HC Deb 08 January 2003 vol 397 cc118-25WH 3.28 pm
Mr. Denis Murphy (Wansbeck)

Thank you, Mr. Cook. I thank the House for granting me this important and timely debate.

In November last year, Dewhirsts, which is a major clothing manufacturer, announced the closure of a factory in Ashington, Northumberland, with the loss of 425 highly skilled jobs. In the next few weeks, manufacturing will cease and the machinery will be stripped out and sent to a new factory in north Africa. Since the announcement of the closure, several agencies have come together to try to save at least some of the jobs. The GMB union initially suggested that it might be possible for the company to secure public procurement contracts. Sadly, when I had a meeting with the company's board, they were pessimistic about whether public procurement could offer any realistic hope of keeping the factory open. The first workers will leave this week, and production will cease in a few weeks' time, causing much hardship to many families and dealing a further blow to a fragile local economy.

I realise that my hon. Friend the Minister may not be able to deal with all the issues that I intend to raise today, but I am sure that he will understand why I am seeking urgent Government assistance for my constituency.

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

Would the hon. Gentleman confirm that the closure that he describes will also have a drastic effect in neighbouring areas, such as Lynemouth in my constituency, and that any measures that Ministers are prepared to consider to help to alleviate that, in Ashington or nearby, would be beneficial to the whole area, where there is considerable unemployment and poverty?

Mr. Murphy

I certainly agree with the right hon. Gentleman. Indeed, when I met representatives of the work force, a number came from his constituency. It will have a drastic effect on those areas.

According to the latest published figures, Wansbeck has the second lowest number of new business start-ups in the United Kingdom, and there has been little new business investment in the district for several years. That partly reflects a general downturn in inward investment projects, but it is also because an enterprise zone is only five or six miles away. It should have been extended into the Wansbeck area. Although unemployment has declined in recent years, the rate of decline has been much lower than the regional and national averages. Wansbeck's unemployment rate is still two-and-a-half times the national average. The Wansbeck action team for jobs has been a welcome addition to the employment services since its introduction in 2000. During the year to October 2002, the action team helped 321 residents back into employment. Key to the success of that team have been the efforts to place people in employment in growth areas outside the district, such as Cramlington and north Tyneside. Although people moving into new jobs is always welcome, we must provide jobs in communities where people live. That will reduce dependence on the motor car and help to promote investment in town centres or edge-of-town business locations.

A recent report by Sheffield Hallam university examined the real level of unemployment, taking into account incapacity benefit recipients and those who had retired early. It estimated that unemployment in Wansbeck was 16.2 per cent. as at April 2002. On that measure, Wansbeck is one of the 30 weakest labour markets in England and Wales.

Apart from the welcome commitment from priority sites to build speculative business accommodation on the Wansbeck business park, private sector commercial and industrial investment has been extremely limited over several years. The district has been unable to bring on stream a new supply of serviced sites and premises to compete effectively for new business investment, simply because property market returns are generally unattractive to the private sector.

Deprivation levels in Wansbeck are acute. The district is ranked as 17th most deprived in the United Kingdom according to the index of multiple deprivation that was produced in 2000.

I am sure that my hon. Friend the Minister will want to look more closely at some of the problems that I have outlined, and I shall be happy to provide him with the relevant information after the debate.

I want to draw the Minister's attention to some of the issues that could play a major role in the economic recovery plan for Wansbeck. We need a commitment from the Government to maintain the Wansbeck action team for jobs beyond its current March 2004 lifespan. The team has been very successful in meeting its clients into work targets over the past two years, in difficult labour market conditions. We need reassurance that that valued local service, which makes a valuable contribution to the district's neighbourhood renewal and economic strategies, will be maintained beyond 2004. Despite the good work of the team, the district's continuing levels of unemployment show that a much longer-term commitment is required.

Much of the success of the action team has relied on finding jobs for residents outside the district in areas such as Cramlington and north Tyneside where property markets, business investment and new job opportunities have been more readily available. Plans to service and promote new investment in North Seaton business park in Ashington need to be vigorously pursued. Although the Government seem to be moving away from the idea of enterprise zones, we need a successor to that scheme.

If the Government concede that special help is still needed in areas of acute deprivation, North Seaton business park and the rest of Wansbeck's commercial and industrial sites should be considered a priority for any new scheme—or even the current scheme—being extended into Wansbeck. In the pre-Budget report in November 2002, the Government announced their intention to provide additional support for businesses in the UK's 2000 most deprived communities, which would be termed enterprise areas.

Of Wansbeck's 16 wards, 14 are in the list of 2000 most deprived wards in the UK. Given the almost universal coverage in Wansbeck, I would like to see the whole district declared an enterprise area. A specialist enterprise team should be established and resourced, to work closely with the action team for jobs and the local strategic partnerships. Flexible budgets and local discretion have worked well under the action for jobs approach.

