Scotland in the World: A New Perspective

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Mr. Michael Weir (Angus): Will the hon. Gentleman give way?

Mr. Connarty: I am sorry. I will not take an intervention because I have many things to say on behalf of my constituents, and this is the first opportunity that I have been given to air them.

Levels of overtime in the United States are so bad that people almost live on the plant. I do not think that that is where we in Europe want to go. I therefore hope that we will look at all aspects of the matter. I should like to ask the Scotland Office to ensure that all relevant Government Departments and agencies are deeply involved in the process at BP Grangemouth and in dealing with the future of the BP work force in the local community and in the Scottish economy.

Do the Government accept that the announcement of up to 1,000 redundancies is viewed as a threat to the basic structure of the Scottish petrochemical industry? I am told by a former Minister that when a previous Government agreed two new licences for BP to take fuels from the north of England into the Forties pipeline, BP agreed to bring the benefit through that pipeline to Grangemouth to enhance the downstream development of chemical production there. That has happened. There has been £2 billion-worth of investment. There are new ethylene crackers, and new polypropylene, polyethylene and ethanol production units. I am worried about suggestions that the integrated synergy between Scottish and English North sea assets and the pipeline in Grangemouth may be broken in the future.

Does the Minister know of an agreement drawn up by the previous Government before 1997 that BP would use increases in feedstock into its Forties pipeline to expand and guarantee a future for Grangemouth? Will the Minister reconfirm that commitment? Will he seek a written guarantee that North sea oil and gas from BP's fields and pipelines in Scottish waters will be processed at BP's Grangemouth facilities?

BP's declared purpose for its actions is profitability. Let us consider that. In 1999, BP declared a £9.9 billion gross profit, or £27 million per day. In 2000, its profits almost doubled to £17.3 billion, or £47 million per day. But that is not good enough for BP. It says that in the Grangemouth complex, it lost £30 million last year.

It is interesting that when North sea oil was $11 per barrel, BP told the people onshore at Grangemouth that they had to meet the $11-dollar challenge offshore because it was getting so little for its feedstock. Grangemouth met that by losing 600 jobs. Suddenly, when offshore oil is $27 per barrel, and BP is declaring £60 million profit offshore, onshore and offshore are split again. Grangemouth has to be treated separately, and is seen as having lost £30 million. Partly, it lost that amount because it was charged $27 per barrel for North sea oil, which pushed the on-costs through the roof.

BP must make up its mind. Does it have an integrated complex from wellhead to chemical output, or separate units? It talks as if it is one complex, one Scottish asset. Will the Minister ensure that BP agrees a consistent method of assessing the performance and profitability of its Scottish assets? Will he also call upon it to end the practice of combining or splitting the offshore and onshore assets in order to transfer its costs and profits between exploration of the North sea oil and gas fields and the onshore assets? It is important to try to pin BP down, so that we have a consistent way of assessing the performance of its Scottish work force and Scottish assets. In my view, it will be shown that BP does very well out of them.

BP also mentions a reliability problem. In the past two years, the Grangemouth complex has had the lowest reliability of all those listed in the BP asset book. One reason for that is not work force effort but problems with management and implementation. I have examined those problems, and if BP does not study its history it is doomed to repeat it. In 1999, BP downsized the work force by 600, and related job losses are on-going.

On 29 July 1999, there was a complete power failure at BP Grangemouth. On 20 November 1999, problems with the catalytic cracker resulted in a blow-out. On 27 November 1999, a problem with the gas compressor left it out of action for 10 days.

On 26 January 2000, two boilers broke down and the major incident control committee was put on alert. In other words, the town was considered in danger. On 29 May 2000, there was a complete power failure and the major incident control committee was again put on alert. On 7 June 2000, a high-pressure pipe fracture almost resulted in an out-of-site fatality. The fracture led to a massive escape of steam beside a main road, along which a woman had been walking her dog some 10 minutes earlier. On 10 June 2000, there was a fire in the refinery unit. The catalytic cracker was burned to rust and will cost about $20 million to rebuild. As I have said, BP must study that history or it will suffer the consequences of repeating it.

I have some other questions for the Minister. Will he work with me to ensure that BP co-operates with the Health and Safety Executive, the elected representatives of Grangemouth, work force representatives and the local community to ensure that the lessons of previous BP failures are not forgotten in an attempt to reduce the work force by 40 per cent? Will he help me to ensure that any methodology or process to reduce staffing, supervision or maintenance numbers at BP Grangemouth is adopted only after full disclosure and rigorous analysis by the Health and Safety Executive?

Will the Minister support the principle that proposals on staffing levels at the production facilities in Grangemouth should be fully disclosed to work force representatives and to me before implementation? In particular, will he ensure that any proposed increase in overtime working is limited to European directive levels and does not endanger the health of the work force or the safety of the BP Grangemouth complex? Does he agree that the precautionary principle should apply on health and safety grounds, and that it would be better to implement any reduction in production facility staff at Grangemouth in discrete stages, in order to establish the effects of each change?

