HC Deb 07 February 1996 vol 271 cc268-88

[Relevant documents: The First Report from the Northern Ireland Affairs Committee of Session 1994–95, on Employment Creation in Northern Ireland (House of Commons Paper No. 37-I and -II) and the Government Reply thereto, published as the First Special Report of Session 1994–95 (House of Commons Paper No. 642).]

11.00 am
Mr. Clive Soley (Hammersmith)

I welcome the opportunity to introduce the Select Committee's first report. A Northern Ireland Affairs Select Committee is a fairly recent innovation. Importantly, it gives us the opportunity to debate on the Floor of the House the economic and social issues that affect Northern Ireland. All too often in the House we speak about the troubles in Northern Ireland, but other issues affect Northern Ireland in the same way as they affect other parts of the United Kingdom, and it is important to consider those issues thoroughly.

Our first report was on unemployment, because we regarded that as profoundly important. The Committee was chaired by the late Sir James Kilfedder until his death in March 1995. Most of the report was completed under his chairmanship, and it is an appropriate time to remember his contribution. The hon. Member for Sevenoaks (Mr. Wolfson) chaired the Committee for the remainder of the time before I became Chairman.

We all wish to thank, not only the members of the Committee for the way in which they involved themselves in producing the report and their work since then, but the staff who service the Committee. The Committee is composed of 13 hon. Members, representing five different political parties, so it is very different from many Select Committees in the House of Commons, but it has worked well and focused on some important issues, which I anticipate that it will continue to do.

We chose unemployment as the first issue because we regarded it as profoundly important to the people of Northern Ireland. We have known for a long time that Northern Ireland has specific serious problems in that respect. It is one of the poorest regions in the European Union—136th on the list of 179 regions—and the poorest region in the United Kingdom.

One of the oddities about Northern Ireland is that the growth rate has been faster there than in other parts of the United Kingdom, even throughout the past 25 years of the troubles, so economic activity has been better than many people expected. It is important not to lose sight of that fact, despite the problems that we mention in the report.

It will be seen in the report, and is common knowledge, that the public sector in Northern Ireland is disproportionately large. Given the circumstances of the past 25 years, that is to be expected, but about 32 per cent.—a third—of all employed and self-employed people in Northern Ireland work in the public sector. That is a large percentage.

With the welcome ceasefire, we all hope that the need for spending on security will gradually decrease, but we make the important recommendation to the House and the Government that it is vital that the Government manage the decline in public sector spending. We cannot simply decide that we need fewer security guards and fewer people policing areas in the infrastructure of communities.

I remember, as many hon. Members do, the number of people guarding hotels who were employed by the hotels. With luck, that type of thing will no longer be needed, but it is not enough to withdraw those jobs and hope that those people find employment. We need some emphasis on retraining and special skills for people who leave such services, which have been vital. We owe a great deal to those people, so it is important that they are given the support that they need in finding new jobs and retraining.

We drew specific attention to long-term unemployment because in Northern Ireland it stands out as an especially difficult problem. Fifty-six per cent. of unemployed people are unemployed for more than a year and 23 per cent. are unemployed for more than five years. That is a very large percentage, and 50 per cent. of unemployed people have no qualifications.

In that context, as in other parts of the United Kingdom, the pattern of work is changing. I hope that the Government will not assume that the fact that more jobs are being created solves the problem; it does not, for two reasons. First, long-term unemployed people need specific help and, secondly, employment is growing faster in part-time work than in full-time work. Nothing is inherently wrong with part-time work, but that has implications for the benefit system and implications for families, who often have lower incomes because jobs are part-time.

Useful background reading to the report is Coopers and Lybrand's "Northern Ireland Economic Review and Prospects". The review says that most of the increase in employment was in part-time jobs which now account for 30 per cent. of total employment". The pattern is no different from that in other parts of the UK and other parts of the western world.

The changes that occur in other industrial regions when heavy industry declines mirror the problems of Northern Ireland. There are periods of long-term unemployment for males especially. Then part-time employment grows, linked to some of the new industries entering the region. There is a need to retrain people who previously worked in the shipyards, for example, and to encourage research and development so that the part-time jobs that are created are not only light assembly jobs without significant skill input. That is why there was a great welcome for the Daewoo plant that was set up in Northern Ireland, which has brought with it some research and development.

There are many similarities between the economic problems and structural change that are evident in Northern Ireland and those that have characterised other parts of Britain—the north-east, south Wales and especially southern Scotland. In southern Scotland, the link between Edinburgh and Glasgow was vital in redeveloping an economy that, 20 years ago, had similar problems to those of Northern Ireland. Southern Scotland is now a major chip producer, producing about 80 per cent. of the chips in Europe. If we brought about similar development in Northern Ireland—especially if we used the link between Dublin and Belfast to build the new economy—the advantages to the people of Northern Ireland might be enormous.

Another of our recommendations, therefore, is that the Government consider the infrastructure between the north and south so as to improve development in that area. Six of the United States' mainframe computer manufacturers are located in the south of the island, but in Northern Ireland, where I believe that we have significant potential for chip development, hardly any work of that type goes on, which is a shame. We need that type of research and development.

In parallel with that type of development, we should develop the infrastructure in Northern Ireland. Specifically—the right hon. Member for Strangford is very keen on this—the road to Larne should be developed. It is used significantly by exporters from Northern Ireland and from the Republic of Ireland, as we say in the report. Developing the infrastructure is very important.

The relationship between the benefit system and the employment patterns that I described is vital in Northern Ireland, as it is throughout the United Kingdom. I have argued for many years that we need a system that recognises the fact that people move into and out of work with increasing frequency and makes it easier for them to do so without losing income and getting into debt, which discourages them from giving up benefits. The system should also recognise the part-time work factor. If the cut-off points are too severe, obviously people are disinclined to take low-income, part-time jobs that might otherwise be available. The report recognises that that is a national problem, and the Secretary of State and his Ministers have an opportunity to reflect that fact in general Government policy.

The report refers also to the core skills needed by the unemployed. As I said earlier, 50 per cent. of the long-term unemployed in Northern Ireland have no qualifications. That is a very worrying statistic because it means that those people do not have core skills. The Committee recommends that core skills should be developed in all training programmes.

