Manufacturing Industry (Dunstable) (Hansard, 21 January 1993)

§ The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh)

I congratulate my hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) on his success in securing a debate on this 603 important issue. I know that he is assiduous in the interest he takes in all matters affecting his constituency. The House will be grateful for his comments.

I share my hon. Friend's concern over the rise in unemployment, although I note that the rate of unemployment in the Watford and Luton travel-to-work area remains below the national average at 9.5 per cent. Naturally, I very much regret the redundancies that have taken place at Renault Trucks and AWD. However, while Renault's manufacturing operations at Dunstable are to cease at the end of March, the French parent company has assured the United Kingdom management that the Dunstable site remains a key part of its European strategy. Dunstable will still employ 240 people involved in customising imported vehicles, engineering design and sales and training.

Of course, my hon. Friend has been actively involved in helping Renault to formulate its future plans for Dunstable. Furthermore, although AWD has ceased manufacturing operations at Dunstable, the acquisition by Marshalls of Cambridge of its four-wheel-drive production has safeguarded 30 jobs in Cambridge and may create another 30 new jobs in the future.

Despite the job losses which my hon. Friend has described, there are a number of promising signs that local industry will be well placed to take advantage of the rise in demand as the recovery gets under way. The United Kingdom car industry has continued to perform well despite a difficult economic climate both at home and overseas. Indeed, there are encouraging signs of renewed growth in the United Kingdom market. There was not only a marked increase in car sales in December, but a slight but encouraging increase for 1992 as a whole over the previous year. Production in December was up by 19.8 per cent. compared with the same month in 1991. Prospects are also improving overseas. Exports in the three months to the end of October—the latest figures available—were up 7.5 per cent. over the previous quarter. This is a most impressive performance in view of the economic slow down abroad.

I am also encouraged to see that the commercial vehicle market—this will particularly interest my hon. Friend—is emerging strongly from the recession. Makers of heavy trucks, which were probably worst affected, will, I am sure, be encouraged by the strongest monthly rise in sales in five consecutive months of recovery. Sales of vans, trucks and buses overall were 7.7 per cent. higher in December than in the same month last year.

Indeed, the local motor industry has been part of the promising national signs of recovery. Vauxhall has remained competitive in a difficult trading period. The company has exported surplus production to the German market through its General Motors sister company. I note with satisfaction that it has had considerable success in improving productivity per employee and that last year's figure for the Luton plant was 9.4 per cent. up on 1990. Production increased from 40 to 47 cars per hour, and 70,725 cars were exported in the same period.

A similar picture of increasing productivity and strong order books is seen in the exciting joint venture between General Motors and Isuzu—IBC Vehicles—where the Frontera range is doing extremely well. At nearby Leighton Buzzard, Boss Trucks, one of the world's leading 604 fork truck manufacturers, is planning a 400,000 sq ft extension to its existing factory. That not only safeguards the position of the present work force, but offers the potential for an additional 500 new jobs.

The strength of those vehicle manufacturers creates opportunities for other related companies in the Luton-Dunstable area. Local component manufacturers, including General Motors components manufacturer AC Delco, benefit from supplying Vauxhall, which last year spent £117.7 million on components and £71.3 million on other services from companies in Bedfordshire.

My hon. Friend cited the example of the closure of the steel industry in Corby as a parallel to the position in Dunstable, but there is an important difference. Dunstable is set in a much larger urbanised area which, until recently, was one of the most buoyant parts of the country. In contrast, Corby was much more isolated. Dunstable is within easy commuting distance of the expanding city of Milton Keynes, where my hon. Friend the Member for Buckingham (Mr. Walden) recently reported that over 6,500 jobs had been created in the past few years.

However, I am much aware that Dunstable has not been able to isolate itself from the broad effects of the downturn in the national and world economies. By the same token, as the United Kingdom pulls out of recession, so we can expect to see the tide turn for the economy of the Dunstable area.

Government economic policy is aimed at hastening that recovery. In his autumn statement, the Chancellor of the Exchequer set out clearly the Government's new framework for economic policy. I believe that the measures announced will promote recovery, to the benefit of all enterprises—large, medium and small.

I have no doubt, for example, that the housing market will benefit from the £750 million available this financial year to buy up some of the empty properties in the owner-occupied sector. The construction sector will be given a further boost by the temporary relaxation of rules governing the use of capital receipts. Housing and construction have faced particular difficulties in the past two years and those measures will help to provide a much needed boost to confidence.

The temporary rise in capital allowances from 25 to 40 per cent. for the first year of investment in plant and machinery should also help to bring forward private sector investment. The abolition of special car tax will provide a direct boost to the motor industry, an industry which lies at the heart of British manufacturing and is particularly significant to my hon. Friend's constituency.

