§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]
§ 7.5 pm
§ Mr. Simon Burns (Chelmsford, West)
I am extremely grateful for this opportunity to raise the question of redundancies at Marconi Communications in my constituency. The issue is obviously extremely pressing and urgent for the people of Chelmsford and the mid-Essex area. I am delighted that my hon. Friend the Member for Maldon and Chelmsford, East (Mr. Whittingdale) is in his place. With me, he has been involved in the matter over the past two weeks or so, pursuing it at a ministerial level and with the trade unions and companies in Chelmsford.
It is a cruel irony that, when unemployment is falling significantly in the mid-Essex area, unemployment in my constituency is down from the height of 4,600 during the recession in the early 1990s to about 1,600 people, economic activity is picking up significantly and the retail sector is doing so well, once again we face a body blow of devastating proportions. Due to the ending of the cold war, the peace dividend and the world recession in the early 1990s—when the market became worldwide and far more competitive, and contracts were more difficult to win—535 redundancies at Marconi Communications have been announced, as well as the closing down of the Marconi college, with the loss of 46 jobs in the town.
It is true that Chelmsford, like other parts of the country, has paid a very heavy price for the peace dividend over the past few years. In fairness, it should be pointed out that, of all the defence-related industries in my constituency, Marconi Communications is less reliant on defence contracts, because it has been diversifying for many years and has of course benefited from a number of civilian contracts. None the less, due to the peace dividend and the contracting of the world market, it, too, has found it very difficult in the new, highly competitive market to win sufficient contracts to maintain the level of employment that it has enjoyed in the past.
To understand the impact of the redundancies, it would be sensible to put into context the history of the manufacturing base in the town and the surrounding area. Chelmsford has always been associated with Marconi companies. In my constituency, there is Marconi Communications, Marconi Radar and the English Electric Valve company. We used to have Marconi Phone and Marconi Marine, and of course, my hon. Friend the Member for Maldon and Chelmsford, East has Marconi Research in his constituency.
Chelmsford and Marconi have been synonymous ever since Marconi set up his factory in the town at the beginning of the century. Twenty years ago, the Marconi companies and English Electric Valve employed just over 11,000 people in the town—one of the main employers outside the local authorities based there—providing jobs not only directly but for all the back-up services. Over the past five and a half years, though, we have seen the all-too-dismal repetition of job losses in those companies.
In January 1992, 150 jobs were lost at Marconi Communications; in March 1992, 140 jobs were lost at Marconi Phones; in June 1992, 600 jobs were lost at Marconi Radar and 225 jobs at Marconi Communications; 79 in February 1993, 95 jobs were lost at English Electric Valves; in July 1993, 300 jobs were lost at Marconi Radar; in 1994, 180 jobs were lost at Marconi Communications; and last year, a further 150 jobs were lost, also at Marconi Communications. In the past two weeks, we have felt the body blow of 535 further redundancies at Marconi Communications.
With the latest redundancies, some 3,500 people will be left working for GEC companies in the town, compared with the 11,000 of 20 years ago. Those figures show the decline in manufacturing jobs in defence-related industries in that time, with some 2,500 of those jobs going in the past five and a half years. Marconi Communications' work force will have been halved to slightly more than 500 when the current redundancies have worked through the system in the next two years. I fear that the redundancies will be front loaded, and a majority of them will occur in the early months of those two years.
Behind that dismal story is a more worrying factor—the erosion of the manufacturing base in the town. The 600 redundancies at Marconi Radar that I mentioned earlier meant the elimination of manufacturing in the town when GEC moved that activity to Leicester. Worryingly, the majority of the redundancies that have been announced at Marconi Communications represents the remaining manufacturing base at that firm. If and when they go, the manufacturing base as we know it will go, and only an assembly line and research and development will remain. That would be a grievous loss for the town and for the industrial base in mid-Essex.
Two challenges face us before the redundancies come into effect. First, we must try to salvage what we can of the manufacturing side of Marconi Communications; secondly, we must provide every assistance possible to those facing redundancy to maximise their potential to get back to work as quickly as possible. I shall deal with those challenges in order.
