I do not believe that there will be any dissent on either side of the House if I say that this Bill is one of the greatest importance, involving a major investment by Government in an important industry. I would be less than fair to the House if I did not admit at the outset that in matters of Government involvement with industry, under all Governments, we are feeling our way towards arrangements with which we do not have a great deal of familiarity.
Although the Liberal Party's Amendment has not been called, perhaps I may be allowed to allude informally to the point contained within it and to say that the Government themselves do not dictate the time scale or the timing of industrial problems that come before them. Were it possible for the Government to anticipate every problem in its entirety, and to have time to review every alternative with academic leisure, we might make better progress. I recognise that the Liberal Party's admendment contains a point to which I have to turn my mind, even though you, Mr. Speaker, have chosen not to call it.
The Bill would empower the Government to implement the Ryder Report which, as the House knows, has been accepted by the Government as the basis for their policy towards British Leyland. Perhaps I may refer to something else which I know will arise—because it has arisen in Questions—about the parts of the Ryder Report that have not been published, but have been omitted. When I made my initial statement in the House I said that it would not be possible, for reasons of commercial confidentiality, to publish the whole report but that I hoped to publish as much as could be published. I can give the House the assurance that the parts that were omitted, were omitted at the suggestion of the Ryder team and not of the Government—that is to say, we are publishing the edited version that was given to us by the Ryder team and the Government have not of themselves determined which parts should not be published.
I know that this bears on another matter which is being discussed, in the context of the Industry Bill, about the confidentiality of commercial information, and I think I could reasonably argue, and would argue, that in recognising that some information is commercially confidential, the Government have perhaps indicated through their action in this case their recognition that these issues of confidentiality have to be taken seriously.
May I repeat what my right hon. Friend the Prime Minister said in paying tribute to Sir Don Ryder and his team and, to set the statutory position straight, say that the Industrial Development Advisory Board had the Ryder Committee's recommendation before it, but that, as its own chairman was one of the members of the team and another, Mr. Urwin, was also a member of the team, the Industrial Development Advisory Board was happy that the Government should proceed on the recommendation of the team without a parallel and separate examination by the IDAB.
Since the Prime Minister's statement in the House of Commons, I have had the opportunity of meeting not only Lord Stokes and others informally but also the board of British Leyland, and I had a very good meeting two or three days ago with Sir Don Ryder and the Confederation of Shipbuilding and Engineering Unions, representing workers in British Leyland. We are now proceeding as fast as we can to make provision for the progressive implementation of the Ryder approach. Sir Don himself, with the help of two members of the team, Mr. Clark and Mr. McWhirter, plus departmental officials from the Treasury, the Department of Industry and the Department of Employment, are now engaged in the current work arising from the report.
Let me add one word also about Lord Stokes, who came to see me last week about the valuation of the shares at 10p. He has a statutory duty to his shareholders, many of whom are small shareholders—many of them workers in British Leyland. He came to me with others from the board—Mr. Lucas and Mr. Park himself—to query the valuation at 10p—I have no doubt that this point will arise in the debate—and to ask the Government to reconsider the matter. In the course of discussion with him I explained, as I would have done any way to the House, the reasons why we had determined as a Government that the Ryder recommendation here was the right one, that the asset valuation was in fact unrealistic, given the state of the company, that the share value which had itself been very much reduced, at any rate before the suspension of dealings in the shares, indicated that 10p was a reasonable offer to make, and that the provision for shareholders to be able either to sell at 10p or to buy in, under the arrangements that we have provided for the special rights issue, was reasonable. I report this to the House because it is right that the House should know that Lord Stokes made separate, distinct and firm representations to me on behalf of his shareholders.
Apart from that one issue, on which the board has its own duty to perform, it has been helping very much to try to carry through the main recommendations of the Ryder Report. Mr. Alex Park has been appointed acting chief executive, together with four managing directors for the four divisions—Car, Bus and Truck, International, and Special Products—and although the chairman has not yet been appointed, Lord Stokes in his capacity is working on the problems of implementation.
