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JTI Gallaher

Volume 587: debated on Monday 27 October 2014

Motion made, and Question proposed, That this House do now adjourn.—(Harriett Baldwin.)

On 7 October, my constituency received the devastating news that a 150-year-old manufacturing industry was to be brought to an end.

JTI Gallaher employs 900 people in Ballymena. It has existed in Northern Ireland since its foundation 150 years ago in the city of Londonderry, and it has been a mainstay of employment in Northern Ireland. It has stood along with key industries such as linen-making, textiles, rope-making and shipbuilding, and it has itself been part of one of the key industries in Northern Ireland. In my constituency, it alone employs those 900 people. It is regarded as one of the largest employers in the constituency, and, indeed, in Northern Ireland as a whole.

Let me put this into a local perspective. In a country of 1.8 million people, that employer’s wage input into my local economy is £60 million, and it puts a further £100 million into the entire Northern Ireland economy through transport, packaging and other associated industries.

In philanthropic terms, the company supports—and indeed is the lifeblood support of—key charities, including Age UK, the Harryville partnership in Ballymena and the Ulster orchestra. We are hearing much locally about the future of the Ulster orchestra. Let us be absolutely clear about this: without JTI Gallaher there would be no Ulster orchestra.

I want to put the 900 jobs into a UK-wide perspective. If those jobs were lost here on the mainland of the United Kingdom, it would be the equivalent of 32,000 people being told that their jobs are over. I welcome the fact that we have a Minister at the Dispatch Box, but I have been totally underwhelmed by the response of this Government to that blow to our economy. There has been no statement from that Dispatch Box about it. The Secretary of State has not come to that Dispatch Box. To say the sense of betrayal in my constituency is palpable would be an understatement.

Does my hon. Friend agree that the Government have surrendered to the lobby from those who oppose smoking? They have put people out of jobs and yet their very objective will not be achieved, because all that will happen is that people will move over to an illegal market, with far more dangerous tobacco products and the financing of criminal gangs?

I thank my hon. Friend for his intervention.

There are three reasons why this factory is going to be closed. The first of the two main reasons is over-regulation. I am the first to say that smoking needs to be regulated—I do not smoke, I do not want my children to smoke, and the product is harmful so it has to be regulated—but to over-regulate it to such a degree that we close the industry down without stopping people smoking is just foolishness.

The second key issue is the illicit trade. As a result of over-regulation—my hon. Friend pointed to this—one in four cigarettes smoked across the whole of the United Kingdom is an illicit cigarette that has been smuggled in. That damages not only the economy and the country, but these jobs.

Does the hon. Gentleman agree that the Government’s absurd proposal for plain packaging of tobacco will not only be dangerous to tobacco smokers, but is partly instrumental in the loss of jobs in his constituency?

The European tobacco directive has undoubtedly helped to kill this industry, but let us be absolutely clear: the betrayal of the Government in putting in place plain packaging has said to an entire industry, “There’s no point staying in this country. There’s no point continuing to manufacture in the United Kingdom.” All it has done is driven—and it will continue to drive—those jobs to eastern Europe while cigarette smoking continues in Northern Ireland.

Europe clearly has a reason for the directive that is coming through, but does my hon. Friend recognise the good work MEPs Diane Dodds and Jim Nicholson did on behalf of JTI? Does he think Europe could have done more, and does he feel that the Minister should have more interaction with Europe?

My hon. Friend raises an interesting point which I want to address slightly later by talking about how Europe has played a devastating role in this development.

Does the hon. Gentleman agree that the Government caving in on this one, and indeed leading the charge on plain packaging, interferes with the intellectual property of companies, which is a dangerous precedent, and that we will end up not with more people giving up smoking, but with the exporting of jobs and the importing of tobacco products?

The hon. Gentleman is absolutely right when he says that plain packaging will not do what it sets out to achieve. It will not reduce consumption; it will simply help to destroy an industry.

I appeal to the Government tonight. They could help me to save jobs in my constituency and help me save this industry by indicating firmly that they will review immediately their decision to implement plain packaging, allowing me to go back to the company and argue that it is worth its while staying in a country that wants to encourage, not discourage, manufacturing.

Does the hon. Gentleman agree that it is not just his constituency that would feel the economic impact of the closure of the JTI factory, but the whole of the north-west of England? Located in my constituency is Heysham port, which is the reserve port for JTI’s goods. My port will lose out on business from JTI should the factory close.

It is not only that the 900 directly employed people in my constituency will lose their jobs. The hon. Gentleman mentions associated companies. Yes, I will lose £60 million from my local wage economy, but approximately a further £100 million will be lost from the local economy in terms of the costs associated with transport, haulage firms and packaging companies. All those other aspects of associated business and trade will be gone. It is therefore no wonder that the hon. Gentleman is concerned about the impact that the closure will have on employment in his constituency.