On the question of manufacturing, I hope that, even at this late stage, Marconi Communications will be prepared to think again. I met the trade union representatives on Friday, and my hon. Friend the Member for Maldon and Chelmsford, East will meet them on Thursday. I have written to the managing director of Marconi Communications requesting a meeting with my hon. Friend, me and the trade union representatives to discuss whether it is possible for the firm to reconsider its decision. I understand that no company makes people redundant lightly. It is done because of economic circumstances. However, because Marconi will continue to assemble products on the site, it is worth asking the company to reconsider its decision.
I wish to suggest a number of options that may provide a way forward, although I know that it is not the Government's role to create jobs per se. It never has been, and it would be foolish of me, simply because we no longer have a Conservative Government, to change my long-held view and start blaming this Government for what has happened. Governments can—indeed, it is a fundamental responsibility of Governments, regardless of their political complexion—create the economic climate in which jobs can be created.
80 If industry and commerce flourish, that will stimulate demand so that people wish to buy the goods or services available, and that leads to job creation. Governments can also create an environment that encourages companies to invest in research and development to identify niches in the market and fill them with new products for people to buy, to safeguard and create jobs.
If it is not feasible or possible for Marconi Communications to reconsider and moderate its proposals, I wish to ask whether consideration can be given to a management buy-out so that manufacturing work can continue on the manufacturing site in the town to supply the assembly lines of Marconi Communications. The people who are facing redundancy are a highly skilled and trained work force, and are used to the ways of the company because they have worked there—in some cases, for many years. Why not harness that expertise and experience through a management buy-out so that the work force can continue to produce the parts and components that Marconi needs for the assembly of its products?
If that is not possible—the management may not wish to invest their redundancy money in a management buy-out—other workers may wish to group together to set up small satellite companies to do the supply work. Other companies in the mid-Essex area already supply the GEC companies and that option could be encouraged. It is a truism, but also a fact of life, that the small businesses of today can become the medium and larger companies and employers of the future. If people can use their skills, with advice, encouragement and help, to set up businesses—as happened to one small company when Marconi Radar made manufacturing redundancies a few years ago—part of the manufacturing base would be safeguarded. I hope that the company will seriously consider those ideas when our meeting takes place in the next few weeks.
The Government have a role to play, even if indirectly, in job creation. As I said earlier, Governments do not have the power to create proper jobs, although they can throw money at artificial jobs, which is in no one's long-term interest. Governments can ensure that the available schemes are used to the maximum effect to help people facing redundancy. I wish to thank the Minister for her prompt reply to a written question that I tabled two weeks ago. She announced that employees from Marconi Communications would have immediate access to the Government's training-for-work programme and that the normal qualifying period of six months' unemployment would be waived. That is greatly appreciated in my constituency as a positive and meaningful step forward to help people who are currently distressed by, and worried about, the uncertainty that they face.
The Minister also mentioned in her answer that further measures are being considered for the action plan, including advice, guidance, training courses, help with job search and assistance to individuals and groups interested in starting their own businesses. That action would dovetail easily with any aspirations to set up satellite companies. The written answer also mentioned help under the KONVER programme, which I remember pursuing vigorously, with my colleagues, when I was a parliamentary private secretary at the Department of Trade and Industry.
That will help, as did the long-term investment for the advanced manufacturing centre in Chelmsford when the last major wave of redundancies was announced in the 81 town. That has done so much to help the people who were made redundant to get retraining and to set up small businesses from a basis of a total lack of knowledge of how to do so. The centre does tremendous work, and has dedicated staff to whom I pay tribute. The scheme was financed with European money, and I subscribe to the old adage that, whatever one's view of a scheme, it is better for it to come to one's constituency rather than go elsewhere.
We are grateful for all the work that is being done to try to help people and to minimise uncertainty, as that is as great a problem for individuals as their redundancy. It is good that the company has hired consultants to help the work force with advice and counselling. I am pleased by the actions of the Employment Service, the Essex Careers and Business Partnership, the Business Development Advisory Service, business link, Essex county council and Chelmsford district council. The advanced manufacturing centre and Essex training and enterprise council are also involved, and I saw the chief executive of Essex TEC on Friday morning.