I say a word now about the background to British Leyland, going back some time, because this, too, might be of interest to the House. My own involvement came first in 1966 when Chrysler decided to buy Rootes and there was anxiety then that this might lead to difficulty in British-owned motor industry. It was at that time that the discussions between Sir George Harriman of British Motors and Sir Donald Stokes of British Leyland began. We had at that time hoped—and I reported this to the House in January 1967—to establish a British motor corporation which would have absorbed Rootes rather than see it absorbed into Chrysler. However, the merger, when it came later, was between the two major companies, and we know now from the Ryder Report that the merger did not succeed in achieving its objectives, Certainly the investment was not available on the scale required, and there were other problems which remained unresolved.
It is no part of my purpose in moving the Second Reading of this Bill to criticise anyone in British Leyland, because the company has formidable difficulties. But we have now an opportunity to consider what needs to be done, and that may throw some light on the inherited difficulties of the company.
I want to put on the record the fact that I had discussions last summer with Lord Stokes about the investment programme of the company to see whether there were possibilities of expanding that programme. It was out of joint studies of that kind that the company's difficulties came to light and I made my statement to the House before Christmas, this corresponding with a period of worldwide difficulty for the motor industry not confined to British Leyland in this country and not confined to motor companies in this country, as the House will know from studying events in the United States and on the Continent.
The guarantee was granted and given, the Ryder Committee was set up, and the Government have now accepted its report as a basis. The Bill provides an opportunity, if the House so chooses, for the Government to proceed themselves and to finance their part of the recommendations.
I turn to the basic proposals, recommendations or conclusions of the Ryder Report. The first matter to which Sir Don Ryder and his team turned their attention related to the basic question whether Britain should remain in, and seek to remain in, vehicle production and what should be the rôle of British Leyland in that picture. There are long passages in the report bearing on this matter, and the conclusion to which it comes is that, despite the problems of the motor industry due to the present world recession, and despite the problems which have struck the motor industry due to the rise in oil prices, the motor manufacturing industry will, worldwide, remain a major industry, that Britain should remain in it and that British Leyland should be, and could properly be recommended to be, a major producer of motor vehicles, buses, trucks and other vehicles.
This issue comes to be discussed in the House today, and I put it to the House that, after examining the Ryder recommendations and considering the matter in the light of independent studies which have been undertaken by the Government, we have concluded that that was a correct recommendation to make.
If we consider the rôle of the motor industry in Britain's foreign trade performance, our exports of motor vehicles are running—to quote the year 1973—at £1,800 million gross with a net export surplus of £1,000 million. Those who argue, as sometimes it is argued in academic and newspaper comment about the motor industry, that we would do better to reallocate the skilled resources into other industries have to be sure before putting forward that view that we could easily shift these highly skilled people from one type of export production to another. We accept what Sir Don recommends, namely, that these figures should influence our mind in these matters.
On the third question, about whether it was right to sustain British Leyland at this moment or to go for a course involving bankruptcy, there is, again, ground for disagreement, and I dare say that that disagreement will emerge in the debate today.
In the case of Rolls-Royce in 1971, the last Government opted for bankruptcy, and that had effects which I need not go over in detail now. But it is one thing to bankrupt an aero-engine company dealing with a relatively small number of aircraft manufacturers where the Government would clearly be involved in the ongoing business, and it is another to bankrupt a company linked to a series of suppliers and distributors world wide. In our view, it would have been wholly irresponsible for us to have adopted the course of bankruptcy with British Leyland. When I say that we considered it, I suppose that every option has to come up on a piece of paper at some stage or other. But I must not give the impression that in our view there was any merit in that method of proceeding. The right hon. Member for Down, South (Mr. Powell) said, in an intervention the other day, that bankruptcy was an inevitable part of our capitalist economics. That may be so, but it is certainly not a practicable or a correct way of handling matters of this kind.
When making his statement my right hon. Friend the Prime Minister drew attention to the fact that there were about 1 million jobs in all at stake here, and that the Midlands had handing over it the spectre of becoming a development area, like other parts of the United Kingdom, or an industrial desert. If British Leyland had been allowed to go into liquidation, in our view that danger would have become a great deal more real. Therefore, I believe that our decision was correct.
I must not do more than quote my right hon. Friend's figures. I understand that what my right hon. Friend the Prime Minister said—I think I am quoting him correctly—was that a million jobs hinged upon British Leyland and that 165,000 people were directly employed. The motor car industry is an assembly industry. About 80 per cent. is bought in. It is centred around the Midlands. The hon. Gentleman will know, at least as well as I do, that there are literally hundreds, if not thousands, of firms whose whole livelihood depends upon components, in part to British Leyland. Therefore, we felt it right to reach the decision not to allow a bankruptcy with all the chaos, uncertainty and risks of further bankruptcies, secondary and teritiary, that would follow from that.