Does the hon. Gentleman agree not only that the decision by JTI, based on the tobacco products directive, shows why the Government must immediately cancel their plans to proceed with plain packaging for tobacco products, but that all the evidence from Australia shows that this will simply drive more customers into the illegal trade, where there are none of the health benefits the Government want to see and none of the money coming into the Exchequer that they would wish? Moreover, it will lead to even more of the job losses he is suffering in Ballymena.

I thank the hon. Gentleman for that. Government policy should be based on evidence. If there were evidence to show that plain packaging will reduce consumption, the Government would have every right to attempt to implement the policy. But given that it is basically guesswork, and that the trial on the ground in Australia shows that consumption is not decreasing as a result of plain packaging, but that illicit trade is increasing, the Government should take stock immediately.

As a fellow member of the Select Committee, does the hon. Gentleman remember that when we looked into the illicit trade issue and interviewed the head of the relevant department in Her Majesty’s Revenue and Customs, his view was that plain or standard packaging would actually increase counterfeiting and the illicit trade?

The hon. Gentleman is making my case for me. He is clearly demonstrating, through his knowledge of this subject and what HMRC has told him that the Government’s policy is wrong-headed and will not prevent people from smoking. I say again: I want to see a reduction in smoking, but we have to have a policy that works and is proven to work. The evidence is not there to achieve the Government’s policy.

Does my hon. Friend agree that when this Government sent their draft regulations to the EU indicating their intention to introduce standardised packaging, that created the uncertainty in the industry that has affected Gallaher so badly—it is now unable to forward-plan—and yet no ministerial decision has been made and no debate has taken place in this Chamber? We have passed enabling legislation, but we did not make a final decision.

I thank the hon. Lady for bringing me on to a key point—the impact of the European directive and, importantly, the Government’s betrayal of this industry. The Prime Minister answered a parliamentary question earlier last year on minimum pack size, which is what the tobacco directive is all about. He said:

“It does not, on the face of it, sound a very sensible approach. I was not aware of the specific issue, so let me have a look at it and get back to my hon. Friend.”—[Official Report, 9 October 2013; Vol. 568, c. 160.]

The Prime Minister was answering a question from a Government Member, and I believe that he has been let down by a failure of his party and colleagues to negotiate the matter appropriately in Europe.

While the then public health Minister, the hon. Member for Broxtowe (Anna Soubry), had control of tobacco products directive negotiations for the UK Government, she was required to keep Parliament informed of developments via the European Scrutiny Committee. When she was brought to that Committee on 17 July 2013, she had to apologise for poor political practice, saying:

“I do not hesitate to apologise for the fact that this Committee has not been fully informed. I only wish that, as a Minister, I was aware of all the things that happen within my portfolio.”

That is an appalling indictment of a Minister who took her eye off a brief and allowed the policy to be rammed through with the consequences that we are feeling today. We will reap a terrible harvest in Northern Ireland as a result.

The provisions under the TPD on the minimum pack sizes that may be manufactured have the direct impact that 82% of the output of my constituency’s factory will be made illegal. The Government have done that with the sweep of a pen—it is little wonder that 900 people are being told that it is over for them. The Government could have said, “Let’s continue to manufacture, but not sell in the United Kingdom,” or looked at other options, but instead they implemented a policy even though their Minister said that she was not fully aware of what was happening. That is a betrayal. It is a scandal that the Government were not paying proper attention.

The Government cannot say that they were not warned. I have spent three years in the House warning the Government about their actions. I was able to attract 82 signatures to an open letter to the Secretary of State for Health from Members on both sides of the House, including former and current Cabinet Ministers. The letter stated that if the Government continued with the tobacco directive and plain packaging, it would have

“disastrous consequences for independent retailers, consumers and those employed in the legitimate tobacco supply chain.”

It said that the products affected involved

“a very significant level of employment in UK factories.”

It said:

“Should these packs disappear, the machinery needed for them will be made redundant alongside the workforce who are employed to operate them. In the current economic climate, can the Government afford to put so many UK manufacturing jobs at risk?”

My constituents got the answer on 7 October: they were told by this Government that they could be put at risk, that they did not matter, and that their jobs and livelihoods were over.

