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Job Losses (Wakefield)

Volume 128: debated on Tuesday 1 March 1988

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Garel-Jones.]

12.23 am

I am most grateful for the opportunity to raise certain issues which are of deep concern to my constituents within Wakefield. The last time I was present in the Chamber for an Adjournment debate at this ridiculously late hour it was to discuss the closure of the Woolley and Redbrook colliery complexes. The debate was led by my hon. Friends the Members for Barnsley, Central (Mr. Illsley) and Barnsley, West and Penistone (Mr. McKay).

I believe that it is appropriate to start my brief contribution in the early hours of this morning by referring to the problems that affect my constituents directly as a result of the rundown of the coal industry in the Wakefield area. I should like to refer briefly to some statistics which show the major problems affecting my constituents as a direct result of the pit closures.

In 1979, in my constituency of Wakefield, there were 4,395 jobs at eight pits. In 1988, there are only 565 jobs at one pit, the complex at Denby Grange and Calder Drift. In 1979, in the Wakefield district, there were almost 17,000 jobs in the mining industry at two pits. In 1988, there are fewer than 5,000 jobs at six pits. It is important to make the point that there are knock-on effects of pit closures. I am concerned not simply about the issue of miners' jobs, although that is important, but about the effects on the rest of the economy. I am particularly concerned about the fact that, directly following pit closures, job losses arise in manufacturing companies and service organisations supplying the goods and services to the coal industry.

The engineering industry in my constituency is extremely dependent on the prospects of the coal industry. I remind the Minister of the closure of the British Ropes factory in Wakefield in January 1986, with the loss of 180 jobs. One of the main factors contributing to that was the rundown of coal in the Yorkshire area. Several other large employers are very much dependent on the prospects of the coal industry, including British Jeffery Diamond. It currently employs 780, yet as recently as 1986 that company employed 950 people in my constituency. Fletcher, Sutcliffe, Wilde employs 385 people at its factory in Wakefield. In 1981 it employed as many as 781, so, clearly, those two companies, together with a number of smaller companies, are very dependent on the prospects of the coal industry.

In detailing the knock-on effects of the rundown of the coal industry, it is important to discuss job losses in local services caused by loss of spending power among mining families. I refer the Minister to the study carried out by Barnsley borough council, which estimated that, for every 100 jobs lost in the coal industry, an additional 24 were lost through loss of spending power by former employees in the coal industry. I understand that that is a rather conservative estimate of the impact.

There are also similar problems in my constituency in the textile industry. Recently there have been major closures at Paton and Baldwin, Listers, where several hundred people lost their jobs. Clearly, there is a similar knock-on effect in the constituency.

I do not want to give the Minister the impression that local people have not attempted to do something about the situation. I wish to pay tribute to the role of the local authority, not just because I was chairman of its Economic Development Committee. Recently, Wakefield district council has made great efforts to attempt to offset the problems that we face in my area as a result of the declining industries, such as textiles and coal. Wakefield district council has established excellent relations with the private sector at local level. People in private industry locally would support that. The district council has worked closely alongside the Wakefield and Kirklees chamber of commerce and, with private industry, has developed a number of initiatives in job creation, which are to be commended. It has developed successful enterprise centres based in the worst hit areas of Wakefield, which are clearly generating new jobs, although not to the extent required to replace the jobs that we have lost in the coal and textile industries, among others.

It is also fair to say that the district council has made strident efforts to attract new investment into the Wakefield district by marketing the area, trying to sell it to inward investment, with substantial success. The Minister will probably be aware of recent proposals by Coca-Cola-Schweppes to open a factory in the Normanton constituency, which, although not in Wakefield itself, will clearly have some bearing on my constituency.