We in Scotland have learnt something about what happens when a firm is bankrupt and we try to bring it back into the public sector. We know how inefficient that is. Heaven help us if that happened to any factory in the Midlands. This is the most inefficient way of doing it.
I am trying not to be too controversial in presenting this matter, otherwise I should have gone into past issues as well.
I should like to make one other point about profitability. It is always open to a firm, by a ruthless chopping of its uneconomic activities, to restore itself to profitability, as might have been done if British Leyland had closed Austin-Morris, for example, and we might have had a small profitable British-owned motor industry, but the vacuum created by so doing would have led to a huge flood of imports of motor cars from abroad—those imports are already running at a hair-raising level—and it would have affected our exports as well.
I come to the next question which arises from the Ryder recommendations and from the Bill; namely, the need for investment on a very large scale. A lot is written about the motor industry, and I want to come back later to some of the things that have been said.
The right hon. Gentleman has now left the Ryder recommendation that we should have an indigenous motor car industry of our own. He has given the reasons why Ryder favoured this course. What he has not done is to say whether Ryder considered other alternatives. There is no mention in the document of other alternatives which could have been pursued. Have the Government given consideration to this?
I shall try to answer the right hon. Gentleman's question as best I can. I cannot speak for Sir Don Ryder, but my understanding of his approach and the approach of his team was that in a matter of this magnitude it would be right for them to make a firm recommendation to the Government and not simply to work for four months and present a range of options. They thought it right to make a firm recommendation.
Let me finish as best I can the answer to the right hon. Gentleman's question.
The Government considered the Ryder report, and, as is inevitable in ministerial examinations of such matters, they noticed at any rate that there were alternatives of a different character, including bankruptcy, to which I have referred. We concluded that the recommendation made was the right one.
No one disputes that it was reasonable for the Ryder team to make a recommendation. That was not the question put by my right hon. Friend. My right hon. Friend asked whether the Ryder team considered a range of options of support.
The Ryder team was a self-contained team that gave me, on the time and date promised, its report. The Government were not involved in discussions with the Ryder team during the progress of its work. The Ryder team presented its report to the Government, which it was commissioned to do. The Government then set up their own internal procedures for examining it. I am now presenting to the House our view, which, as the hon. Gentleman knows, is based on the belief that the Ryder recommendation was correct.
It seems a little curious that the Government have accepted a commitment to an expenditure of £2·8 billion without knowing whether there were alternative ways of saving the British Leyland company.
I anticipate, as I am sure the House does, with interest the hon. Gentleman's speech. In my opening remarks I made a comment about the Liberal amendment, and I said that the Government did not, in the circumstances, find it easy to sit back with time and leisure to consider a wide range of options and did not always have all the information that they would like to have when reaching decisions of this kind. I can do no more than put forward the Ryder recommendation upon which we reached our own view.
It must be within the right hon. Gentleman's knowledge, as he was holding discussions with the company last summer, that British Leyland itself had a £5 million investment plan. What consideration was given to that at the time, and was this taken into account on receipt of the Ryder report?
I answered that point too eliptically a moment ago when I said that last summer. I went to see the company to inquire about its investment plan and to see whether it felt that there was a level of investment it would like to see that was beyond its current capacity because of difficulties over finance. Out of the joint examination of these problems which took place between British Leyland and my own officials was revealed a much graver problem which led to my coming to the House for permission to give the guarantee and to the Ryder recommendation. In the Ryder team's examination of the British Leyland problems, Sir Don himself—I speak subject to correction—has readily recognised that he was able to draw upon its own plans and the possibilities that it has considered and to incorporate those which he thought sensible in his recommendation. To that extent the Ryder team reflects clearly the thinking done within the company.
What I was dealing with a moment ago was the fact that one could have made the company profitable by the most ruthless amputation of unprofitable volume car work, which would have left us with a profitable company but a flood of imports, substantial unemployment, and a loss of exports and would not have been the right course to adopt. Therefore, the hon. Gentleman will appreciate that consideration has been given to this matter.
