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28 Mar 2001 : Column 316WH

Unemployment (Jarrow)

1.30 pm

Mr. Stephen Hepburn (Jarrow): My hon. Friend the Under-Secretary will be pleased to hear that the content of my address will not be as negative as the title of the debate implies. If we practised joined-up government--rather than just talking about it in government--and got down to grass roots to deliver it, the Department of Trade and Industry would have a far easier job in creating wealth in the northern region.

Since we were elected in 1997, a lot has been done and there is much to be proud of in the northern region, especially in my Jarrow constituency. We certainly picked up a poisoned chalice from the Tories. When I see the farmers' present plight, I can do nothing but sympathise with them and hope that they get over their problems quickly. What they are going through is certainly nothing that we have not experienced in my constituency. When the previous Government were in power in the 1980s, we lost the mining industry, the steel industry and the shipyards--and that was only in my Jarrow constituency. Decent men were thrown on the scrap heap and forgotten.

I do not remember Prince Charles packing in his holiday and saying, "I'll not go on holiday and I'll not go skiing; I'll stay in the country and look after this tragedy." I do not remember anyone saying that we should have emergency daily Cabinet meetings to sort out the unemployment problems in Jarrow, when all those great industries collapsed through Government inaction. As I said, I hope that the farmers get over their problems; certainly, they have our sympathy because we have been through similar problems.

When I got into Parliament, I was nagged by the question of how we were getting on creating manufacturing jobs in my Jarrow constituency. Obviously, I am talking about manufacturing jobs, but that is not to demean other areas of the economy. None the less, manufacturing jobs are important in Jarrow, as they are in Tyneside. Tyneside communities and towns in my constituency were built on the back of manufacturing, and that will always be the case. When I asked the Chancellor how many manufacturing jobs had been created since the election--given concerns about the running-down of the industry in the past--I was careful to take into account manufacturing jobs that had been lost in the same period. I was pleased that there was a net gain of more than 800 manufacturing jobs in Jarrow; that shows that the manufacturing sector in my constituency, which reflects the rest of Tyneside, is picking up.

In the same period, thanks mainly to the new deal, youth unemployment has dropped in Jarrow by a massive 75 per cent., and long-term unemployment has fallen by an impressive 63 per cent. I am wary of using percentages in talking about unemployment because, even if there is only 1 per cent. unemployment, people within that percentage are 100 per cent. unemployed. However, I use those figures showing a massive decrease in unemployment to give an indication of where the Government are going and how they are tackling unemployment.

We are delighted at the way in which all sectors in the north have taken up the Government's challenge to work in partnership. Of course, that is not a new

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initiative. It was started by the Tories, but the difference is that we want it to work. If it is to do so, every part of the partnership, whether the private sector, the Government sector, Government agencies or trade unions, have got to have an input, and feel that they are valued and being listened to. Above all, they must feel that they have made a contribution. Under the previous Government, the only sector that got to make a contribution was the private sector, so partnerships did not work. I am pleased to say that partnerships are now working on the Tyne, and there have been some landmark agreements between employers and trade unions in ship-related industries.

Employers, trades unions and politicians formed a unique group called the Tyne Maritime Group under the chairmanship of Kevin Curran, the regional secretary of the GMB, and a north-east member. A charter has been agreed with each Tyne company that is involved, which addresses basic but important issues such as health and safety, labour agreements and training. It also deals with contracts between companies--if one company is quiet, another will help it out--and exchange of labour during boom times in the industry.

The Tyne Maritime Group will play an even greater role in promoting Tyneside as a cluster of shipbuilding expertise. It is the first time that employers, trade unions and Government agencies have worked together to promote that great Tyne industry, which made our communities what they are. Employers are not doing that from benevolence, but because they know that if the Tyne is working and there is shipbuilding and ship repair on the Tyne, the rest of Tyneside is working. Tyneside was built on the shipyards; it will survive and, indeed, prosper through them in future. We are therefore making marvellous progress.