The swift action from those organisations and the Government's regional offices is heartening, and they have tried to come up with practical help for those people, rather than just sitting around a table and talking in meaningless platitudes. I have seen the programme produced by the TEC for the different activities and time scales of the different organisations and its projections of what they will be doing in the future. That part of the package has been prepared and is greatly appreciated. I should like the Minister to elaborate on the help, advice and training to which she has referred, so that we know exactly what will be on offer and what people can expect. They can then start thinking seriously about the best way forward to maximise their opportunities in securing another job.
Secondly, I am grateful to the Minister for Defence Procurement—whom my hon. Friend the Member for Maldon and Chelmsford, East and I visited last week—for his comments on the Government's defence procurement policy. Clearly, this is not a significant matter for Marconi Communications, but it is important to the other companies in the town which are more reliant on defence procurement contracts. Obviously, a great deal of the work of Marconi Communications is in the civilian sector, although there are overlaps with military contracts.
I was pleased by the assurances from the Government that they plan to continue the policy of the previous Government of a £9 billion-plus defence procurement budget, in which about 90 per cent. goes to British companies—or to conglomerates of which 50 per cent. consists of British companies—to safeguard British jobs. Clearly, contracts can be placed only when it is feasible to do so, as the British taxpayer must get value for money and the armed forces must get the best equipment possible. It is heartening that the Government are committed to continue the last Government's policy where it is feasible.
I should be grateful if the Minister could elaborate on what the Government's plans for a defence diversification agency mean and how they would impact on defence-related industries. From a philosophical, rather than a narrow party political point of view, there is a potential difficulty which, without knowing the full details about the agency, means that one has to be cautious. We have seen in the past—particularly in the 1970s— 82 well-meaning, although misguided, examples where agencies sought to guide and influence commercial decisions. That failed because business men and their companies know the best decisions to take. I should be worried if an agency were to be seen as interfering in the running of a company.
That may not be the case, and we are in the dark as to the aims, aspirations and purpose of the agency. It would be interesting to know more about how the agency would impact on larger companies, although I can see how it could impact on small and medium companies. Marconi has had the commercial sense in the past decade to see that it was important to diversify and broaden its base. In fairness to the Marconi companies, they have done so. The trouble is, as any business man knows, that when a company seeks to diversify beyond its core business into areas where there are already established companies, it is more difficult entering the new markets. Notwithstanding that, the Marconi companies have made strenuous and successful efforts to diversify their base into civilian markets, and that is a positive thing.
I have said on numerous occasions—when, sadly, I have had debates of this nature—that I am not of the neanderthal school of politics, believing that anyone who is unemployed is a scrounger. That is a travesty. Those people are desperate for work, and they do not want to be reliant upon the state for their income. They want to work and contribute to companies so as to enhance and improve their standard of living.
We are grateful for the help that has been given so far, and I am grateful to the Minister for being here to reply to the debate. We look forward to what she has to say, so that my hon. Friend the Member for Maldon and Chelmsford, East and I can tell our constituents what is going on. We want to tell them that they will not become the forgotten people of Chelmsford, languishing in the dole queues with no one giving a damn. They will know that my hon. Friend and I—despite our limited powers to do anything—will continue to pursue the matter to make sure that they get all the help to which they are entitled for retraining, counselling and advice so that they can get back to work as quickly as possible.
§ Mr. John Whittingdale (Maldon and Chelmsford, East)
I congratulate my hon. Friend the Member for Chelmsford, West (Mr. Burns) on his initiative in obtaining this debate, and I thank him for allowing me to speak briefly in it. I am also grateful to my right hon. Friend the Member for Wokingham (Mr. Redwood), the shadow Secretary of State for Trade and Industry, who has taken the time to attend the debate.
My hon. Friend has ably represented the town of Chelmsford for the past 10 years. Sadly, he has had some experience of trying to ensure that as much help as possible is given to those who have been made redundant from Marconi.
As the Member of Parliament representing Maldon for the past five years, I have obviously been aware that a number of my constituents in the Maldon district have been affected by the redundancies. As a result of boundary changes, I now represent part of Chelmsford town, so I shall work even more closely in future with my hon. Friend the Member for Chelmsford, West on behalf of the people of Chelmsford.
83 I do not want to add a great deal to what my hon. Friend has said about the plight of those who have been made redundant, but I reiterate that I do not expect the Government to dissuade Marconi from its course, which is a matter for the company, operating, as it does, in a highly competitive environment; of course, it has to make its own commercial judgments.
