Mr. Malcolm
Moss
(North-East Cambridgeshire): I am grateful for this
opportunity to put to the Minister for Small Firms, Trade and
Industry an important case on behalf of my constituents and
those of the hon. Member for North-West Norfolk (Dr. Turner).
This is my sixth time of asking for the debate, and I am glad
finally to have come up trumps in the ballot. I thank the
Minister and his team for their co-operation, particularly in
answering letters and in meeting a deputation from my local
authority, Fenland district council.
I do not want to belittle the
difficulties that the Minister and his team face. There have
been parallel submissions from many other local authorities for
objective 2 status under the structural fund budget. Those bids
are not coterminous with bids for assisted area
status, but the core criteria are, in many cases, coupled. The
shared criteria include having 100 people per square kilometre,
having a percentage share of agricultural employment equal to or
higher than twice the European Union average in any year since
1985, and having an average unemployment rate over the past
three years above the EU average.
When those stringent criteria are
taken together, the present is not the most auspicious time at
which to plead for my area.
The major issue facing the fens is the fight against the
perception that East Anglia is uniformly prosperous--a
perception reinforced by the allocation of regional budgets. The
east of England, containing a population of 5.3 million, will
receive £28.8 million, but the south-east of England, where the
population is 7.8 million, will receive £60 million. On a pro
rata basis, the money for the south-east would be £45 million.
In August 1993, the Government
designated the Wisbech travel-to-work area
as an assisted area
with intermediate status. The reasons were higher than average
unemployment, measurable deprivation, staple industries that
were mainly in declining sectors, and problems of isolation and
peripherality. The same factors applied to the successful
application by local authorities in North-East Cambridgeshire
and North-West Norfolk for European objective 5b structural
funds. We were also successful, under the same deprivation
criteria, in applying for rural development area
status.
I am not talking only of the
Wisbech travel-to-work area,
of course, because the submission made to the Minister by
Fenland district council offered a twin-track approach. It
included the idea of moving from wards upwards, aggregating areas
across county boundaries and involving a large area
in the constituency of my neighbour, the hon. Member for
North-West Norfolk.
Having got assisted area
status, what is the track record of my local district councils?
We would say that we have been the most successful area
in the eastern region. We have had about 60 offers of regional
selective assistance, totalling almost £5 million, compared
with just over £2 million in the Great Yarmouth assisted area,
£750,000 in Harwich and £1.3 million in Tendring. So, the
fenlands area has
been by far the most successful in attracting Government grant
and, as a result, in levering in substantial amounts of private
sector investment. About £25 million of such investment has
come in under that leverage.
The investment has safeguarded
1,015 jobs in the Wisbech travel-to-work area
and has created 922 new jobs. It has also been successful in
lowering unemployment, which stood at 11.5 per cent. in 1992 and
was below 4 per cent. earlier this year.
Those figures do not take into
account recent job losses in the area.
A few months ago, Hazelwood Foods announced the loss of 420 jobs
at one factory alone. Within several weeks of that announcement,
Carnaud Metal Box announced 90 job losses at its plant, which
makes cans for the canning industry. The company has since
changed the figure to 75 job losses. None the less, that is a
significant number for the travel-to-work area,
given its size and population. With the losses in smaller firms,
we will be facing more than 500 job losses in the next few
months.
What are the employment prospects
for that area of
Cambridgeshire--a prosperous county, within a seemingly
prosperous East Anglia? How is that pocket of deprivation likely
to get out of the trough? A jobs deficit of about 9,800 is
predicted by 2006, yet 6,300 jobs will be required merely to
bring male and female activity rates up to the Great Britain
average. On top of that, 3,500 will be needed to provide
employment for the projected 7,300 growth in population by that
year.
The area
has a problem of structural decline. The Henley industrial
structure index predicts that it will be one of the worst local
authority areas
for employment in Britain. The index ranks the fenlands 433rd
out of a total of 459, so it is at the bottom end of that
structural index.
Of course, it is an agricultural area,
and we have uncertainty over reform of the common agricultural
policy. Last year alone, we saw a 45 per cent. reduction in farm
incomes and the National Farmers Union predicts a 50 per cent.
reduction in farm holdings in the next five years. Therefore, it
is unlikely that the base industry of agriculture will be able
to take up any slack in unemployment in the next few years.
The capacity to create new jobs or
to travel to such jobs in other parts of East Anglia is
constrained by a number of factors. First, there is a
concentration of businesses in declining sectors that risk
rundown or closure. Some 60 per cent. of industries are in
mature or declining sectors, and only 40 per cent. in growth
sectors. Secondly, there are poor prospects for investment,
particularlywith the non-viability of commercial property. My
constituency cannot attract speculative industrial build,
certainly in the north, because when the factory or building is
constructed, its value on the open market is three quarters of
what was paid to put it up. There is, therefore, a problem in
sale and lease-back arrangements, for example, and only with the
intervention of the local authority or English Estates can the
gap be made up so that we can have a viable commercial
industrial sector.
There are constraints on water
supply and disposal. We are talking about the fens of East
Anglia and parts of my constituency that are below sea level.