In my opinion, the efforts that are being made by the local authority have been totally undermined by the Government's withdrawal of assistance. I want to give four brief examples of the ways in which I feel that the Government have directly damaged the prospects of the local economy in the Wakefield constituency and in the wider Wakefield district. Way back in 1982, the industrial development certificate system was abolished. Until that point, that system had actively encouraged the movement from the prosperous south-east to areas of unemployment in the north of people who would be prepared to create jobs. I felt at the time, and have certainly felt since, that such abolition was a backward step. In the same year—this is probably the most crucial point—the review of regional policy led to the withdrawal from Wakefield of the intermediate status that it had previously enjoyed. I shall refer to that later.

In 1985, the Department of the Environment announced that Wakefield would no longer be eligible for urban development grant. At local level, much progress had been made as a result of the use of those urban development grants. Indeed, I recently discussed the successes that we have had with the hon. Member for Rossendale and Darwen (Mr. Trippier). When he visited my constituency before Christmas he was able to see the successes that we have had directly as a result of urban development grants being available to firms in Wakefield.

My request for this Adjournment debate stems from a recent spate of job losses that have hit my constituency. I should like to detail briefly the extent of those job losses. February 1988 was a black month for employment prospects in my constituency. On 4 February, as I am sure the Minister is fully aware, Hagenbach's bakery was scheduled for closure by Allied Bakeries Ltd. I believe that the bakery employs altogether over 300 people, but Hagenbach's and the people at the bakery have run a number of shops in the Yorkshire and Lancashire area. I believe that the total package of losses announced by Allied Bakeries on 4 February was about 430 jobs—more than 300 jobs in the bakery in my constituency and the rest based in shops throughout the north of England.

What was especially worrying was that there had not been any prior warning to the employees about the drastic nature of the step taken by Allied Bakeries, although it is fair to say that 46 redundancies had occurred the previous October. However, there had been no subsequent attempts to cut production or reduce costs. As I understand it, distribution patterns had remained constant and there had not been any staff cuts.

I had subsequent contact with a gentleman by the name of Mr. J. W. Mutch, the personnel director of Allied Bakeries. I explained my concern and that I felt that it was discourteous, when there was such a sizeable closure, that the company had not taken the trouble to notify the local Member of Parliament which, from discussions with my predecessor, I had understood to be normal practice. Because of his concern at my involvement, Mr. Mutch came up to Wakefield overnight and I met him together with the local manager of the bakery to discuss in detail my concern over the issue. I also discussed with the trade union representatives at the bakery their concern about what had happened. Mr. Mutch informed me that the closure decision was
"based on commercial decisions connected with the changing pattern of trade in the bread market, against a background of overcapacity in the plant bread industry."
In a letter to me, Mr. Mutch further stated:
"We very much regret that the closure decision has had to be taken and it is important that we should assure you that the decision is no reflection on the skills and attitude of the workforce—many of whom have given loyal service over many years."
I do not have to tell the House that, in a situation such as this, the staff who had given such loyal service were devastated by the announcement. What particularly concerns me is that many of the staff are female and many are under 40: this poses particular problems when it comes to generating the jobs to make up for the major loss of this bakery.

As if that were not bad enough, in the same month Northern Dairies, which has a plant in Back lane, Wakefield, announced 58 job losses caused by a
"reduction in milk production"
at its Wakefield site. In his official announcement of this reduction, Mr. N. F. Benson, the area manager, stated:
"This decision, which has not been taken lightly, is as a result of the cost of updating the Wakefield operation, the difficulties of the site itself and the need to maximise the effectiveness of production capacity across the company."
To be fair to this company, I understand that it intends to upgrade the remaining operation to what it calls "modern standards" and to spend some £750,000 on the site in the next 12 months. Nevertheless, this changeover has resulted in the loss of 58 jobs in an area where we can do without such a loss. It is likely that there will be other redundancies as a knock-on effect of the Northern Dairies announcement, presumably in the supply of milk to that dairy.

In addition to these two announcements of major job losses, two others were also made in February. An organisation called CAIB UK Ltd., previously based in the Horbury area and owned by an Australian conglomerate, Brambles Europe Ltd., has moved the operation of its railway wagon hire business from the Wakefield constituency to London; seven of its employees have been offered work in London but the remaining 18 have been made redundant. So here are more job losses directly affecting my constituents.