The Committee also hopes to examine the education system in Northern Ireland some time in the future. The Minister will know that, although the Northern Ireland education system has many good and attractive features, the more disadvantaged students are under-performing. The report suggests that the Government should spend money more effectively on disadvantaged students and on nursery education. Evidence gathered in the United Kingdom and in almost every other country in the western world indicates that spending on nursery education— introducing children to the education system at a fairly early age—is very beneficial to their later achievements in work.

I shall be brief as a number of hon. Members wish to speak in the debate. However, I must refer to the question of investment, and particularly research and development in Northern Ireland. I was pleased to note that, on page 10 of their response, the Government reacted positively to the Committee's concern about the low level of investment in research and development in Northern Ireland. I touched upon that point earlier. We believe that that investment must be targeted and the Government seem to share that view.

I cannot over-emphasise the importance of targeted research and development. An economy that is on the fringes of the European Union and of the British economy must have the edge in research and development in order to put it ahead of the game. A few years ago when I was shadow Minister with responsibility for Northern Ireland, I examined the question of agriculture and food processing and packaging. It was clear that Northern Ireland had enormous potential in that area. The report also refers to that matter and it makes recommendations with regard to the role of the Department of Agriculture. There are considerable opportunities in the area of food processing and packaging in Northern Ireland, but it is an advanced technology which is becoming more advanced every day. I often wonder whether Northern Ireland could move into the biotechnology area, because it has the obvious base for that technology. Northern Ireland needs those high levels of research and development.

I was struck by an interesting statement in the Coopers and Lybrand report. Although it does not refer specifically to research and development, it contains knowledge about investment generally. Page 28 of the report states: There are no up-to-date data on actual investment spending patterns. The most recent numbers for the manufacturing sector come from the latest regional accounts data which give estimates of investment only up to 1993. Building on what the report and the Minister have said, I wonder whether we could make an effort to try to get a better picture of the investment pattern in Northern Ireland—in terms of not only total amounts, but of research and development. We do not want to see a repeat of what occurred in the late 1970s when international and national companies received considerable grants to establish their businesses and invest in Northern Ireland but then left during the slump of the 1980s. Virtually no infrastructure remained in place to provide work for those who had been left unemployed. We should have a more detailed look at the way in which the investment pattern in Northern Ireland is emerging, including the balance between industrial investment and research and development.

I would like to refer to a whole range of issues in the report, but I promised to keep my remarks to less than 15 minutes so that other hon. Members can contribute to the debate. In conclusion, the people of Northern Ireland have their fingers crossed about the long-term success of the ceasefire—not least because they know that they deserve, and can achieve, a better life. Northern Ireland is a wonderful place, as everyone who has been associated with it knows, and its people are very good and very decent.

We must recognise that Northern Ireland can have a normal, healthy economic development and that its people can enjoy above average quality of life. To achieve those aims, we must improve the economic conditions in Northern Ireland and improve the unemployment figures. Unemployment is a severe problem in Northern Ireland, which is one of the poorest regions in Europe and the poorest region in the United Kingdom. That is why the Committee's first report is so important and why we ask the Minister to respond to it today and to continue to address the problems that we have put before the House.

11.14 am
Mr. John D. Taylor (Strangford)

I support the speech of the Chairman of the Northern Ireland Affairs Select Committee, the hon. Member for Hammersmith (Mr. Soley). The Committee is a new venture for the House and it introduces to the people of Northern Ireland the same facilities that exist in other parts of the United Kingdom—a fact that is welcomed throughout Northern Ireland. The Committee took many years to establish, but it is now proving its worth.

This is the first report to emerge from the Committee, which commenced its work under the chairmanship of the late Sir James Kilfedder. He was my neighbouring Member of Parliament for the constituency of North Down. He was full of enthusiasm about the future success of the Northern Ireland Affairs Select Committee. In debating the Committee's first report, I place on record our appreciation of the leadership that he gave to the Committee during its first few months of deliberations.

I also thank the hon. Member for Hammersmith for the way in which he has presided over the Committee's subsequent meetings. He and I have differences of opinion on many subjects—including social and economic matters and certainly about Irish nationalism—but we have managed to work together. As the hon. Gentleman said, the Committee comprises five political parties, including the two largest parties in the House and the three parties from Northern Ireland—the Ulster Unionist party, which is represented in the Chamber today; the Social Democratic and Labour party, which is represented by the hon. Member for South Down (Mr. McGrady); and the Democratic Unionist party, whose representatives may be along later.

The Committee addressed the question of unemployment, which is a major problem in Northern Ireland. When one hears that Northern Ireland is the most depressed area of the United Kingdom, one is led to believe that things are very bad in Northern Ireland. However, it is important also to place on record Northern Ireland's successes not just in the past 18 months since the temporary ceasefire began, but in the previous decade.

As the report points out, in the past decade Northern Ireland has been more successful at creating new jobs than any other region of the United Kingdom. However, that has not had a significant impact on that country's unemployment figures because it also has the highest birth rate in the United Kingdom. I was amazed to learn that the birth rate in Northern Ireland is higher than that of Catholic Ireland—and that is saying something. No matter how successful we are at creating new jobs in Northern Ireland—we are particularly successful in that area—we must also contend with the greater demand for jobs as a result of the high birth rate.

It is also interesting to note that Northern Ireland has a very good quality of life. Its educational achievements are great and its transport system is good. We used to talk about migration from Northern Ireland, but people are now moving there from other parts of Great Britain. Not only does Northern Ireland have a high birth rate but more people are coming to the Province than leaving it, creating a greater need for jobs than for many years.

Energy costs in Northern Ireland are the subject of a recently published separate report from the Committee— rightly, because while the Province is subject to a monopoly control of electricity prices, it is under a great handicap.

