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Ms Rachel Squire (Dunfermline, West): First I must tell the hon. Member for Roxburgh and Berwickshire

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(Mr. Kirkwood) and the hundreds of men and women and their families who are facing redundancy that I am confident that they have the deep sympathy of the people of Dunfermline, where at one time 6,000 people were employed in the textile industry--now, it is only 120. As my hon. Friends will be aware, we have also lost thousands of jobs in other traditional industries in the past few years, and recently our hopes were dashed by Hyundai mothballing its development.

Does my right hon. Friend agree that, in such depressing circumstances, it is vital that all sections of the community work together, and that there is a strong public and private partnership at local and national level to overcome the problems and bring some hope to the community that things can improve?

Mr. Dewar: Of course I recognise that; it is a difficult situation, as I said. It is unusual, because the unemployment rate in the Borders is around or just under 4 per cent., so, superficially, it does not seem to be a particularly hard-hit area, but I recognise that the figures can be misleading. I mention that fact as a corrective against despair for the future.

I accept that all parts of the community must come together. I was, for totally unconnected reasons, in the Borders only a week or two ago, when I had the opportunity--very briefly--to meet some of the local political representatives and the local enterprise company. My Department has been in fairly constant touch with them over the past few worried weeks, and we want to play our part, as I said, and take account not only of a narrow spectrum of Borders opinion, but of the community as a whole.

Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): I welcome the Secretary of State's acknowledgment of the problems in the Borders, especially as yesterday's hammer blow to the local economy follows a series of grim announcements in the past few months and years. He mentioned an increase in funding for the local enterprise company, but will he acknowledge that that merely reinstated the previous year's cut, which was imposed by the previous Administration? Does he accept that the low unemployment rate is a result of the fact that, when there are so few opportunities for other jobs, people leave--they do not hang around to be unemployed in the Borders?

Does the Secretary of State seriously believe that the Government's economic policy, particularly on the exchange rate--I welcome the fact that the Economic Secretary to the Treasury is in the Chamber--is sustainable? If Government policy does not change, there will be more job losses, not only in the knitwear industry but across Scottish and, indeed, United Kingdom manufacturing.

Mr. Dewar: I understand the hon. Gentleman's points, and I do not want simply to repeat what I have said, but we believe that certainty and stability are extremely important, particularly for those who trade across exchange rates. We also believe that sustainable growth is a major prize, and that low inflation is enormously important not only to industry, but to the community as a whole. We would not follow our economic policy if we did not think it sustainable. I appreciate that, in almost all economic circumstances, there is likely to be a less easy outcome for some--a balance must always be struck.

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The £8.2 million given to Scottish Borders Enterprise is not, in per capita terms--I accept that that is only one measurement--out of line with moneys given in the rest of Scotland; indeed, it is probably above average. As I mentioned, we tried--modestly--with the additional £500,000 to recognise some of the problems that had arisen in Hawick. We are not inflexible, but obviously our budget is not unlimited--we must be certain that we are responding to practical aims, and solutions to what we accept are general problems. If such practical solutions and ways forward are charted in the discussions that I know will take place, we shall certainly do what we can to respond to them.

Mr. John Home Robertson (East Lothian): The news is indeed desperate for the Scottish Borders and all surrounding areas. Will my right hon. Friend do everything to ensure that Dawson's and public agencies take all possible steps to look after the people who are facing redundancy, and their communities? Will he take this opportunity to comment on the conspicuous failure of the industry to develop, let alone maintain, the market for high-quality knitwear products? Will he urge all agencies to concentrate on whatever scope there is for developing the potential of the high-quality, high-skill sector of the Scottish textile industry?

Mr. Dewar: I have made it clear that the Scottish Office believes, as I certainly do, that there is a future for textiles. We accept that things are difficult, and that there have been pressures both at the top and, for rather different reasons, at the bottom of the market. I am conscious of the difficulties that Dawson's has suffered, as anyone who has read the financial pages recently will be. The company is attempting to restructure and to refocus. As it is, even after these events, a very important employer in the Borders, it is obviously in our interests that it should succeed--and be helped if at all possible--in doing so.

It is also important--I think that there is unanimity on this--that we look beyond the one sector facing these problems, and try to diversify and broaden the range of economic activity in the Borders. It may be a small beginning, but BT's upgrading of its infrastructure in the area will, I hope, pay dividends in the longer term. We must look for such developments on which we can build and from which, we hope, we can get back the rather broader base that we all want.

Mr. Robert Maclennan (Caithness, Sutherland and Easter Ross): Does the Secretary of State recognise that the textile industry generally, and not only a particular company in the Borders, is facing a period not of stability, to which he would aspire, but of collapse, and that tens of thousands of jobs are threatened? People will take no comfort from reading today that the purchasers manufacturing index shows a record fall over two years. The Government's policy on exchange rates is widely considered to be a major contributory factor.

Will the Secretary of State exercise his influence in the Government to seek to rectify the problems that have arisen from their uncertainties about the future of sterling

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and its relation to the euro, and recognise that it was a mistake to put taxation on businesses instead of on consumers?

Mr. Dewar: I do not accept that analysis, and I would dispute many of the right hon. Gentleman's assumptions. I remind him that the latest exports survey from the Scottish Council for Development and Industry shows a slightly improved performance in the textile sector for the first quarter of this year, which does not encourage total doom and gloom about the industry's future, although I freely concede that there are substantial difficulties.

We need to pursue an economic policy that is in the interests of the economy as a whole. We must recognise that the textile industry, with its heavy connection with the far east, has had a particularly difficult time. That is why we are talking about diversification, and considering a way forward. The right hon. Gentleman's criticisms are not justified and will not hold water.

Mr. Ian Davidson (Glasgow, Pollok): As one of only a couple of Labour Members who were born and brought up in the Borders, I urge my right hon. Friend to take into account the enormous cultural and social impact of the textile and knitwear industry on that part of Scotland. It is a matter not only of jobs but of the way in which the area identifies itself to the outside world.

The Borders area is a relatively threatened habitat in cultural and social terms. I would certainly not want it to become merely a commuter suburb of Edinburgh, so I hope that my right hon. Friend can not only bring in other jobs but try to preserve the cultural habitat that is the Scottish textile industry.

Mr. Dewar: I am not sure that people would appreciate the term "cultural habitat"--it sounds somewhat off-putting--but I accept entirely the point about the individual character of the Borders. Perhaps I should confess, although that may not be the right word, that, when I was younger, I lived for a period in the Borders, just outside Hawick--but I do not want to blame Hawick for anything--and I greatly appreciate the charm and the quality of life offered by the area. We are trying to ensure that there is an economic infrastructure to support the communities and allow them to flourish. I think that everyone in the House is united on that.

Mr. Andrew Welsh (Angus): Has the Secretary of State read the latest Bank of Scotland survey of manufacturing and service industries, which shows that the problems experienced by Dawson International are being repeated throughout the 300 companies surveyed? What steps is he taking on interest rates and the strong pound, and to repair the damage done to the Borders and other regional economies?

Mr. Dewar: I have already tried to answer that question, but obviously not to the hon. Gentleman's satisfaction. It is important to have a stable economic framework within which industry and commerce can operate. Low inflation is certainly important, although there is a tendency for people to pick on one indicator and ignore all others, when there is often a trade-off for a change in policy.

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Sustainable growth is also important, to allow people to plan ahead, whether they are selling overseas or in the British market, which is so important to most industries in Scotland. It is not helpful to pick one indicator in isolation and say that we should change it, without concentrating on the overall pattern of the outcome of economic policy.

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