Economic Development (North Northumberland) (Hansard, 8 July 1998)

§ Mr. A. J. Beith (Berwick-upon-Tweed)

The Minister for Competition and Consumer Affairs has been on the Treasury Bench for most of the past seven hours, but I must detain him a little longer. A matter of importance to people in my constituency has arisen from the announcement last week by the Dawson Group of more than 700 redundancies. The group, which owns Pringle, the knitwear company, has blamed the high pound, a reduction in far east markets and general economic conditions, all of which have presented severe obstacles to exporting companies, particularly those producing quality products for the far east. However, the company has had its own failings in the United States and in its marketing strategy.

It is a tragedy for Berwick that so many jobs should be lost in the borders. Pringle has been in Berwick for 50 years, and the factory that is to close currently employs 280 people. The remainder of the 700 jobs are in other parts of the borders. Pringle used not say much about the Berwick factory; I think that it thought that too high a profile for the significant part of its product that was expertly made in England would undermine its claim to be Pringle of Scotland. Privately, however, Pringle recognised how successful that manufacturing unit was.

The shock closure follows many years of job losses in a small town that cannot stand so many losses. Recently, 200 jobs were lost at Pringle. More than 100 jobs were lost when Polychrome left Berwick. About 100 seasonal jobs in the salmon fishing industry have been lost. More than 150 went when the shipyard closed. Other trades, including agriculture and engineering, have also had significant job losses. The latest blow is devastating for the families involved. The loss to the local economy will add up to millions of pounds in wages that passed through the town's businesses and contributed to the welfare of all.

We need help, on both sides of the border, and some of the crisis can be dealt with on a cross-border basis. Reports in London newspapers have referred to closure of two Scottish factories by Pringle, carefully omitting to mention that one of them is in England. That is why the English Minister responsible for industry—Scotsman though he is—is here to answer this debate. His counterpart at the Scottish Office, the Minister for Education and Industry, has also been closely involved in discussions since the redundancies were announced. He said: I recognise that a significant proportion of the people working in the Berwick factory are resident on [the Scottish] side of the border. There are many reasons why the Scottish Office must remain interested in what is happening not only in Scottish parts of the borders, but in Berwick-upon-Tweed, for which the English-based Minister is responsible.

The Minister for Education and Industry, Scottish Office visited Hawick two days after the closure announcement. He announced a package of measures at a meeting arranged before the closure by my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood). The package aroused much interest. 1214 My hon. Friend described it as the beginning of an answer, feeling grateful that the measures had been announced but that more needed to be done. From the English side of the border, the question that comes to mind is: what is our equivalent of those measures? That is one of the things that I hope the Minister will tell us tonight.

The Scottish Office Minister announced an additional £1 million for Scottish Borders Enterprise immediately; a commitment to best endeavours to find additional extra funding if Scottish Borders Enterprise can bring forward further viable projects; the setting up of a new rural inward investment unit within Locate in Scotland, which will attract investment to areas such as the borders; a commitment to provide the borders with reallocated, unused European structural funds if any become available; and a commitment to keep discussions with the Dawson Group open and to assist it in redevelopment. We are anxious that that may lead to the funding of new factory development on the Scottish side of the border to replace factory capacity still available on the English side. That would make no sense.

The Scottish Office Minister also announced Scottish Office support for an IT link between Heriot-Watt university and the Scottish college of textiles and mentioned other measures already announced, such as the designation of Hawick as a property employment support programme area and the expansion of telecoms infrastructure in the borders. In some parts of the borders, it is even less developed than it is in Berwick. The package must have some English counterpart, and I hope that the Minister will say what it is.

I wish to put to the Minister some other measures that should form part of the response on the English side. On European funds, we are already anxious about the potential loss of objective 5b funds, which have been a source of some help for industrial projects in north Northumberland. Northumberland and Durham's joint bid for objective 1 funding has been jeopardised by the claims of European statisticians that it is not a cohesive area. I contradict that argument. I hope that the Government will continue to press actively for objective 1 status.