Transport is also of great importance to Northern Ireland. My hon. Friend the Member for East Antrim (Mr. Beggs) has campaigned continually for the improvement of the A8 from Belfast to Larne harbour. No doubt he will dwell on that matter if he catches your eye, Mr. Deputy Speaker. As a member of the Northern Ireland Affairs Select Committee, I want to emphasise that we referred to that road system regularly. As the hon. Member for Hammersmith mentioned, I stressed its importance because only 5 per cent. of Northern Ireland trade goes to the Republic, whereas 95 per cent. goes to Great Britain. The road to Larne is twice as busy as the road to Dublin. A Government commitment to funding the A8 improvement scheme is a priority for the Province's infrastructure.

Northern Ireland is also successful in education, with the best A-level results in the United Kingdom—as was again confirmed last week, when school league tables were published in the Northern Ireland press. The other side of the story is that the Province has the largest percentage of young people leaving school with poor qualifications, which contributes to longer-term unemployment. The hon. Member for Hammersmith mentioned the need for proper pre-school and nursery education provision. That subject is dear to my heart because as someone who has contributed to Northern Ireland's high birth rate, with six children, I am aware of the lack of pre-school and nursery education.

I hope that the £240 million of peace and reconciliation money being allocated by the European Union to Northern Ireland will be used properly, not foolishly. I have great fears and suspicions, as I watch how the money is being controlled at present, that some of that funding will disappear down the drain. If it were to be used properly, one priority should be the creation and provision of nursery education in Northern Ireland, which has the lowest level of such provision anywhere in the United Kingdom.

Jobs are of course difficult to provide. Under the chairmanship of the late Sir James Kilfedder, the Committee visited South Korea. I personally travelled on to Taiwan. Although members of the Committee came from many different political parties, we demonstrated that we could work well together as a team in the interests of trying to help Northern Ireland.

In Seoul, one could not but be impressed by the presence of the Industrial Development Board, its personnel and its acceptance in South Korea. I hope that I will not be speaking out of turn when I say that officials who represent the United Kingdom at various levels in Seoul were able to confirm that Northern Ireland's presence in South Korea is better than that of any other region of the UK, including Scotland. Seven South Korean companies have opened factories in Northern Ireland, and that investment is most welcome. When I went to Taipei, I was impressed by the IDB operation there. The Province has already attracted one firm, Hualon—but it has not yet arrived due to legal problems in Europe. I hope that every effort will be made by the authorities involved to expedite that matter, so that Hualon can make its decision to invest in the south and east Antrim area. The company has promised 2,800 jobs, which is more than the number of people employed in Belfast shipyard. That puts in its proper context that proposed major investment and provision of new jobs. If only we can get over the legal problems. I reiterate my hope that every effort will be made to assist that investment to be made as quickly as possible.

One cause of concern in recent weeks was the Government's decision to reduce by 25 per cent. funding for the action for community employment scheme, which is mentioned at paragraph 254 of the Committee's report. ACE has been important in providing jobs for the young and unemployed, and in creating a service in the community for less well-off people and those who are elderly and require assistance. Out of the blue, the Government announced a 25 per cent. reduction in ACE investment, at a time of high unemployment.

One problem in the House is that when one tables parliamentary questions, it is difficult now to get answers from Ministers. I tabled two parliamentary questions asking why ACE funding had been reduced. On both occasions, the Minister refused to answer. Instead, he got the manager of the ACE operation to write to me. I was not asking about the way in which ACE was administered but about the decision to reduce its funding by 25 per cent. Ministers should not run away form their responsibilities. They decide Northern Ireland policy and they should answer for it. I deplore the new system whereby Ministers from the Northern Ireland Office— who are not elected by the people of Northern Ireland— refuse to answer in the House for their policy decisions. I place on record the all-party opposition to that 25 per cent. cut in ACE funding—which will be confirmed by the hon. Member for South Down and by the Democratic Unionist Members—when they turn up.

Mr. Soley

If I may add to the right hon. Gentleman's armoury, I discovered yesterday that the Coopers and Lybrand report referred to the immense importance of the ACE scheme to local communities.

Mr. Taylor

That emphasises my point. As we have not been able to obtain an explanation for that funding cut through parliamentary questions in past weeks, we would like one on the Floor of the House today.

I conclude with a problem in my constituency that relates to the policies of the Northern Ireland Office and of the Industrial Development Board. Unemployment is worse in some areas of the Province than in others, and social deprivation in some areas is not equalled in others—so priorities must be set in terms of investment and jobs provision. However, the priority policy that is developed should not be used as a means of denying jobs to areas that are perceived as somewhat better off.

I understand that the Northern Ireland Office and the Industrial Development Board have to carry out the policies of the Northern Ireland Office. Its policy objective is that three out of every four new jobs attracted to Northern Ireland must go to specific areas of deprivation. That is, no doubt, a worthy objective, but it places most of Northern Ireland at a disadvantage in getting new firms and jobs, because they are being concentrated in a smaller number of areas considered to have high social deprivation.

My constituency of Strangford is not considered to be an area of social deprivation. It is considered to be one of the better-off constituencies in Northern Ireland. Yet if one looks at pockets in Strangford, one will find unemployment almost equalling the level of unemployment in the so-called areas of social deprivation. I think of villages such as Portaferry, Kircubbin, and Ballywalter and other villages in the South Down constituency, such as Killyleagh, which will soon come into the constituency of Strangford. I am sure that the hon. Member for South Down will agree that that is a good thing.

The hon. Member for South Down and myself, being neighbours, have suffered alarming unemployment decisions in our constituencies in the past few weeks. In my constituency alone, in the village of Ballywalter, the Ballywalter Clothing Company has closed with the loss of 150 jobs. There is no major employer anywhere in the Ards peninsula. That one factory provided employment for many people throughout the Ards peninsula, and now it has disappeared. In Comber, in my constituency, the Albion Clothing Company, which manufactured trousers, has closed down in the past week. Nearby—and many of my constituents are involved— Shorts has a major problem as everyone knows. There is the threat of the loss of 1,500 jobs, many belonging to my constituents in Strangford. This weekend, more of my constituents have lost their jobs—I hope for a month only, but we do not know—in the Killyleagh Spinning Company, which suddenly told all 150 workers that they would be off work for a month.