As a further strengthening of the enterprise area package, I would like the district council to be able to offer a much wider basis for discretionary rate relief, funded by the Government, to help safeguard local businesses and to stimulate investment in the enterprise areas. Recent announcements indicate that the Government intend to introduce several pilot initiatives to support further people who are out of work. I welcome those initiatives.

New programmes should be designed to offer intensive support in neighbourhoods with high concentrations of unemployment, and they should allow access to the new deal after only three months of unemployment. I welcome moves to streamline the various regeneration programmes. The national neighbourhood renewal strategy recognised that achieving sustained and significant progress in such areas required a 10 to 20-year perspective.

In small areas such as Wansbeck with uniformly high levels of deprivation, and where ward boundaries mean very little in delivering programmes, we need a wider commitment to neighbourhood renewal. It is essential that the Government commit to continuing funding well beyond the March 2006 limit and channel additional resources to ensure employment targets are met.

In recognition of low business formation rates and the lack of an enterprise culture, and—I am pleased to say—in line with Government policy to introduce enterprise to the high school curriculum, I request support for the planned bid to establish enterprise college status by St. Benet Biscop high school in Bedlington. Additionally, I request that the Ashington education achievement zone be considered to introduce pilot initiatives to promote enterprise in Ashington schools.

The towns of Ashington and Bedlington have undergone massive change, with huge private sector housing developments being built during the last 20 years. The district needs to continue to develop. Plans have been prepared during the past two years to achieve significant investment in Ashington town centre, in Bedlington and in Newbiggin-by-the-Sea.

Complementary plans to develop strategic new housing and recreational facilities in a village-style design have been prepared by the private sector. I request Government grant support for the district council to co-ordinate a multi-agency development team to assist key infrastructure costs for all the schemes.

The coal industry still plays an important role in the local economy. More than 400 miners still work at Ellington colliery. Were it not for the introduction nationally of the operating aid scheme, Ellington would now be closed. UK Coal now considers it to be one of its best collieries. We need to secure a long-term future for that mine. A more generous investment aid scheme would assist Ellington in accessing coal reserves that could keep the colliery open for a further 20 years. The coal industry faces a crisis nationally, with many collieries facing early closure. I realise that my hon. Friend the Minister will not be able to address those problems here today. I simply stress how important Ellington is to the local economy.

The Government have invested much time and effort and many resources in addressing some of my constituency's problems. All that I ask today is that the current schemes should be strengthened and extended, and that extra resources, where necessary, should be invested in the area. It is fairly obvious that until the new business parks and industrial sites come on stream, people will have to travel further afield to work. The Employment Service has a team of dedicated people working in the Dewhirst factory assisting people with retraining, the preparation of new CVs and identifying available jobs.

As people will have to travel further to work, it is essential to strengthen our public transport links. There has never been a better opportunity to reopen the Ashington, Blyth and Tyne railway line to passenger services. It was one of the priorities of the south-east Northumberland-north Tyneside regeneration initiative, SENNTRI. That has identified three important transport corridors, alongside which economic development could take place: the A19, the A189—both important dual carriageways—and the reopened Ashington, Blyth and Tyne line. All three need to be supported.

The recent closure of Blyth power station was another blow to the area. It is currently being demolished, and could provide the most important development in our region for decades. It has access via a deep-water port, a dual carriageway and a railway link. If it were developed correctly, the site could eventually provide thousands of jobs in a beautiful, landscaped environment.

The quality of life for the great majority in Wansbeck is very high. We have a wide range of quality housing and live in an area of outstanding natural beauty, only 20 minutes from what will be the next European city of culture. The extra Government assistance that I am seeking is to ensure that all the local population can share that quality of life. We need to demonstrate to those working at Dewhirst that the Government want to help them to go straight into new jobs.

To that end, my final request today is for the Government to assist in the economic recovery of the area by relocating some Government offices. I understand that inquiries have been made about office accommodation in Northumberland and I urge my hon. Friend to use his good offices to press for an early positive decision. Success in that would send out all the right messages, and I am sure that, along with the measures that I have suggested, it would encourage much more private sector investment.

When I visited the Dewhirst factory in Ashington a few weeks ago, I met many highly skilled and dedicated people, all of whom want to continue working and supporting their families. I ask on their behalf that the Government do everything in their power to ensure that those people are placed in jobs as soon as possible.

3.43 pm
The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms)

Let me begin by congratulating my hon. Friend the Member for Wansbeck (Mr. Murphy) on securing the debate, and paying tribute to him for the hard work that he has done over a long period on the future of the Dewhirst factory in Ashington, and particularly his work with the GMB. He came to see me with the union regional secretary in November. I know that he has put a great deal of work into looking for a viable future for the Ashington factory. It is through no want of trying on his part or on the part of the GMB that it now looks certain that redundancies will be made next month.