Any changes to the complex must be rigorous and risk free, and must not threaten the health and working ability of the work force. After the last round of cuts, workers told me, ``We work until we're stressed and go off sick. Someone takes over our shifts, they go off sick, and we have to come back and work their shifts.'' Today, the union told me that the director intends to get rid of all non-core workers. Others at the plant will therefore have to work overtime to cover holidays, sickness and other jobs that non-core workers currently do. That is an extremely dangerous thing to do at Grangemouth, and it is not in line with the European working standards that we want. We do not want people to live to work; we want them to work to live, even in a complex that runs 24 hours a day.

We should consider the consequences for the people who will lose their jobs. Neither I, the unions nor the people of Grangemouth want the work force to work in such a way as to increase costs and render BP Grangemouth uncompetitive. However, the plant can work more efficiently. For example, last year one part of the complex was supposed to run at 60 per cent. capacity, but it reached only 14 per cent. The KGXX cracker expansion has never been properly commissioned, so the complex is not working as well as it could. None the less, with present staffing levels, BP Grangemouth could have made £100 million profit last year, instead of losing £30 million, even with oil costing $27 per barrel.

It is important that we work together with the Scottish Executive, Scottish Enterprise Forth Valley, local councils and the local community to ensure that when people have to leave their job they do not feel like they are being thrown on the scrap heap.

Will the Minister give assurances to the 2,500 members of the work force at BP Grangemouth and their families, who live in my constituency and elsewhere in the central belt of Scotland and who feel that their future is threatened by BP's proposals, that he will work with me, the Scottish Executive and the local MSP Cathy Peattie to ensure that every effort is made to give people who are made redundant the widest opportunity to find gainful employment? Will he ensure that the full resources of government at UK and Scottish levels are channelled through the local department of employment, which has dealt excellently with downsizing in other industries, to make available the widest possible training, re-skilling and enterprise options? We must ensure that every opportunity is given to people threatened by this tragedy.

Finally, will the Minister make every effort to ensure that BP, which has made it clear that it is carrying out these redundancies in the name of profit, contributes to the training and alternative employment options that are sought by the work force and the enterprise company? I am not referring just to redundancy money: BP can buy people off in its Grangemouth complex with the amount of money that it can offer individuals. There must be more than that, or we shall end up with another generation walking the streets with skills that they are not using, which happened in the 1980s and some parts of the 1990s. BP should contribute to the options available to the local community, or people will feel this blow this year, next year and every year thereafter as their earning and spending power diminishes. BP should provide assets for the local community so that this employment loss can be absorbed, and people can have confidence that there is indeed a future for BP at Grangemouth.

1.16 pm

The Minister of State, Scotland Office (Mr. George Foulkes): I congratulate my hon. Friend the Member for Falkirk, East (Mr. Connarty) on securing this debate on BP Grangemouth. I know from my many discussions with him that it is a topic about which he is deeply concerned, and I assure him and the Committee that the Government also take the matter seriously. I thank him for his kind remarks, and also for giving me notice of the specific questions that he planned to raise. I shall try to answer all his questions.

As my hon. Friend said, the trigger for this debate was the sad announcement of redundancies at BP Grangemouth. My colleagues and I regret that the Government have had to make this announcement, and that up to 1,000 job losses are planned. I understand from BP that it believes that the restructuring is necessary to allow the site to compete effectively in the future and for it to cope with the worldwide downturn in the chemical industry. I know from my hon. Friend's remarks that he understands that competition is getting keener in this area, and that that must be taken in account.

As my hon. Friend said, he and I recently met representatives of BP to look at all possible ways of avoiding redundancies. Both he and I urged it to consider this, and I repeat that call today. BP told us that it had taken account of safety concerns, but it also mentioned the need to optimise resources at Grangemouth within a safe operating environment and a sound cost structure.

I have been assured that BP remains committed to a secure future for the site at Grangemouth. Part of the discussions included assurances that operations would continue at the present level, albeit with a lower level of staffing. That is of course part of improving competitiveness, and I shall to come to the important question of safety in a few moments.

My hon. Friend's immediate concern, and that of all of us, is for the work force and the families living under the threat of redundancy. I shall touch on that issue, but first I shall underscore that BP has assured us that it remains committed to a strong future for the Grangemouth site, in which it has invested $1.8 billion over the past decade.

There is also upstream investment to take into account. With the company's continued handling of crude oil and gas, the billion-dollar planned investment in North sea activity underpins the role of Grangemouth. The 10-year programme of investment is now bearing fruit and new plants are coming on stream. That is in addition to the company's increase in sustaining investment since 2000, which is likely to entail about $115 million in each of the next two years. BP is making a significant contribution to the site at Grangemouth.