I do not want to create the impression that everything in the garden is rosy, however--it is not. We have done a lot, but we have much more to do. The average age of a skilled worker on the Tyne is now 50, owing to the running-down of the shipyards in the 1980s, which I have already mentioned. A whole generation between the ages of 25 and 40 has been lost. We must address that urgently if we are to benefit from the skills of the 50 year-olds, which need to be passed to young apprentices to make the Tyne prosper. If we do not do that immediately, the Tyne's maritime industry will go, with the loss of lots of jobs, signalling the end of Tyneside as we know it.

That is the main issue addressed by the Tyne Maritime Group, whose members are working together and promoting the area. However, they can only succeed with Government help. I shall come to that point later. The Tyne is doing well at present and is the envy of the country. For example, Swan Hunter has orders totalling £130 million for Ministry of Defence supply vessels, and Cammell Laird has placed a bid to build £340 million-worth of cruise vessels. We are still waiting for clarification of the Cammell Laird contract from the DTI, and I hope that the Minister will deal with that today. There is an order to build a floating production and storage vessel at Aker McNulty's and, of course, last week the Prime Minister made a great announcement of 2,000 jobs that would be created by AMEC in a massive contract for Shell, again for production and storage vessels.

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Basically, a lot of work is going on, but we have skills crisis which, I hope, is being addressed. There is a contract with the MOD on the horizon for a £1 billion aircraft carrier, but to build that we need a skills base. What was a sunset industry under the Conservatives has become a sunrise industry under Labour, and the orders that I have mentioned have given us a much-needed boost.

However, I cannot let this opportunity pass without mentioning the disappointment that I share with all of Tyneside at the MOD's decision to give a contract for the construction of roll on/roll off ferries to Germany. I see from the newspapers that the MOD has been experiencing difficulties with the Weir consortiums on commercial issues. It has taken control of part of that order and has placed the construction of two ferries directly in Belfast. I only hope that it sees the light, has the guts to take over the rest of the order and gives it to Merseyside and Tyneside. That would create an extra 1,500 jobs, and another 1,000 jobs would be created in local businesses and suppliers; it would inject £650,000 of workers' money into the local economy. We cannot ignore that. That is what joined-up government is about. The DTI is doing much to create wealth and jobs in the area, but what on earth can it do when the MOD turns round and stabs it in the back?

I shall finish my contribution by saying something about the public sector and its role in job creation and joined-up government. Again, I believe that the DTI has been let down by other parts of the Government in its efforts to create jobs and wealth in the northern region. In the past, Governments have had the nationalised industries in the north through which to regulate employment levels. If they wanted to create jobs, they would put in more investment, the number of apprentices would go up and output would increase. Now, of course, we do not have the nationalised industries. They have gone, but we have the public sector, which is in an ideal position to take over the role of boosting the economy in the northern region. It is already one of the largest employers in the region.

Over the border in Scotland, there is a vastly better grant allocation system, owing to the Barnett formula. In the north-east, we are told about the million-pound divide--

Mr. Ronnie Campbell (Blyth Valley): I thank my hon. Friend for giving way. He just touched on an important point. My daughter lives in Sussex, and me and the wife were down there with her at the weekend. It is a lovely little village and we went to the local pub and had a drink on Sunday night. Some people were playing cards in the corner, and someone came in and asked, "Have you sold all your shares? Did you panic and sell your shares?" Someone else said, "No, no, I have kept my shares." The conversation among everyone was about shares. The barman said, "I was buying when you were selling, because I was buying cheap." Imagine that conversation back home, in a pub in my constituency or that of my hon. Friend the Member for Jarrow (Mr. Hepburn). It would more likely be, "Hello, Joe. When do you get your giro? Did it come on Saturday?" and the reply would be, "No, no, I had my incapacity benefit."

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That would be the conversation. That is the difference between the north and the south--and to some extent, with Barnett, even Scotland.

Mr. Hepburn: My hon. Friend is right, and Ministers must grasp the difference. We need extra investment in the north. We need extra public investment, and that can be done through a Barnett formula 2. The conversation in the south is about which shares people have. In the north, the situation is vastly different. We have struggled in the past, and the only way that we will drag it round is by means of a Barnett formula 2. If it were the same formula as in Scotland, that would put an extra £1 billion into Tyne and Wear, £100 million on to the budgets of South Tyneside councils and 50 per cent. on to Gateshead council's budget.

