HL Deb 06 October 1998 vol 593 cc253-6

2.56 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

What action they are taking in the north east of England as a result of the many redundancies declared in that region in recent weeks.

Lord Hunt of Kings Heath

My Lords, where substantial redundancies have occurred, access to the recently established Rapid Response Fund is available and task forces have been established to co-ordinate activity. Local authorities and Government Office-North East are pursuing the potential for attracting alternative buyers for the facilities, either as a going concern or for alternative purposes. The Employment Service is providing immediate on-site assistance to individual employees on re-employment, jobsearch techniques, re-training and benefit entitlement.

Lord Dormand of Easington

My Lords, is my noble friend aware that the northern region has had the highest unemployment rate outside of Northern Ireland since these statistics were first instituted and that it is now having to bear the brunt of the first and heaviest round of factory closures, not just by the big players, such as Siemens and Fujitsu, but by many smaller companies, a matter about which all parties are concerned? Is he further aware of reports that both employers and members of trade unions are expressing disappointment at what is considered to be inadequate discussion and consultation by the Government? While I welcome the last part of the Answer, I have to say to the Minister that much more is expected.

Lord Hunt of Kings Heath

My Lords, I understand my noble friend's concern. The Government are concerned about the impact of these decisions of companies to cease to operate on the individuals and communities involved, and that is why we acted so quickly to put in the support measures that I have mentioned. However, we have to put this in perspective. The fact is that the north east has undergone considerable industrial structural reform in the past few years which has helped it to become more resilient in the face of changing circumstances. The area has attracted considerable inward investment. Figures for August show that unemployment is continuing to fall. We are all concerned about the impact of redundancies, but there is some good news from the region as well.

Lord Clark of Kempston

My Lords, does the Minister agree that the high interest rates which we suffer in this country are hitting exports because of the strength of sterling? Is it not high time that the Chancellor of the Exchequer took responsibility for that rather than hiding behind the Bank of England, particularly in view of the fact that, following the recent G7 meetings, he has urged our partners throughout the world to reduce interest rates while doing nothing about them in this country?

Lord Hunt of Kings Heath

My Lords, monetary policy needs to be guided by the long-term needs of the economy and not by short-term political considerations. It is worth making the point that interest rates are low by historical standards. It is important to put exchange rate movements in an international context. The level of sterling has barely changed against the dollar since the end of 1996, while other European currencies have depreciated against both the dollar and sterling. Of course, the Government understand the problems which the rise in the pound has caused manufacturers and exporters, but it is essential that we take a long-term view. Short-term fixes are no answer at all.

Lord Taylor of Blackburn

My Lords, is the Minister aware that quite a number of people who are trying to invest in power stations, particularly in the north west, are awaiting the Government's announcement on their energy policy? If that policy were announced soon, those people would be able to invest and help to remedy the difficulties in the north east to which my noble friend referred.

Lord Hunt of Kings Heath

My Lords, there are very many examples of companies that are investing in the north east. Over the past six months 6,000 new jobs have been created in the region. For example, MTK Containers has taken on 220 staff, Black & Decker 350 and British Airways 450. It is very important to keep this matter in perspective and not engage in too much doom and gloom.

Lord Mackay of Ardbrecknish

My Lords, I begin by welcoming the noble Lord to the Front Bench and congratulate him on his appointment. I also commiserate with him that his Minister has decided to allow him to answer this Question today, especially in view of the general government line that interest rates have nothing to do with them and that unemployment and the destruction of manufacturing industry in many parts of the country—for example, West Central Scotland and the Borders—have nothing to do with them. I am not surprised that the Government do not like that. Will the Minister take responsibility for anything? For example, will he take responsibility for the vacillations over oil taxation in which the Chancellor has been engaged since the election? Although that matter has recently been resolved, that vacillation has persisted for so long that many orders in the oil industry have disappeared. Does the Minister appreciate the damage that has been done to the yards and the engineering industry of the north east and will he take responsibility for that, if nothing else?

Lord Hunt of Kings Heath

My Lords, I thank the noble Lord for his welcome this afternoon. I am sure that he is disappointed that my noble friend is not able to be here but I am sure that her answer would not be any different from mine. The Government are determined that the economy of this country should be run in the long term, in contrast to the past boom and bust situations and short-term political fixes which have had a damaging impact on both stability and productivity.

Lord Dixon

My Lords, is my noble friend aware that the biggest employer in the region is tourism and that this year government funding for the northern region via the English Tourist Board has been cut by 10 per cent. to £260,000? That represents 8p per head of population compared with £5 in Wales and £3.56 in Scotland. If the Government want to do anything about the problems in the north east does my noble friend agree that they should create a level playing field?

Lord Hunt of Kings Heath

My Lords, the support of the tourist industry to which my noble friend referred is a small part of investment in this country. The north east has much to offer tourists. It is a growth area and I am sure that it will continue to grow.

Lord Renton

My Lords, is the long term this year, next year, some time or never?

Lord Hunt of Kings Heath

My Lords, that is an extremely interesting question. The expression "the long term" means that over a period of years this country establishes stability in its economic policy and framework in a way that it has not achieved for many years. That is the aim of this Government's policy.

Lord Mackie of Benshie

My Lords, while it is very important to have inward investment, which has created a large number of jobs, can the Minister inform the House how many of the redundancies in the north east have been due to a cutback in production by inward investors?

Lord Hunt of Kings Heath

My Lords, I am happy to write to the noble Lord on that issue. Referring to inward investment as a whole, it is very important that we continue our efforts to attract it as much as possible. Our success in attracting such investment has brought wide benefits to the region in terms of initial investment, such as new technology, and its input into the economy as a whole. There is strong competition from other countries to attract inward investment. It is absolutely essential that we continue to compete effectively for that investment.