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Mr. Dominic Grieve (Beaconsfield): I do not belittle the success of the past two years--although not of the past year--in attracting inward investment to Scotland. In the past year, inward investment has decreased. Statistics clearly show that the years 1991 to 1997 constituted a record period of investment and exponential growth. That happened under a Conservative Government.

Mr. Marshall: If the hon. Gentleman knew anything about Scotland, he would hesitate to point out any possible deficiencies in a period of two years when, for 18 years, the people of Scotland suffered at the hands of his Government.

The nationalists would put the success of the past two and a half years at risk by divorcing Scotland from the rest of the United Kingdom and cutting off Scottish business men from their biggest single market. Divorce can be costly.

The report acknowledged the need to attract high-tech, highly skilled research and development and added-value jobs, but we also appreciate the need to attract any sort of job. A job is a job, especially for someone who is desperate to get one, as most unemployed people in Scotland are. I warmly welcome the Government's measures such as the new deal, priority for education and training, the national minimum wage and investment in people. They will help to equip the people of Scotland to maintain and improve its attractiveness as a major destination for inward investment, thus helping to ensure and contribute to its future prosperity. If our Select Committee inquiry and report have also helped, even in a small way, they will have been worth while.

5.9 pm

Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): It is a great pleasure to follow the hon. Member for Glasgow, Shettleston (Mr. Marshall), on whose Select Committee I served for the first two and a half years of the Parliament. The inquiry was especially important, and I was pleased to sign up to the report at its conclusion.

Economic development in Scotland, as well as in the whole of the United Kingdom, has always been a key point of political debate and, as the exchanges across the Floor of the House have shown, inward investment is a key aspect of that debate. In its inquiry, the Committee sought to strip away some of the myths that have undoubtedly grown up around sensitive issues such as

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inward investment and tried to get to the core of the arguments: whether inward investment is a good thing; whether Scotland has become over-dependent on it; and whether we can expect to sustain the quality and nature of the investment that we enjoy. A number of those themes were usefully explored and I want to highlight in particular the fact that the nature of investment and the types of future direct foreign investment that we may hope to attract to Scotland will change. The assembly operations that have been a feature of inward investment over the past 20 years will decline in significance over the next 10 or 20 years and, notwithstanding the comment of the hon. Member for Shettleston that a job is a job, the nature and availability of some of those jobs will certainly change.

The location of the investment in Scotland has also caused great concern and great argument. We have different perspectives because we represent different parts of the country, but I agree with the hon. Gentleman that, at times, it has seemed as though the inward investment that we have enjoyed has been focused on particular areas. Although Glasgow may have been badly neglected, those of us who represent rural parts of Scotland feel that that is the case for our areas as well.

The world economy is changing, we are losing some of our old industries and Scotland's economic shape is different from that at the beginning of the 1980s, when a previous Select Committee considered this issue. One of the most encouraging aspects of our inquiry was the fact that many of the lessons and warning signals that we were told about were actively being tackled by Locate in Scotland. Like many other members of the Committee, I pay tribute to the hard work that it does around the world and the extremely high success rate that it has achieved over many years. The highlight in that respect is the Project Alba development and the idea that Scotland can be at the forefront of the very industries--

Mr. Grieve: I am most grateful to the hon. Gentleman for giving way. He congratulated Locate in Scotland and I heartily endorse that but, in view of the comments made by the hon. Member for Glasgow, Shettleston (Mr. Marshall), does he agree with the statistics provided by it showing that the highest level of planned investment ever recorded in Scotland--£3.1216 billion--was made in 1996-97?

Mr. Moore: I have no desire at all to enter into a sterile party political debate; I want to focus on these different and dynamic types of inward investment. I spent the first few minutes of my speech explaining that the nature of inward investment in Scotland is changing and one year's statistics are irrelevant two years down the line. I repeat the invitation made by the hon. Member for Shettleston: the hon. Member for Beaconsfield (Mr. Grieve) should visit Scotland and see these places for himself.

The Committee's report referred to the first-class support that exists, but I want to focus briefly on a couple of themes before discussing an issue that is of particular concern to me and to my constituents--it lies at the heart of some of the remaining problems that we have with inward investment. I have touched briefly on the idea that the rural parts of Scotland have traditionally lost out, although I acknowledge the efforts of then Scottish Office and, in particular, the Minister of State, Scotland Office to respond to the difficulties in the Borders over the past

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18 months to two years. A rural unit was established in Locate in Scotland, but my concern is that, because it has only a couple of people, it will be hard pressed to tackle the issues seriously unless it comes under the new Scottish Executive arrangements. It must be able to attract significant and realistic resources for the next few years.

