Orders of the Day — Bradford (Industrial Assistance)

Part of the debate – in the House of Commons at 4:55 am on 29th July 1982.

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Photo of Mr John MacGregor Mr John MacGregor Parliamentary Under-Secretary (Department of Industry) 4:55 am, 29th July 1982

I in no way underestimate the seriousness of the situation in Bradford and I sympathise with all those who have been or are about to be made redundant and with their families.

I suspect, as the hon. and learned Member for Bradford, West (Mr. Lyons) said, that the contraction is a good deal faster in Bradford than in the United Kingdom as a whole. This graphically illustrates some of the structural, technological and market—including international market—changes that our own and all advanced economies face.

The hon. and learned Gentleman very fairly pointed out some of the factors that had led to the present situation in companies and industries in his area. He said that when the Government came to power British industry was too sickly to withstand the policies that we have pursued. I believe that he is half right in that. It is always dangerous to generalise about British industry as a whole, but for a number of reasons much of British industry had not been in a competitive state for a considerable period and it was too sickly to withstand the gales of international recession that have occurred since 1979. The problems with which we have had to deal include all the factors that the hon. and learned Gentleman mentioned, but especially the uncompetitive nature of so much of British industry compared with more successful companies and countries overseas at a time of world recession, caused in large part by the oil crisis, and of very fast-moving technological change.

The examples that the hon. and learned Gentleman gave of companies that have recently got into difficulties and of industries such as the wool textile industry illustrate the international nature of the problem for many of these companies and the fact that so often at present lack of orders is a feature of international markets and the companies' traditional export markets as much as of the domestic market. The problem is no longer really because of the overvaluation of the pound last year—as was then argued, although I shall not go into that argument—but because all too often the orders are not there in international markets.

The industries that the hon. and learned Gentleman mentioned in the first part of his speech illustrate my point. He referred to the problems of the wool textile industry. As he rightly recognised, there has been a decline in employment in the industry as a whole for many years. He gave figures from 1961 until the present. There has been a steady decline. Again, as the hon. and learned Gentleman will know, that was caused by international factors and by technological change and change in the demand for individual products as much as by anything else.

The Government appreciate the seriousness of the problems that have faced and continue to face the textile and clothing industries. We have debated this frequently in the House and we are doing all that we can in the framework of our domestic economic policies and international obligations to create the right environment in the longer term for an efficient economy in which the industry can compete.

In particular, the hon. and learned Gentleman will know of all the efforts that have been made in relation to the multi-fibre arrangement. This industry has the greatest battery of protection available to any industry. We believe that the Community mandate for the negotiation of the bilateral agreement on the framework of the renewed MFA gives us the possibility of renewed restraints on the supplying countries a good deal tougher than those which at present exist. I shall not enter into a long debate on the textile industry, but this is an attempt to give some temporary protection to an industry that is going through substantial change.

Of the individual companies involved, the hon. and learned Gentleman referred first to the redundancies at GEC (Large Machines) Ltd., at Thornbury. He will know, as the company made clear, that those redundancies were due to the worsening demand for its electric motors. The Government are naturally concerned about those who lost their jobs, and the services of the Manpower Services Commission have been made available. The decision to reduce the work force was, as it had to be, for the judgment of the company in the light of the management's assessment of the market.

The company considered the total closure of the site, but retained 350 jobs at Thornbury because it was aware of the employment problem in that area. The company talked to officials in my Department and I understand that the decision is irreversible. It was taken in the full knowledge of current Government assistance schemes, but the market no longer existed for that product.

Rank Wharfedale, and the closure of its factory in Idle, is a graphic illustration of these problems. I regret the demise of such a long established and well-known manufacturer, and I have sympathy for those who have lost their jobs. Unfortunately, Rank Wharfedale had been making losses for some time. The recession and the changes in the audio market resulted in a sharp drop in sales. The company had been working a two or three day week and at only 25 per cent. of capacity for some months. This was partly responsible for the substantial loss of £3·75 million incurred by the industrial division in 1981. The change in world markets for that product is significant.

