HC Deb 12 February 1997 vol 290 cc294-301 12.29 pm
Mr. Walter Sweeney (Vale of Glamorgan)

For nearly five years, I have had the privilege to represent one of the most beautiful constituencies in Wales, with Cosmeston lakes on the boundary with Cardiff, South and Penarth to the east, St. Donat's castle to the west, Barry Island and Porthkerry park in Barry, the attractive market towns of Cowbridge and Llantwit Major, and several miles of coastline. We also have countless lovely villages and some very pretty countryside.

Any visitor to the Vale can readily appreciate the tourist attraction that it represents and the general prosperity of the people. Closer inspection would reveal some of the sources of that prosperity and why unemployment in my constituency has fallen from 8.7 per cent. five years ago to 7 per cent. last month. If the Daily Mirror is to be believed, the figure is even better today.

There has been well over £1 billion of inward investment in the Vale in the past five years. I should like to give the House some examples of the successes achieved there, to draw attention to the likely causes and to express some hopes for the future. One of the most exciting developments in Wales is known as the Waterfront Barry, where Associated British Ports, in partnership with the Welsh Development Agency, is engaged in the regeneration of a 190-acre site.

The principal components of that £25 million project are 65 acres of residential development, comprising more than 1,000 homes for all sectors of the community, including luxury waterside apartments and affordable family homes with gardens; a 12.5-acre retail park with 120,000 sq ft of retail space, to revitalise the town centre and restore Barry's reputation as one of the major shopping centres in south Wales; eight acres of commercial development, with new offices, restaurants and smaller businesses; and about 40 acres of leisure and recreational development adjacent to the waterside, creating amenities, space, jobs and environmental improvement.

I had the pleasure of visiting that development last Friday and I had a bit of fun driving a digger on the site; I hope that I did not damage it. It was an interesting visit. The first phase of the contract for the Waterfront development, due to be completed on St. Valentine's day, is virtually complete. The former graving dock has been completely lined, filled with low-level waste and covered with earth that is being levelled in readiness for the construction phase.

The first tranche of new retail development and family homes should be ready in the first quarter of 1998. The project will create many new jobs, both during the 10-year construction period and in the finished development.

The port of Barry has also received a major boost, with the signing of a 25-year contract with Dow Corning. That is associated with the new £150 million Genesis plant, and from 1999 onwards it will substantially increase shipping traffic at the port. That is important to Barry and reflects ABP's continuing core activity as a company that runs ports.

I should also mention the Van Ommeren tank terminal in Barry, which took over the Powell Duffryn terminals last November. Van Ommeren is negotiating with Dow Corning and ABP to build a new storage facility near the chemical complex by Hayes road in Barry. The first phase will allow the 24-hour transfer of feedstock and finished products between the production plant and storage facility by dedicated pipelines, and from the storage facility to two berths in No. 2 dock, Barry, to meet the worldwide sales and demands for silicones.

Cost estimates for the first phase are £11 million, and construction should commence at the end of this year or the beginning of next year, and last for about 18 months. Jobs will be involved during the construction period, and eventually the existing staff at the old tank terminal will transfer to the new tank facility. The main benefit of the development is the guarantee of existing jobs into the next century and the continuance of silicone production in Barry at the Dow Corning site.

Historically, British Petroleum was the major player on the chemical complex site near Hayes road, but over recent years much of the land has been transferred to other companies. Despite that, BP invested £26 million in 1992 to build a new phenolic resins plant, and in doing so created one of the most modern manufacturing facilities in Europe. BP employs 125 people in Barry and currently has 12 modern apprentices. Given the size of the work force, that number of apprentices represents a considerable investment in the future.

Dow Corning is one of the biggest investors in the Vale. The company, founded in the United States in 1943, began to manufacture silicones at Barry in 1952. Since then, it has invested more than £100 million in the site and developed thousands of new products. It is currently in the middle of a major expansion of capacity at Barry that will create about 150 new jobs, so Dow Corning will employ more than 600 people there.

The project will generate up to 500 additional jobs during the construction phase. Silicones are used every day, without people realising it. The work force at Dow Corning are indirectly helping to protect tiny diodes, to make babies' teats, to seal windows and even to make sure that stockings stay up. The people of the Vale can be proud of that forward-looking, high-investing company.

Another important investor in Barry, next door to Dow Corning, is Cabot Carbon, which built a plant for $62 million in 1991—note the dollars, as this is American investment in Wales—of which $6 million was grant. Since then, $1 million was spent on a dispersion plant in 1995 and a further $5 million on plant expansion last year. This year, a further $1 million is being spent on the treatment plant and $2.5 million on plant expansion. In addition, $1 million is spent each year on improvements. Cabot employs 67 people in Barry, plus 10 contractors, and expects to take on four extra staff this year.