The DTI has been let down. It is promoting regional development and the concept of One NorthEast, but how can One NorthEast compete with the Scottish Development Agency, which is working under an entirely different funding regime and a vastly better one than in the north-east? I am not suggesting that Scotland should come down to our level--rather that we should go up to Scotland's level, to allow us to compete for jobs and promote our area.

I heard--or read in the newspaper--with pleasure that the Prime Minister and the Chancellor had said that, after the election, millions of pounds would flow from the south towards the north. I assume that that is an indication that they plan to tackle the Barnett formula, to the benefit of the north-east.

We have come a long way since those dark days when the only announcements in Jarrow were about another closure or further lay-offs, but with 2,492 people still unemployed, I am sure that my hon. Friend the Minister will agree that we have a long way to go. If we are to achieve the Chancellor's goal of full employment--a dream that we never had in the past, in the dark days of the 1980s when lay-off followed lay-off--we need to achieve the goal of joined-up government. Until we achieve that, with the MOD and the Treasury working with and helping the DTI, we ain't going to get there. I have great hope for the next Parliament and for a new Labour Government who will address the problems that I have outlined.

1.45 pm

Dr. David Clark (South Shields): I congratulate my hon. Friend the Member for Jarrow (Mr. Hepburn) on obtaining the debate. I intervene briefly, as his constituency and mine are inextricably linked. Ours are the two authorities in the South Tyneside local authority. My hon. Friend spoke about partnership, which is a matter that I want to raise with the Minister.

We have done extremely well over the past few years under the Labour Government. We had the unenviable reputation of having the worst unemployment record in England. Currently, the level for South Tyneside is 11 per cent. out of work. The two constituencies are neck and neck, although in South Shields the official figure for male unemployment is still 18.1 per cent. One in five men is currently out of work.

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As I said, we have made great progress. We are well on the way, but I urge the Minister to start drawing up plans to take our progress further under the next Labour Government. The new deal has been a success. In South Shields, 2,000 people entered the scheme, and 900 of those young people have entered full-time employment. That is a great tribute to the Government, but we take the responsibility on ourselves, as well. It is our responsibility to pull ourselves up by our own bootlaces.

I hope that we will have every assistance from the Minister, working across government. If we speak of worthwhile jobs in the future, we are speaking of highly skilled jobs--jobs requiring high educational attainment. I am delighted that in the key stages examinations in English, there has been an 11 per cent. improvement over the past four years, and we are almost up to the national average. In mathematics, there has been a 21 per cent. improvement in attainment, and we are better than the national average.

I make that point because I want to get across to the Government the fact that we recognise that that is the result of a partnership not only between Government Departments, but between the people of South Tyneside--the people of Jarrow and South Shields--and the Government. If the Government continue to give us the tools to help ourselves, we will deliver in South Tyneside. That is my message. We have made tremendous improvements and tremendous progress, and I am very optimistic that, after the next general election, when we have a new Labour Government, we can move forward and reduce those horrific levels of overall unemployment from 11 per cent. to the national average.

1.46 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): I congratulate my hon. Friend the Member for Jarrow (Mr. Hepburn) on securing the debate on issues that are obviously close to his heart, and close to the hearts of my right hon. Friend the Member for South Shields (Dr. Clark), whose point about the Labour Government continuing to promote social progress and attack social exclusion is well made, and of my hon. Friend the Member for Blyth Valley (Mr. Campbell), who was helping to bring civilisation to Sussex at the weekend. I can well imagine a similar conversation taking place in a pub in West Hull. I hope that he sympathises, though, because, although there are many good things about living in Sussex, you also have to drink the beer. That is a very big difference between our constituencies and the constituencies in Sussex.

I am well aware of the excellence that exists at Tyne shipyards and of the important role that they play in the local economy. I am also aware that those shipyards, like shipyards throughout the UK, face difficult challenges. However, as my hon. Friend the Member for Jarrow said, the situation has been transformed under this Government. There have been considerable improvements in the prospects for Tyneside yards in recent months. It is worth elaborating on some of my hon. Friend's points about the success of Tyneside companies involved in both shipbuilding and the related offshore fabrication sector.