The fourth major announcement last month was the fact that the Britvic Corona soft drinks depot in Flanshaw lane, Wakefield, is to be closed in the not too distant future. On that site at present there are 35 jobs altogether. I spoke to a Mr. Michael Salter, who is the new company secretary of Britvic Corona, based in Chelmsford. He told me that this was
"part of a rationalisation programme."
He added that there was hope for relocation of some of the jobs in Leeds. But for me, attempting to keep work in my constituency, it is a net loss of 35 jobs for the people of Wakefield.

In a matter of four weeks, therefore, over 400 jobs have been lost to Wakefield people, So I am here to tell the Government that we need some assistance and some response about the situation in Wakefield.

What do Wakefield people want from the Government? We need a recognition that unemployment is a human issue, not an abstract concept. It worries me sometimes, listening to debates in the House, that people forget that it is human beings we are talking about. It certainly hit me when 1 met the people at Hagenbach's, who told me that when the announcement was made people there who were not prone to show emotion wept openly, because it was the end of the world for them: their future was a complete blank, a mystery, to them from that day.

We require recognition, particularly when it comes to closures in the coal industry, that redundancy payments, however generous, are no substitute for real jobs which are needed by school leavers, by young people and by unemployed people in my area.

We need a recognition of the problems facing the local economy in Wakefield. It concerns me that much of the Government policy at present directed towards local economies is based on figures in the 1984 census of employment. As regards Wakefield, those figures pre-date the huge decline in mining jobs, in particular, which have taken place in the past two or three years. At that stage, of course, there was what I would call a stockpile of miners, awaiting the development of the new Selby coalfield. Things have changed significantly since 1984, and the Minister should he clear about that.

It is important to stress the concern that the Government's industrial policy is aimed largely at inner areas of large cities. Wakefield has small towns and communities, which are not suited to the type of redevelopments undertaken by the Government in certain of the large inner-city areas.

Further, the Wakefield people want recognition that Wakefield's problems are in many ways a consequence of the operation of market forces. We do not believe that free market operations will resolve the serious problems that we are facing. Wakefield people want their area to be granted appropriate economic development status, so that public funds are made available to invest in the infrastructure needed for job creation — roads and factory premises—and to attract direct investment in jobs.

Other Yorkshire Members and I received a letter from the Yorkshire and Humberside Development Association about the urgent need for advance factory units, especially in non-assisted areas such as mine. The letter refers to the reply from the Parliamentary Under-Secretary of State for Trade and Industry, the hon. Member for South Ribble (Mr. Atkins), when he said that in his opinion the issue will be dealt with by market mechanisms. The YHDA said:
"The trouble is, if you compare the 1982 to 1987 figures quoted above with the 1977 to 1982, and with the 1972 to 1977 figures, the general picture remains the same. Taking the entire 1972 to 1987 period, industrial property values rose by 12.5 per cent. in the South … If you take inflation into account, at 11 per cent., you will see that there is a positive growth rate in the South and a negative one in the North. We have been waiting 15 years for market mechanisms to sort out the problems we presently face. It is our belief here at the YHDA that those market mechanisms need a gentle nudge."
I am sure that the Minister will take the points I have made seriously.

I am not here with a begging bowl; I am here with pride in my local community, in which I have lived all my life, and a strong conviction that, with the restoration of the minimal assistance from Government that was taken away, Wakefield can begin to tackle successfully the problems I have outlined and start to rebuild its economy.

12.43 am

I congratulate the hon. Member for Wakefield (Mr. Hinchliffe) on having secured this Adjournment debate. I fully understand his concern for the needs of his constituents and his commitment to them.

I accept that job losses have occurred in Wakefield and that the unemployment rate is higher than any of us would wish it to be. I recognise that we are talking about human beings. Like many areas throughout the United Kingdom, Wakefield has suffered from a decline in traditional industries, particularly coal mining. I shall be spending much of this speech talking about matters of particular relevance to Wakefield, but I should first like to put Wakefield's situation in a broader context.