When we spoke to the professionals in the United Kingdom, when we were in the United States and when we met Locate in Scotland officials, we were told time and again that it would not matter what we did to point people in a particular direction. Ultimately, companies would decide for themselves where they would go, and would be influenced by the existing criteria and what was available to people in the part of the world that was involved. Such companies would have a number of requirements, but transport links and the transport infrastructure in a given area would rank high in their list of priorities. Those of us who represent the more rural parts of Scotland are very conscious of the fact that that immediately disadvantages us.

Mr. Martin O'Neill (Ochil): Is it not the case that an area that is not close to one of the new towns will also be denied access to potential investment? Part of the "cluster syndrome" is geographical, in that it focuses on new towns. My constituency includes Clackmannanshire, which is surrounded by about three new towns, and which is also a black hole down which a good deal of investment seems to disappear. The investment goes elsewhere, and I think that the Borders suffers from the same problem.

Mr. Moore: The hon. Gentleman has made a valid point. There are a number of reasons why inward investors are attracted to particular areas, including tax regimes and the available incentives. There is also the question of numbers, to which I shall return in due course. Like the hon. Member for Shettleston, I am glad that the Secretary of State will respond to the debate. I urge him to use his influence, and his co-ordinating and championing roles, to ensure that transport links within Scotland, and between Scotland and the rest of the United Kingdom, are not neglected, and are developed further.

The main point that I want to make relates to the sad case of Viasystems. I refer hon. Members to paragraph 47 of the report, which gives a brief resume of some of the difficulties faced by my constituencies in the light of that case. The loss of 1,000 jobs from the Viasystems site has been the worst single industrial disaster in the Borders in 30 years. As paragraph 47 of the report makes clear, the issues at stake with those job losses lie at the heart of the debate on whether inward investment has been good for Scotland, and whether competition between different parts of the United Kingdom has always been handled in the most positive and constructive manner.

Viasystems was the final incarnation of the idea of a company that was indigenous, in the Borders, and built up from scratch over 30 years. When it was taken over by what I can only politely describe as a bunch of unscrupulous American corporate financiers, it was clear that they intended to close down the sites on the Borders, and to move both jobs and contracts to other parts of the United Kingdom.

At an early stage, what concerned us most was the fact that Viasystems had also taken on ownership of

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International Systems Ltd. in north Tyneside, just across the border. It had received a Government grant of £12 million. The project to build the facility and recruit people to do jobs was incomplete at the time when Viasystems was acquired, which allowed it to make serious strategic decisions about the way in which it would organise its business in future. Viasystems was provided with a state-of-the-art facility in an area that was increasingly concentrating its resources and was very capital intensive, while just up the road there was older equipment, and no hope of competing in terms of the economies of scale.

It was with some nervousness that those of us in the Borders learned of the strategic vision presented to the backers in the United States. We learned that Viasystems wanted to control the world market in printed circuit boards. We may all have our views about people who set out to dominate the world. It often ends in tears, and many of them have been shed in my part of the world.

Early in 1998, Viasystems announced a series of poor results. It clearly overestimated its ability to acquire and integrate new facilities successfully. It was not helped by a world downturn. We were concerned. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) accompanied me to meetings to discuss the poor results and the threat of redundancies, talk of which was beginning.

Information began to trickle out from management, unions and employees not only that wholesale redundancies were in prospect, but that, early in 1998, several contracts were already being passed to north Tyneside. Expertise was being shipped out, at a cost to people trained to do highly technical and specialist work that had previously been done in the Borders.

On 19 May 1998, I wrote to the Minister of State, the hon. Member for Cunninghame, North (Mr. Wilson). I commented in the letter:

Early on, we were giving warnings and alerting Government to the fact that there was a serious problem.

Later that summer, we had further bad news. We had already lost 200 or 300 jobs and we began to hear rumours that the sites might be closed in their entirety. With my hon. Friend the Member for Roxburgh and Berwickshire, I led a delegation to St. Louis, Missouri, the location of Viasystems worldwide headquarters. We had assistance from unions, the local enterprise company and the local council. We went there in the hope of finding out what Viasystems had in store for us. Our anxiety was simply that, with the facility in north Tyneside, it was going to be able to close our local factories.