All that is happening in a constituency that is considered to be prosperous, yet—I repeat—in places like Ballywalter or Killyleagh, there are very few other opportunities for employment. It is important that the Northern Ireland Office ensures that the IDB is given every encouragement to try to attract new industries to those rural areas, where there is no alternative manufacturing employment. Yes, there are jobs on the land in farming and agriculture that increase the level of prosperity in the constituency, but in the villages and smaller towns there are no alternative jobs. Those villages and towns must get equal and fair treatment from the IDB, compared with the so-called socially deprived areas of Northern Ireland. I ask the Minister of State, in his reply, to confirm that we will get fair treatment from the Government and from the Industrial Development Board, and that we will be not discriminated against in favour of other parts of Northern Ireland.

11.33 am
Mr. Eddie McGrady (South Down)

Like the right hon. Member for Strangford (Mr. Taylor), I wish to express my appreciation of the chairmanship of Sir James Kilfedder, the former Member of Parliament for North Down. He was a magnificent Chairman and a kind friend. I wish also to congratulate the present Chairman, the hon. Member for Hammersmith (Mr. Soley), who introduced the debate this morning, on continuing the even-handed and productive way of conducting the debate.

The report touches on a wide variety of aspects of employment creation in Northern Ireland. It would not be possible in a few moments even to consider one facet of it in any depth. Employment creation is a multi-faceted problem, and even the in-depth discussions that the Select Committee has had only touched on some of the factors that contribute to employment creation and unemployment.

During the inquiry into employment creation in Northern Ireland, we had the outbreak of peace. That created a new dimension and a new era for the prospect of employment creation—one that of course we all welcome very much. It will make the job of the employment-creating agencies that much easier to pursue.

The outbreak of peace also had a further dimension, in that it enormously increased the expectation of people for a better way of life in Northern Ireland. The absence of violence has achieved that already, but other aspects of a better way of life include the social ones of a house and a reasonable job. The housing problem in Northern Ireland is reasonably under control at the moment, but unemployment is not. Unemployment is still the greatest scourge that we have suffered in my memory.

When I talk about employment, I mean employment with good conditions. I do not mean employment in a low-wage economy, in which the unemployed, because of their availability, are at the mercy of the would-be employer, whether indigenous or an inward investor. We should sell Northern Ireland not as a low-wage economy, but as an economy that has a very highly educated and skilful work force. We should sell it as an area where the highest quality of training can be provided in the shortest possible time, and where efficiency and quality make up for deficiencies in foreign products. We should not concentrate on being a low-wage economy, but be able to compete on the international stage in efficiency and quality.

Much has been said in the past few years in Northern Ireland about fair employment, and legislation is currently in place and being reviewed to see whether it has the intended effect. There is a problem not only with the allocation of jobs, but with the location of jobs. That was mentioned by the right hon. Member for Strangford. He listed, quite rightly, some of the horrendous losses that have occurred in the recent past, including some in my constituency. I could not help but think as he spoke that, in my constituency, we could not have big losses because we did not have the jobs in the first place.

An article in the local newspaper, the Down Recorder, last week gave the statistic that in the past decade, between 1985 and 1995, the number of unemployed increased by 40 per cent. When my constituents read the headlines about the peace dividend and a job bonanza, they wonder where those jobs will go. We are fairly certain that none of them has gone to south-east Ulster between Strangford Lough and Carlingford Lough. In that 10-year period, not one single inward investment job was created in that area. I could repeat the same sad story about infrastructure, which has also been totally neglected in that area. No inward investment jobs have been created in the area and there has been no job bonanza. That is not my interpretation of what I see around me, but the statistical results in parliamentary questions that prove beyond doubt what I am saying.

One can adopt one of two attitudes to the problem. The first is to say that it is an accident of history; the other is that it is the result of deliberate policy. One of our local newspapers this morning carried an article about how the inward investor Sanchez (UK) Ltd. has been treated. It was to come into the area of Warrenpoint, where there is considerable unemployment. I do not know whether the problem was intentional or simply due to inefficiency.

Down district, which I represent, has the second highest unemployment among the nine council areas surrounding Belfast. We have severe infrastructure problems, too. In South Down, the ferry that plies between Portaferry and Strangford is a disgrace; it will not sustain economic trade between the two areas. It was out of action for several days last week and it continually breaks down.

I do not mean to be a dog in the manger, but we need a new approach to job creation and to the areas in which effort is concentrated.

One of the great disadvantages from which areas such as south-east Ulster suffer is that they are always included in Government statistics in the Greater Belfast travel-to-work area. In fact, unemployment statistics vary from 6.8 per cent. in Strangford—the lowest in Northern Ireland—to 22 per cent. in other areas. So the inclusion of high unemployment areas in the Belfast travel-to-work area statistics completely distorts the unemployment figures. It also means that areas of multiple social deprivation are not highlighted; they are merely camouflaged in the overall picture.

I ask the Department to provide proper statistics, broken down into the natural units made up of the communities of Northern Ireland. I would also suggest a greater element of partnership between the Government, the job-creating bodies and the vibrant local industrial development bodies working with the local councils. That would be an invaluable and fruitful process.

Mr. Thomas McAvoy (Glasgow, Rutherglen)

My hon. Friend consistently gives the impression that the job-creating agencies run by the Northern Ireland Office seem to neglect the peripheral areas outside the Belfast conurbation. Has he detected any improvement in their attitude recently?

Mr. McGrady

Since the Committee's report to the Government and to the House, I have detected no change whatever. Of course I can speak only for my own area, but I believe that other areas are in the same situation. We seem to be recreating the Pale of the 16th and 17th centuries—this time not around Dublin, but around Belfast. Into this new economic Pale all good things go and nothing emerges for the peripheral areas.

I also suggest that indigenous and inward investment incentives be graded and geared to provide more jobs near the areas of greatest deprivation. After all, that can be done in Scotland, Wales and the Republic of Ireland, so why cannot it be done effectively in Northern Ireland? We also need a redefinition of the so-called priority areas, to ensure that the real unemployment blackspots are more effectively helped by making them more attractive to investors. There is nothing to be ashamed of in providing jobs for those areas.