On the same important site, Dow Chemical Co. employs 32 people and has six contractors permanently on site. The number of employees has diminished over the years, but two teenagers are working there under a work experience scheme organised by Barry training and enterprise council. Over the past five years, Dow has invested approximately £5 million in its facilities and it is planning a long-term future in Barry. It hopes to recruit one or two new employees in the coming year.

Zeon Chemicals is another Barry success story. Between 1988 and 1995, production increased by 50 per cent., but acrylonitrile and butadiene emissions were reduced by 90 per cent. Last year, substantial further investments were made to expand production while further reducing emission levels. Zeon and all the companies on the chemical complex in Barry co-operate closely with one another to protect the environment, to comply with statutory requirements and to keep the public informed through regular consultation.

The last company on the chemical site that I must mention is European Vinyls, a company that has its UK headquarters at Runcorn and is the largest PVC producer in Europe. It employs 100 people in Barry in a plant built by BP for £42 million in 1981. In the past three years, EVC has spent £4.5 million on improving the plant.

On the western edge of my constituency, Ford Bridgend produces the Zetec engines for the Escort and other Ford models and I understand that production is likely to continue, whatever happens at Halewood. Of particular interest to me, as a Jaguar fan, was seeing the production line for the new Jaguar V8 engine, which was gradually stepping up production in July last year, ready for the introduction of the fabulous new Jaguar sports car in the autumn. That certainly bodes well for the future of that plant, as I have no doubt that the demand for that model will help to protect the well-paid jobs at the Ford plant.

Moving to the northern boundary of my constituency, I must refer the House to the success of the Robert Bosch plant, which was opened in January 1991. Last year, when I visited the factory, it was producing 15,000 alternators a day and easily out-performing its rival parent plant in Stuttgart. In 1995, it produced its 10 millionth alternator. Bosch had 27 apprentices at the time of my visit and was using sophisticated methods, such as just-in-time working. There was high pay for the workers, giving the lie to the allegation so often made by Labour Members that Wales is a cheap-labour economy. The plant provides excellent working conditions and good retraining facilities. In case anyone from Cardiff international airport is listening, I should perhaps mention that Bosch would very much like a direct air link between Cardiff and Stuttgart.

I visited Robert Bosch in Stuttgart in 1995 and asked Mr. Gerhard Turner, who is now commercial director of the K2 division, why the company had come to Wales. He said that, first, it provided easy access to the large United Kingdom domestic market. Secondly, he mentioned the lack of red tape in Wales and the fact that it took half the time to build the plant and get it up and running there as it would have taken in Germany. The third reason was the flexible work force: if an order is received on Friday to supply goods the following Monday, the company does not have to engage in lengthy negotiations with work force representatives—they simply change the shifts and get on with it.

Fourthly, the company has no problems with moving goods by road at weekends in Wales: in Germany, there are restrictions on lorry movements at weekends. Fifthly, and a very important factor, there are the lower social costs that are added on to wages, which make a huge difference to the net cost of employing people in Wales compared with Stuttgart. Finally, there are good road and rail communications. Mr. Turner might also have mentioned that the Vale is an extremely attractive place for Bosch workers to live.

RAF St. Athan is the biggest employer in my constituency. It has been pursuing an active civilianisation programme for the past four years and 1,190 new jobs are being created over a three-year period. In the process, about 350 personnel are being trained. The annual cash budget for RAF St. Athan is around £115 million, or about £250 million for the full cost budget, with spares and overheads. About £50 million of that finds its way into the local economy. RAF St. Athan is subject to market tests and open competition and is due to submit its in-house bid on 19 February. Whatever the outcome, prospects look good.

Also, Blue Circle Aberthaw is investing nearly £2 million this year and is planning to invest another £5 million by the millennium.

Finally, there is Cardiff international airport, which in some ways is the jewel in the crown. The airport, which was run by three local authorities, was bought by TBI plc and has since gone from strength to strength. Two Ministers have recently visited RAF St. Athan and my right hon. Friend the Secretary of State for Wales has visited Cardiff international airport; they could see for themselves the huge strides that have been made since privatisation.

I have a special plea for my hon. Friend the Under-Secretary of State for Wales on behalf of the airport. I ask him most sincerely to continue to plan to fund the new road to connect Cardiff docks with the airport. My hon. Friend has already approved some £800,000 of initial spending to cover the design stage of the road and I emphasise the tremendous importance of the road, not only to the potential £40 million development in the vicinity of the airport but to the whole of Barry, including the chemical complex that I described.

