Unemployment and Poverty (Cornwall)

– in the House of Commons at 1:30 pm on 22nd January 1997.

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Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Environment) 1:30 pm, 22nd January 1997

Cornwall is a poor county and has several of the country's worst unemployment blackspots. In fact, Cornwall is as poor as any region in Europe, our unemployment rate is as high as that of rural Portugal, and incomes and wealth per head are as low as those of the Aegean islands. This poverty is made worse by high costs: housing is expensive, public transport is scarce and, to top it all, we pay the highest electricity and water bills in the country.

Since 1 January, we have been hit by a series of blows: the loss of more than 300 jobs at the St. Ivel factory at St. Erth; the fact that 300 or more jobs are to go in St. Austell's china clay industry; the loss of the air link to Heathrow, which is vital for local businesses; and the news that the A30 improvements at Goss Moor have hit another Government delay.

Officially, however, the south-west region stretches westwards from Cornwall to include the far more affluent counties of Gloucestershire and Wiltshire. As a result, according to the Government's official statistics, Cornwall is simply a small part of the country's third richest region. This merging of Cornwall with a group of far more affluent counties has served to disguise its high levels of poverty and unemployment. Even taking Cornwall and Devon together as a mini south-west region leaves the impression that Cornwall is better off than it really is. It is therefore worth spending a few minutes on hard facts.

Let us start with unemployment. Seasonally adjusted figures for the entire south-west region released earlier this month showed an unemployment rate of only 5.5 per cent., the second lowest in the country after East Anglia and lower than the national average. However, the level of unemployment in our county is more than 25 per cent. higher than the national average. Unemployment in Cornwall actually rose last month, and the county continues to have several of the country's top 10 worst unemployment areas. Already this year, more than 700 jobs have gone or are to go. They have been lost as a result of long-term changes in the local economy and they are unlikely to come back.

For me, however, the key figures relate to the long-term trends for Cornwall compared with the rest of the United Kingdom. Suffice to say that economic reports for the county in the early 1970s, which I have read, talk of the problems of over-employment, with a shortage of workers to fill available jobs. Now, on current figures, our unemployment rate is 25 per cent. higher than the national average, and the gap has widened under this Government.

In December 1981, on the narrow based definition of unemployment—the only definition of unemployment at the time—the national unemployment rate was 12 per cent. In Cornwall it was 16.6 per cent., just over 38 per cent. higher than the national average. As economies fluctuate, those figures will vary, but the differential should not change for the worse—indeed, we would hope to improve it. But, in December 1996, the gap had widened from 38 to 54 per cent. higher than the national average on the equivalent figures. The current figure of 25 per cent. is based on a different calculation of unemployment.

The problems are not confined to people out of work. Those in work in Cornwall can expect to take home far less than the national average wage. Average male weekly full-time earnings in Cornwall are now under 80 per cent. of the national average, and the gap has been widening. In other words, wages in Cornwall are falling ever further behind the national average, despite bills in Cornwall going up more quickly than the national average. Female workers do not fare much better—they are earning just over 80 per cent. of the woman's national average wage. The gap between average female full-time weekly earnings in Cornwall and the national average is wider now than at any time in the past 15 years—indeed, it is twice what is was in 1981.

High unemployment and low wages combine to give Cornwall an average disposable income as low as anywhere in the UK. In 1993, the latest year for which figures are available, the national average gross domestic product per head was £9,263—taking into account everyone in the country, working or not. In Cornwall, it averaged £6,596, only a fraction more than 70 per cent. of the national average.

Costs, however, are high in Cornwall—that applies to housing, getting around and bills. The best-known example is water. Since privatisation, water prices for domestic customers in England and Wales have risen by an average of 39 per cent. in real terms. In the region served by South West Water, however, the rise has been much higher. Since privatisation, average water bills have risen by more than 100 per cent. and are easily the highest in the UK. Local incomes do not reflect that fact, and neither pensions nor benefits are adjusted to allow for it.

The problem is the same in housing. The difference between average incomes and average house prices is, I am told, the highest in the country. This makes the actual poverty far worse in practice because people cannot afford the bills in the way they might be able to elsewhere in the country on the same income.

I hope that there is therefore no doubt of the high level of need in the county. That level of need implies an equally high level of help from the Government, but, time and again, Cornwall does not get the fair deal that I believe it deserves.