The not-so-new policy of the Industrial Development Board and LEDU—the Local Enterprise Development Unit—of concentrating on developing companies with an exporting orientation is fine as far as it goes, but it does not help if a constituency has nothing to develop in the first place. It is impossible to develop the export sector, or the research and development sector, of industries in places where there are no industries. I therefore say that the IDB and LEDU must act more assiduously to create the economic conditions that will attract grant aid and make those places more attractive generally.

I am talking about a change of tactics, a change of the grant aid structure and a change of the policy guiding industrial development—especially inward development.

The right hon. Member for Strangford referred to trade with the Republic which, as he stated, is running at only 5 per cent. of our total trade. The right hon. Gentleman seemed to take some delight in that fact. I take no delight in it; it is a scandal that the two parts of Ireland are not trading much more to their mutual benefit.

I cannot close without first mentioning the 25 per cent. budget cut for the Training and Employment Agency, announced on 11 December last. The effects of that cut have percolated dramatically down into the action for community employment programme. I doubt whether the Government fully thought through the extent to which the effects would be felt, but the results of the cut for meals on wheels, care in the community, Barnardo's homes, Age Concern and cancer research will be considerable. It is sad that those most vulnerable sectors of voluntary work have been targeted, and that 3,000 jobs are due to be cancelled by a stroke of the pen that came out of the blue on 11 December last.

The irony is that other Government Departments will have to pick up the tab. The services will still have to be provided, if not by the voluntary sector and the ACE programme, then more directly.

No one has yet touched on tourism in this morning's debate, yet tourism development can be one of the quickest ways of creating jobs in Northern Ireland's economy. There have been huge increases in the number of visitors since the ceasefire of 18 months ago, but I do not detect any urgency about providing the much needed infrastructure to accommodate them. I am talking primarily about beds. The policy of the Northern Ireland tourist board seems very confused. Hitherto it has been creating 50-bed hotels, whereas local market conditions dictate a need for much smaller hotels of up to 15 beds. They can be built quickly and be ready, if not for this summer, then certainly for next summer's tourist trade. I therefore urge a radical rethink of that aspect of the board's policy.

Many parts of Northern Ireland, including mine, have never had the privilege of massive job losses because we never had those jobs in the first place. That is an abiding local problem; and if there is any inequity in the approach to solving it, it must be dealt with and eradicated.

11.48 am
Mr. Mark Wolfson (Sevenoaks)

I start by adding to what has been said about the establishment of the Northern Ireland Affairs Select Committee, and about the important role played by the late Sir James Kilfedder. He was always enthusiastic and interested in all who served on the Committee, and was keen to get it off on a sound and effective footing. It is a pleasure to work on the Committee, and the current Chairman, the hon. Member for Hammersmith (Mr. Soley), who opened the debate, has continued the tradition of involving us all in the Committee's work.

My right hon. Friend—I call him that advisedly— the Member for Strangford (Mr. Taylor) spoke of the vigour of the Northern Ireland economy. It has always impressed me that, despite the difficulties in Northern Ireland, those in business there demonstrate such a positive attitude to achieving success for their companies and their economy. The Province provides an extremely attractive life style: it is a good place in which to live and work. I continue to be impressed by all the people whom the Committee meets, and from whom it takes evidence, who are involved in the Northern Ireland community and, in particular, its business life.

The Committee has discussed small firms, and made recommendations. As in many other parts of the United Kingdom, the opportunities for job creation exist largely in the small business sector. Small firms form a larger proportion of the economy per head of population in Northern Ireland than elsewhere, and they are therefore very important to that economy. A third of those firms are connected with agriculture, and manufacturing also relies heavily on small businesses.

Northern Ireland's small firms are successful in themselves. The Province has a better record in that regard—a record of small business survival, as opposed to a high failure rate—than other parts of the United Kingdom. Small firms have problems, however, many of which relate to the difficulty of raising capital. We made that point in our report. The Small Business Institute had told us of the shortage of venture and development capital for small businesses, and we recommended that the banks should pay particular attention to the evidence that we had received. We felt that they could and should provide more support, within the constraints of prudent banking.

We also focused on the need for training of managers and supervisors in small businesses—a particular interest of mine—and the relationship between such training and the readiness with which banks would lend to small companies. Banks' unease increases if they feel that they are being asked to lend to organisations which may have experienced a vigorous and energetic start-up, but which may be at risk as they grow because management is not trained to handle a larger business. The Government must give all the support that they can to ensure that training opportunities continue to increase.

Cash flow and debt are also problems for small businesses in the Province, as in other areas. I hoped that the Government would legislate to allow those who do not pay their debts within a reasonable time to be fined. There has been considerable controversy about that in the past few days, and it is very relevant to Northern Ireland.

The Committee found that small companies were also concerned about the burden of regulation, which causes them particular difficulties. Large companies have staff to deal with the regulatory framework; they can employ specialists, and they can afford to spend money on ensuring that regulations are followed. The job of small firms with five, six or 10 employees is to secure orders, to ensure effective accounting and, above all, to get the product or service out of the door and to provide customers with what they need. It is frustrating as well as expensive if they have to spend too much time dealing with Government regulation. We appeal to the Government to minimise that burden wherever possible.

The role of LEDU is extremely important to the development of small firms. We felt that some of its procedures were confusing and lacked clarity; we strongly recommended the design of a format for a business plan for small firms that was acceptable and would be used by the multitude of agencies operating under the Government umbrella, often with Government support, rather than the present multiplicity of requirements.

Reference has been made to the importance of inward investment, and the Committee's visit to Korea early last year. We were very impressed by the standing of the Industrial Development Board in South Korea: its work was effective, and has paid off in terms of investment in the Province. The Koreans told us that the board's follow-up work in helping their expatriates to settle in the Province was particularly effective. It is important for managements that are considering inward investment to know that their own people will not be left high and dry, and that help with education and housing, along with advice, will continue to be provided.

It is also important to improve education standards, allied to work requirements, at the lower end of the education spectrum. It was made clear to us that the qualifications and abilities of those leaving university in Northern Ireland were of a high order, and we saw evidence of that; but it was felt that, at the lower end of the spectrum, young people with minimal qualifications found it difficult to obtain jobs, and, even when jobs were available, the qualifications with which they left school were considered inadequate.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Does the hon. Gentleman share the serious concern expressed to me by many of my friends who work in voluntary organisations in Northern Ireland about the savage cut in the ACE budget?