I also hope that we shall see the opening of the existing freight railway line between Barry and Rhoose for passengers, preferably with a spur serving the airport and, ideally, the line continuing to Llantwit Major. I appreciate that there are cost problems for that major investment in upgrading the line, but with the substantial housing development in Rhoose and Llantwit Major and the increasing traffic at the airport it may well become a viable proposition.

I must put in a special plea on behalf of residents in the Dinas Powys area of my constituency, who would appreciate some help from the Government. I realise that, as the highway authority, the Vale of Glamorgan council is responsible, but we very much want a new bypass around Dinas Powys; it would not only improve the quality of life for people living there but make transport between Cardiff, Barry and the rest of the Vale very much better.

12.46 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones)

I am grateful to my hon. Friend the Member for Vale of Glamorgan (Mr. Sweeney) for giving us the opportunity to debate the economic and inward investment success story in Wales. It is a remarkable story, which many of our competitors envy, and it is a story that affects all of us in Wales. My hon. Friend details an impressive list of all that is going on in the Vale of Glamorgan. I know that that reflects his extensive activities as an assiduous constituency Member of Parliament. I believe that that is very much in the traditions of the late Sir Raymond Gower who, in many ways, was the predecessor of both my hon. Friend and myself.

My hon. Friend excited me with what is happening with the waterfront development in Barry. I am sure that his practical involvement recently will have been significant in taking that project forward to its imminent completion. He rightly referred to the importance of Cardiff International airport to his constituency. My right hon. Friend the Chief Secretary to the Treasury was one of the Ministers who visited recently, and he went elsewhere in south Wales last week. I am sure that he was impressed by being able to see on the ground what good use we make of the money that we receive from the Treasury. That will better equip my Department for the next round of public expenditure negotiations.

My hon. Friend was concerned about improving the road from Cardiff to the airport. The road is the responsibility of the Vale of Glamorgan local authority as the highway authority. The original scheme involved on-line proposals to upgrade the A4050 and the A4226 between Culverhouse Cross and the airport at a cost of £23 million. However, there was fierce opposition to the plan, and there were congestion concerns, to the extent that an alternative, off-line route has been proposed at a cost of £58 million. My hon. Friend is a strong supporter of that proposal. As he said, we have provided transport grant settlement of £800,000 for the local authority for 1997–98, which will allow it to proceed with the preparation work for phase 1 and to investigate further the feasibility of phase 2.

I have to acknowledge my hon. Friend's persuasive powers. At a time of the greatest constraint on public expenditure, he was primarily responsible for persuading the Secretary of State and me to provide the £800,000 that will enable the local authority to go forward. No doubt next year he will seek to be even more persuasive in trying to elicit money from us, but I cannot anticipate. I note what he said about the need for the Dinas Powys bypass, but I cannot give any promises today.

My hon. Friend's constituency has shared in the exceptional success that we have enjoyed in attracting inward investment to Wales. Since 1983, almost 7,000 new jobs have been promised, with associated capital investment of almost £1.7 billion. Ford, Robert Bosch and British Airways have caught the eye because of their size and importance, but many other good projects have come to the Vale of Glamorgan through companies from the United States, Europe, the far east and elsewhere in the United Kingdom.

We have had a good run of industrial news for Wales in the past year or so. Sony, Ford, Newport Wafer-Fab, Toyota, British Aerospace and St. Merryn are only a few examples. LG was the most significant single announcement. It was the largest ever inward investment not just in Wales and the United Kingdom but in Europe. Those projects will take a further 10,000 people off the unemployment register. Moreover, that figure does not take account of the indirect jobs that will undoubtedly be generated.

What the Government have done to bring LG to the Cardiff-Newport area must be of the greatest importance to my hon. Friend, given the close proximity of his constituency. We shall build on those investments in the months and years to come and make sure that Wales continues to forge ahead in the important job of sustaining a vibrant and dynamic economy which is capable of taking on and beating the best in the world.

It is incumbent upon us all to ensure that the whole of Wales enjoys the full benefits of inward investment. We want better distribution throughout Wales and we have given the Welsh Development Agency targets to achieve that. I am pleased that those targets have been achieved and, indeed, consistently exceeded over the past three years.

Major announcements in recent months present enormous opportunities. All of us involved in economic development must work together to make sure that we take full advantage of those opportunities for the people of Wales.

Wales is home to more than 300 overseas-owned manufacturing companies which employ more than 75,000 people. They are spread throughout Wales from Toyota in the north-east to Panasonic in the south-east, Euro DPC in the north-west and Calsonic in the south-west. Those investments have provided much-needed new jobs but the impact of inward investment is wide-reaching. The new jobs are vitally important to the families they support: none of us should underestimate that.

