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10.40 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): I congratulate my hon. Friend the Member for Denton and Reddish (Andrew Bennett) on securing this debate on manufacturing in Denton and my hon. Friend the Member for Ashton-under-Lyne (Mr. Heyes) on his thoughtful contribution.

I wish to express my concern at the loss of the manufacturing facility of any leading company. Manufacturing matters, and it matters to the Government, to the economy, to the people who work in it and to all of us who enjoy its products. It accounts for about a fifth of our national income, with almost £150 billion of output each year. It employs about 4 million directly, and millions more depend on manufacturing for their livelihoods, including 2.5 million people in the service sector. A strong manufacturing sector is the backbone of our economy.

As the Minister responsible for small and medium-sized enterprises, I have visited manufacturers who were pioneers 200 years ago and who are now innovators at the cutting edge of competition. On Monday this week, I visited two leading manufacturers in Cornwall—Precision Audio Products and Allan and Heath—and both are major local employers and leaders not just in the UK but worldwide. They export all over the globe. Many of the components for those companies are foreign sourced so

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they do not advocate the devaluation that my hon. Friend the Member for Denton and Reddish has advocated. However, I recognise that the exchange rate impinges on companies in variable ways.

Manufacturing is led by some of the most innovative businesses that invest heavily in research and development. It drives innovation in the rest of the economy and creates jobs and prosperity. It is the crucible for productivity improvements across the whole economy, through advances in technology, new goods and processes; but most of all through a highly skilled and highly flexible and dedicated work force. ln the last four years, we have helped 3,000 businesses, and supported £6 billion of investment and 135,000 jobs—most of them in manufacturing.

Manufacturing is proportionately even more important in some areas of the country, and Denton is one of them. In Tameside as a whole, around one third of the work force are employed in manufacturing, as against a national average of about 17 per cent.

I was very sorry to hear about the announcement made by Hawker Traction UK that the Oldham Batteries site in Denton is to close. No constituency has a more doughty fighter for manufacturing than that of my hon. Friend. Although such decisions are for the companies concerned to make, they are always extremely regrettable and the effects are devastating for staff and their families.

When redundancies are inevitable, we will not walk away. We will do everything that we can to help people to find new jobs and to get new skills. We cannot, sadly, make up for what my hon. Friend described as the lack of interest shown by successive managements. That is a damning indictment of those managements, but I fear that the Government find that the position is difficult to influence or to reverse.

The company has been in contact with the Small Business Service in connection with the present situation, and the service has provided advice for and assistance with the task of identifying alternative employment opportunities for Oldham Batteries staff. In the north-west, helping businesses is a key element of the North West Development Agency's regional strategy. A number of tools are available to the agency and other Government bodies to help them to assist businesses. In 2000-01, 81 offers of regional selective assistance to businesses in the north-west were accepted. That is the largest number of any English region. The total value of the assistance was close to £20 million, and went towards capital investment of almost £158 million. That had the effect of creating 3,267 jobs and safeguarding 2,056 more across the region. At the same time, 93 offers of enterprise grant funding were accepted in the 12 months to March 2001, with a total value of £3 million going towards capital investment of more than £26 million.

We are always seeking to improve the assistance that we give to companies, and we want to have the right toolkit to do that. Our rapid response units have a creditable record in finding new employment for people who are affected by major job losses. The rapid response unit helped to ensure that about 94 per cent. of the work force at Fujitsu in county Durham found new jobs within 12 months. At Siemens in north Tyneside, the Employment Service played a major role in helping about 90 per cent. of the work force to find new employment. Recently, the Government helped Kirpak Ltd., near

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Wigan, when its plant was threatened with closure. Plans to move production overseas threatened 169 jobs. Following Government assistance, the company invested £10 million and created an extra 116 jobs. The new plant will be officially opened on 1 February this year.

The rapid response service has shown that it can be effective in the constituency of my hon. Friend the Member for Denton and Reddish. The Canadian-owned company Celestica announced in September its intention to close its plant in Ashton-under-Lyne, with 570 job losses. By the end of the year, 412 employees had sought the assistance of the Employment Service job shop. Some 243 were referred to job opportunities and 71 were referred for training.