Mr. Wolfson

Given the importance that the Select Committee attached to maintaining that budget, that cut is regrettable. However, the Select Committee also said that the content of the work needed review. It is important that such money should be spent and focused in the most effective way.

I am pleased to have had the opportunity to make a short intervention in the debate and I look forward to further opportunities in the Select Committee to monitor the work of the Department and how it spends Government money.

Several hon. Members


Mr. Deputy Speaker (Mr. Michael Morris)

Order. I shall call the hon. Member for Belfast, East (Mr. Robinson) next. I emphasise the need for hon. Members, if possible, to attend the whole of a debate.

12.1 pm

Mr. Peter Robinson (Belfast, East)

I shall not make a speech—I shall simply make a few points so that another hon. Member may have the opportunity to speak before the Front-Bench spokesmen.

I welcome the opportunity to comment on the Select Committee's first report. I hope that those who were concerned that the Select Committee might result in some sort of revolution in Northern Ireland now see that it can do a useful job for the people of Northern Ireland. It makes more accountable not only the Ministers responsible for Northern Ireland, but the Departments and the civil servants.

I join other hon. Members in paying tribute to the late Sir James Kilfedder. He played a significant role in the formation and the early days of Select Committee, in particular in the report on employment creation in Northern Ireland. The subject chosen by the Select Committee for its first report was clearly considered to be a priority. I suppose that, as with most Committees beginning their work, the report grew like Topsy. We went wider and wider and ultimately had to draw a line under it and bring it to a conclusion.

The significant factor that formed a backcloth to the Select Committee's considerations was the two ceasefires and the resulting change in atmosphere for business. No one would deny that there was a considerable peace dividend for business in Northern Ireland, although it was not long before we also realised that there could be a significant peace deficit.

Jobs in Northern Ireland attend the violence—glaziers who put in new glass after bombs, the construction industry that replaces buildings, the security firms that guard the companies throughout the Province and, most particularly, the security forces themselves. Jobs would be lost as a result of the peace, just as jobs would be gained. Of most concern was the fact that jobs that would be lost would be lost much quicker than they could be replaced by new ones being brought into the Province. Firms quickly reduced their security levels. Jobs such as those filled by men doing searches at the door were lost instantly and the task of filling the gap was considerable.

During the past few months in Northern Ireland, there has been a new drive and energy not only among those in Government Departments who are seeking jobs but in the business community itself. That augurs well for the future.

Mr. David Wilshire (Spelthorne)

The hon. Gentleman knows Northern Ireland a great deal better than I do, but can he confirm that I was right during the negotiations to get the impression that sometimes terrorism was being used as the reason for non-investment when peripherality might have been the cause of the problem, and that will remain and will need to be addressed even if the peace process becomes permanent?

Mr. Robinson

Undoubtedly a number of ingredients are to the disfavour of Northern Ireland, and peripherality is one. Members of the Select Committee well recognise that many business men will sit back for a long time in order to ensure that peace has a permanency about it before they invest in the Province.

The hon. Member for South Down (Mr. McGrady) referred to Sanchez. It was a sad fact that a firm considering investing in Northern Ireland was invited to meet representatives of the IDB in a restaurant's bombed out car park. That did not seem a sensible decision. Nor was it sensible to leave them stranded there afterwards. However, putting that to one side, we saw a much more helpful IDB, particularly, as was mentioned, in South Korea. Most of us were impressed by the enthusiasm and commitment of the IDB staff in South Korea—their organisation and personnel left a good impression on the Select Committee.

It would be wrong of me to fail to take the opportunity to point out that no matter how hard the IDB and others may work in trying to bring jobs into the Province, if some of the core jobs in Northern Ireland were lost, the Province would have a difficult time recreating them. I think particularly of Shorts in my constituency. If 1,500 jobs in Shorts were to be lost, it would take the IDB and LEDU a long time to replace them. As economists tell us, a further 1,500 jobs rely on those jobs in Shorts, making a net loss of 3,000. The impact of that would be on such a major scale that the Minister responsible for industry in Northern Ireland needs to be on the ball, as I know that he is. It is vital that the Government do everything possible to ensure that Fokker stays in business in some form and that the contracts are maintained.

One thing that the IDB and LEDU lack is some type of performance indicator that would enable us to see how well the IDB was doing—whether the targets are being properly met and how good is the work rate. I hope that the Minister will address himself to that, if not now, certainly in the future.

12.6 pm

Mr. Roy Beggs (East Antrim)

Improved cross-border transport and the development of cross-border business and trade are often projected as a means of reducing unemployment in Northern Ireland, but the benefits that will flow to the Province as a whole, and to the Irish Republic, by upgrading the Larne-Belfast road do not receive the emphasis and attention that they merit.

We resent the political decision made some time ago to pour money into the Belfast-Dublin road. That is traversed by only 8,500 vehicles daily compared with 16,000 vehicles through Larne. Last year, 1.9 million passengers travelled through the port of Larne. Cars, caravans and freight transport increased. The relocation of Sealink from Larne to Belfast has not had the dramatic impact that some predicted. That has been largely compensated for by the introduction of additional ferries by P and O.

It is frustrating that higher priority should not have been given to the A8. We do not accept the most recent fudge of all—a suggestion that the Department of the Environment will look into providing passing opportunities along the road. The Secretary of State for Northern Ireland must secure the funding necessary to extend the existing dual carriageway from Gingles corner. That was promised to start in 1997. At the very least, we should complete the dualling to Ballynure where the road diverges and traffic moves towards the airport and county Antrim. It is significant that Corr's corner was the chosen location for Hualon, which may still produce up to 2,000 jobs for us.

I am impressed by the work that has been done by the Select Committee on Northern Ireland Affairs. Its report on employment creation highlighted problems and difficulties but identified the positive advantages for foreign investment in Northern Ireland. The Committee's visit to South Korea was constructive and identified why Northern Ireland is attractive to foreign investors. We must continue to highlight the matters that it identified.