Getting the water off the land is a problem, but so is getting
the water that industry uses into the rivers and out to sea.
Unfortunately, while considerably more investment is going into
water treatment and sewage
systems--Anglian Water has a substantial investment
programme--our relatively sparsely populated area
is towards the back end of development. To my knowledge, we have
lost the investment of two major European food processing firms
who wanted to come to Fenland, but did not because Anglian Water
could not cope with their water requirements.
The third factor is the
uncompetitiveness of the work force, which is manifested by low
educational attainment, skills in declining sectors, low pay and
low entrepreneurial capacity. Educationally, 69 per cent. of
16-year-olds obtain fewer than five GCSEs or national vocational
qualifications at grades A to C, against the national average of
55 per cent. On training, 23 per cent. of the work force do not
have a nationally recognised qualification and only 19 per cent.
have NVQ1.
Low pay means average earnings of
£321 against a Great Britain average of £354. Those figures
relate to pre-minimum wage days, so I do not know the current
figures. They reflect low added value and a low skill profile.
On entrepreneurial capacity, between 1993 and 1996, VAT
registrations fell by 13 per cent. That shows a decline in the
business start-ups that we hoped would grow into companies that
could take up the slack of unemployment.
Fourthly, we have a poor strategic
transport infrastructure. We are outside the key north-south
routes and have poor east-west routes. I single out the A47
trunk road, which comes across from the midlands, goes round
Peterborough and then disintegrates into a very poor road
through Wisbech. There is now some dual carriageway between
Wisbech and King's Lynn, but there are problems further east
towards Norwich. We do not have a decent east-west route to take
our business and products quickly to the main north-south line
of communication, the A1.
We suffer from peripherality. The area's
lack of communication links is highlighted by a Henley hub index
of 0 and a contiguity index of 0.8. Those are technical points,
but I am sure that the Minister understands what they mean.
Dr. George Turner (North-West Norfolk): The hon.
Gentleman will know, although the House may not, that the
western part of my constituency is similar to the description
that he gives of his area. Does he agree that, although there
has been some success in acquiring support, our communities are
extremely precarious at present? He has realistically described
the threats faced by those communities. Does he agree that this
would be almost the worst possible time to remove the support
that they have enjoyed during recent years?
Mr. Moss: I am grateful for that intervention. The
hon. Gentleman and I share the same problems in our communities.
For six years, those communities have enjoyed and made good use
of that support, which they will continue to receive until
January 2000. The point of our submission to Ministers at the
Department of Trade and Industry, of the meetings that we have
held and even of the debate tonight is to impress on the
Minister that to snatch that facility away from our community is
the worst possible thing that could happen at this juncture.
I emphasise that we do not have any
natural advantages to attract inward investment to the area.
There has been no credible offer in the inward investment market
and none of the inward investments secured by
the East of England investment agency in its first 18 months of
operation have located in our fenland area. That underlines the
point made by the hon. Member for North-West Norfolk.
There has been a good response from
my local authorities. Redesignation of regional selective
assistance will be the centrepiece of the fenland partnership
that has been set up. That partnership of local authorities,
local businesses, the local chamber of commerce and the training
and enterprise council has a four-point regeneration strategy.
It aims to retain and enhance the competitiveness of existing
industry--most notably, the fenlands food cluster, which is
marketing under the name of Foodfen.
Through Cambridgeshire county
council and the local education authority, we intend to raise
levels of educational attainment. We shall address the barriers
to investment created by infrastructure constraints. One aspect
of the partnership's work is to hold on-going discussions with
Anglian Water, the Government office of the eastern region and
the Rural Development Commission.
In conclusion, the fundamental
question, and the problem facing my constituents and their local
authorities, is how they can meet the new criteria that have
been laid down by the European Union and which the Minister and
his Department have to implement. That is not only a problem for
my constituents, but for representatives from about 51 other
areas in the UK who have beaten a path to the Minister's door
during the past few months.
The problems of pockets of local
deprivation and disadvantage are often masked by selecting large
geographical units. I hope that the Department will not go down
the road of designating according to NUTS3 criteria. The
criteria that the Government choose should reflect localised
areas of deprivation, and take into account the endemic problems
of industrial development that mitigate against self-help and
free-market solutions. Fenland district council has mounted a
twin-track approach in its submission; either starting with the
local authority, which is a NUTS4 unit, or at grass roots,
building up from the individual wards to create a sensible area
that cuts across county boundaries, but shares the problems
referred to by the hon. Member for North-West Norfolk.
The Parliamentary Under-Secretary of State for Trade and
Industry (Mr. Michael Wills): I congratulate the hon. Member
for North-East Cambridgeshire(Mr. Moss) on securing the debate
on assisted area status for Wisbech. I know that that is
important to him and to his constituents. Indeed, the review is
also important to many other areas of the country. The hon.
Gentleman has eloquently put the case for his area--as, indeed,
did my hon. Friend the Member for North-West Norfolk(Dr.
Turner). I welcome the opportunity to reply to the points that
have been made.