I note my hon. Friend's comments on the Urban Regeneration Agency. Its primary aim will be to bring vacant and derelict land in urban areas back into use. It will be expected to concentrate on urban priority areas and assisted areas, but—this will be of interest to my hon. Friend, as he made a point of mentioning it—it will also take over responsibility for derelict land grant and will be able to assist local authorities and the private sector with the reclamation of derelict land wherever the need arises. However, it will need to consider any such requests against its priorities for urban regeneration and wider land reclamation.

My right hon. and learned Friend the Secretary of State for the Environment operates the derelict land programme to deal with problems of dereliction. The derelict land survey showed that, in 1988, south Bedfordshire had 76 hectares of derelict land justifying reclamation.

605 Historically, there has been little demand for derelict land grant in Bedfordshire, because market forces have generally been strong enough to secure the reclamation of derelict sites. Resources have therefore, for obvious reasons, been directed to sites that needed extra assistance. From 1989 to 1991, two schemes received aid totalling £106,000. In 1992–93, three will receive grant totalling £60,000, and 93 per cent. of this money will be paid to local, authorities and the remaining 7 per cent. to private bodies. The amount of grant available in Bedfordshire in 1993–94 is not yet determined, but a number of applications have been made to my right hon. and learned Friend's Department, and grants will be made as resources permit.

I am sure that my hon. Friend is aware of the specialised nature of the AWD and Renault premises. Their suitability for re-use or redevelopment is best assessed by prospective buyers. If they consider that the premises pose significant problems, they are at liberty to apply for a grant from my right hon. and learned Friend's Department, or, when established, the urban regeneration agency. Grant could then be awarded for any eligible works, subject to the availability of resources at the time.

I have taken careful note of what my hon. Friend has said today, and I will make sure that my right hon. and hon. Friends in the Department of the Environment are made aware of his concern. I hope that he will be reassured by what I have said about derelict land grant.

My right hon. and learned Friend the Secretary of State for the Environment is aware of the general stagnation in the housing market across much of the country including south Bedfordshire. He is also aware that housing need exists in many places which could be helped by bringing into use some of the empty houses at present standing unsold. The Government therefore announced in the autumn statement a £750 million housing market package which will be channelled through the Housing Corporation to a selected number of housing associations which will buy houses in the market.

The aim of the scheme is to stimulate the depressed private housing market by buying up around 17,000 homes from a variety of sources. This will need to be done before the end of March.

In south Bedfordshire, this will be undertaken by the Bedfordshire Pilgrims housing association, which will be handling the package allocated to the whole of Bedfordshire, except for Luton. A total of £6.5 million has been allocated to the Bedfordshire Pilgrims housing association, which, in conjunction with some half as much again from the housing association's own resources, borrowed by it from the finance market, should allow the purchase of approximately 190 housing units. Possibly one third of these would be in south Bedfordshire. Some will be purchased from builders who have empty houses that they have completed but have not been able to sell. Some will be from estate agents who have empty houses on their books awaiting sale. Some will be from building societies which have empty houses which they have repossessed through mortgage default and which are at present unoccupied.

Among the range of options available to the South Bedfordshire district planning authority in promoting urban regeneration and economic activity is the establishment of simplified planning zones. As a result of this debate, I will make sure that there is proper liaison 606 between the local district council and my right hon. Friends in the Department of Environment. I hope that that is of help to my hon. Friend's constituency.

Simplified planning zones supplement the enterprise zones which my right hon. and learned Friend the Secretary of State for the Environment has designated in various parts of the country. They establish an alternative approach to the control of development which allows the planning system to work more effectively and efficiently in designated areas. Under the procedure for establishing simplified planning zones set out in the Department of the Environment's planning policy guidance note No. 5, it is for the local planning authority to consult widely on the desirability of such zones and before the preparation of such a scheme. The provision of enterprise zones is a matter for my right hon. and learned Friend the Secretary of State for the Environment, and local planning authorities must apply to him for the designation of zones where they consider that there is a special case which cannot be addressed through the use of simplified zones.

My hon. Friend asked about the responsiveness of training and enterprise councils to major redundancy announcements such as the one in his region. TECs are, of course, designed to be responsive to local needs. Their boards are made up of business men and others drawn from local communities. The DTI regional office in Cambridge expects to receive the Bedfordshire TEC business plan for the next financial year at the end of this month. It is anticipated that the TEC will be seeking to deliver business counselling, a business information service and business skills training. The business plan will apply to the whole of Bedfordshire, but will certainly take into account the particular needs of the Dunstable area.