My hon. Friend and I will be anxious, however, to ensure that every possible option is considered before the last option of declaring the redundancies. We will want to be satisfied that there are no alternatives of the kind that he has described. I shall meet the trade unions later this week, and I hope that my hon. Friend and I will both have the opportunity to lead a delegation to meet representatives of the company management in the next few weeks.
I also look to the Government to ensure that every help is given to those who have been made redundant. My hon. Friend has described the help being given by the various agencies that are active in Essex, and I add my thanks to all those involved for the swift and compassionate way in which they have responded to what is clearly a serious blow to the town. In particular, I know that Essex training and enterprise council responded extremely quickly and is active in trying to provide help.
The picture is not entirely bleak. There is no doubt that new jobs are being created in Essex. A few months ago, Boulton and Paul, a company making kitchens and doors in my constituency, sadly announced that it would be closing its facility in Maldon, with the loss of about 200 jobs—that is a serious blow to Maldon—but a few weeks later I visited another company, Keltek EDMS, about 100 yards away, which was about to create a new facility in the town, with 220 new jobs, making printed circuit boards.
Inevitably, there will be change in the employment pattern, but it is not all one way. A week ago, I visited one of the most successful employers in Maldon, Industrial Control Services, which makes safety and control systems. I was told that the outlook for the company was extremely bright, that it was winning orders from throughout the world and that if it had a problem it was the shortage of skilled engineers.
New jobs exist. The task that we have now is to try to ensure that those who have lost their jobs at Marconi are swiftly placed in those new jobs. There are various ways in which that can be made to happen. Already, some of the agencies are trying to ensure that it happens as quickly as possible. I want to hear from the Minister tonight about any additional measures that she can offer the constituents of me and my hon. Friend, to ensure that the period of unemployment that sadly faces them is as brief as possible.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mrs. Barbara Roche)
I have listened with great interest to the hon. Members for Chelmsford, West (Mr. Burns) and for Maldon and Chelmsford, East (Mr. Whittingdale), and I thank them for the extremely valuable points that they have made. I greatly appreciate the constructive and helpful way in which they have addressed the issue. There is no doubt 84 that both hon. Gentlemen have done a great deal of work with all the interested parties as constituency Members of Parliament, to ensure that this difficult issue is dealt with as sympathetically as possible.
I share the hon. Members' concern about the redundancies, and I hope that the measures that I outline tonight will show that effective action is being taken to improve the employment prospects of those affected. As they pointed out, the redundancies will have a significant impact on the Chelmsford economy, not only in themselves but in the knock-on effect on the many local suppliers.
When large-scale redundancies occur, co-operation between all local partners is essential. I am grateful that tribute has been paid to the parties concerned. Chelmsford borough council convened a meeting of the key players, including Marconi Communications, at which Essex training and enterprise council offered to co-ordinate the efforts of the partnership, and it has drawn up a plan of action.
I have visited Essex TEC and I know how hard it works. It has assigned an adviser and account manager to keep in close contact with the company. I know that the hon. Member for Chelmsford, West has also met Essex TEC and that it will keep him fully briefed about the activities being undertaken.
Business Link Essex is already working with Marconi to identify suppliers whose businesses may be at risk as a result of the planned redundancies. I had the great pleasure of attending the opening of BLE a few months ago. It is offering support and advice to ensure the continued success of those businesses by developing their activities in other areas.
I totally agree with the hon. Member for Chelmsford, West about the importance of diversification. Chelmsford's great advantage is the skills base of its people. That will do a great deal to ensure that other businesses will grow and flourish.
The Employment Service, together with the Essex careers and business partnership, will provide advice on services and benefits available to those under threat of redundancy, assisting Grosvenor Associates, outplacement consultants engaged by Marconi, in setting up a job shop on the company premises. That will not only have all the vacancies available locally but will offer guidance and assistance to those wishing to make applications for new jobs. Clearly, it will have an important role to play in the area.
For those wishing to go into self-employment, a range of services will be on offer from the Business Development Advisory Service. Support is also available to any start-up businesses set up by redundant workers through the Centre for the Advancement of Manufacturing and Technology in Chelmsford. Essex county council is also offering managed work space as an additional way of supporting those start-up businesses.