The right hon. Member for Berwick-upon-Tweed (Mr. Beith) intervened earlier, and I note the presence of my hon. Friends the Members for Blyth Valley (Mr. Campbell), for Easington (Mr. Cummings) and for Tynemouth (Mr. Campbell). That reflects the wide impact of the proposed closure at Ashington on the regional economy, and I want to put on record my sympathy for all the employees and their families who face the prospect of redundancy in the next few weeks.

My hon. Friend the Member for Wansbeck graphically described the problems faced in his area. He said how much he welcomed the comments of my right hon. Friend the Chancellor in the pre-Budget report last autumn, when he spoke about addressing precisely the issues that we are discussing in parts of the country that still have high unemployment, despite the reduction in unemployment nationally. On several occasions, my right hon. Friend has set out his commitment to creating a culture of enterprise in every part of the country so that people will be confident about setting up businesses, even in areas where it was assumed that one would never get a job. There will certainly be more business start-ups, as my hon. Friend suggested. I agree that the measures set out by the Chancellor hold much promise for constituencies such as his, with the characteristics that he described.

My hon. Friend also drew attention to the importance of ensuring that good transport links are in place, and I agree. It is often the case that jobs are available not far from the areas with the most severe problems. If we can match those jobs with proper transport connections—good work is now being done on that—that will offer us an attractive way forward, too.

My hon. Friend mentioned the regeneration initiative and the responsibility for specialist schools. I agree with him about the importance of enterprise status for local schools, but, as he indicated, those are matters for other Ministers. However, I shall ensure that his remarks are drawn to the attention of my right hon. and hon. Friends who have responsibility for those issues, so that they can take account of the telling points that he has made.

I am responding to the debate because of my responsibility at the Department of Trade and Industry for the textile industry, and I want to make several points about the Government's response to the closure that we are discussing. The Government are not in a position to intervene in the commercial decisions of individual companies, but there is much that we can and will do to help those who face redundancy as a result of the closure in Ashington. As my hon. Friend knows, Jobcentre Plus has designated the Dewhirst's factory in Ashington as significant to the labour market, which means that employees who are made redundant will be eligible for early access to a range of Government programmes and services. They will have access to the programme centres, where those who need immediate help can get advice on CV preparation, job applications and interview techniques. Those who are eligible will also have early access to the new deal for young people, which gives those in that age group the opportunity to access the full new deal programme of support. It offers a range of employment, education and training opportunities.

Mr. Ronnie Campbell (Blyth Valley)

My hon. Friend talks about getting people back into work, and that is all well and good. We had the same situation in Blyth Valley a few years ago, when we lost a lot of jobs, but in my area, we are losing the jobs and not getting them back because all the money goes to the enterprise zones. South-east Northumberland and the rest of Northumberland are not part of an enterprise zone and we do not get the money that enterprise zones get. All the jobs are there, but workers in our area do not have jobs. My hon. Friend the Member for Wansbeck and I are saying that we need jobs in our areas.

Mr. Timms

I agree with my hon. Friend about the need both for jobs in the immediate area and for people in the area to have access to jobs in other areas, if they are available. There have been no new enterprise zone designations since 1996. The Chancellor has set out thinking about how we can promote business start-ups and new enterprise in areas such as those that my hon. Friend the Member for Wansbeck and I represent. That approach is much more promising than those applied by the previous Government. We need to create many more new jobs in the immediate area. In opening the debate, my hon. Friend set out a number of proposals, with which I have a lot of sympathy, and which reflect the work that the Government are doing to achieve exactly such results.

We will ensure that those made redundant at Ashington will have early access to the programmes I have described, including workplace learning for adults, which will provide short, job-focused training and longer occupational training. A local Jobcentre Plus liaison officer has been appointed to support those made redundant, and to act as point of contact. Dewhirst has, I am pleased to say, agreed to provide office accommodation at the factory, and it is intended that Jobcentre Plus staff will be on site from tomorrow in order to start their work. They will make presentations to groups of employees about benefit entitlement, training and work opportunities, and will give information on other organisations that may be able to help.

There will be information from the Inland Revenue on new tax credits, so that people will understand their position if they move on to other employment. For those who request it, there will be a counselling service that will include skills analysis to help people ascertain future job goals. There will be access to specialist support, such as disability employment advice, lone parent advisors, and the Wansbeck action team staff, in cases in which it can help. There will also be direct internet access at the site to the Jobcentre Plus vacancy database, which will provide detailed job vacancy information and a job-matching service, through Jobseeker Direct. A wide range of support will be provided on the site from tomorrow to those facing redundancy in the next few weeks.