Cornwall's councils are still funded by an average of £100 less per person compared with the rest of England. The gap is even greater if we look further afield—the two Coopers and Lybrand reports commissioned by the West Country Development Corporation make it clear that the county does not get the help that similar areas, often facing fewer problems, get—for example, Scotland and Wales. The west country tourist board received only around £400,000 from the Government last year for the whole of the south-west, whereas Scotland received £16.9 million and Wales £14.78 million.

Photo of Mr Paul Tyler Mr Paul Tyler , North Cornwall

My hon. Friend may have seen the figures that Ministers produced for me this morning on the level of Government investment in the promotion and development of tourism in England generally. It now stands, in real terms, at one third of the commitment that existed even in 1979 whereas in Wales, Scotland and Northern Ireland it has increased by 50 per cent. in real terms. It has increased to the ridiculously low level of 10p per head in England—and, of course, in this context, that includes Cornwall.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Environment)

My hon. Friend reinforces what I am saying.

Statistically, as Cornwall is lumped together with its wealthier neighbour Devon or with the wider, even more prosperous south-west region, the county does not get the help it could and should get from Brussels. The county's poverty entitles it to the highest level of European grant funding but it gets only a lower level because it is linked statistically with wealthier Devon. Equally, British Government funds have been axed this week as the Rural Development Commission announced that cuts have forced it to close its business support programme.

Today's announcement by the Cornish company St. Merryn Meat that its next major development of 700 jobs will be in Wales not Cornwall illustrates the problem. The company emphasises the good road links to Wales, yet we still struggle to get the A30 completed. The Welsh Development Agency gave it 20 acres of land—we do not even have a development agency.

What does Cornwall need to build jobs, increase wages and create prosperity? How do we overcome the problems of high and rising unemployment, and of increasing poverty against a background of rising incomes in the rest of the UK? Let me set out what might be seen as a manifesto for Cornwall, containing eight key policies to put our problems right. Perhaps I should say at the start that most of them are already supported by most people in Cornwall, irrespective of political party. They are mainly issues on which all Members of Parliament and councillors have fought together, but we need national Government support. So far, the Government have not been persuaded. I hope that whichever party is in government after the general election, we can persuade it to act.

First, we must have a commitment to maintain the air link to Heathrow. It is a vital lifeline for business people in Cornwall, providing frequent global links that allow easy access to worldwide markets, as the Secretary of State for Transport said in the previous debate. The loss of that air route would be catastrophic for many businesses in Cornwall and would make the area even less attractive to inward investors, who often regard access to Heathrow as essential. English China Clay International, for example, has told me in the past that a number of its operations based in Cornwall for its international work could not be operated without the air link to Heathrow. That is not the only business that could consider relocating some operations out of the area if the air link were axed. I have received many letters on the issue, as have other Cornish Members of Parliament.

Gatwick is not a viable alternative. A connection to Gatwick has been tried in the past and proved unviable. Gatwick does not have the same range, let alone frequency, of international flight connections as Heathrow. The Secretary of State has already admitted that he has the power to ring-fence the landing slots at Heathrow for us. So far he has refused to use it. It is time that he did so.

Secondly, a date must be set for starting improvements to the A30 at Goss Moor. After halting the design work more than a year ago, late last year the Government announced that it was to restart—a widely welcomed announcement. The county council had a contract to do this, which it was half way through when the Government previously stopped it. The county council could start again immediately, but the Government are now insisting that the work is re-tendered, so nothing will happen until well after the general election, probably not until 1998. The lack of an efficient road link to the rest of the country is hurting local business and hurting the surrounding villages, into which all the tall, heavy lorries from west Cornwall have to be diverted, because they cannot drive down the main road through the county.

Thirdly, the Millennium Commission has an important proposal for a university for Cornwall before it. The plan has widespread, cross-party support and should be actively supported by the Government. Expanding higher education opportunities in Cornwall would be good for business and good for jobs, stopping the considerable brain drain of the best of Cornwall's young talent out of the county, to which they rarely return.

A similar proposal was a Liberal Democrat manifesto commitment at the last election. This time, I hope that all parties will be able to unite around that promise, on the back of Millennium Commission support. A university for Cornwall would give a much-needed economic, as well as intellectual, boost to the county. The campus would generate hundreds of new jobs and would bring an estimated £20 million a year into the local economy.