In appreciation of the special needs of the redundant workers, the TEC has already waived the six-month qualifying period for access to training for work. It is primarily designed to help unemployed adults to get jobs, including self-employment, as quickly as possible, through an appropriate mix of guidance, training, approved qualifications and structured work experience. The training for work programme in Essex is one of the 85 most successful in the country, with nearly 60 per cent. of those undertaking it immediately moving into employment.
Those measures are designed to alleviate the immediate needs of the area, but, as the hon. Gentlemen have pointed out, Chelmsford faces considerable long-term difficulties. The town has traditionally been dependent on high-technology, defence-related industry, with Marconi Communications, Marconi Radar Systems and EEV providing most of the employment within that sector. As the hon. Gentlemen said, as a result of the peace dividend and the recession of the early 1990s, there has been a general decline in defence-related manufacturing which, regrettably, has resulted in the redundancies announced by Marconi.
The growth in the service sector has to some extent offset the decline of the manufacturing sector. Public administration provides 26,000 jobs. Both the financial services and the hotel and distribution sectors play a significant part in local employment, providing a further 20,000 jobs. Chelmsford is the main United Kingdom base for Britvic Soft Drinks Ltd. and is also the administrative headquarters of the investment managers. M and G Group.
Chelmsford has a growing reputation as an ideal place for new and expanding businesses to settle. As the hon. Member for Maldon and Chelmsford, East said, the picture is not all gloomy. It has a strategic location, close to London, Stansted airport and the ports of Tilbury, Harwich and Felixstowe, and its work force is well trained, highly qualified and adaptable, so it is clear why companies such as Royal Mail, Royal Insurance and Barclays Bank have recently chosen Chelmsford. I am sure that, given the skills and abilities of the work force, those will not be the only locations and relocations.
The hon. Member for Chelmsford, West mentioned the KONVER programme. Although the Chelmsford economy has diversified away from defence-related manufacturing, the problems of defence rundown continue. That is why Chelmsford is designated as a KONVER area. Since 1993, KONVER has enabled affected regions to respond to factory closures and deal with high job losses. KONVER funding is already being used to help train and retrain employees of firms dependent on the defence sector in the Chelmsford area. Organisations such as Essex TEC, Essex county council and Anglia polytechnic university have developed a wide range of vocational guidance and vocational training projects. The TEC alone has helped to retrain more than 400 former defence workers since the start of 1996.
More than £1 million from KONVER has been used to establish a regional centre for the advancement of manufacturing and technology, the AMT, whose activities include hands-on experience of modern machine tools, high-level training, technology transfer, prototype development and advice. As the hon. Member for Chelmsford, West knows, I visited the centre a few months ago and was tremendously impressed by its work. Much knowledge and experience, which can help both well-established and newly established firms, can be found there. The centre clearly enjoys much respect in the local business community.
I am certain that the centre will provide a vital base for re-employment of the well qualified and highly skilled local work force. It helps small and medium-sized firms 86 to develop new products and improve competitiveness through the introduction of new technologies and training. As the Minister responsible for small firms, I am acutely aware of the needs of small and medium-sized businesses and I am working through the network of Business Links to develop support and advice that can be accessed by all SMEs.
I agree with the hon. Member for Chelmsford, West about SMEs, which are essential to Britain's competitive edge and central to the Government's competitiveness agenda. The encouragement of high-tech SMEs is a key factor in our programme. That is why I believe that our programme is in line with the way in which local businesses in Chelmsford, especially local start-up businesses, can be helped. Chelmsford's work force clearly has the skills, know-how and dedication to make SMEs a success.
Over the past year, the AMT has saved more than 200 jobs in businesses threatened with closure and has directly supported growth in businesses providing a further 100 jobs. It has also run two meet-the-buyer events, attracting more than 100 national and international buyers and providing direct sales meetings for more than 600 local businesses.
The AMT estimates that more than £2.5 million worth of business was brought to Chelmsford in that way. Such work is essential in the climate of redundancies. Any encouragement to start-up businesses is important, in that the development of regional supply chains and networks is vital. That may be one subject which the hon. Member for Chelmsford, West could discuss further with the AMT.