The textiles industry continues to be important for the UK. It contributes 0.8 per cent. of GDP, accounts for £15 billion in sales, employs some 250,000 people, and exports goods to the tune of more than £7 billion. That is why the Department of Trade and Industry is committed to helping the sector to improve its productivity, and to remain competitive in the tough global marketplace in textiles that now prevails, which is the background to the closure that we are debating. The Department will continue to support close work with the textile and clothing strategy group, which includes representatives of employers, trade unions, the retailers and the universities, to work together on the issues that the industry faces. This is a tough period of change. There have been substantial and severe job losses, such as those at Ashington, as manufacturers adjust to meet the challenges that they face.

In the context of Ashington, my hon. Friend the Member for Wansbeck has raised the issue of public procurement for UK-based manufacturers. We cannot pursue a buy British policy. Public purchases must observe European Union rules and the Treasury's value-for-money guidelines, and it is in the public's interest that they should do so. However, it is important to recognise that value for money is not the same as the cheapest unit price, and that there is scope for UK textile and clothing companies to compete more effectively in tendering for public sector contracts within the European and Treasury framework. If something costs 50 per cent. more than the alternative, but lasts 100 per cent. longer, there is a clear value-for-money choice to be made.

We must ensure that public sector procurers are able to make such choices, and are working with the industry through the textile and clothing strategy group to find ways in which to help UK suppliers to be more successful when they tender for public sector contracts. We have had meetings with senior figures in the industry to discuss the impact of current public procurement policy. Those have highlighted the opportunities for UK suppliers that are prepared to raise their game to meet the purchasing needs of public purchasers. We also supported the conference on public procurement organised by the GMB in November 2001, which was addressed by my noble Friend Lord Sainsbury and representatives of the Ministry of Defence and the Prison Service, both of which procure garments on a big scale. The conference highlighted the opportunities available to textile and clothing companies tendering for public contracts to identify the issues that have caused some UK suppliers to struggle to win contracts, and the actions needed to reverse the trend.

We have produced a good practice guide on value for money to remind public purchasers of the key element in the Treasury guidelines, because we recognise that the industry needs to make changes. Equally, procurers and those responsible for procurement in the public sector need to be able to make qualitative assessments about value for money when they are looking to award contracts for textiles or clothing. That has been widely distributed. Similarly, the Small Business Service and the Office of Government Commerce have produced detailed guidance for firms wanting advice on how to tender for public contracts.

We want to see dynamic, competitive markets operating throughout the economy. That encourages firms to bear down on costs and improve their efficiency and enhances their competitiveness in the home and overseas markets. However, in markets in which the Government are a major procurer of goods and services, our actions can have a big influence on the market and might impact on competition and on the long-term value for money that that can secure for procurement, ensuring value for money and encouraging strong competition go hand in hand. We welcome the Competition Commission's recent recommendations to improve competition in procurement and have asked the Office of Government Commerce to consider what further steps can be taken to increase competition and to encourage better long-term capacity planning in markets in which the Government have significant purchasing power. For example, advance information for all the potential suppliers about opportunities that are about to come up could be improved. We have also asked the Office of Government Commerce to build on its recent work to enable small and medium enterprises to compete for Government contracts to deliver value for money. The office of development and commerce will take those issues forward in consultation with a group that involves the Treasury, the DTI and the Small Business Service and will report to the Government in the summer. I shall ensure that the interests of the UK textile and clothing industry are represented.

The textile and clothing strategy group's recent report, "Making it Happen", which I launched in July, outlines the progress that has been made since the launch of the national strategy. It also charts the great challenges that the industry faces, underpinning the closure that we have debated. It describes an industry that is still going through profound structural change to enable it to compete in the global economy, and Ashington provides stark evidence of the scale of the change. That is deeply concerning for those who are affected. There is some reassurance to be gained from the industry view that it is not in terminal decline—it is undergoing a process of change as it faces global challenges. The industry has reaffirmed its belief, through the "Making it Happen" report, that the strategy blueprint remains the right direction for it to follow, so that it has a sustainable and competitive future. We will continue to work with the group to ensure that that happens. A great deal has still to be done, but with the industry and the Government working together we are confident that we can achieve it.

I am grateful to my hon. Friend the Member for Wansbeck for giving the House the opportunity to consider the particular problems facing his area that arise from the closure. I hope that the measures that I have set out, and the ideas that he proposed to which other Ministers can respond, will enable my hon. Friend's constituents to face the future with much greater confidence than would otherwise be the case.

Mr. Frank Cook (in the Chair)

Order. We now come to a debate on national health service provision in Sutton. I ask right hon. and hon. Members who do not wish to participate in that debate to leave the Chamber quietly and expeditiously.