Swan Hunter at Wallsend has secured a major contract to build two troop landing ships for the Royal Navy, which will create up to 2,000 new jobs at the yard.

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In addition, it has secured a contract from Kerr McGee to build an FPSO--a floating production, storage and offloading facility--which will create a further 800 jobs. Between them, those contracts are worth almost £300 million.

On Cammell Laird, before I deal with my hon. Friend's question, I can tell him that the UK's largest ship repair and conversion company recently completed a passenger ferry for a Norwegian owner at its Hebburn facility. That was the first ship to be built on Tyneside for seven years. The UK's other major ship repair and conversion company, A & P, remains a major presence on the Tyne.

With regard to Cammell Laird, there is the prospect of building the first cruise liner in this country for many years. At this delicate stage of negotiations, when we are continuing to talk to Cammell Laird and to Luxus, I can say nothing more helpful than that the DTI has gone to extraordinary lengths. We have made an exceptional and unprecedented offer aimed at helping Luxus to attract a commercial lender to share the risk, so that the project can proceed. We are continuing to talk to the companies about the proposal. We share my hon. Friend's concern that we should leave no stone unturned in our efforts to assist in any way that we can. That work is still in progress. It would be wrong to go into further detail, however, as sensitive negotiations are under way. Along the river from my hon. Friend's constituency, Aker McNulty has had success in the FPSO field. The most recent good news is the award to Amec by Shell of the Bonga contract, which will create 1,000 jobs in Wallsend and another 3,000 in the UK, many of which will be in the north-east.

Such contracts are not won easily. Neither my hon. Friends nor I are complacent about the difficulty of sustaining that level of activity on the river. The developments show, however, that the industry is alive and well on Tyneside and that we have companies and a work force with the skills, technology, ability and determination that are necessary to succeed in a competitive global market.

The key challenge facing the UK shipbuilding industry is to improve its competitive performance. We recently published a White Paper entitled "Enterprise, Skills and Innovation: Opportunity for all in a world of change", which developed some of the themes raised in this debate. It deals particularly with education, skills and training, which are especially important for the future. It is for a second Labour Government to take those forward, providing that we receive the electorate's support. The White Paper also explained how we are helping British businesses to respond to challenges in five key areas: developing a more highly skilled work force; building prosperous regions and communities; investing for innovation; fostering enterprise; and ensuring that markets operate effectively and fairly.

We are working closely with the shipbuilding industry to help it to improve its competitiveness. As my hon. Friend said, we have established the shipbuilding forum to facilitate that process: for the first time in the history of this maritime nation the shipbuilding industry, its work force and the Government are sitting down around the same table to discuss the industry's problems. The forum was established thanks to my predecessor, my hon. Friend the Member for Leeds, West (Mr. Battle), who introduced the initiative.

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The shipbuilding forum has taken forward a great deal of work, and my Department is committing substantial funds to competitiveness projects. For example, we are contributing £2.8 million to the link research project, which is led by the Shipbuilders and Shiprepairers Association, to help the industry to identify where improvements are necessary. We are providing grants of £176,000--50 per cent. of total costs--towards a three-year marketing project that is aimed at generating new orders to match the increased production that the link project is expected to generate. We are also introducing an idea that was developed by the trade union movement to improve skills and training. Indeed, an initiative is currently under way in my constituency to advance that aspect of the forum's work. We are also considering creating a pilot training scheme within a selected area. That proposal is based on the excellent training initiatives that are already under way on the Tyne.

There are concerns in shipbuilding about Korean competition. I know that my hon. Friend is aware of those anxieties, as we had a meeting about them recently. The Government are still aware of the matter and we are considering carefully whether to support World Trade Organisation action. Our preferred option was a bilateral agreement between the Commission and Korea, but Korea has recently been extremely unwilling to restart the talks that began last year, so we may not have any alternative but to pursue WTO action. That would be time-consuming and bureaucratic, but it might be the only course open to us.