I turn to investment, because this is a very substantial investment programme. I have said elsewhere that there is probably a Ryder report to be written about a lot of other companies, some of which are not in difficulties. There has been over a 10-year span a substantially lower level of investment in British plant, equipment, tools and tackle compared to that of our major competitors. When this big reinvestment programme is brought forward it indicates, in the context of one company, the measure of the gap that there may well be in other companies. I was handed today an item on the tape—it may be in the evening papers—which indicated that the President of the Machine Tool Trades Association said that the investment that would flow from the Ryder recommendation would be such that the machine tool industry would not, in his judgment, be able to meet the demand.
It is a fact that while British Leyland was running down for lack, in part, of modern machine tools Alfred Herbert was running down for lack of orders for machine tools. This collaborative decline, this parallel decline, has been going on throughout a great deal of the British engineering industry. It explains a lot of our weakness. It is certainly our hope—we have already set up working parties to look at it—that the expenditure flowing from the Ryder Committee's report, if the Bill is passed by the House, will find its way to sustain by orders and secondary re-equipment other parts of our engineering industry.
I accept what the right hon. Gentleman has said about the enormous amount of leeway in investment which a vast range of British manufacturing industry has to catch up. Can he give a reassurance that his Department is now engaged in assembling as best it can estimates of the size of the gap and the resources which it would take to fill it?
Any Minister would like to be able to assure the hon. Gentleman, as I would, that his Department had answers to every question put to him. But the magnitude of the problem is very great. We are opposed in general to the idea of doing our paper planning at Whitehall level without regard to the experience of industry. The whole concept of the planning agreement is to seek to identify and to meet the gaps, in so far as they can be identified from tripartite discussions between the major firms and the management and the unions—and not confined to firms in difficulty. We need to be able to identify the gaps and to seek to meet them if we are to match our major international competitors.
As regards investment in industry, we should have to be thinking in terms of about doubling our present level, progressively. That again would be a figure one could arrive at if one were thinking of creating jobs in manufacturing industry at about the rate at which they are disappearing. That is a much wider question. From close studies in the NEDC planning agreements and in other ways, we hope to get an assessment of what is necessary to make British industry competitive again.
The Bill provides, if the House assents, for £265 million to allow the Government to acquire shares and liabilities in the new British Leyland Company. Of this, £65 million is the upper limit for equities and £200 million to underwrite a new issue, assuming that both are fully needed. The new company, British Leyland Limited, would be empowered to offer one new share at 50p for each 10 existing 25p shares. The Government would offer to acquire each share at £1 a share, in all costing £60 million if every one of these shares was sold, and amounting to 10p a share, to which I made reference. That would be the £60 million. If the convertible loan stock were converted to British Leyland shares that might involve a further £5 million. The £65 million is, therefore, an upper limit for that purpose.
The second part of the Scheme of Arrangement would be that £200 million of new capital would be available to underwrite a special rights issue of 50p shares at £1 a share, and these would be underwritten by the Government. The details will be circulated to the shareholders, meetings will be held under the auspices of the court, and we hope to have final sanction from the court in July and to complete the arrangements in September.
However, I stress to the House that it is urgent that we should get this new investment going, and meanwhile, in another order which will come forward from my hon. Friend the Under-Secretary, who will be moving it after this debate, we are seeking the necessary extra guarantees for the interim time involved.
Looking beyond that matter, beyond the immediate issues raised by the Bill, we are, as the House knows from the Prime Minister's statement, ready to make a further £500 million of capital available from 1976 to 1978, which would come from the Industry Act—Section 8 and conceivably Section 7—and from tranches available under the new Industry Bill through the National Enterprise Board. That would be the statutory cover for this action.
The Government will be making this available in such a way and in such a form as seems right, but it will be adjusted if necessary to see that with this substantial investment of public money there is a majority control of the company. The shares would be held, subject to the Industry Bill being enacted by the House, by the National Enterprise Board, which would have responsibility as the shareholder for seeing that a level of management efficiency was achieved.
The new British Leyland would have a planning agreement of a kind that, again, arises under our industrial policy, and the normal provisions for discussions between the Treasury and the Department of Industry, as for a nationalised industry, would be operating to monitor the new investment.
That is the broad framework of financial support and investment which we propose.
