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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

The hon. Gentleman makes an interesting point. I understand from the company that although it offered short-time working as a way of managing the reduction in head count that it needed without losing valued expertise completely, a number of staff opted for the voluntary severance package rather than for such work. I am not sure about the extent to which shorter-time working affected the total number of people who would be seeking other work.

I understand that employment at Nortel grew rapidly after 1998—I have referred to the figures—and that that accounted in part for strains in other sectors of the local labour market. The hon. Gentleman referred to unfilled vacancies in the tourism sector last Christmas, so it may be that people who have taken redundancy or who find themselves with no alternative but to do so will be fairly rapidly absorbed into high-tech manufacturing with other employers or into other sectors in the region.

Let me make a slightly more general point. The Torbay area has access to a range of programmes to help the local economy and, in particular, to improve skills and employability. They include the new European objective 2 programme in the south-west, which is worth some £108 million in European grant money over seven years. They also include objective 3, the new deal and our new DTI enterprise grant for businesses. As the hon. Gentleman will know, Torbay is one of the South West regional development agency's five priority areas for regeneration. The agency has already agreed to invest more than £500,000 towards the development by Midas Construction of more than 6,000 sq m of factory units at Long road, Paignton. It is also working with Torbay council on regeneration proposals for Torbay's waterfront.

The hon. Gentleman mentioned at the end of his speech a number of specific factors that needed attention as part of the wider regeneration of the local economy. In particular, he mentioned transport. In relation to the A380, my understanding is that a bypass was not proposed in Devon county council's local transport plan, so it was not possible to consider funding for the project, of which I know that he is long standing supporter. I believe that the joint study that was commissioned by Devon county council and Torbay council concluded that a bypass could be delivered only in the medium term of 2006 onwards. However, I believe that the hon. Gentleman has arranged to meet my right hon. Friend the Minister for Transport. I am sure that he will find him helpful in considering the way in which an effective transport structure strategy can be established with the help of the county council and, I hope, the regional development agency.

The first of the hon. Gentleman's five points dealt with support for businesses affected by foot and mouth disease. My right hon. Friend the Minister for the Environment, who chairs the rural taskforce, has already announced a substantial package of Government support for a range of businesses in different sectors that have been affected by foot and mouth disease The majority are not agricultural.

We have significantly extended the small firms loan guarantee scheme. Although it is too early to predict its impact, inquiries about it are running at six times the normal rate. It will not help every business, but I hope that it will be useful to some that have been disastrously hit by the disease.

We have introduced a package of more generous rate relief for rateable values of up to £12,000. My right hon. Friend the Chief Secretary to the Treasury told me this morning that the Inland Revenue and Customs and Excise have already deferred £28 million of due payments on income tax and VAT. That proves that the Treasury agencies are fulfilling my right hon. Friend's pledge that businesses that genuinely struggle with cash flow because of the disease will receive sympathetic support from Customs and Excise and the Inland Revenue.

The hon. Gentleman asked whether the current population of the area was genuinely reflected in the calculation for standard spending assessment. That is a matter for my right hon. and hon. Friends at the Department of the Environment, Transport and the Regions, and I am sure that he will take it up directly with them.

I have dealt with inward investment, which the hon. Gentleman mentioned. He also referred to the business park. That is exactly the sort of investment that the regional development agency, the county council and other local partners can make. He rightly stressed that it needs the benefit not only of potential skilled workers—the area has them—but good transport links.

I reassure the hon. Gentleman that we greatly value Nortel as a major inward investor in the United Kingdom. I have no doubt that it will remain committed to the area for many years and that its current activities do not reflect a weakened commitment to the United Kingdom or Paignton. They are simply the inevitable but painful result of a global downturn in the sector.

I also assure the hon. Gentleman that we will continue to do all that we can with the local agencies to ensure that the individuals who are affected by redundancy receive all possible help to get new jobs quickly. We shall continue to support the area to carry on creating the conditions for sustained economic and social success.