I shall now return to my hon. Friend's constituents, about whom he and I are concerned. I assure him that, after discussions, the Scottish Executive plan to mobilise the full available support to assist any staff who are likely to be affected by redundancy, at whatever level. Support will be provided to those affected through a local response team operating under the Executive's partnership action for continuing employment—PACE. That will ensure a co-ordinated and strategic response from local agencies in terms of offering advice, support and guidance that embraces, as my hon. Friend requested, retraining, reskilling, upskilling and employment opportunities. The support offered will be tailored to meet individual needs and local circumstances.

The company has given an undertaking to continue to work with local agencies, to prepare a robust action plan to broaden and enhance the economy of the whole area and to take an interest beyond its boundaries. That will include reusing some buildings and land for light industry, specialist advice, and assisting in the provision of training for engineering skills. Those leaving are likely to have good skills and to be able to compete well in the market, and BP has given a commitment to investigate redeployment opportunities in the BP group.

Tomorrow, Scottish Enterprise Forth Valley will present proposals to BP for BP's support for the repositioning of the local economy. I hope that my hon. Friend will be encouraged when he sees them. During the coming weeks, those proposals will be worked on in more detail to confirm the nature of BP's intervention, and to ensure that the beneficial impact on the economy is maximised and that public and private sector support is secured. A formal announcement of the action plan is expected in the first few weeks of January, including both immediate deliverables and a definition of work for the larger activities to be put in place in the longer term.

Work will be undertaken in a similar approach to that at Prestwick. I know about that from my experience in Ayrshire. Scottish Enterprise Energy Group is keen to help in bringing together employer and trade associations effectively to tie up vacancies, job specifications and people who are willing to move. It would be happy to offer similar advice to BP. There will also be opportunities to co-ordinate the recruitment needs of biotech industry clients through the PACE response.

My hon. Friend also asked about BP's reporting of its performance on its Scottish assets. That is a matter of concern for the company and its shareholders, but I hope that he is reassured by what BP told us about its plans for investment in Scotland. I will be keeping in close contact with it on that matter.

My hon. Friend has understandable concerns about health and safety. As he has said today, a major concern with such a large redundancy programme is the continuing safety of the Grangemouth site. I can assure him that the Government place the continuing safety of the Grangemouth operation at the forefront of our considerations. The site is subject to the Control of Major Accident Hazards Regulations 1999—COMAH. In relation to its restructuring, BP will have to submit risk assessments and substantially amended safety reports. The Health and Safety Executive will assess them and use them as a basis for future inspection plans. BP alerted the HSE to its intended reorganisation some time ago and is expected to submit more detailed proposals soon. The points about safety were reinforced when I met representatives from the Scottish TUC to discuss the Government's energy policy. I understand the concerns of the trade unions from first-hand experience.

The COMAH regulations are enforced by a joint competent authority: the HSE and the Scottish Environmental Protection Agency—SEPA. After assessing the revised safety reports, I can assure hon. Members that the HSE will examine particularly the company's methodology for managing the reorganisation and the human factors. The aim will be to ensure that change is managed safely and that the refinery continues to operate in accordance with the regulations. If the HSE finds that there are serious deficiencies in the proposed measures, it has the powers under COMAH to prohibit operations, although we hope that it does not come to that.

The HSE's role as enforcer of health and safety law at the plant involves proactive and reactive inspection visits. As a result of the reactive work, it investigated three incidents that, as my hon. Friend said, occurred at Grangemouth in May and June 2000: an electrical power loss causing emergency shutdown; a high-pressure steam pipe failure; and a catalytic cracker fire. Those incidents, although disturbing, did not cause any serious injuries, but they resulted in an understandably high level of public, media and political concern in Scotland.

As a result of the investigation into the incidents and BP's own audit carried out by a taskforce, the company initiated a major action plan. I can tell my hon. Friend that the HSE monitors that plan regularly and seeks to ensure that it is implemented. It will consider the implications for the action plan of BP's recent announcements, and if it believes that appropriate progress is not being made to implement it, enforcement powers can be used to address that. BP is currently co-operating fully.

I can also tell the Committee that the HSE sent a report about last year's incidents to the procurator fiscal and legal proceedings are being instituted that are likely to be heard over the next few months. The timing is, of course, a matter for the procurator fiscal.

I hope that I have dealt with most of the points that my hon. Friend raised. If any are outstanding, I shall be in touch with him in writing, as well as having further discussions with him.

Although the announcement by BP includes a significant number of redundancies, we are assured—and I take that assurance seriously—that the company's commitment to Grangemouth remains strong. I hope that members of the Committee are encouraged by that.

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Prepared 28 November 2001