What frustrates me most is that the Government had warning upon warning upon warning from not just me but colleagues. The Chair of the Home Affairs Committee visited my constituency and the factory to find out about smuggling. The shadow Secretary of State for Northern Ireland visited the factory, as did the previous Northern Ireland Secretary. The Minister’s predecessor has visited the factory, as have my Northern Ireland colleagues and other MPs, including members of the Northern Ireland Affairs Committee. However, when I asked the Government to come and to say, “This fight is on. This is about saving jobs,” I got the terrible message that they did not want to be associated with the industry. I can represent jobs in my constituency without being associated with smoking. It is a pity that there was not just a wee bit of strength—a wee bit of backbone—in the Government when it was needed. They could have stood up to Europe and said, “We’re not implementing that. That’s the end of our jobs.” Instead, they have stubbed those jobs out, just like a fag end, and my constituents are facing the terrible consequences of that tonight.

There are some things that the Government could do, and I want to turn to those briefly in my closing remarks. First, I think that they could look afresh at the issue of plain packaging and recognise that it offers them a negotiating opportunity with the company. Removing the proposals for plain packaging and the threat to the industry for the next five years would provide an opportunity to stretch those jobs out a little longer. I have managed to help negotiate a two-year stretch for those jobs. If we could push that to five, six, seven or even eight years, because the Government are prepared not to roll over on plain packaging, that would help considerably in defending and keeping those jobs.

Like my hon. Friend, I am a non-smoker, but I never miss an opportunity to ask smokers whether their tobacco purchasing habits would change if plain packaging were introduced. They find the idea laughable, so the whole thing is based on a false premise.

I agree with my hon. Friend.

Secondly, I want the Government to help the work force via the European globalisation fund, because many of my constituents currently in employment will need to be retrained. The skilled engineers, for example, could work on oil rigs or do other engineering work, but the certifications needed cost thousands of pounds. The globalisation fund, if accessed by Her Majesty’s Government, would allow for those certificates to be paid for and help those employees under a restructuring deal.

Finally, if the work force come up with an alternative plan to help save some of those jobs, I want the Government to assist them by allowing them access to Invest Northern Ireland and other skilled business planners so that they can put in place an alternative plan that will hold water and can be put to the company’s headquarters in Geneva. That way, they can see for themselves that there may be a viable alternative. If that happens, we might be able to postpone what is happening in Northern Ireland, but I am really concerned that the Government have put out these jobs for ever.

I am grateful for the opportunity to respond to my hon. Friend the Member for North Antrim (Ian Paisley) and congratulate him on the robust way in which he has put the case. His constituents will be very pleased with that, and I think that it does him great credit. The closure of the JTI Gallaher factory in Ballymena and the loss of hundreds of jobs and some £60 million from the town’s economy, and indeed from the whole economy of Northern Ireland, is a major blow. He is quite right to put that in proportionate terms, making a comparison with Great Britain and how we might view such losses on the mainland. He is quite right that this is indeed a major blow for the whole of Northern Ireland. I will do what I can to assure him that the Government are doing what we can, under the terms of the 1998 agreement, to protect jobs in his constituency and promote the prosperity agenda in Northern Ireland at this difficult time.

As my hon. Friend said, the factory in his constituency has been producing tobacco for 150 years and is the last tobacco manufacturing concern in the UK. I recall my own visit to one of the last tobacco factories in the UK, in Bristol 30 years ago—ironically, I was at medical school. Cigarette factories then were commonplace, and I think that he would admit that their decline is in some respects a good thing, since it tracks the fall in smoking, but not if production is simply shifted abroad. Of course we would all much rather have those jobs here in the UK and, specifically in the context of this evening’s debate, in Northern Ireland.

The announcement takes place against the background of the Northern Ireland economy continuing to move away from its reliance on industrial production. It is still too reliant on the public sector for jobs, as he knows. The economy in Northern Ireland is rebalancing, with the generation of creative industries, life sciences and the knowledge-based sector, which accounts for the large majority of all foreign direct investment into Northern Ireland. Aerospace, for example, continues to perform well in a very competitive market.

I accept, of course, that it is cold comfort for JTI employees to be told that software and financial services are experiencing the fastest growth or that Belfast is the No. 1 destination globally for financial technology investment. My hon. Friend will be aware, however, that the prospects for the tobacco industry overall are not very good. Indeed, they point to long-term decline as demand for cigarettes continues to fall and smoking rates edge downwards all the time. This is of course good news for health, but very bad for jobs in his constituency.

In 1974, almost half the UK population smoked—a remarkable thing to reflect on now. Last year, the figure had fallen to 18.7%. About 68% of smokers want to quit and are increasingly aware of the dire health implications of smoking. The tobacco industry has recognised the declining market caused by consumers’ health concerns and is diversifying into electronic cigarettes and associated technology that is deemed to be safer.

Does the Minister accept that while there may be a decline, the irony is that while the Government are encouraging the private sector to grow in Northern Ireland, in this instance Government policy has squeezed the private sector?

