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Business secretary answers Daily Echo questions over Ford closure
12:23pm Monday 29th October 2012 in News
Q: The Daily Echo revealed last week that Ford was approved a Government multi-million pound grant from the Regional Growth Fund aimed at creating jobs in Essex – just less than a week before the car company announced its Southampton closure decision.
Did you know anything about the closure plans when you set aside money for Dagenham in Essex?
A: No absolutely not. No we didn’t. But let’s be clear about how the Regional Growth Fund actually works.
This was not a case of ministers sitting down and negotiating this with Ford.
That is not the way it works. It is a competition for funding.
Hundreds and hundreds of companies apply, they are then vetted through a team of business people, with the good ones passed to my department.
We do an evaluation on value for money, then it goes to ministers for a final sign off. And the Ford project for engine development was agreed as part of that.
The money the Government put in was £10 million, which was only one twentieth of their investment decision, it clearly was not crucial to that.
Q: When did you first hear the news that Ford was axing its Southampton plant and switching production to Turkey?
A: Well I had a telephone call from Stephen Odell, Ford’s head of Europe, the day before the public announcement – but by then the matter had been already leaked into the media.
So I was aware this was coming, but it was only a day before the official announcement that ministers were told.
I did ask him to explain why Turkey was better from their point of view than Southampton.
First of all it’s on a vastly bigger scale, at least ten times as much.
They say they can export at a much lower price than the factory down the road – even when you take into account all the tariffs and transport costs.
Now, the guys in Southampton will say they have been running the plant down for years, so we never had a chance. Why over a long period of time was Southampton never given the investment which I believe was promised at various stages? Three years ago they were promised a lot of investment here and it never happened – that seems to me the real story.
Q: We understand even Ford UK bosses were unaware they were going to take this decision?
A: Yes that is quite possible.
Q: Do you feel let down by the announcement?
A: People feel very let down – and I think I felt let down that we did not get any more notice and I think we should have done.
I can understand why people were angry. Obviously reading that your jobs are going through the newspapers is a terrible way of finding out.
We don’t know... your suspicions may be conceivably right, that they have been planning this for some time. I tried to find out what led to the decision and I did challenge it.
Their explanation was that the market in Europe, not in Britain, had collapsed really quickly.
Q: Would you have signed off the money if you knew they were going to close Southampton?
A: Well we would have certainly gone back to Ford and said what on earth was going on here.
But in terms of the process we have to judge an application on its merit.
As we did with all the other companies, when we make a Regional Growth Fund allocation, we look at individual projects, we don’t sit down with the company and say let’s have a look at your other operations in Britain and work out what you are doing.
Q: The Solent area has been named as one of 20 areas competing for a New City Deal – millions of pounds of cash to successful bidders to create jobs. Some cities have already received this cash. Liverpool for example received £75m. Given what has been happening in Southampton, can you today promise Daily Echo readers that Southampton will get preferential treatment in the bidding process to help the local economy recover?
A: I can’t promise to you because there is a process we are going through, but there is certainly a very, very strong case for it. That is the best I can say. We do recognise there are serious problems in the Solent area, particularly the two big cities, that is why the Enterprise Zone was given priority, and we are proceeding with the Daedalus site.
Hopefully the New City Deal will come through, but I can’t promise that because there will be a formal announcement shortly.
Q: Daily Echo readers require hope, this is your opportunity to give them a positive message by announcing here and now through our newspaper that taxpayers’ money will be spent in Southampton to help compensate towards recent appalling job losses.
A: I have already said that I and the Government want to do what we can to help people in Southampton who are affected by this, that is a commitment.
The Government doesn’t have an infinite amount of money, we are grappling with a very serious budget crisis, and we have to be careful how we use public funds, but we will do what we can through the Local Enterprise Partnership, which is the key organisation here, to provide them with assistance.
There will obviously be some public money involved but I can’t at this stage promise how much this is.
Q: Would you agree the best possible use of any available Government expenditure in this part of the UK would be ensuring the Ford site is kept for businesses rather than housing?
A: I think that makes a great deal of sense, but is going to depend on the local council working through the local Enterprise Partnership, which in turn will work with the Government.
My impressions are that Eastleigh has an extremely good record of job creation with low levels of unemployment, and making imaginative use of sites for small and medium sized companies, and I would hope that Southampton would respond in the same way.
Q: The Solent Local Enterprise Partnership will be calling on the Government to release funds from the Regional Growth Fund as well.
Do you agree it is now a top priority that these funds are released immediately?
A: The Regional Growth fund runs on a project by project basis. The priority is given to parts of the country that are suffering serious job losses. The Solent area has been hit hard and we clearly need to prioritise it and give whatever help we can.
Q: Do you think there is a misconception that northern cities are more deserving?
A: No, I certainly don’t see it as a north/south issue, I am in Southampton quite frequently going to Harbour Lights and doing my shopping here... as it happens my wife has a small farm in the New Forest.
So I am aware of the city – its good sides and its problems. There are parts of the north that are doing extremely well but other parts are troubled. I do recognise Southampton and Portsmouth have serious problems, too.