Unemployment is not just a matter for local or even national concern. It is an international problem: over 16 million people are currently unemployed in the 12 countries of the European Community. We are constantly searching for ways to help industry and commerce create new jobs, and to help the unemployed help themselves, and we are having some success.

Unemployment in the United Kingdom has now fallen for 18 months in succession: by almost 647,000 since July 1986. This is the largest sustained fall on record. Over the last six months, unemployment has fallen by a record average of 52,000 per month. Over the past year, United Kingdom unemployment has fallen faster than in all other major industrial countries, and our rate is now lower than in France, Belgium, the Netherlands, Spain and Ireland. Of particular note is the fact that unemployment has fallen significantly among under 18-year-olds and among those who have been unemployed for more than 12 months.

Unemployment has been falling for the last 18 months, but employment has been rising for the last 18 quarters. In that time, the civilian labour force in the United Kingdom has grown by over 1·5 million. This is the longest period of continuous employment growth for nearly 30 years. I am particularly pleased about that, although much of this growth has been in the service industries and in the ranks of the self-employed. Manufacturing employment has also been rising over the last three months.

Wakefield and the whole Yorkshire and Humberside region are sharing in these favourable trends.

Unemployment in the region fell by 46,600 in the 12 months to January 1988. In the same period, unemployment in the Wakefield and Dewsbury travel-to-work area fell by over 2,600, and in the hon. Gentleman's constituency by 828, which represents over 15 per cent. of the total unemployed in the constituency at January 1987. Unfilled vacancies at jobcentres at January 1988 totalled 878, up 20 per cent. on 1987.

In this same period, in the 12 months to January 1988, youth unemployment in the Yorkshire and Humberside region fell by over 25 per cent. and the number of those unemployed for more than 12 months fell by over 16 per cent. In the period from June 1983 to June 1987, the civilian labour force in the region grew by 97,000. This represents a 5 per cent. increase, which exceeds the growth in the north as a whole.

The specific job losses in Wakefield to which the hon. Gentleman referred are primarily job losses due to colliery closures and cuts, the closure of a bakery and staffing reductions in a local dairy. I am sure that, as in almost all situations where workers stand to lose their jobs, there are arguments, some more valid than others, that can be mounted against these particular cuts. But ultimately they are clearly all decisions for the commercial judgment of the companies concerned. I have to say bluntly that none of them is a matter in which it would be correct for the Government to intervene, and it would be unfair to the employees concerned to pretend otherwise.

It is a fact of commercial and industrial life that companies both large and small sometimes find themselves in a position where closure or a reduction in the workforce is unavoidable. Legislation exists, subject to certain conditions and thresholds, for the notification of redundancies, for consultation with recognised trade unions and for redundancy payments. In many cases employers—the National Coal Board is one—go beyond the strict legal requirements in terms of consultation and redundancy pay, and of course all the facilities of the Department of Employment and of the Manpower Services Commission, to which I shall refer extensively, are available to those who lose their jobs, and that is all to the good.

But it is futile to think that the Government or anyone else can wave some magic wand, halt the process of change or turn the clock back to the employment pattern of some past time so as to prevent these closures and job losses from occurring. Change is inevitable. What matters is how we respond to change.

There is evidence that not all the change in Wakefield is in the direction perceived by the hon. Gentleman. I have referred to the favourable trends in unemployment and employment which can be seen in the hon. Gentleman's constituency. Jobs are being created to replace in part those being lost. We had the recent planning decision, taken against a background of some local opposition, to allow a major soft drinks warehouse on the outskirts of Wakefield which it is hoped will create several hundred jobs. I also note that Wakefield district council is encouraging job creation by giving financial assistance provided by the European social fund to local firms taking on young people.

I have taken an interest in the problems of Wakefield, and went there last April. One of my engagements was to visit a job club, of which there are three in Wakefield. They have an excellent record and two thirds of the unemployed who have passed through these job clubs have found employment. I also visited M. P. Stonehouse Ltd, at Albion Mills, Wakefield, a textile company which, certainly at that stage, was trading well.