The use of Korean nationals as representatives for the IDB in Seoul has proved itself, and perhaps similar use of foreign nationals should be made elsewhere. The staff there were identified as being very competent. Northern Ireland was perceived by Korean firms as being a good place to invest because of the excellence of the work force and the benefits of close links with the United Kingdom and, indeed, with the European Union, where there are opportunities to market. There are 50 million people in the United Kingdom and 350 million in the European Union, whereas the Irish Republic market is limited to some 3.5 million.

The welcome that is given to overseas people by people from all sections of the community in Northern Ireland was recognised as very genuine, warm and welcoming. Praise was heaped on the IDB for the aftercare provided to new companies, ensuring that there were suitable facilities for their personnel, their workers, and, above all, for the excellence of our education system, with opportunity for the children of those who remain permanently to move on to our excellent universities. The success of South Korean companies in Northern Ireland has opened up a path for other Korean companies to follow. They heard the good news by word of mouth.

I reiterate the tourist board slogan, "You will never know unless you go", and now is an excellent time to do so. With the prospect of permanent peace, I suggest that similar initiatives by the Chairman and his Committee to visit overseas locations from which we have been able to attract foreign investment could be of great benefit. Will the Minister tell us whether much attention is paid to Select Committee reports and whether it would be a good investment and make good sense to develop cultural and sporting links with South Korea?

12.12 pm
Mr. Eric Illsley (Barnsley, Central)

On behalf of the Opposition, I should like to associate myself with the remarks made about the late James Kilfedder.

I congratulate my hon. Friend the Member for Hammersmith (Mr. Soley) and the members of his Committee on an excellent report, and I add my welcome to it. I also welcome the comments made by my hon. Friend the Member for Redcar (Ms Mowlam), who has said that the report highlights the crucial need to free unemployed people from poverty traps by easing the transition from welfare into work.

The report is concerned about the level of bureaucracy and lack of openness and co-ordination in Government Departments. It seeks new measures to help Northern Ireland's businesses to develop, market and export their products. It sees the advantages of ensuring that all three and four-year-olds have access to quality nursery education, and it calls for better targeting and monitoring of public expenditure.

There is little time for me to respond to many of the comments made in the report, and I am sorry that some hon. Members have not been called to speak in the debate: given the issues involved in the report, a much longer period is needed to do justice to it.

I shall comment on the rationale behind the report itself: the high unemployment in Northern Ireland, especially long-term unemployment. I appreciate that unemployment is at its lowest level for 14 years, at about 11.4 per cent. The key factor, however, is that some 55 or 56 per cent. of Northern Ireland's unemployed are long-term unemployed—that is, longer than one year— and 23 per cent. of them have been out of work for more than three years.

As a number of hon. Members have said, qualifications are crucial. We are told by the Government that unfilled vacancies are at record levels in Northern Ireland. I take on board the comments that have been made about part-time working, and I shall speak in a moment about benefit traps, but it is obvious that measures should be taken to bring the long-term unemployed back into employment. One such measure is the action for community employment programme. The right hon. Member for Strangford (Mr. Taylor) referred to all-party opposition to the cuts in ACE, and I add my voice to that.

The report reflects on some of the criticisms of the ACE programme: it is short term; jobs last for only one year; the employment offered is sometimes low grade; and it has a limited training aspect. But the programme did address the problem of the long-term unemployed, which makes it all the more surprising that the Government have decided to cut it by some £12.5 million and implement cuts of between 20 per cent. and 40 per cent., despite the fact that the community work programme, which the Government hope will replace the ACE programme, is still only a pilot in three areas. Cuts to the ACE programme will displace 3,000 placement jobs for the long-term unemployed, and 200 permanent management jobs.

The Government argue that the CWP is a better approach as jobs are for a longer period—three years— and it has an enhanced training element. I remind the Minister that it is a pilot scheme, but the cuts in ACE are happening now. Community programme schemes are chosen according to whether unemployment in a particular area is high, whereas the ACE programme takes a proportion of long-term unemployed in each district, so assistance is spread more widely in the ACE programme. A number of people are on record as complimenting the ACE programme on its success. The Training and Employment Agency is on record as saying that it believes that the ACE programme is one of its most successful.

It has been mentioned that some of the cuts are disproportionate. For example, job placement for the Ulster wildlife trust amounts to 38 per cent., despite the fact that 51 per cent. of participants go on to full-time employment or education. That compares favourably with any training scheme, whether it be in Great Britain or in Northern Ireland. In my constituency, training schemes deliver full-time jobs to some 30 per cent. of people who complete the courses. I suggest that the Government reconsider the cuts, particularly the targeting of resources.

The report highlights the fact that job creation in Northern Ireland is above the average of the United Kingdom or the European Union, yet there is a record number of unfilled vacancies. The right hon. Member for Strangford referred to the high birth rate in Northern Ireland, and the report gives that as a reason why Northern Ireland must achieve a high rate of economic growth, and fill the vacancies.

There is also a benefit culture in Northern Ireland, whereby people will not move from benefit to employment and must be encouraged from long-term unemployment into jobs. The benefit and tax system must adapt to that need. Tax and benefits systems must be in place in Northern Ireland, to encourage people away from benefits and back into secure employment. We have to move away from benefits and poverty traps. One way to do so would be the minimum wage, as proposed by the Labour party. When I mentioned that to the Belfast chamber of commerce recently, it raised no objections, but even that would not make any impact on the number of unfilled vacancies.

The Government's response to the report refers to the Northern Ireland growth challenge. I am pleased that the Government welcome the efforts of the growth challenge, which offered excellent ideas in relation to employment creation in Northern Ireland. They involve a number of private sector companies. It is disturbing to hear the Northern Ireland growth challenge refer to a culture of comfort in Northern Ireland and to the possibility that, unless the peace dividend is properly managed, there could be a gap in its cycle of comfort, as it calls it, which could lead to higher unemployment in the short term.