Knowing the right hon. Gentleman's very great propensity for discussing his arrangements with the workpeople concerned, may I ask whether he has mentioned to them that it is possible to give a golden handshake of £10,000 to every employee of Austin-Morris out of less than half the total of public money to be paid into the corporation?
The hon. Gentleman puts in a very vivid form a recipe for the expiry of Britain as a major manufacturing nation—that is, giving golden handshakes to persuade people to leave manufacturing industry and to emigrate elsewhere, where work is no doubt readily available. The hon. Gentleman highlights a point I made earlier. It is always possible to reduce by amputation manufacturing firms which are in difficulties to a smaller profitable part. The question for the House is how seriously we now take the spiral of contraction in the manufacturing industries, because this lies at the core of Britain's weakness and difficulty in so many areas. Perhaps the hon. Gentleman is right and is cleverer at his economics than I am. But even if it were practicable so to do, such a policy would not or should not recommend itself to the House of Commons.
I come to the particular point which the hon. Gentleman raised in opening his intervention—the point about the relationship of this policy to the people who work in British Leyland. The Ryder Committee, in making its report, attached absolutely correct priority to this question. The consultative arrangements which have been hammered out by the Ryder Committee in consultation with the management and the unions lie at the heart of the prospects of success of this enterprise.
The discussions which I have had over many months—of course not only in this context but particularly the recent meeting with the confederation and the principal shop stewards concerned—have certainly persuaded me—although I did not need persuading—that the trade unions recognise that a very substantial change needs to be made in British Leyland to make it successful and that their anxiety and prime concern is that they should have opportunities, through new machinery, to play a much fuller part in the successful development of their company under those new arrangements.
I have read many public comments about the need for copper-bottomed guarantees from trade union leaders and workers before a penny goes into the firm. I am sometimes puzzled by these comments because I should like to know exactly in what form, with whom and with what validity treaties of this kind can be arrived at between Secretaries of State and large bodies of workpeople who, in our free society, work voluntarily. There are many histories littered with examples of people who came back with pieces of paper that did not turn out to have any real basis.
I would only say to the House that what we are being asked to do here—for everyone has a part to play in the recovery of British Leyland—is to look again perhaps in part at the attitude that as a nation we take to motorcar workers, as we invite them to look again at the rôle they may play in British Leyland. No doubt many hon. Members—all those with motorcar constituencies—will have had the opportunity on many occasions, as I have had on few occasions, of seeing the great assembly plants. They are the most dehumanising forms of manufacturing known to man. It was not for nothing that Charlie Chaplin's "Modern Times" struck a responsive chord when it was first shown to the world, because he demonstrated with comedy and insight the tragedy of those locked in as people to the great production lines.
I must say, without making any reference which could be held controversial in the House, that I am amazed that this body of workers in our industry, who contribute £1·8 billion of exports a year, should be so reviled, so attacked and so identified for special disapproval generally in the society in which we live. Perhaps they are better paid, perhaps they are better organised, perhaps we as a nation are guilty in that we worship the golden car instead of the golden calf. Perhaps our holy spirit is found in five stars at the petrol pumps and that somehow as a nation we feel guilty about it.
Whatever the reason, it is perhaps astonishing—and only the dockers, I think come into the same category—that in the Press, on television and on radio, and notably, I suspect, in the BBC, I have yet to find programmes or articles which recognise the contribution made by the people in the motor car industry. I am not saying this provocatively, but if one-thousandth as much time were given by the BBC—I take that example to show that I am not appearing even to attack the opposition Press—to industrial diseases, or industrial accidents, or the need for re-equipment, as is devoted to industrial disputes in the motor industry alone, this country might not have needed to wait for a Ryder Report before it recognised one of the main reasons why we have fallen behind our competitors.
In the light of what the right hon. Gentleman has said about the motor car workers and the consideration they deserve from Government and public at large, does he not feel that the taxpayers are also worthy of some consideration? Does he not agree that, when he is dealing with very large sums of taxpayers' money in this way, to say that one cannot make an agreement is an unsatisfactory way of handling other people's money?
I do not dispute what the hon. Gentleman has said. But motor workers are taxpayers and taxpayers are motor drivers, and this tendency to divide us between the long suffering motorist and the poor group here or there is wrong. We are all people. We as a society depend on our motor workers, and yet, through our public Press and media, we find very little recognition of the dehumanising work they do, without which our society would not manage. I wanted to put that on record without offence, and I will give one example.