I also understand that the Wakefield enterprise zone, which exists on three sites in the locality, has shown an excellent record of attracting employment. In December 1986, the latest date for which I have seen figures, there were 65 firms located in the zone, compared with 18 on the dates of designation in 1981 and 1983, and that there were 2,700 jobs compared with 1,200 on designation and 1,700 in December 1985.

While the Minister says that the enterprise zone has attracted jobs, my impression is that the zone, which is not in my constituency, has attracted those jobs from elsewhere rather than having created new jobs.

My experience of enterprise zones—I have the experience, I am glad to say, of having two in my constituency — is that, while some jobs move from outside into an enterprise zone, normally some new jobs are created. Also, an enterprise zone creates new factories, which obviously help modern manufacturing processes.

The Government believe that they are creating an economic climate in which industry is becoming more competitive in world markets, and which allows enterprise and job creation to flourish. But it should not for one moment be thought that we are leaving it at that. We are also helping firms, especially small firms, to equip themselves for growth, and helping the unemployed to equip themselves for a return to work. My Department and others have a wide and costly range of measures to help industry and the unemployed.

The Department of Trade and Industry recently launched its enterprise initiative, which will provide assistance mainly to small and medium-sized firms. My Department, through its small firms centres, supports the budding entrepreneur as well as established small firms with low-cost information and advice, offered through more than 300 counsellors in 170 locations, including Leeds. In 1987, the small firms service dealt with 282,000 inquiries nationwide and provided more than 38,000 counselling sessions.

The local enterprise agency movement is also proving to be a potent force for encouraging enterprise and employment at a local level. Nationally, more than 3,000 private sector companies now support local enterprise agencies. Although the Government believe that this movement must be led by the private sector, we have introduced a grant scheme to strengthen agencies and make them better able to attract further private sector funds. I am sure that the hon. Gentleman will be familiar with the Kirklees and Wakefield venture trust, which was launched in 1981 and which has received assistance under the grant scheme.

My Department is particularly concerned about unemployed people who possess initiative, ideas and some capital, but who hesitate to take the risk of losing unemployment benefit. To help them we have introduced the enterprise allowance scheme, which encourages enterprise among the unemployed by paying them £40 a week for the first year of self-employment. About 274,000 people nationally have so far started a business using this scheme, and more than 1,600 individuals are currently benefiting from the scheme in the Wakefield area.

I have tried to demonstrate that, despite certain job losses, there are encouraging signs in Wakefield's employment position. Unemployment is falling; and employment in the region as a whole is rising.

Assisted area status is a matter for my right hon. and noble Friend the Secretary of State for Trade and Industry, not for me and my Department. However, I draw the hon. Gentleman's attention to an article in the Yorkshire Post on 26 February, headed
"City on the verge of a job bonanza".
It refers to the comments of Councillor John Pearman, who
"hinted at exciting developments on the jobs front in the immediate future",
and later to the comments of Councillor Peter Box, chairman of Wakefield's employment and economic development committee. He said:
"There's a certain buoyancy at the moment as far as interest from private sector companies is concerned. We are dealing with a substantial number of inquiries from firms large and small."
He went on to say that
"it seemed that Wakefield's geographical advantage being close to the M1 and M62, was central to the attraction, coupled to a reputation of having a good workforce and excellent industrial estates."
One hopes that some of those general optimistic comments will, in the fulness of time, come through in the form of specific jobs.

I have tried to show that the Government are helping Wakefield and areas like it to overcome their economic problems. We are putting in place measures, such as YTS and our new adult training strategy, which are not merely short-term expedients, but are long-term programmes designed to meet the nation's long-term future needs.

Above all, we see our role as establishing economic conditions conducive to enterprise and job creation. 'We are succeeding in that. We are now well into our seventh successive year of steady growth, and the fifth year in which growth has been combined with low inflation—

The motion having been made after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at seven minutes to One o'clock.