HC Deb 06 May 1980 vol 984 cc71-4W
Mr. Russell Johnston

asked the Secretary of State for Scotland what special Government grant was sought by Wiggins Teape and Consolidated Bathurst in connection with their proposed development of a newsprint plant at Corpach, Fort William; how this compared with the level of Government assistance offered; and if he will make a statement.

Mr. Younger

The companies made clear that government grants had to be considered together with a number of other factors. The amount of financial assistance available under section 7 of the Industry Act 1972 was similar to that offered for projects of comparable size and importance, and regional development grants would have been paid to the full extent of the statutory provisions.

My ministerial colleagues and I, and officials in my Department, the Department of Industry and the Forestry Commission made every effort to devise an acceptable package of Government assistance and wood prices, and it was with great regret that we learned of the companies' conclusion that they could not manufacture newsprint competitively at Fort William.

Mr. Russell Johnston

asked the Secretary of State for Scotland whether his Department was involved in discussions between Wiggins Teape and Consolidated Bathurst and the Forestry Commission regarding wood price for the proposed newsprint project at Corpach, Fort William; whether his Department gave any advice to the Forestry Commission regarding wood price; and what was the difference between the wood price offered by the Forestry Commission and the wood price sought by Wiggins Teape and Consolidated Bathurst.

Mr. Younger

There was close consultation between my Department and the Forestry Commission and the Department of Industry in preparing the package of Government financial assistance and wood prices for offer to the companies. Wood prices in the United Kingdom, which are similar to those in Europe generally, are currently at about twice the level of wood prices in North America which the companies had hoped to achieve.

Mr. Dewar

asked the Secretary of State for Scotland if he will visit Fort William to discuss with the local authorities, the Fort William Action Group and other interested bodies the closure of the pulp mill and its impact on the area.

Mr. Younger

My hon. Friends and I will certainly respond sympathetically to invitations from any of these bodies.

Mr. Dewar

asked the Secretary of State for Scotland (1) what is the male unemployment rate in the Lochaber district of the Highland region at latest convenient date; and if he will estimate the likely figure which will result from the closure of the pulp mill at Fort William;

(2) what is the male unemployment rate in Fort William at the latest convenient date; and what this figure is likely to be following the closure of the pulp mill there.

Mr. Younger

Unemployment figures are not available separately for the Lochaber district; the available figures relate to the Fort William travel to work area. The number of unemployed in the Fort William TTWA at April 1980 was:

male 309 (5.8 per cent.)
female 282 (11.0 percent.)
total 591 (7.5 per cent.)

The closure of the pulp mill itself involves the loss of 450 jobs. It is not possible at this stage accurately to predict the effect of the closure on jobs in associated industries, or what unemployment rates in the local community are likely to be six months hence if the closure then takes place.

Mr. Dewar

asked the Secretary of State for Scotland what is the amount of public money, in terms of grants and loans, respectively, which has gone to the pulp mill at Fort William since its inception in 1963; and what proportion of these funds will be recovered.

Mr. Younger

Wiggins Teape has received grants and loans towards capital expenditure on the Fort William operation as a whole, comprising both the pulp and paper mills. It is not possible separately to identify the amounts of grants and loans paid in respect of expenditure on the pulp mill.

Under the terms of the Fort William Pulp and Paper Mills Act 1963 the company received a loan of £8 million, most of which has already been repaid with interest. The balance of outstanding instalments, amounting in total to £15 million, is due to be completely paid off in June 1981.

In addition regional development grants totalling £762,689 have been made to the company. These grants were made subject to conditions which required the company to notify the Department of Industry if the grant-aided assets were not brought into use or ceased to be used, and which imposed upon the grantee an obligation to repay the grant in whole or in part if either of these events occurred. The precise sum which the company would need to repay will depend upon the length of time the conditions have still to run and what ultimately happens to the assets after closure of the pulp mill.

Mr. Dewar

asked the Secretary of State for Scotland if he will make a statement on the impact on employment in the forestry industry of the closure of the pulp mill at Fort William; and how many jobs will be directly lost in forestry and related haulage and contracting firms as the result of this closure.

Mr. Younger

The closure of the pulp mill would mean the loss of an important market for wood in Scotland, which would be bound to affect employment in forestry. At present, about 550 people are employed in the harvesting and transport of pulpwood to the mill through the Forestry Commission, private forestry, private harvesting companies and transport companies throughout the Highlands. But there are alternative uses for wood which will be actively developed and it is not therefore possible to predict the outcome in terms of employment.

Mr. Dewar

asked the Secretary of State for Scotland if the financial assistance offered to Wiggins Teape and Consolidated Bathurst in connection with the proposed production of newsprint at Corpach was the maximum possible under present statutory and departmental guidelines; and if he is satisfied that no more financial help could be made available, given the social and economic consequences to Fort William of the closure to the pulp mill.

Mr. Younger

I refer the hon. Member to my replies today to the hon. Member for Inverness (Mr. Johnston).

Mr. Dewar

asked the Secretary of State for Scotland if he will make a statement regarding his Department's negotiations with Wiggins Teape and Consolidated Bathurst regarding the future of the pulp mill at Fort William and the proposed joint venture to develop a newsprint mill there; and what were the reasons for the failure to reach agreement with his Department on wood costs and Government grants.

Mr. Younger

I refer the hon. Member to my replies today to the hon. Member for Inverness (Mr. Johnston).