Equally important is the diversity that inward investors have brought to Wales. Where we were once heavily dependent on a narrow band of industries, we can now boast significant strengths in automotive components and aerospace—as my hon. Friend knows through their strong representation in his constituency—in consumer and office electronics, and a growing one in semiconductors. We are at the leading edge of technology in many of those sectors and more and more centres of excellence are being established in Wales. That diversity has given the economy of Wales robustness and dynamism. Wales can now withstand the inevitable peaks and troughs of the commercial world.

Falling unemployment in Wales has not happened by accident but by design. As my hon. Friend said, there has been another big and welcome fall in unemployment today. In January, unemployment in Wales fell by 2,700, leaving a rate of 7.1 per cent. Since October, 9,200 people in Wales have been taken out of unemployment.

Our excellent performance might well be compared with that of, say, Germany, because now no constituency in Wales has unemployment as high as the latest German figure of 12.2 per cent. I have the latest figures from the Library, which show that not only does every constituency in Wales compare favourably with Germany but only one out of the 38 constituencies in Wales has unemployment higher than the European average. I am pleased that the Vale of Glamorgan is below the Welsh average, and that my own constituency is the second lowest in the Welsh list.

I readily agree that unemployment remains too high, but we should take encouragement and heart from the progress that we have made, especially compared with others in Europe. In line with that was the banner headline on the front page of the national daily newspaper of Wales, the Western Mail, which proclaimed the likelihood of a further 1,000 jobs coming to the capital city of Wales, through a proposal for a call centre by CableTel, which is already well represented in south Wales. That is in line with other companies that have chosen to invest in Wales to establish call centres.

That fact offers a stark rejection of a less prominent article on page 5 of the same newspaper describing a survey which suggested that people find the Welsh accent unattractive and that even we in Wales do not care for it. I am sure that the survey must be too narrow to have any real validity, as I am sure that CableTel and others who have already established call centres in Wales, or are thinking of it, would not have done so without the fullest research, including evaluation of the worth of the Welsh accent in dealings over the telephone. Again, the possibility of 1,000 jobs from CableTel is welcome. My hon. Friend and I welcome the fact that more employment will be created for his constituents in the Vale of Glamorgan and I hope to discuss the proposals with Mr. Terry Ryan of CableTel.

Strong economic and fiscal measures have given this country stable and predictable inflation and interest rates, which have given companies the confidence to invest in Wales. We are getting new investors, as well as expansions by well established companies.

Mr. William Cash (Stafford)

Has my hon. Friend noticed the extraordinary outburst of Mr. Niall FitzGerald, the chairman of Unilever, claiming that, if we do not join a single currency, that enormous multinational company, which employs 21,000 people in Britain, would think twice about its investment programme in the United Kingdom? Is that not an outrageous interference in the political process, and does not the situation in Wales show that Mr. FitzGerald is quite wrong about inward investment? Companies such as Nissan and Honda, and many others, have said that their decisions have nothing to do with the single currency. Would it not be as well for Mr. FitzGerald to leave politics to the politicians?

Mr. Jones

I am sure that there is great substance in my hon. Friend's point. In considering matters such as the single currency, which go wider than this debate, we need to take all factors into account rather than adopting the narrow approach that Unilever and others may have taken. Further and more mature consideration may lead them to a different conclusion.

The jobs created by inward investors and the new industries that they have brought are not the full story. Inward investors are keen to source locally and the Welsh Development Agency's "source Wales" programme has played a vital role in ensuring that we maximise the potential that exists. The agency worked closely with indigenous companies, many of which have taken the opportunity to expand and create jobs to satisfy the often substantial needs generated by the likes of Sony, Panasonic and Toyota.

While large inward investors catch the headlines, we have always taken—and always will take—an active role in encouraging home-grown companies to develop. The support that we can and do provide to inward investors is available to indigenous companies under the same terms. Indeed, over the past 10 years the support provided to indigenous companies has exceeded that given to inward investors but inward investors tend to have the headline grabbing projects. The combined effect of this industrial development is the strengthening of our whole economy.

New inward investors and local sourcing replace imports. That is good news for the United Kingdom as a whole. Just as important, inward investors use this country as a springboard into Europe. Many have achieved the Queen's award for export achievement, some more than once, and there are even examples of Japanese companies in Wales exporting back to Japan.

As my hon. Friend and I know, the single market offers many opportunities for our home-grown companies as well as our inward investors. It is a market of almost 400 million consumers, many of whom are developing and many of whom aspire to those things that we in the west have taken for granted.

My hon. Friend is absolutely right to say that there are many good things happening in Wales, both in his constituency of the Vale of Glamorgan and up and down principality. Those will continue as long as we resist the dreadful, job-destroying twin threats—the social chapter and the minimum wage from Europe and the totally unnecessary bureaucracy of a Welsh Assembly—that would stifle further development in Wales.