I wonder whether the Retex scheme for textile areas still has funds in it that could be made available to help replace lost textile jobs in the area. The loss of jobs in the textile industries is recognised across Europe as requiring special help.

There are employment measures that could be taken. The Government could accelerate the new deal programme for over-25s. On present plans, it will be some time before they become eligible, and redundant Pringle workers would not be become eligible until they had satisfied the 12-month rule. In other areas, I think that measures have been taken to exempt redundant workers from that limitation. It could be done alongside bringing forward the new deal measures for over-25s so that they become available more quickly in Berwick. I hope that the Minister will press his colleagues to pursue that course.

To attract new industry to the area, we want to press ahead with infrastructure projects that make the area attractive to and viable for industry, of which the best known is the need to complete the dualling of the Al, which remains on either side of Berwick an unsatisfactory single carriageway road and a deterrent to industrial development. There is cross-party agreement that dualling 1215 should go ahead. We await the announcement of the roads review with trepidation. I hope that the news about Pringle has been telegraphed to the Department of the Environment, Transport and the Regions so that it realises that A1 dualling has assumed even further importance as we try to make the area attractive to industry.

Berwick has longer-term plans for a rail freight terminal. We want that development to be encouraged. There are also various local projects in different Government Departments and with other bodies which, in these circumstances, Ministers should try to help along and give a sympathetic nod to. There is a private finance initiative bid by the council for 250 houses to be built by housing associations in the town and the surrounding area; I hope that that will be encouraged. There is a foyer project for young people in the Old Granary in the town centre. There is a heritage lottery bid for completion of townscape work that has already been begun, but has been set back by a change in the national heritage fund rules and system of bidding. I am concerned about that, because we need such work to continue; it provides some continuing employment during the present crisis and helps to attract people to the town.

I emphasise that many of my suggestions go beyond the Department of Trade and Industry. What needs to be done is interdepartmental, involving many Government Departments, and cross-border. We used to have an eastern borders development association that recognised, by its very existence, that the eastern borders had a coherence. Indeed, the borders as a whole, with their shared dependence on the textile industry and agriculture, have many features in common; people travel across the border, and businesses ignore the border as their activities cross it continuously. We have to look at the impact on both sides of the border of measures of this sort.

A practical way forward is to respond to the present crisis by getting the relevant agencies together and knocking heads together so that we can get some co-ordination of possible solutions. That could be done by forming a task group, which could meet in Berwick and draw together all those who have a contribution to make, ensuring that action in Berwick was related to that in the adjoining borders. That group could include the local authorities from both sides of the Border—Northumberland county council, Berwick-upon-Tweed borough council and the Scottish Borders council—the Northumberland training and enterprise council, Northumberland business link, English Partnerships, the Northern Development Company, the Government office for the north-east and Scottish Enterprise. The group would embrace the means to cover local business development, training measures, the attraction of new activities to the town and the provision of the new infrastructure and facilities to support new growth. In addition, it could press the European funding issues I mentioned.

The work would be greatly helped if the Government looked again at Berwick's status for development purposes. Berwick lost its assisted area status in 1984, but, much more recently, the Rural Development Commission excluded Berwick from the areas in which it did economic regeneration work, even though that work was vital to the rural hinterland around Berwick, whose population's prospects depended on what happened in the town. Now 1216 that the factory closure has taken place, surely this is the moment to reintroduce the RDC work into Berwick. That work is in the process of being transferred to the regional development agency, but, before that process is completed, a decision should be taken that Berwick should be included within the rural project work that used to be undertaken by the RDC.

All that work can be better advanced if we get the various agencies together, recognise that many Departments, governmental bodies and local government bodies have a contribution to make, and acknowledge that the problem is a cross-border issue. We have to get people moving to draw together the resources that are already available through existing channels and to put in bids for the new funds that will be needed for significant new action.

Over the years, the nominal unemployment rate in Berwick may have appeared low, but, as in much of the borders, that is partly because young people simply give up and go away to find work elsewhere. The actual unemployment rate will be increased by 50 per cent. as a result of the closure of the Pringle factory. The situation has worsened significantly, so action of the sort that I have outlined is now essential.