Fourthly, we need a commitment to the Eden project, which is also before the Millennium Commission. It is a hugely exciting project that would be a vital boost to visitors to Cornwall, creating much-needed jobs in the St. Austell area, which has been hard hit by the loss of another 300 jobs in the clay industry—losses that can only worsen, as they have over the past 20 years. Once access problems are overcome to protect local residents—I am sure that they can be—the project will become a symbol of optimism for the county and could be a genuine boost to jobs, cutting unemployment and giving the kind of investment in the county that will bring other economic gains.

The fifth vital commitment for Cornwall is that the Government—any Government—should back Cornwall county council's bid to be classified separately from Devon for European funding. Treating the two counties as one area has masked the true extent of Cornwall's relative economic disadvantage. The Government are reviewing the situation. I hope that they will agree that Cornwall deserves a separate NUTS 2 classification, as it is called—I do not think that the name represents a particular view on Europe, it is just the name that it has been saddled with. That classification would give Cornwall the highest rate of European economic support—the so-called objective 1 status, granted in this country only to Merseyside and the Scottish Highlands. That would also reduce the problem of finding matching funding in such a poor area, lack of which is currently holding up many projects that could otherwise go forward.

Sixthly, any new Government must review the funding that Cornwall receives. With fewer police, less for schools, less for development and less for local services, Cornwall has failed to get a fair deal over many years. The two Coopers and Lybrand reports proved that, but still no real action is being taken.

The seventh vital issue is a review of the system of water and electricity charging. The current system leaves us with the highest bills in the United Kingdom, hitting businesses and people alike. Liberal Democrats have already outlined how we believe that that could be tackled. Ours is not the only possible solution, but a solution is needed.

The final, and most important, commitment must be the creation of a Cornwall development agency. The advantages that such an agency, if properly funded, can bring to an area are clear. The successful records of similar agencies in Scotland and south Wales confirm their potential, but they must be backed by adequate Government funding. A Cornwall development agency could draw on local expertise to back local small businesses, as well as the larger employers in the area. It could be a one-stop shop, providing advice and financial support for businesses in the county. Drawing together funds already held by the training and enterprise council, the Department of Trade and Industry, central Government and Europe, it would have real financial clout. It is important to remember that it would not be an extra, but would replace many of the existing agencies.

Decisions could be made locally and fast by people based locally, fully in touch with the problems and needs of the community. Their jobs would depend on bringing investment that far west. Anyone in such a job based further east can justify their job by developments further east, which are easier to bring in. Few developments come to our side of the Tamar.

We are not suggesting breaking links across the border. Cornwall has shown, through the joint office in Europe, that we can build links, working with others, but the agency must concentrate on success in Cornwall. Its work must be based on local knowledge and activity, backed by existing funding. That funding is currently so widely spread between so many organisations that many of them can do little more than print letter heads and fund their bureaucracy before they run out of money, which means that much of it is wasted.

The issue is too important to Cornwall for simple party politics. As I have said, most of the ideas have cross-party support in the county, but not, sadly, at national level, which is what counts for getting the go-ahead. That is why the Liberal Democrats commissioned an independent group of leading Cornish businesses and development experts to draw up a report on how an agency could be set up and how it would work. That report is to be published next Monday and I hope that every party will take it seriously. Whoever wins the general election, the new Ministers will find the report on their desks, with Cornwall demanding action.

People in the county want the chance to show what we can do. We know that we can make a real success of our economy—the talent is there—but this manifesto for Cornwall can be achieved only by Government action, because the power for each decision lies in London, not Truro. If the answer is yes, poverty and high unemployment can become things of the past in Cornwall.

Photo of Eric Forth Eric Forth , Mid Worcestershire 1:47 pm, 22nd January 1997

I congratulate the hon. Member for Truro (Mr. Taylor) on obtaining this Adjournment debate. The issues that he has raised are obviously important for his constituency and the surrounding area.

As the hon. Gentleman knows, last week we announced another large fall in United Kingdom unemployment and a strong rise in the number of people in jobs. That good news applies to all regions, including the south-west, which has the second lowest seasonally adjusted unemployment rate in the country, at 5.5 per cent. As the hon. Gentleman acknowledged, unemployment in the south-west has been falling over the past six months by an average of around 3,500 people a month. The national and regional picture is positive.

However, I accept that unemployment is still too high. I fully accept that more needs to be done in Cornwall in particular, where unemployment regrettably rose last month, against the trend. However, the current unadjusted unemployment rate for Cornwall of 8.8 per cent. compares favourably with the figures of 10.2 per cent. in December 1995, 14.5 per cent. in December 1992 and a peak of 15.5 per cent. in January 1986.

