A SENIOR Cabinet Minister has declared Terry's decision to close its historic factory as a "body blow" for York

The Leader of the House of Commons, Peter Hain, told MPs: "It is a very serious

situation with the job losses - it is a body blow."

York MP Hugh Bayley, who has backed the Evening Press campaign to persuade Terry's to remain in York, had told Mr Hain that 316 workers face the axe. Terry's owner, Kraft, is shifting production from Bishopthorpe Road to factories in Sweden, Belgium, Poland and Slovakia - despite warnings it will destroy brand loyalty.

During business questions in the Commons, Mr Bayley said: "Despite the fact that we are still getting inward investment, does my Right Honourable

Friend, Mr Hain, share my concern about the loss of manufacturing jobs to

other countries?

"Will he express my concern to the Secretary of State for Trade and Industry, Patricia Hewitt, and is there going to be an opportunity for short debate in this House?"

Mr Hain said Mr Bayley would get the chance to raise Terry's plight at Trade and Industry questions at Westminster.

But he said that firms switching production overseas was a fact of life for York and the rest of the UK economy.

He gave the example of China, where engineers are paid as little as 60p. To survive, Britain had to make extra investment in skills and science.

But Mr Hain claimed there was one silver lining for workers at Terry's. He added: "Unlike the 1980s and 1990s, his constituents will have the alternative of being able to apply for jobs because there are more jobs being generated in the British economy than ever before."

Mr Hain claimed last December that Norwich Union's decision to shift jobs to India would be good for the British economy after Mr Bayley had raised the decision by Aviva, the insurer's parent company, to export 2,350 posts overseas in a Commons debate.

Meanwhile, Terry's plant director John Pollock revealed further details today of the reasons why Kraft decided to shut the York factory and move production abroad.

He said in an interview with the Evening Press that exports of Chocolate Orange to America had slumped, partly because a special raspberry flavour variant had flopped.

But the biggest problem was one of fixed costs, with an old site and buildings which did not lend themselves easily to modernization and which were operating at less than 50 per cent of capacity.

He revealed that when, or if, Chocolate Orange is made in Poland, most would be exporeted back to the UK. The extra costs of transport will largely be offset by the savings made by the use of cheaper labour in Poland. Mr Bayley was due to meet Mr Pollock and GMB union leader John Kirk at Terry's this afternoon.

Updated: 10:32 Friday, April 23, 2004