In the time left available to me, I should like to touch on other issues in the report. I endorse the comments of the hon. Member for Sevenoaks (Mr. Wolfson) on small businesses. Northern Ireland has a high proportion of small firms compared with the rest of the United Kingdom. Paragraph 184 of the report states: Small businesses … can suffer from a cautious approach to lending on the part of the banks. Paragraph 189 states: The largest problem encountered by Northern Ireland's small businesses is that of cash flow, payments and debtors". It is probably as well that the right hon. Member for Henley (Mr. Heseltine) is not the Secretary of State for Northern Ireland, or small businesses in the Province would be in real trouble. The Labour party is on record as saying that it is considering proposals for statutory protection for small businesses in relation to late payment of debts, and a moratorium law to assist in relation to bankruptcy.

Energy costs are the subject of another Select Committee report. That issue needs to be dealt with. The privatisation of electricity in Northern Ireland has left generators in an unregulated monopoly position, with contracts extending well into the next century—until 2024. There is little likelihood of electricity prices coming down in Northern Ireland until the issue of those contracts—including the gas "take or pay" contract— is dealt with.

On transport links, I take on board Northern Ireland Members' comments on the A8 to Larne. The Province has a high level of academic achievement, both at A-level and at universities. The downside is the number of children who leave school without any qualification. I am pleased that the Government's response to the report calls for measures to improve that position.

I have mentioned the peace dividend. It is essential that the Government carefully manage what is referred to as the peace dividend—about £500 million going into the Northern Ireland economy. I hope that it will continue to be the case that we no longer need to spend as much on security and such matters in Northern Ireland. That money should not simply be removed from the Northern Ireland economy in one go.

I do not have much time to debate tourism, but the report says that it has the potential to create 20,000 jobs. That must be dealt with.

I endorse the report's final paragraph, which states: The ceasefires, if permanent, are potentially a turning point in the Province's history".

12.22 pm
The Minister of State, Northern Ireland Office (Sir John Wheeler)

Like the hon. Member for Hammersmith (Mr. Soley), I pay a warm tribute to the work of the late Sir James Kilfedder, who became the first Chairman of the Select Committee on Northern Ireland Affairs. He is remembered with enormous affection in Northern Ireland as a great constituency Member of Parliament. We are grateful to him and to the people who followed him in the Select Committee's chairmanship for their work. We are also grateful to all members who served on that Committee and for the content of their first report. In the time available to me, I shall try to pick up on some of the points that have been raised in this important debate.

The debate has understandably attracted a great deal of interest in Northern Ireland. Consequently, many Northern Ireland Members are present in the Chamber and have sought to speak. Unfortunately, the debate's short duration has prevented many of them from making the speeches that I know they would have liked to make. It is therefore important that I should place it on record that the right hon. Member for Strangford (Mr. Taylor) was present and spoke and that the right hon. Member for Lagan Valley (Sir J. Molyneaux) was also here, as were the hon. Members for Fermanagh and South Tyrone (Mr. Maginnis), for East Antrim (Mr. Beggs) and for South Antrim (Mr. Forsythe). The hon. Member for South Down (Mr. McGrady) also spoke.

If I may impishly pick up a remark by the right hon. Member for Strangford on the theme of, "They haven't gone away, you know," the hon. Member for Belfast, East (Mr. Robinson) also made it to the debate and made an important speech, with which I shall try to deal. My hon. Friend the Member for Sevenoaks (Mr. Wolfson), who is a sterling member of the Select Committee, also made some valuable points.

In the brief time available to me, I should like to deal with some of the key, important points that have been a theme of the debate. In his role as the distinguished Select Committee Chairman, the hon. Member for Hammersmith raised the important point of better information on research and development in Northern Ireland. I inform him and the House that the Department of Economic Development has undertaken new research on spending on research and development in the Province. The first results are available. That research will be continued and published in future years, so it will not only assist the Select Committee on future occasions, but guide and inform Northern Ireland Members who consider the effectiveness of investment in Northern Ireland's economy.

The right hon. Member for Strangford and others raised the issue of the action for community employment programme, which I should like to deal with early in my remarks because I know that it is of great importance to Northern Ireland's people and to Northern Ireland Members in particular. I fully understand the concerns that have been raised in the debate and I assure the House that my noble Friend in the other place has received similar representations on the matter. She has advised me that she is preparing measures that will help smooth the transition to an ACE programme that is more appropriate to the current economic circumstances. I assure hon. Members that she will announce those transitional arrangements shortly.

ACE, however, was introduced when unemployment was rising rapidly. As we have discussed during this short debate, that position has changed for the better and employment opportunities have markedly improved. We have 7,000 registered vacancies and we must skill the people of Northern Ireland to ensure that they can take up those vacancies. Next year, ACE expenditure will be about £40 million. In total, about £46 million will be spent on schemes for the long-term unemployed in 1996 and 1997.

The theme of the debate has been, to use the language of the hon. Member for South Down, quality and efficiency, and getting the right jobs in Northern Ireland— not merely low-grade, low-paid ones. The hon. Gentleman made an important point, which I link to the ACE programme. The pot of money that is available in Northern Ireland must be effectively used if it is to realise the Select Committee's objective, as well as meet the interests of the hon. Member for South Down.

The right hon. Member for Strangford mentioned the importance of the rural economy. As the Minister with responsibility for finance, I am only too aware of his point. I assure him that I shall consider that matter in my overarching role. He made a sound point. We must not overlook the needs of people in the rural economy. They are being dealt with, but it is important that that should followed up.

The road to and from Larne is for ever etched on my memory. In constituencies in southern England, the campaign is about not having the motorway at one's front door, but in Northern Ireland the reverse is true; everybody, especially in Larne, would like the motorway to end at his front door. The hon. Member for East Antrim pleaded his case with his usual eloquence, and I hope that the private finance initiative may ride to the rescue and provide in due course investment that would help to solve the problem.

In the one minute that I have left, I shall touch upon another important issue that several hon. Members raised—the question of Fokker and Shorts. I appreciate the importance of the contracts to Shorts, and confirm that Baroness Denton recently met Dutch Government representatives to discuss that subject. Although it is a commercial matter and will have to be resolved by commercial mechanisms, I assure the House—

Madam Deputy Speaker (Dame Janet Fookes)

Order. We must now move on to the next topic.

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