Once a business plan is agreed, it is not set in stone. The plan can always be revised in the course of a year to respond to unanticipated events affecting the labour market. As a result of the debate, I shall ensure that our DTI regional office is made fully aware of the problems to which my hon. Friend has alluded, and we shall have to see how the TECs can be best encouraged to help my hon. Friend's constituency.

My hon. Friend will be aware of the wide range of help that is available to businesses in his area to enable them to become more competitive and expand their markets overseas. More than 1,000 companies in the county of Bedfordshire have benefited from the expert advice of the DTI's enterprise advisers, and 390 of these have gone on to receive subsidised consultancy help intended to improve and strengthen those companies' performances.

Many companies in my hon. Friend's area also take advantage of the wide range of services that are available to help the exporter develop sales in new markets and identify new market opportunities through the overseas trade services. Together with the Bedfordshire chamber of commerce, the DTI has an extensive programme of seminars and clinics on helping companies to penetrate new markets.

My hon. Friend has a first-rate record on helping companies in the export field. He will be aware of the efforts being made by my right hon. Friend the President of the Board of Trade to promote exports. Again as a result of the debate, I shall ensure that our new export promoters in the DTI are made fully aware of my hon. Friend's concerns about export promotion.

Support for technology-based businesses is available through grant aid for individual companies under the 607 SMART competition and the SPUR scheme. The former is for companies employing up to 50 persons and the latter for those employing up to 500 people. Both are for innovative product and process development. Almost £500,000 has so far been awarded to Bedfordshire firms under these schemes.

In addition, the Department, with EC support, is providing substantial support for collaborative research. It is also funding the establishment of an industrial unit at Luton college to ensure the commercial exploitation of technological developments in the area. My hon. Friend's area is particularly noted for its technological prowess, and I hope that we can ensure that any available money is channelled to companies with worthwhile schemes there.

My Department's very popular "Managing into the 90s" programme, aimed at exposing senior management to the very best management practice, was hosted by Texas Instruments in Bedford in one of the first management action briefings. My first ministerial visit was to Texas Instruments, and I have taken a close interest in the company ever since. Since that time, Cranfield school of management has co-ordinated the "competitive edge" manufacturing workshop programme, and following the DTI east launch of the regional "Managing into the 90s" programme on 9 December, we will be offering firms from the county the opportunity to explore management best practice in some of the medium and small companies in the region as well as staging a further series of specialist management, seminars.

My Department, through its regional office in Cambridge, is working closely with local agencies, particularly the Bedfordshire and district chamber of commerce and the Bedfordshire training and enterprise council to improve and widen the range of services available to business. The DTI gives financial support to the chamber's export development adviser, whose role is to give advice and help to new and passive exporters. We have supported the chamber's recent very successful mission to Malaysia and Singapore, which included a number of Bedfordshire companies, and we will be supporting missions in 1993 to the USA, Malaysia and Singapore.

We are working closely with the TEC, the chamber, local authorities and other bodies to improve collaboration and co-ordination of services to medium and small enterprises by delivery through a single site in Luton, 608 which could form the basis for a bid under the DTI's new one-stop shop competition, which my hon. Friend particularly mentioned. His area could be successful in that competition. No doubt my hon. Friend will wish to encourage these developments and will ensure that the submissions by the organisations in his area are of the highest calibre. I hope that there will be successful bids from Bedfordshire.

My hon. Friend will appreciate that this substantial and wide range of advice, help and financial support will be of longer-term significance in establishing a strong base for the future growth of business in the Dunstable area.

I fully understand the importance of manufacturing to the Dunstable area and to the economy of Bedfordshire as a whole, and my hon. Friend put his case forcefully tonight. The latest employment census shows that 30 per cent. of the Bedfordshire work force are engaged in manufacturing. I assure my hon. Friend that the Government are committed to the maintenance of a strong manufacturing sector and recognise the crucial role that it plays in the national economy.

Manufacturing accounts for more than one fifth of our total output, one fifth of total employment, and four fifths of visible exports. The Government believe that the recession should not be allowed to obscure the manufacturing achievements of the 1980s, which saw high growth rates and sustained improvements in manufacturing performance.

United Kingdom manufacturing output is up by more than one fifth on 1981—the trough of the last recession. Productivity is up by nearly two thirds, investment by one third, and export volume by four fifths. Export volume since 1981 has grown faster than in France, Germany, the United States of America, Japan and Italy.

Despite the recession, exports and productivity are both at record levels. The gains of the 1980s will not be wiped out by the recession, and manufacturing is well placed to benefit from the resumption of growth.

Businesses in Bedfordshire are particularly well placed to take advantage of the anticipated upturn and to repeat the benefits that will come from the completion of the single market. I assure my hon. Friend that my Department will play its part in ensuring that businesses in his constituency are in a good position to derive their full share of the benefit from the recovery.