The example is that of the Cowley engine tuners. They had a dispute. That dispute was flashed over every bulletin and newspaper. It sold newspapers for weeks. But I had to search very hard to find a quarter-of-an-inch-long story on the back page of the Financial Times some weeks later to find it reported that the engine tuners had won their case at an independent arbitration.
Whenever there is trouble—and everyone who knows industrial trouble as I do will agree—there is public clamour for sackings and redundancies and copper-bottomed guarantees. Why should that always be the way the community discusses these problems, without recognising the contribution that is made by the workers concerned? I say seriously to the House that it is very curious that, with all the marvels of mass communication at our disposal—high speed presses, television and radio—we should have had to wait for the Ryder Report to tell us that at the heart of the problems of the industry were bad facilities for people to contribute well and a lack of investment.
If it is true—that sometimes out of an accident we discover what is happening—there may now be a wind of change, to recall Harold Macmillan's famous phrase, in British industry, we have to recognise it as being as relevant as it was when Mr. Macmillan used that phrase in South Africa many years ago. I say this because I do not think that it would be right for the House, representing the community, to complete its examination of the problems of this industry without recognising that, within it, are highly skilled people, including shop stewards, who are anxious in the case of British Leyland, and also in the case, I believe, of Ford and other companies, to make a contribution which we have not yet been able to institutionalise as we must now try to do.
Of course, in the examination of these matters and the further progression of the proposals I am putting before the House, there will be monitoring, both internal and external. The Department of Industry has its role. Reports will be made to the House from time to time and the situation will be subject to such special inquiry as the House may wish to conduct.
I want to set this problem against the background of the spiral of decline of British manufacturing industry which has been in progress, under all Governments, over the last 30 years and has accelerated in recent years—namely, that we have been losing workers capable of manufacturing cars, ships, motor cycles and many other products, and as a result we have lost export markets and seen greater import penetration. Quite apart from the slump which now affects the world, if this spiral is not reversed by investment and a new spirit and a new opportunity for industry, it will de-industrialise the United Kingdom.
What I fear, and what I think the House and the country must fear, is that when the upturn comes in world trade we shall have so demobilised our manufacturing industry that we shall not be able to take advantage of the upturn. There must be a substantial increase of investment. Meanwhile, there must be support for great manufacturing traditions so that the opportunity to regenerate them will occur. There must be a big rôle for the Government in this because, without Government and public funds, properly matched by investment, accountability and a sharing in the profits, it does not seem at present that under any Government we can get the investment we need. We must do it by democratic discussion with those concerned, with the people who work in industry—people who are not able, under present arrangements, to contribute what they are capable of contributing by their skill and ability.
I do not wish to over-dramatise the Bill or the motor industry, but I genuinely believe that the future of Britain as a manufacturing nation will begin when we can turn the tide of decline, but, above all, when we can begin to express more positively our confidence in the people who ultimately produce our wealth.
Unlike the Secretary of State, I actually represent some of the people who work in the Cowley plant of British Leyland. As I listened to the right hon. Gentleman describing the conditions on the assembly lines—and I have a certain sympathy for what he said there—I could not help picturing the scene with which certainly all of my constituents are familiar, as are many constituents of hon. Members opposite, who will recognise it very readily themselves. It is that there are jobs available all over my constituency, in the magnificent countryside of the Chilterns, in small businesses where a more personal sort of atmosphere exists. They offer all sorts of jobs which might give a more human approach and environment in working conditions, but which are not filled because my constituents opt to work at the higher levels of earnings that Cowley offers.
When the right hon. Gentleman depicts this heart-rending story in the graphic language he uses, the fact is that it has nothing to do with the determining motive of the men and women who have to decide the purpose for which they go to work. If the right hon. Gentleman would understand for one brief moment that the language he uses to describe Britain's deteriorating industrial position is totally divorced from the realities of the impact his speeches make upon the people who make the decisions which will effect the prosperity and livelihoods of those working people he claims so often to represent, he would know that never has there been a time at which investment prospects were so gloomy and when the prospects were declining so fast as in the period since he took responsibility for British industry.