I think that is a little unfair. Perhaps as I go through my remarks, my hon. Friend will be somewhat assured that the Government are doing what they can to promote the private sector, in particular, in Northern Ireland. I think he should know that from his experience of Northern Ireland overall, where the private sector is doing relatively well and the economy is, without a doubt, rebalancing, albeit at a rate that is perhaps not as fast as we would have liked.

There have also been job losses from the mechanisation and streamlining of tobacco production, and that has had a greater impact on jobs than tobacco control measures implemented by this Government. My hon. Friend the Member for North Antrim would probably accept that, given the changing nature of this industry, which he will have seen over many years.

On the tobacco products directive, my hon. Friend should know that I am generally loth to accept anything that comes out of the European Union, particularly when it results in regulation. However, it is fair to say that the tobacco products directive aims to protect health—that of his constituents, my constituents, and all constituents. Tobacco use is responsible for an estimated 700,000 avoidable deaths in the EU every year, and smoking accounts for over one third of respiratory deaths, over one quarter of cancer deaths, and about one seventh of cardiovascular disease deaths. I have seen these cases; I saw them day in, day out when I was practising regularly. I am sure he would agree that if we are to make any progress in improving public health, we have to cut the consumption of cigarettes. I do not think there is any difference between us on that.

Does the Minister accept that smoking is not illegal in this country, and unless he is proposing to make it illegal, it makes no sense to regulate the industry into the hands of organised crime, whereby money will not be going into the Exchequer and there will not be the health benefits he is talking about? It is not an illegal activity, and we have a duty to protect jobs in manufacturing products involved in a legal activity.

It is clearly not an illegal activity, and I hope it never will be. For as long as people wish to smoke, they are entitled to do so. HMRC has the control of tobacco smuggling in Northern Ireland as its joint No. 1 priority. In my view, people are entitled to smoke if they want to, but if we are interested in improving public health, there are measures we can take to reduce consumption. Tobacco consumption is in long-term decline, as I described, and we need to try to work out what that means for the industry in this country, particularly in Northern Ireland, and how we can diversify it to create new jobs to replace those that are being lost. In the very few minutes that I have available, I will try to describe how the Government propose to do that.

No decision has yet been made on standardised packaging of tobacco products. Ministers at the Department of Health will review the results of the recent consultation before taking a position. My hon. Friend the Member for North Antrim has read Sir Cyril Chantler’s report and it does not give him much comfort, but I am sure that my colleagues at the Department of Health will note the contents of this debate very carefully and that they will be mindful, as all Ministers are, of the particular impact this issue is likely to have in Northern Ireland, for the reasons my hon. Friend has elegantly laid out.

It is important that we find new and sustainable work for JTI employees. Obviously, the Executive are in the lead, notwithstanding what my hon. Friend the Member for East Antrim (Sammy Wilson) has said about the Westminster Government in his typically robust terms. I know that Arlene Foster, the Minister for Enterprise, Trade and Investment, and Dr Stephen Farry, the Minister for Employment and Learning, have conducted a skills audit at the factory.

I have spoken to Arlene myself and she is very much on the case. Stephen Farry is on record as saying that his priority is to re-skill the work force and to ensure access to training courses, particularly in further education and especially at the Northern regional college. My own constituency experience very much suggests that the focus and priority in situations such as these has to be re-skilling and up-skilling the work force, and I am very pleased that that work is under way. The Government will, of course, support that wherever they can, but I must emphasise that, under the devolved settlement, it is first and foremost a matter for the Executive, which I suspect my hon. Friend the Member for North Antrim knows full well.

The auguries are good—my hon. Friend knows that. Northern Ireland continues to do well in respect of inward investment. Indeed, under devolution it has attracted more than twice its share of UK incoming jobs and investment. Since the start of 2014, Invest Northern Ireland has announced more than 1,250 new jobs from 11 new inward investors. That is an incredible achievement of which Northern Ireland should be very proud indeed. The future looks bright and maintaining that momentum has to be the priority of both the Executive and the Government. My hon. Friend can be absolutely certain that we will do whatever we can to support the prosperity agenda in Northern Ireland and make sure that his constituents benefit fully from that, given what has happened recently in relation to JTI Gallaher.

The economic pact published last year represents a different approach to delivering the Government and the Executive’s shared aims of rebalancing the economy and building a shared future. It recognises that working together can deliver better results for the people of Northern Ireland. “Building a Prosperous and United Community: One Year On”, published in the summer, makes for good reading. It is a backdrop against which I hope the work force in my hon. Friend’s constituency will emerge well from the setback that he has so ably brought to the attention of the House.

Question put and agreed to.

House adjourned.