The hon. Gentleman referred to recent redundancies in Cornwall and in his constituency. Of course, the recent announcements from English China Clay International at St. Austell. and St. Ivel at St. Erth, did not make for the best of starts to the new year for those affected by them. We always regret job losses and want to do everything possible to help. Programmes such as training for work, work trials, jobfinder's grants, and so on, are in place to come to the rescue of people who unfortunately find themselves out of work—particularly if it is for a long period. The English China Clay International and St. Ivel rationalisations will be treated as major redundancies, which means that the normal eligibility conditions for the Employment Service and training and enterprise council programmes will be waived. That is a very important consideration for the individuals involved.

With help from the Employment Service and Devon and Cornwall training and enterprise council, there is good reason to believe that people affected can expect—directly or after retraining or other supportßžto find other work in the foreseeable future. I understand that, with regard to the proposed closure of the St. Erth factory, new jobs will be generated at other St. Ivel and Unigate processing plants in the region and redundant workers from St. Erth will be given priority for those jobs.

I hope that the hon. Gentleman will acknowledge that the recent news on jobs in Cornwall has certainly not been all bad. As a result of the Inland Revenue at St. Austell winning its bid to house the self-assessment inquiries and stores section, 300 to 400 telephonist jobs are being created over the next couple of months. He will be aware that a number of new retail jobs can be expected as the new Treliske retail park nears completion. He must also be aware of the £4.8 million six-year CHEERS project, led by Restormel borough council and funded under the single regeneration budget, which is aimed at building and providing housing refurbishment and redevelopment to strengthen community involvement, improve employment and raise skill levels.

I make such comments not of course unaware of the pain and problems caused by unemployment to those affected, their families, and, indeed, across a much wider area, but I do not think that the prospects are quite as gloomy as the hon. Gentleman appeared to suggest. We know that not all people who are made redundant become unemployed and that most spells of unemployment tendßžmercifully—to be short. Of those people who do become unemployed, a quarter leave unemployment in one month, half in three months and two thirds in six months. Those are well-established trends.

However, we need to face the fact that the sort of job rationalisations to which the hon. Gentleman has referred are part of the process of a dynamic and changing economy—indeed a changing region, as he pointed out. It is not for the Government to interfere with or second-guess commercial decisions made by companies. If we were to try in some way to force companies to keep unprofitable sites open, we would inevitably add intolerable burdens to those already on business and risk destroying jobs in the long term, as our partners on the continental mainland have discovered very much to their cost.

We have to recognise that some jobs will be lost and others created, and that the pace of it will vary from time to time in different regions of the country. I should point out that it is to our great credit as a nation that the traditionally large disparities in unemployment between regions have largely been evened out. The extent to which we have succeeded as a nation in ensuring that, by and large, people up and down the United Kingdom have broadly the same opportunity to work is quite remarkable—a startlingly different picture from that even 10 years ago and certainly 15 or 20 years ago. We should be happy and optimistic about that. We must face the fact that people cannot expect to have the same job throughout their working life, and in doing so we must try to ensure that, whether by education, training or different kinds of support, we can help people to make the adjustments that inevitably arise from such changes.

The hon. Gentleman said much about economic assistance to Cornwall and implied—indeed I think said—that Cornwall was not somehow getting its fair share of Government funding. The problems that Cornwall faces are widely recognised in a number of different ways. That is why so much of the county has assisted area status and is eligible for regional selective assistance. Indeed, I understand that nearly £5 million-worth of regional selective assistance grants have already been offered in 1996–97 to companies in Cornwall, generating more than £31.5 million of investment and creating or safeguarding more than 600 jobs.

A number of other sources of assistance include funding to help develop the local economy under objective 5b of the European Community's structural funds. The private-sector led £8 million Bodmin business park, currently under construction, is an excellent example of how that funding is providing opportunities for business and new jobs in Cornwall. Local partners can apply for challenge funds under the single regeneration budget, and there is the new local competitiveness challenge fund, which was announced in October, under which local partnerships can bid for support for programmes to improve the competitiveness of local businesses.

I gather that there has been some misunderstanding locally over the fact that the Rural Development Commission's rural business support fund for rural development areas has become part of the local competitiveness challenge fund, as was alleged in a local newspaper. RDC money has certainly not somehow been cut and therefore become no longer available to rural areas. On the contrary, money formerly available from the RDC is part of the local competitiveness challenge, ring-fenced for rural areas—although that certainly does not prevent rural areas from bidding for further money that is available from the total pot for local competitiveness challenge.