Before we went, we had a meeting with Lord MacDonald of Tradeston, the Minister with responsibility for trade and industry at the Scotland Office. I have subsequently been able to get hold of the Scotland Office minutes for that meeting, which confirms my recollection of the occurrence.

I do wish to refer to the civil servant who was talking at the time by name--I pay tribute to the civil servants,

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who tried hard to work with us to find a solution--but he said at the meeting:

    "The factory was still being kitted out and built up to full production levels"--

this was in August 1998--

    "but, again, the payment of grant would be dependent on both the company's ability to prove that products within the North of England were not simply being substituted for those previously produced in the Scottish Borders, nor were redundancies taking place in Scotland at the same time as government grant was being paid out in England. There had to be a clear definition that these were new lines of work, and it would be the DTI's responsibility to check carefully that this was the case. The Scottish Office would be liaising closely with the DTI to ensure that this condition was fully met."

At that point, we felt that we had at least some support and that there was at least some hope of ensuring that the corporation would not abuse the inward investment rules to ensure advantage for one part of the country over another. Sadly, as many hon. Members will be aware, our trip to St. Louis was not successful and, ultimately, the decision was taken to close those factories.

At that point, I began to call for a public inquiry, so that we could learn some lessons from what had been a devastating time in the Borders, the scars of which are still evident to anyone who visits the area. On different occasions, I requested public inquiries. The right hon. Member for Glasgow, Anniesland (Mr. Dewar), now Scottish First Minister, rebuffed those and said that nothing had been revealed at internal inquiries.

I wrote to the Secretary of State for Trade and Industry requesting that he carry out an inquiry and make the findings public. I got a response from the then Minister for Small Firms, Trade and Industry, the hon. Member for North Swindon (Mr. Wills). He said:

That immediately contradicts the assurance that we had been given only months before at the Scottish Office meeting.

In the same letter, the then Trade and Industry Minister commented:

I tell the Secretary of State and other hon. Members that no one in the Borders believes that that investigation has been done, and no one accepts that the jobs in the north Tyneside plant have been created other than at the expense of the Borders.

Most recently, we started to believe that we had hit our head against a brick wall for the final time. On 7 April 1999, the right hon. Member for Anniesland wrote to me and said:

He again rejected the call for a public inquiry.

There has, however, been a further piece of correspondence--and perhaps devolution has taken itstoll. Ultimately, we have had a letter from the Scottish

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Executive's Minister for Enterprise and Lifelong Learning--the hon. Member for Central Fife (Mr. McLeish)--who recently wrote:

    "I can confirm there is no condition attached to the grant precluding workers from any particular area taking jobs created on the Viasystems (Tyneside) site. Equally, the monitoring of the grant does not require a check on the previous employment of any of the workers."

All that correspondence, and all the notes of meetings that we have obtained, point to one fact: whatever has happened in the Scottish Office--now the Scottish Executive and the Scotland Office--the DTI is not signed up to the internal inquiries. Indeed, decisions being taken by the Scottish Executive seem to show that they are washing their hands of the entire process. I very much regret that.

The matter has left in the public mind an impression of complete mess and a feeling of utter disappointment. The public inquiry that I have called for, and that has been supported by other hon. Members, is needed now more than ever. I am not simply hoping that we shall be able to return to the previous position--no one believes that that is possible--but it would be helpful if Ministers would admit that mistakes have been made, and perhaps even apologise to those who have lost their jobs. Most importantly, we want to learn lessons for the future.

It would be unfortunate if I were not to highlight the fact that there have been some positive responses--many positive responses--from the Scotland Office and the Scottish Executive. A working party has examined the devastation associated with Viasystems and with the many other hundreds of jobs that have been lost in textiles and farming. There has also been additional funding for Scottish Borders Enterprise and relaxation of capital constraints for the local council. However, the process is slow, and many people in the area are extremely unhappy and worried that, eventually, those measures will replace the many thousands of jobs that were lost.

The report is good and constructive, and it offers the House a valuable insight into the changing market for inward investment into the United Kingdom generally. More than anything else, however, it highlights the fact that there are still many lessons to be learned about inward investment into Scotland and into the United Kingdom generally.

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