share that concern. Article 15 applications have significant public expenditure implications. I assure my hon. Friend that we are considering urgently the policy on the treatment of article 15 applications, and I hope that an announcement will be made soon on resolving that dispute.
I accept that English Estates should undertake a full programme in the area, and I shall take a close interest in its policies for the Plymouth area and the south-west. I accept that in the coming year it may have a role in enabling the opportunity for development of industrial sites to be progressed. My Department cannot be wholly responsible for training generally, but I will ensure that my hon. Friends in the Department of Employment consider the point.
The business improvement scheme is widely accepted as a form of assistance, especially for small businesses. My hon. Friend recommends that the scheme should be extended to Plymouth. There will be no further European Community extension of the BIS at the moment, but we will carefully consider having a nationally funded extension. I understand the importance that my hon. Friend attaches to that measure. The BIS has an important part to play in many areas that have suffered from structural or sudden decline, which my hon. Friend emphasised in relation to the dockyard.
There are a number of enterprises already in place in the Plymouth travel-to-work area. There is a network of local enterprise agencies and community-led organisations, supported by Government, whose primary purpose is to provide support and advice for those who may want to become self-employed. The Manpower Services Commission provides financial support for those in that category under its enterprise allowance scheme at the rate of £40 per week for 52 weeks. Currently there are 1,640 people on the scheme in Devon. The MSC also provides a number of training programmes that are specifically designed to assist men and women who wish to start new businesses.
For those who may not find employment on leaving the dockyard, the MSC has a broad range of training and retraining programmes, including the new job training scheme. As a long stop, the MSC's community programme provides 12 months' work for longer-term unemployed people, and there are currently 4,000 approved places in Devon. Certain other developments are being brought to bear on the problems that my hon. Friend and the right hon. Member for Devonport have raised. Again, I shall 373 ask my right hon. Friend the Secretary of State for Employment to review these in the light of the comments that my hon. Friend has made.
Other issues raised by the right hon. Member for Devonport concerned land and land holding. He will be aware that my right hon. Friend the Secretary of State for Defence has received a consultants' report known as the Plymouth area survey, which seeks to rationalise the property of the Ministry of Defence in Devonport and the surrounding areas. The report is being urgently considered by my right hon. Friend the Secretary of State for Defence, and he fully understands the need for conclusions to be reached soon. This is exactly the sort of survey that would have the effect that the right hon. Member for Devonport would wish to see, with special and urgent attention being given to the Ministry's holdings within the Plymouth area. I hope that the report will produce solutions for it.
I understand that there are issues in connection with the release of land, the planning of enterprise zones, and the development of an airport. The question of the Plymouth area, and measures to alleviate the consequences of the changes in the dockyards, which have been put in hand, require a multi-purpose approach. When my right hon. Friend the Secretary of State for Defence met the Plymouth council recently, in the company of my hon. Friend the Member for Plymouth, Sutton (Mr. Clark), whose commitment to dealing with these problems is total, it was suggested that there should be a co-ordinated effort by all Departments. I expect that, again, this is something that my hon. Friend the Member for Cornwall, South-East would fully support.
There has been no specific departmental initiative, but my right hon. Friend the Secretary of State for Defence attended a meeting with the council. As a result, my hon. Friend the Member for Plymouth, Sutton accepted the remit to bring together officials from the Departments of Employment, of Trade and Industry and of the Environment and from the Ministry of Defence with the object of recognising those elements in the programmes that would relate to them. Assuming that it is approved by the policy resources committee, the Departments will receive the Plymouth city plan, which is another important initiative relating to the consequences of the changes in the dockyard.
We recognise the enormous problems that Plymouth is facing as a result of the changes in the dockyards. The Government will be doing all that they can to support the local economy during its present difficult period of restructuring. Obviously this is a matter that cannot be changed easily or quickly, but the Government, through their economic policy, are providing a climate of sustained growth and falling inflation within which they can expand and flourish. I am sure that Plymouth, too, will take full advantage as it seeks to improve and develop its economic base.