§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Nigel Griffiths)

I congratulate the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on securing this important debate. The right hon. Gentleman has represented his constituency for 25 years and he spoke with considerable knowledge. I grew up in the borders and I have always taken a keen interest in the issues affecting Berwick, Galashiels, Hawick and the other conurbations. I am pleased to be able to respond on behalf of the Government.

I worked briefly in a textile mill and I have some first-hand knowledge of the sector. I am sad, but not surprised, that neither the shadow President of the Board of Trade nor any of his Conservative colleagues have appeared in the Chamber to listen to this important debate on the problems facing the textile industry, particularly in the Berwick area. I am afraid that it is yet another example of the Opposition failing to know or care about the problems that have been raised.

The textile and clothing sector is of great importance to the United Kingdom economy, to local employment and to regional economies. The sector is the ninth largest UK manufacturing industry, if we include footwear. Manufacturers' sales total over £17 billion and the value of exports was over £7 billion in 1996, the latest figure available. With employment totalling over 421,000, it is clearly an important and significant employer. That is why my hon. Friend the Minister for Science, Energy and Industry has met representatives of the textile, clothing and footwear industries over the past six months. He has had the opportunity to discuss with them the important issues affecting that sector.

The Government are supporting a range of activities aimed at improving the competitiveness of the textile and clothing industries. These include projects to help improve marketing skills, develop supply chain partnerships, encourage better links with industry and academia and improve environmental performance, 1217 as well as promoting the profile of the industry and assisting young fashion designers, which I know that all right hon. and hon. Members will welcome. My hon. Friend has also initiated a dialogue with the leading trade associations and with the trade unions with a view to reviewing and establishing a national strategy for the textile and clothing industries.

Let me indicate the help that has been given and then go on to deal in more detail with some of the other points raised by the right hon. Member for Berwick-upon-Tweed. In the five years from April 1993 to 31 March 1998, enterprises in Northumberland received 127 offers of financial assistance from the regional selective assistance scheme. That totalled almost £24 million. The projects involve a total investment of £156 million, and they aim to create 3,340 new jobs and safeguard 865 existing jobs.

The right hon. Gentleman told us of some of the ways in which the Scottish Office has been able to respond to the Pringle closure, which demonstrate the value of regional autonomy. That is not yet available in the English regions, but the Government have introduced legislation that will result in the creation of regional development agencies. They will be in operation in April 1999. Until then, the Government's response will be as strong and positive as possible.

A number of steps have been taken so far in response to the local crisis to which the right hon. Gentleman referred. The regional director of the Government office for the north-east has already been in contact with Berwick-upon-Tweed borough council and will be visiting soon to co-ordinate a response group. That group already includes the Northumberland training and enterprise council, the Employment Service, Northumberland county council, Berwick-upon-Tweed borough council, Scottish Border Enterprises and representatives from Pringle. Initially, it is trying to help those affected by the redundancy by improving counselling, careers guidance and advice on retraining opportunities. The group will also examine ways in which 1218 to make better use of resources, including the Government's new deal programme and funding from a range of European sources.

The right hon. Gentleman has asked me whether his constituency is eligible for Retex assistance. Berwick-upon-Tweed is eligible for assistance under the EU's Retex II initiative. The purpose of that scheme is to provide assistance to areas affected by the decline in the textiles industry. The closure of the Pringle factory makes the area an obvious choice for funding from the scheme.

Over £500,000 is still available and can be used to provide business support to small and medium-sized enterprises, and for the conversion of former textile buildings to put them to commercial use. Another source of EU funds is the objective 5b northern uplands programme, which provides funding support for four main priorities: economic development and diversification, tourism, community development and environmental enhancement and conservation. Some £2 million of assistance is still available from that resource.

The creation of a response group provides the basis for a robust reaction to the Pringle factory closure. My officials in the Government office for the north-east understand the priority that I attach to ensuring that the group gets all possible Government support. I urge the right hon. Gentleman to liaise with the group to ensure that it benefits from his considerable expertise, which he has built up over a long period.