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Dawson International (Redundancies)

3.31 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire) (by private notice): To ask the Secretary of State for Scotland if he will make a statement on the 720 redundancies announced yesterday by Dawson International Ltd. and the Government's plans to support the economy of the central Borders.

The Secretary of State for Scotland (Mr. Donald Dewar): I can well understand why the hon. Gentleman put down this private notice question. I have every sympathy with him and other hon. Members in the areas affected, and with their constituents. I recognise and understand the seriousness of the position. This is indeed bad news, although problems had been expected since Dawson announced its financial results some time ago. The news follows disappointing information about Viasystems, the printed circuit board manufacturers at Selkirk, where 200 redundancies were announced in May.

Although the unemployment rate in the Borders has been lower than that in the rest of Scotland for some years, there is no doubt that the Borders economy is heavily dependent on the textile industry, and these announcements have come as a particularly heavy blow.

I share the desire of many in the area to see the Borders economy diversify and modernise. The local enterprise company, Scottish Borders Enterprise, is at the heart of that effort, working with the local authority and other partners. Scottish Borders Enterprise has a budget of some £8.2 million in the current year, which, in per capita terms, is a comparatively generous allocation.

An extra £500,000 was added last year in recognition of problems in Hawick, which was appreciated in a tight and difficult year. The area was designated as a 5b area under European structural funds, with a programme worth around £21 million between 1994 and 1999. That makes it eligible for a whole range of grants to help to develop economic diversity.

I want to stress that the Government stand ready to play their part in further economic development plans for the area. My hon. Friend the Minister for Education and Industry, Scottish Office, has been discussing the situation in the Borders with the hon. Gentleman and others. He will visit the Borders tomorrow to continue those discussions with the economic development agencies, the local authority and, indeed, the public.

As the hon. Gentleman knows, my hon. Friend was especially anxious to have contact with the public, and he volunteered for what might be seen as quite a difficult engagement. He will listen carefully to what I hope and expect will be constructive proposals for the future of the Borders economy, but I am sure that the hon. Gentleman would not expect me to anticipate that at the moment.

I cannot pretend to the hon. Gentleman or to the House that problems such as these can be solved overnight--indeed, it would be irresponsible to do so. However, my hon. Friend the Minister of State and the Government will respond positively in the course of discussions tomorrow, and ensure that the House is informed of any further developments.

Mr. Kirkwood: I am grateful for that answer. I acknowledge the work that has already been done by

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the Minister for Education and Industry, and we look forward to his visit tomorrow. However, does the Secretary of State understand that the scale of the redundancies--720 job losses, in contrast with what the Prime Minister has just been saying, in prime manufacturing, full-time, knitwear jobs--is a shock to the whole economy of south-east Scotland? The most recent estimate I have been able to get, with the assistance of the Library of the House of Commons, is that £6.5 million of purchasing power will be taken out of the central Borders economy, starting in August. That is a severe blow, which needs an urgent response.

The Minister for Education and Industry has been doing what he can, and we look forward to what might flow from his visit tomorrow, but it will take more than the Scottish Office Education and Industry Department to attend to this matter. Will the Secretary of State give the House an undertaking that he will involve local government Ministers and farming Ministers at the Scottish Office, and take a broader look at the whole Borders economy after the Minister for Education and Industry returns from his visit?

This is far and away the biggest economic blow that the region has suffered in living memory, and, if the Secretary of State does not take urgent steps to stem the haemorrhage of economic activity, the future for the Scottish Borders economy is extremely bleak indeed.

Mr. Dewar: I very much hope that the future is not bleak--I think that the Borders region has many advantages and many strengths, and we want to build on them. I entirely accept that the decision by Dawson's to shed 720 jobs is a real and significant blow. As the hon. Gentleman knows, 280 are in Berwick, but the whole area will suffer from this sad event.

The firm has major trading links with the far east, and perhaps some instability has resulted from that, but it is clear there have been long-standing problems in the textile industry of the Borders for some time. Ministers have talked to Mr. Finlay, the chairman of Dawson's, about the situation. We have made clear our anxiety to help if specific requests and proposals are made, although they would have to be considered on their merits. Dawson's still employs 1,500 people in the Borders, so it is still an important employer. Its redevelopment and restructuring, and its future success, are matters in which we all have a stake, and we have that very much in mind.

I accept that we have to look in a broad way at the problems of the area, and that that does not involve only one department of the Scottish Office. I have made it clear that we want to play our part, and implicit in that is that we are prepared to look in a broad sense at what strategic advances can be made and what can be done to help. However, it will not be a matter of an instant solution to what is a serious problem.

Mr. Dennis Canavan (Falkirk, West): Is my right hon. Friend aware that concern about the redundancies is not confined to the Opposition Benches? I fully understand the deep concern felt within the Borders community and by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) about the devastating effect that the redundancies will have in the region.

Is my right hon. Friend aware that, only a few months ago, there were several hundred redundancies at the Wrangler jeans factory in Camelon in my constituency?

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There seems to be a common complaint in the textiles and clothing industries that part of the problem is the pound being too strong. Will my right hon. Friend have a word with the Chancellor of the Exchequer to try to bring about a situation in which the textile and clothing industries in Scotland can be more competitive?

Mr. Dewar: I accept that concern about the situation is widespread. I made it clear that it was shared by the Government, as I am sure it is by many of my right hon. and hon. Friends on the Benches behind me. I assure my hon. Friend that we take the matter seriously. Textiles is a particularly difficult sector at the moment. While other parts of the Scottish economy are doing well and flourishing, that sector certainly has its problems, which are not easy of solution, but we are prepared to consider anything that can be done.

On the pound, self-evidently a good deal of the increase in its value was completed more than a year ago, and,in fairness, a collapsing pound might be a more embarrassing problem than a strong one. For Scottish and, indeed, United Kingdom industry, above all we want stability, sustainable growth and low inflation. We want to ensure that we do not return to boom and bust and the stop-go cycles of the past. The Government are achieving all those aims to a fair measure, and they are important aspects of our economic policy.

Dr. Liam Fox (Woodspring): To understand the impact that the job losses will have in Hawick, Jedburgh, Galashiels and Selkirk, the House must understand how heavily reliant that area is on textiles. Also, it is worth noting that there are job losses on both sides of the border, and that any help will have to be on a United Kingdom-wide basis.

The greatest help that the Secretary of State could give, if he wants to help, would be to ask the Treasury to change its economic policy. We have an overvalued pound, rising interest rates, rising mortgage rates, a manufacturing recession, falling exports, a huge balance of payments deficit, and, now, rising unemployment. Are the Secretary of State and the Prime Minister living in some sort of economic wonderland--do they not understand the realities of what is going on out there? Under this Chancellor of the Exchequer and this Prime Minister, Labour is bad for business, and if the Secretary of State is correct and the Government are avoiding the boom and bust cycle, it is only because we are going to get the bust without the boom.

Mr. Dewar: That is a somewhat excitable summary from the Opposition--or I hope it is. Of course we recognise that there is a downside to the strong upside of stability and sustainable growth that we are trying to achieve. Dawson's has talked directly to the Treasury about the matter, and I think that my hon. Friend the Economic Secretary met the company recently to discuss it, so the Treasury is well aware of those points. The hon. Gentleman's line was a convenient one to take, particularly in these unfortunate circumstances. I do not think that the views he has expressed would be shared widely throughout industry--certainly not in the form in which he put them.

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