In recent years, Wisbech has been
successful in attracting investment and, as the hon. Member for
North-East Cambridgeshire described, assisted area status has
played an important part in achieving that success. Since 1993,
there have been 62 offers of regional selective assistance
totalling more than £4.6 million, which has led to total
investment of £29.6 million and the creation of 1,000 jobs; in
addition, a further 1,000 jobs have been safeguarded. Fenland district
council has put the case for continuing assisted area status
under the current review, and the hon. Gentleman has written to
Ministers and assiduously pressed that case on behalf of his
area. It is true that the new assisted area map will be reduced
from current levels, and there are some hard choices to be made
when designating areas. We have yet to make final decisions, but
I can assure the hon. Gentleman that his points about the claims
of Wisbech will be, and are being, carefully considered in the
review.
Let me set out where matters stand
in respect of the review. Following new European Commission
guidelines on regional aid, all member states must propose new
assisted areas to operate from 1 January next year, so the
Government announced on 30 July last year a review of the
assisted areas in Great Britain. Because of its special
problems, Northern Ireland retains special status under the
guidelines and will be covered in its entirety. A great deal of
work has been done since then: my officials have been working
closely with their counterparts in other Departments, especially
the Scottish Office, the Welsh Office and the Department of the
Environment, Transport and the Regions; we have held a public
consultation; and, since assuming ministerial responsibility for
the matter in January, I have met about 50 Members of Parliament
who wanted to discuss the case for their own areas.
The Government are now considering
what proposals they will make for new assisted areas, and we
shall put those to the Commission as soon as possible. We are
carefully considering the needs of all areas, including Wisbech,
but the task we have been set is not an easy one. The
Commission's guidelines are part of its effort to reduce the
overall level of state aids in Europe, and the UK, like the EU
as a whole, faces a reduction in the population coverage of its
map. The figure for the UK is about three quarters of current
levels, so there are hard choices to be made and there will be
some pain. However, we must bear in mind the wider picture: the
UK is one of the lowest providers of state aids, so the removal
of distortions to competition by lowering overall EU state aids
will be beneficial to UK firms both inside and outside the
assisted areas. The lower aid limits are expected to bear down
especially heavily on other EU states, which should improve the
UK's ability to attract inward investment.
We do not have an entirely free hand
in drawing up our proposals. Areas measured at NUTS2 under the
European system of units for regional statistics will
automatically qualify for assisted area status if their gross
domestic product per head is less than 75 per cent. of the EU
average. However, in choosing other areas, the Commission
guidelines require us to use up to five social or economic
indicators and one common unit of geography for the country as a
whole. There is also a penalty for proposing areas with a
population of fewer than 100,000, as those will be counted as
100,000 against our population total, which would result in a
further reduction in the coverage of the map.
In the review, we are trying to
combine areas of need with opportunities for employment
creation, investment and regeneration--in other words, we are
targeting areas where regional industrial assistance is a
sensible policy response to need. We are considering indicators
for selection and designation of areas,
and we have not made final decisions. However, in line with the
outcome of the public consultation, we expect measures of labour
market weakness--high unemployment or low employment rates--to
be an important factor. Using a smaller, rather than a larger,
geographical unit for the map will offer the most scope for
targeting areas effectively within our overall population
ceiling. Again, that is in line with the outcome of our
consultation. It showed that there was most public support for
the use of wards--which is the smallest unit--as the building
block of the map. We are currently working on how we can achieve
that effectively within the various rules set down by the
Commission.
I shall conclude by saying a few
words about the timetable from now on. The Commission asked
originally for proposals to be submitted by 31 March. That was
always going to be an ambitious date, and we are not alone in
not having submitted them by the end of last month: we think
about half of member states have not yet submitted their
proposals to the Commission. We are working to complete the map
as soon as possible. However, seeking the best outcome for Great
Britain must be the key objective and we are not ready to submit
our proposals. We do not want to rush this task. We could draw
up a map easily and quickly that is based on five indicators and
a unit of geography. However, the challenge is to draw up a map
that is right for Britain and which provides coverage that most
effectively meets our reduced population ceiling.
As to when we will be in a position
to announce our proposals, we must work on them further. We must
respect the purdah periods imposed before the local elections,
the elections in Scotland and Wales and the European elections.
As the hon. Gentleman said, in the early summer we shall develop
our proposals for the European structural funds--the objective 2
areas--for the period from 1 January 2000. Public consultation
is now under way. The Berlin Council decided--rightly in the
Government's view--that there will not be an enforced link
between the assisted areas and the structural funds maps. Those
instruments have different purposes and are aimed at different
goals. They do not need to be identical, but they should clearly
make sense when they are put together. Announcements about our
proposals for the structural funds map and for the assisted
areas will be taken together to provide an effective strategy
for tackling need through regional development.
As a result of various factors, we
do not think any announcement is likely before mid-June.
However, I assure the House that we will continue to move as
quickly as we can towards finalising our proposals. In the
meantime, I hope that my remarks this evening will provide
comfort to the hon. Gentleman, my hon. Friend the Member for
North-West Norfolk and to their constituents. We want very much
to achieve the best result for this country, and I believe that
we are moving in the right direction.