My hon. Friend touched on the comparative costs of making people redundant across Europe. He will know more than most that that is a difficult and complex assessment to make. It is not necessarily cheaper for companies to close down plants and make people redundant in the United Kingdom than it is elsewhere in Europe. The Organisation for Economic Co-operation and Development rates the UK eighth out of 15 for redundancy costs. Many firms here pay above the statutory minimum redundancy compensation.

Individual circumstances of employees in companies that are making redundancies can, of course, cause significant variations in the overall cost of each large-scale redundancy. By comparing Britain, France and Germany, economists at the Department of Trade and Industry found, on average, that while it is cheaper to make workers with only one or two years' service redundant in the UK than it is in France or Germany, if a worker has longer service, the cost of making them redundant in the UK is less than it is in Germany.

Andrew Bennett: Does my hon. Friend accept that one of the problems is the amount of consultation, in particular the period of notice in which discussions have to take place? As I understand it, the consultation period is substantially longer in both France and Germany.

Nigel Griffiths: I am happy to refer my hon. Friend's concerns to Ministers in the Department for Work and Pensions. However, I chaired a meeting with my hon. Friend the Member for Alyn and Deeside (Mark Tami), a trade union, and key representatives of a plant that was threatened with closure. I put it to the management of that company, which was based in the United States, that the local work force believed that it was keeping the German plant open at the expense of the British plant because it was easier to make people redundant in the UK. The management told me that that was not the case and, separately, that the German plant was being closed as well. There is not a uniform position on that, but obviously I will ensure that the DTI considers my hon. Friend's thoughtful points carefully.

It is of course important that we constantly review the Department's business support activities. My right hon. Friend the Secretary of State for Trade and Industry has announced several important changes to ensure that, in the regions, Government agencies work together to improve the delivery of support to manufacturers and other businesses.

We can no longer compete on labour costs and raw materials alone. With globalisation, low value added goods can be produced more cheaply elsewhere. The challenge for

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the UK is to shift focus from competing on cost alone to competing on high skills and high value added products and processes based on quality, innovation and know-how—the very qualities demonstrated in many of the manufacturing plants in the constituencies of my two hon. Friends. Like many British manufacturers, companies in their constituencies are responding positively to the new challenges. A good example in the north-west is that of Bodycote International in Macclesfield in Cheshire. Originally a garment manufacturer, it is now a world leader in heat treatment technology.

The Government are committed to providing high-quality help to people faced with redundancy and to companies facing change. To enable them to overcome the difficulties, we have put in place a combination of mechanisms to encourage inward investment and technological investment in UK companies. At the same time, if companies are not able to keep up or catch up with global competitors, we want to enable the work force to be redeployed to more successful companies, and to retrain if necessary.

Andrew Bennett: Will my hon. Friend consider carefully the possibility of helping people, especially the stewards, who want to keep the manufacture of cap lamp batteries in Denton? Are the Government able to give some help to get their efforts off the ground?

Nigel Griffiths: We are already in touch with the Small Business Service and the Business Links organisation in my hon. Friend's constituency. I am happy to give him an assurance that we will facilitate a meeting with our key business advisers and Employment Service representatives to ensure that every avenue is explored

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and that all thoughtful and practical suggestions made by my hon. Friend's trade unionist constituents are taken fully into account.

We recognise that the Government have a clear role in helping companies to face the challenges of globalisation, technological change, and the various stages of the business cycle. We are investing £15 million in a new manufacturing advisory service to spread best practice; that will include a centre for manufacturing excellence in every region. The Government are committed to working in partnership with manufacturing and other business sectors, and with employees, to maintain and develop a strong British economy.

We will promote closer links between education and industry, with a view to improving the skills base on offer in all the regions of this country. The Government's policies for delivering stable and steady growth are working, and we shall continue to pursue them as the best means of supporting manufacturing and British industry generally in a global and competitive economy. British manufacturing and business will change, as they must, but we will ensure that they match the best in the world.

Question put and agreed to.

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