The world market for audio equipment has suffered a decline since the peak levels attained in 1979–80. That is due to the world decline in economic activity and to increased competition for consumers' discretionary expenditure represented, for example, by video cassette recorders, sales of which have rapidly expanded in the United Kingdom. There is a much greater concentration in that area of consumer expenditure than on the products manufactured by Rank Wharfedale. Moreover, there is the increased, highly efficient and advanced competition from Far East countries.

Selective financial assistance under section 7 of the Industry Act 1972 is available to any parties interested in taking over any of the company's assests and restoring some employment. My Department is open to discussions on that possibility with anyone who is interested. The worrying aspect of the situation is that it is again international and modern trends that have brought about a complete change in the market.

The hon. and learned Gentleman referred to the closure of the International Harvester plant at Idle. Hon. Members will be aware of the continuing depression of agricultural machinery and tractor markets in nearly all countries. International Harvester is an international company. We know that other international companies in the same sphere have also faced an extremely difficult time.

The world depression is a significant factor in this respect. Tractor manufacturers in the United Kingdom, including International Harvester, have traditionally sold a high percentage of their output overseas. The factors contributing to the world depression show no signs of alleviation. The hon. and learned Gentleman must accept that we can do nothing substantially to alter the orders from other countries for those products. No general improvement in demand is forecast for the near future—although in certain areas such as the United Kingdom a small growth may take place this year—and consequently all manufacturers in the industry are operating substantially below capacity. Naturally, manufacturers are looking for ways of rationalising their operations.

The world-wide lack of demand has meant curtailing production by short-time working, which has resulted in redundancies. The decision announced last Friday by International Harvester to close the tractor component factory led to 500 job losses.

Only in March the American parent group took the exceptional step of temporarily halting all tractor production in the United States at its Illinois plant in an effort to rationalise. The Department's ability to influence international markets and the operational pattern of international companies is relatively limited. I listened carefully to everything suggested tonight, but there was nothing that could affect the position of Rank Wharfedale or of International Harvester. Officials in my Department are in close touch with International Harvester and have been made aware by the company of the group's deep difficulties and the impact that that has on its United Kingdom operations.

A number of alternatives to closing the Bradford factory have been carefully considered by the company, but unfortunately it is not possible to avoid the decision to close. We hope that the company can maintain its important manufacturing base in Britain. The full range of Government financial incentives is available to help with capital or development projects.

I shall now consider what can be done and examine the hon. and learned Gentleman's prescription. We have recently had both a debate and a statement about assisted area status, so it is not necessary to go over the Government's regional policy or the changes made to bring assisted areas down from covering 44 per cent. of the working population to 27 per cent. The main objective is to ensure that regional aid is concentrated on the areas of greatest need. The evidence, such as it is, indicates that that is the most effective way of carrying out regional policy.

Bradford is to retain intermediate area status. Like the other areas which will continue to be assisted after 31 July, that status will be enhanced because the coverage of assisted areas generally is to be reduced. That means that places with a form of assisted area status will be better placed in terms of regional policy. That is especially so in Bradford, since Bradford will be the only assisted travel-to-work area in West Yorkshire.

The July level of unemployment is 15·3 per cent. That compares with a development area rate for June of 16 per cent. We have to take a number of other factors into account when assessing the status of a travel-to-work area. There is no evidence of a necessity to change Bradford's status. But from 1 August, Bradford will be relatively well placed.

The hon. and learned Gentleman referred to the loss of jobs in the pipeline and to International Harvester in particular. I recognise that there will be a change in the percentage, but it is difficult to conclude from any projection that a change in assisted status should be made. We must look for evidence of permanent structural change relative to other parts of the country. Our pledge remains, if there is clear evidence of permanent structural change relative to other areas. We shall consider any individual travel-to-work area in which it is clear, for whatever reason, that that is about to happen. There is not that evidence at present.