Orders of the Day — Debate on the Address [Second Day]

Part of the debate – in the House of Commons at 12:00 am on 2nd November 1960.

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Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry North 12:00 am, 2nd November 1960

An hon. Member opposite earlier in the debate referred to the way in Which he had seen the decline of our exports to Sweden and Spain, but no Member need go so far in order to see the consequences of decline in our exports; he need go only to the Central Lobby, or Westminster Hall, or Parliament Square in order to see at least 500 shop Stewards, representatives of the motor workers in Coventry and the Midlands generally, who have come to Westminster to protest against the decline not only in the industry but in their own standards of living.

They are men threatened with redundancy, already working on short time. They are the representatives of 60,000 men in Coventry alone who are working on short time, men who, a little while ago, were working a full week, and, indeed, overtime, and now, on the average, are doing a nineteen hour week, with many of them bringing home at the end only £5. If it were not for the fact that they are working on short time there would be a massive redundancy which would deepen the crisis which has already been felt inside Coventry and in the older established areas of the motor industry.

This crisis in the motor industry is a pilot crisis which will affect the whole of our economy unless something is done to arrest it rapidly. In Coventry there are men who have hire-purchase commitments based on the buoyant optimism, reflected today in the President of the Board of Trade's speech, which I believe to have been fundamentally misleading, on the prospects of the industry. They entered into hire-purchase commitments with their families, and the result is that today they are facing the future with anxiety, distress and anguish because they will not be able to fulfil those commitments.

The immediate reason for the decline in the condition of the industry has been the falling-off of exports. The American market has contracted. The home market has remained fairly static, but, having visited the Motor Show and having seen something of the industry's prospects there, I doubt very much whether the situation will improve, particularly in view of the fact that only the other day the Chancellor of the Exchequer declined to give a positive statement about Purchase Tax between now and the Budget, with the result that uncertainty has deepened, buyers will hold off, and the dangers to the home market will consequently increase.

The reasons for the difficulties in the industry are not simply local but are part of the general difficulties that the motor industry is facing all over the world. I therefore opened my eyes wide when I heard the President of the Board of Trade talk so glibly—and, I thought, smugly—about seasonal fluctuations and changes in the industry, which somehow or other would automatically produce a restoration of its former prosperity.

It is true that in the past, and certainly before the war, the motor industry was a seasonal one in which men tended to be kept on for the summer season and stood off when winter came. The pattern of employment was seasonal. One of the reasons for strikes in the industry—reasons which sometimes bewilder many commentators—is that workers accustomed to seasonal fluctuations before the war have constantly since 1945, when employment was stabilised, looked for danger signs and have become anxious in case seasonal fluctuations return.

The President of the Board of Trade talks as if these fluctuations are part of the normal condition of the motor industry, but since 1945 the industry has not been a fluctuating one but a stable one. Ever since the Labour Government introduced full employment into it and stimulated the export market by Sir Stafford Cripp's physical controls on steel—which sent manufacturers screaming, against their will, into the export market—there has been stable employment, with the home market being used as a cushion whenever there were difficulties in the export market.

Today, the difficulties of the industry have been aggravated by the state of the American market. I felt that the President of the Board of Trade—I am sorry that he is not present—was being extraordinarily unrealistic when he failed to speak not only of likely competition through the further contraction of the American market but of the actual competition from the United States itself.

It is not generally known in this country that the American motor industry today is working at about 70 per cent. of potential capacity. If anyone doubts that, I refer him to the Stock Exchange Gazette. The other day, when I asked a Question about future prospects of the British motor industry in connection with extension plans, the Parliamentary Secretary to the Board of Trade, in reply to what he regarded as my pessimistic forecast, said that he thought that the motor manufacturers knew far better what prospects were likely to be than I did—who, incidentally, have been occupied with the motor industry only for fifteen years. But whatever my own shortcomings as a prophet, the motor manufacturers themselves have proved to be even more fallacious in their forecasts in the past of what the industry can do.

There is a saying in America—it applies to the American motor industry but can also be applied to ours—that there are two estimates of next year's car sales. First is the one which the president of the corporation announces publicly and confidently. The other is the one which he studies behind locked doors alone with his ulcers. There is great anxiety in the United States about the prospects of the American motor industry.

Perhaps I should say, when I talk about the British motor industry, that the term is becoming more and more of a misnomer because more and more it is falling into American hands and being controlled not from Coventry, Dagenham or even Whitehall, but from Detroit. I can say that today more that 50 per cent. of the British motor industry is in American hands. Consequently, we have to consider that if there are to be difficulties in the United States, if General Motors or Fords or someone else find that an American recession, to which my right hon. Friend the Leader of the Opposition referred yesterday, is creeping up on them, then no one can imagine that they will give priority to employment to workers in Luton or Dagenham or Coventry over their own workers in Detroit.