The centre will work with its current partners to interview individuals affected by the latest round of redundancies to ascertain their transferable skills and how it can help by customising training courses to suit their future needs.
The hon. Members have drawn attention to the many people who are unemployed in their constituencies as a result of a series of redundancies at defence manufacturing establishments over the past few years. Tackling unemployment is one of the new Government's key priorities, and we intend to tackle it during lifetime of this Parliament. Our first priority is the "new deal" and measures to reduce unemployment among young and long-term unemployed people. Work is already under way to put that initiative into action.
The hon. Member for Chelmsford, West also stressed the importance of defence procurement decisions to the prosperity of towns such as Chelmsford. As the Prime Minister said, the Government are committed to service. That is an attribute long possessed by our armed forces, which are admired around the globe. Our commitment is to provide them with a longer-term sense of direction and a stable basis for defence policy and planning. The current strategic defence consideration is designed to ensure that our security and defence needs are matched by appropriate capabilities, both for today and for tomorrow's challenges.
Out of that defence consideration will come a procurement policy that will provide industry with the longer-term vision that it needs if it is to realise projects of the highest quality and value for money. If British industry can supply to specification, to cost and to time in a way that represents best overall value for money, it 87 will ensure success at home and abroad. I am delighted that the hon. Member for Chelmsford, West had a useful meeting with my ministerial colleagues at the Ministry of Defence.
Our commitment to service and to our armed forces requires that we give them the best equipment to do the tasks that we require of them. However, we are committed to a strong UK defence industry that is a strategic part of our industrial base as well as our defence effort. The industry employs some 360,000 people across the country, wins 90 per cent. by value of our business and, last year, won £5 billion-worth of export orders. That is quite a record.
It is that strength on which we wish to build for the future. We want to maintain strong links between the user and the industrial base. We want a partnership between Government and industry to enhance our economic prospects and our national security. We want to ensure that we maximise the contribution of our defence effort to the wider economy.
I agree with the hon. Member for Chelmsford, West that it is important that regional and industrial policy implications are well understood in taking procurement decisions. That is why my Department works closely with the Ministry of Defence on issues that affect the competitiveness of the UK defence industry. My officials ensure that the industrial implications of MOD procurement decisions are taken into account. They work closely with industry to ensure that all matters are taken into full and active consideration.
The hon. Member for Chelmsford, West asked about defence diversification. We support a strong UK defence industry that is a strategic part of our industrial base as well as of our defence effort. As stated in our manifesto, we believe that some of its expertise could be diversified by extension to civilian use. Nowhere is better equipped for that than Chelmsford.
The objective would be to widen the contribution made by the UK defence industrial base to Britain's economic performance by diversifying some of its technological processes and manufacturing skills into new markets. We 88 should certainly ensure that the investment that we make in defence equipment research and technology is put to good use for the economy as a whole.
We are actively considering the establishment of an organisation with specific responsibilities for diversification issues. The aim will be to ensure better co-ordination between Government Departments on issues such as regional policy, training and business planning to develop a positive strategy for industrial regeneration.
As my hon. Friend the Under-Secretary of State for Defence told the House on 16 June, we will be making proposals in the autumn on how best to give effect to our objectives for defence diversification. Those proposals will include how best to harness the contribution of the Defence Evaluation and Research Agency to those objectives. I will certainly ensure that the interesting remarks of the hon. Member for Chelmsford, West are drawn to the attention of my ministerial colleagues as they formulate their policies in that area.
I hope that what I have said will reassure the hon. Gentlemen that I fully recognise the problems that the redundancies announced by Marconi will create. I welcome the initiatives that local partners are taking. The speed with which that response has been put together underlines the fact that the matter is being taken seriously.
Considerable efforts have also been made in the long-term restructuring of the Chelmsford economy away from defence-related manufacturing. That accounts for the relative prosperity of that part of Essex. Many local agencies can take credit for that. More work remains to be done, however, and we will continue to support the local partners who can best take that forward.
I fully recognise all the difficulties that the redundancies have caused for individual employees and their families. I appreciate the efforts that the local Members of Parliament have made to work constructively with the company, the trade unions and all the local partners. For our part, the Government will ensure that we do all we can to support their efforts.
§ Question put and agreed to.
§ Adjourned accordingly at nine minutes to Eight o'clock.