Before I deal with some of my hon. Friend's other points, I should like to comment briefly on the marine export partnership, which my Department launched earlier this month. The initiative seeks to strengthen the promotion of British marine industries, including the shipbuilding, conversion and repair industries, to overseas markets. It is supported by Trade Partners UK and brings together the trade promotion work of the DTI and the Foreign and Commonwealth Office, which are trying very hard to achieve the sort of joined-up government to which my hon. Friend referred. People often use platitudes when they speak about joined-up government, but I know from experience that it is difficult and complicated to achieve. The marine export partnership is another attempt to achieve joined-up government, and we are providing it with support of more than £100,000 during the next 18 months.

The shipbuilding market remains difficult. I am encouraged by recent developments on the Tyne. Few shipbuilding regions in the UK can match the range of new building, conversion and repair capabilities that the Tyne yards now possess, building on their proud history. I assure my hon. Friends that the Government will continue to work closely with those yards further to enhance their competitiveness and to help them to win new and vital orders. In particular, we want to help them to deal with the problem of a work force who are dedicated and skilled, but who are ageing, like many of us in this Chamber. We must tackle that problem, which is probably the most serious challenge that the industry faces. My hon. Friend's point about that was well made.

My hon. Friend spoke about the wider problems in his constituency. Unemployment is a huge concern to us all and was one of the major challenges that faced us when we took office. This month, we took great comfort

Reducing unemployment in the context of that stable economic platform is a tremendous achievement, but I agree with my hon. Friend that somebody who is unemployed is 100 per cent. unemployed. We have to work towards the target of full employment--a goal which was announced recently by my right hon. Friend the Chancellor.

Mr. Ronnie Campbell: I was wondering about the Barnett formula, which my hon. Friend has not mentioned, even though my hon. Friend the Member for Jarrow (Mr. Hepburn) did so. Scotland was given the Barnett formula all those years ago in the 1960s because it had high unemployment, and because shipyards were closing on the Clyde and in other such places. As we have made clear, our area is now in the same position, so why can we not devise a Barnett formula for the north-east? We get blanket replies to that question. I can see that my hon. Friend is trying to avoid it, but I am trying to get him on the right track and to get some words out of him.

Mr. Johnson: I was rather hoping to avoid the Barnett formula, but I accept my hon. Friend's point. I am not equipped to speak about any plans for the Barnett formula, but I can say that the initiative announced by my right hon. Friend the Secretary of State, who knows a thing or two about Tyneside, is geared towards the need to ensure that the prosperity that is created from our fine economic record does not leave people out in particular areas, such as my constituency and those represented by my hon. Friends.

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Perhaps this assurance will not solve the Barnett formula problem, but I can say that the funds that are being generated and distributed through the regional development agencies are directed at tackling those very problems. Such assistance seeks also to deal with earnings problems and the traditional earnings gap between the north and south. Thanks to the minimum wage and many other initiatives, that gap narrowed considerably this year. From memory, I think that earnings have increased by 4.7 per cent. in the past year, whereas in London and the south-east, they increased by about 1.2 per cent. That is the first indication for many years that some of these problems are being tackled. Unfortunately, however, we may have to wait for another debate before questions about the Barnett formula can be given a more lucid and comprehensive reply.

Mr. Ronnie Campbell: I feel an Adjournment debate coming on.

Mr. Johnson: I hope that I will not be the Minister who responds.

Economic stability is helping UK areas to prosper, but my hon. Friend the Member for Jarrow makes a valid point. Unemployment has fallen in his constituency and in the north-east. Spectacular gains have been made, although they are lower than the national average. In his constituency, the reductions are lower than the average in the north-east in general. It is, however, worth repeating that unemployment in the north-east has fallen by 27 per cent. and by 39 per cent. in the UK since 1997. As my hon. Friend rightly said, long-term unemployment has fallen by 63 per cent. throughout the country.

I should like to return briefly to the recent successes on the Tyne. The projects were not won because of hidden subsidies or state intervention, but because the best of our businesses and work force are truly world class and can compete with all comers. Having created a stable economy, our next challenge is to ensure that all our businesses, regions and work force benefit from that stability. It will not be easy, but that objective can be achieved if Government, business, education, trade unions and Members of Parliament work together.

Question put and agreed to.

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