It is obvious that if there is to be a recession in the motor industry it will be in the peripheral activities of the American industry that there will be the first unemployment and the drawing in of horns. It is in that context that we must look at the expansion plans for our own industry. I have from time to time voiced certain criticisms of projected expansion plans of the British motor industry. I would certainly not wish to do or appear to do, or say or even appear to say, anything which might in any way be thought to be critical of an attempt to create employment in formerly depressed areas or areas where there is today a high level of unemployment.

If we can have expansion and prosperity, I am all in favour of extending the motor industry to Scotland, Liverpool and South Wales, but if expansion is to take place in conditions that involve the export of employment from, say, Coventry and the Midlands to those new areas and the import of unemployment from those areas to Coventry and the Midlands, that is not expansion in the true sense. It is not creating employment but merely diluting it; spreading it thin to give the illusion of spreading the area of employment.

Therefore, we must consider very carefully those plans which, as the Parliamentary Secretary said the other day, it is hoped will create 41,000 new jobs by 1962. According to the project of expansion, the capacity of the motor indusay to produce cars will have changed by 1962. By then, potentially three times as many cars will be produced as are being produced now. Has the industry considered where the cars are to be marketed? I doubt it very much. The expansion is enormous, and I think that I ought to recall it very briefly to hon. Members so that they can see that this is a projected expansion which will take place in the next two years, at a time when we already see the dark signs of unemployment and redundancy in places like Coventry.

The B.M.C. will expand to the tune of £49 million, of which £10 million will be spent in Scotland, Merseyside and South Wales. Ford will have £140 million worth of expansion at Dagenham; Rootes, £22 million at Linwood, in Scotland; Standard, £11 million at Speke; Vauxhall, £30 million and Pressed Steel £20 million. A reasonable person might say that this is a kind of megalomania inside the industry, and that if we are contemplating the whole question of national investment it might be thought that the national investment could be more successfully and productively applied, as my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) has said, to heavy engineering rather than to increasing the number of motor cars on the roads—cars which we hope to sell at a time when the French, German and American motor industries all either have surplus capacity or are preparing to expand.

I said that it might be thought to be megalomania, but for the motor manufacturers there are very great advantages to be obtained from this expansion. Under the Local Employment Act they are receiving loans. Does anyone know at what rate of interest those loans are made? I think they are being made at a rate of 2½ per cent. Perhaps the Government spokesman will correct me if that is not so.

The rate of interest is certainly low, and the advantage to the manufacturers is quite clear. They, at the end of a short period of years, will have acquired great capital assets which will increase the equity value of their businesses. On the other hand, while that is going on, while there are these accumulated profits, plus the advantage to the Government, the workers at Coventry and elsewhere are in fear. They are afraid that what might happen to them is what we have already seen happening, in the ordinary process of capitalistic economics, to the workers of the News Chronicle. In other words, men who in some cases have served a whole lifetime in the industry may suddenly find themselves redundant, given derisory compensation—a few weeks' notice—at a time when the manufacturers have accumulated really vast profits. While on that topic, I forecast that when the B.M.C. dividend is declared it will be an all-time record.

I believe that two acute problems face this industry today. The first is the very short-term problem of how it can cope with the immediate emergency and the immediate crisis. I do not want to see the workers in Coventry, the Midlands or in the industry generally fall into a condition of redundancy and unemployment this coming winter. Earlier in the year I proposed a cut in Purchase Tax, believing that, as I have said, the home market should be a cushion for the industry. I hope that (the Chancellor will reconsider the whole case, will agree to cut Purchase Tax and will make an announcement promptly in order to avoid a long period of uncertainty between now and the next Budget.

I am not so happy about the project for making hire-purchase terms rather easier. It may, perhaps, be necessary as a short-term measure, but I consider that to bolster the home market by hire purchase is merely to discount the credit of the future. If we do that we shall merely be postponing the crisis, and I am quite convinced that if to this hire-purchase State that has been created by the present Government we are to add a large home market that is purchasing oars on the hire-purchase system, it will mean that the acute crisis will merely be postponed until the coming spring. Therefore, I certainly have hesitations about that.

I conclude by saying this of the industry as a whole. In the past, during the reign of the motor manufacturers, the industry has been in a state of happy anarchy. The manufacturers have gone on (pretty well in a booming market and have always been prepared to enjoy the benefits of inflation. They have done very well in the past few years, but if this industry is to compete in the increasingly difficult competitive conditions of today it is absolutely essential that there should be structural alterations inside the industry as such. I must say that I welcome the fact that the trade unions are now beginning to take an interest not only in wages but in the operation of the industry as well, and have set up committees to consider the question.

What is required is perfectly clear. It is quite obvious that if those in charge want to cheapen the unit product they must cut down the number of models, which have been multiplied as a bait to tempt reluctant purchasers on the home market in the past; they must create long lines of production; they must have standardisation, and they must do away with the electrical monopoly—and that is the responsibility of the President of the Board of Trade—