Photo of Eric Forth Eric Forth , Mid Worcestershire

I cannot give way to the hon. Gentleman because I am going to try to answer all his points in the very little remaining time.

The hon. Gentleman will be aware that, in April, my right hon. Friend the Prime Minister appointed my right hon. Friend the Minister for Local Government, Housing and Urban Regeneration as Minister with special responsibility for the south-west, focusing particularly on Devon and Cornwall. He was given responsibility for co-ordinating Government policy towards the region and for taking forward a "new deal" for the area. That was in recognition of the distinct identity and needs of the region and is a clear demonstration of the Government's support for the south-west.

Since taking up his appointment, my right hon. Friend the Minister has been able to deliver on many of the key strategic issues identified by the West Country development corporation as crucial to the region's economic development. Such issues have included improving vital communications to the far south-west by, for example, securing the restart of work on the dualling of the A30 between Bodmin and Indian Queens and securing £650,000 of European Union money for a feasibility study to speed up train services between Bristol and Plymouth.

My right hon. Friend the Minister has taken a close interest in tourism—a key part of Cornwall's economy—and announced in November a pioneering project funded by South West Water to regenerate Newquay and other seaside towns. A Government-funded strategic study of tourism in the region is also under way, which will provide the region's tourist industry with the best possible analysis of where growth opportunities exist. I would therefore urge the hon. Gentleman to keep in touch with my right hon. Friend in the weeks and months ahead. I shall of course bring the hon. Gentleman's points to his attention.

I might add that I am aware of the perception that the west country generally gets a raw deal compared with, for example, Wales and Scotland, to which the hon. Gentleman referred, when it comes to big inward investment decisions backed by Government funding. Part of the problem is the lack of very large sites for major developments. None the less, my right hon. Friend the Minister has secured progress on the Broadmoor farm site near Saltash by removing the Highways Agency direction to refuse planning permission, thereby paving the way for serious negotiations between developers and the local council. He has also secured early progress on the disposal of Seaton barracks—a prime inward investment site which, although in Plymouth, offers the potential to provide many additional jobs to Plymouth and the surrounding area. In addition, he has announced English Partnership's £5 million factories first initiative, which will provide a stock of readily available units of more than 10,000 sq ft in Devon and Cornwall.

I know, too, that Devon and Cornwall Development International is working hard with the local authorities to attract inward investment. There have already been some notable successes—such as that regarding the United States company Harman International in Redruth—which have been backed by regional selective assistance funds.

The hon. Gentleman mentioned the low pay earned by his constituents. Low pay is of course a relative term. There will inevitably always be some people whose pay is lower than others. The fact is that real earnings have increased at all levels since 1979 and real take-home pay for the bottom 10 per cent. of full-time workers is 14 per cent. higher for a single person than in 1979. More important, low pay does not necessarily mean low household income because household income comes from a number of sources. A family may have more than one wage earner or receive earnings plus state benefits. Even the European Community has recognised that, in the UK, unlike in most EC countries, low pay is a relatively minor cause of low living standards. Here in the UK, the single main cause of low income is not having a job. The best way of helping the lower paid is surely through the creation of the right conditions for a growing economy and the removing of barriers to employment.

The most effective way of raising the living standards and prospects of unemployed people of working age is to help them to get to work. We set up a comprehensive range of measures to help people to provide a better standard of living for themselves through work. The new jobseeker's allowance, for example, helps people to plan the most effective route back to work and creates a better framework of advice and support for the jobseeker.

We provide help through the benefits system to ease the transition from unemployment to work through such measures as family credit and the back-to-work bonus. The Government are currently piloting earnings top-up—an in-work benefit for single people and couples without dependent children—which makes working more worth while and widens the range of potential jobs for unemployed people. From April, the new child maintenance bonus will provide a bonus of up to £1,000 for people with care who leave benefit for work and who were receiving child maintenance while on income support or the jobseeker's allowance.

I hope that the hon. Gentleman will therefore accept that the Government recognise the difficulties that Cornwall faces and are responding to them—perhaps not quite in the way in which he has suggested, but in a way that will be more effective in the short, medium and long term. I hope that he and the local community recognise and support the important work that my right hon. Friend the Minister is undertaking, and that all local agencies, like those in London, will do everything possible to respond to the problems that he has drawn to the House's attention.

It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.