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Nortel Networks, Paignton

Part of Opposition Day – in the House of Commons at 10:24 pm on 25th April 2001.

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Photo of Patricia Hewitt Patricia Hewitt Minister of State, Department of Trade and Industry 10:24 pm, 25th April 2001

I begin by congratulating the hon. Member for Torbay (Mr. Sanders) on his tenacity in securing the debate, on the vivid picture that he has painted of his constituency, and on the way in which it has moved from dependence on tourism to becoming one of the world's centres for high technology in manufacturing. The hon. Gentleman has set out the difficulties that he and his constituents are now facing, given the global downturn, including the temporary but painful downturn in telecommunications and other parts of high-technology sectors. As the hon. Gentleman mentioned, he and I have met and discussed and also corresponded on the situation caused by the job losses at Nortel and, as we learned today, at JDS Uniphase as well. As I told him previously, we are already in touch with Nortel and we will continue to do everything that we can to assist his constituents and the wider community who are affected by the closures.

As a member of the rural taskforce, I heard again at our meeting this morning of the impact of foot and mouth disease on a wide range of businesses right across Devon and Cornwall. The hon. Gentleman's comments about the impact, particularly on tourism businesses, confirms what we heard from the regional development agency and other colleagues at the rural taskforce meeting this morning.

Like all my colleagues, I very much regret the job losses that are taking place in Torbay and other parts of the country in the telecommunications sector in the UK. The problem is not unique to Nortel, nor is it unique to the United Kingdom. Almost every major company in the telecommunications sector is experiencing substantial restructuring and job losses. That has been a marked feature of the past couple of months and is a direct result of the sharp downturn in the global telecommunications market, which is particularly pronounced in the United States, with the fall in stock market valuations.

Today, as the hon. Gentleman said, there was a further announcement of site closures and job losses by JDS Uniphase in the UK, including the job losses at the company's Sifam operation in Torquay and the additional job losses at the two plants in Plymouth. Already, the Employment Service has been in touch with that company to offer advice and assistance, and the company is consulting with the work force on how the cuts will be achieved.

We have been closely in touch with Nortel Networks and the hon. Gentleman has met some of the company's representatives. They are clear that the job losses being suffered in Torbay and south Devon are due to the downturn in the American economy. However, even with those job losses, painful though they have been, Nortel remains a very important and successful employer in the wider Torbay area. Even after the earlier round of job losses, employment in the company as a whole stands at more than 4,000—twice the level in 1998. The reflects the strong growth that the company enjoyed in the intervening period.

I can confirm to the hon. Gentleman that all the local agencies—the Employment Service, the Benefits Agency, the RDA and the Government office of the south west—have been working closely with Nortel and the local authority to establish exactly what help is needed and to ensure that it is delivered. On 1 February we granted major redundancy status, which means that the employees affected by redundancy have immediate access to Government job search and training programmes. We have extended that help and that status to cover all subsequent redundancies at Nortel in Paignton.

Devon Training for Skills bid on behalf of local partners for rapid response funding, and that funding of almost £200,000 was approved by the Department for Education and Employment on 3 April. Former employees of Nortel are already benefiting. They are getting help in various forms, including further IT training to help them move into other parts of the labour market. That help will continue to be available to people for up to 12 months after they have been made redundant.

It is important to stress that the skills of the hon. Gentleman's constituents will be in high demand by other local employers. I understand that Nortel held a jobs fair on 5 March at which local employers, the Employment Service and the Benefits Agency offered help back into work, and that more such events will be held if there is demand for them.

When we met last month, the hon. Gentleman suggested that the skills of those employees, which is such a precious competitive asset, could provide an opportunity for potential inward investment into the UK. I assure him that the regional development agency has already been working closely with Nortel as part of what could be called its after-care programme for inward investors. Invest.UK is always in touch with inward investors wherever it can market existing facilities and skills within the United Kingdom. I have also specifically asked Invest.UK and the communication and information industries directorate within my Department to meet him to discuss Nortel and the wider aspects of marketing the attractions of Torbay, including both the climate to which he referred and the skills of the work force. I understand that a date is being fixed with some urgency for that meeting.

It is difficult at this stage to assess with any certainty the effect that the job losses will have on the wider economy in either the short or longer term. I understand that the Employment Service has received locally a total of 285 new claims for jobseeker's allowance from ex-Nortel employees, which compares with the loss of about 1,400 jobs. That may indicate that many other people have already found alternative employment locally or elsewhere.