As I listened to the right hon. Gentleman depict this curious contrast between the settlement of the Cowley tuners' strike and the headlines that attended upon the strike itself, I saw a parallel which all of us who have watched him at work would not fail to notice. The Secretary of State for Industry's particular message and his personal impact are headlined across every newspaper in the land every day and are on every television screen every night, because he has decided to create a degree of trouble for the Government which has not been equalled in modern times.
The Secretary of State for Industry is dominating the media because he has learnt to harness the forces of protest in this country. Other members of the Government, who go about their task, loyally serving their Prime Minister and their party, are excluded from equivalent coverage by the media. Everyone knows that that is what the Secretary of State for Industry has proved beyond doubt.
I understand that Labour Members do not wish to have the difficulties of the extreme Left of the Labour movement ventilated in public. However, if they were able to persuade the Prime Minister about the truth of the protest they make this afternoon, it would not be necessary for him, on an escalating scale, to do the job of the Secretary of State for Industry.
The Secretary of State for Industry has created his own vested interest in difficulties. He has learnt, as no politician in the top ranks of the Labour movement, the vested interest of causing dissension, which has its own premium in media time.
Last night during a television programme with workers from Sheffield, one of the fortuities, which the hon. Member for Plymouth, Sutton (Mr. Clark) made just now about £10,000, cropped up. One of the shop steward conveners in Sheffield stood up and said that they were asking for full employment and not hand-outs of money which would be gone in a few months.
It amazes me that the hon. Gentleman can refer to the newspapers attacking my right hon. Friend without mentioning the fact that those newspapers, to a man, are owned by the deadly enemies of working people and endlessly pour out lies and innuendoes about the Secretary of State when any—
Order. It is the custom in this House for whoever has the Floor to decide how long an interruption should last. However, I would draw the hon. Gentleman's attention to the fact that he may have a chance to speak later.
—about the pressures to which they are subjected.
The Secretary of State for Industry quoted a statement, which the Prime Minister made to the House—I have it here—about the possibility that if British Leyland was not rescued in the way envisaged, a million jobs would be endangered. I know of no conceivable way—and I am sure the House will have noticed this afternoon that the right hon. Gentleman was not able to indicate any way—in which more than a fraction of those jobs could have been endangered, no matter how harsh the sanctions are that have been brought to bear on that company.
The attractive word from the political point of view is to refer to the "bankruptcy" of the company. I have never heard anyone urge that that company should be declared bankrupt. I have heard many people suggest that it should go into receivership. That would mean that the profitable parts of the company would continue in a free-standing rôle and, therefore, the jobs involved would be protected and the suppliers to those sections of the company would be protected. There would then be an isolated question surrounding the Austin Morris problems, which would have to be dealt with one way or another.
Whichever way we look at the possible solutions to the British Leyland problem, 1 million jobs could in no conceivable situation disappear or be in any way endangered. To use the language used by the right hon. Gentleman is completely to misunderstand the nature of the problem with which British Leyland is confronted—unless we are trying to appeal, over the heads of people who understand the realities, to people who want to be given political platitudes in order to feed their own convictions.
The whole IRC strategy was designed to solve the problems of Austin-Morris, to cure those problems and to bring about a free-standing and credible story which would enable the jobs of those concerned to be made more secure. Today Austin-Morris is losing £1 million a day. The whole IRC strategy of the Secretary of State lies in tatters. That is what this legislation is all about. The right hon. Gentleman is coming round the track for the second time and the arguments are exactly those we heard when he passed the starting point the first time round.
The reality is that he failed to tell us that there is a very different series of arguments, depending upon which part of British Leyland a person works for. There was no serious analysis of whether, if British Leyland had not been formed, the additional opportunities for the workers at Jaguar, Rover and Triumph would have provided real and lasting jobs in the towns and cities where the companies are based, and whether Britain would not have earned higher levels of exports by backing the successful former Leyland and Jaguar operations, rather than holding them back, without solving the problems of the Austin-Morris complex. That is the argument.
To trivialise that with references to 1 million jobs is simply to debase the whole language of industrial political decision making to the level of the street corner. The Secretary of State for Industry, better than anyone in Britain, knows it.
I turn to, perhaps, the most staggering revelation in terms of the sums of money involved. The Secretary of State was not able to answer the questions by my right hon. Friend the Member for Lowestoft (Mr. Prior) and myself about the way in which the Ryder Report team had reached its strategy. I find it incredible that a sum of £2·8 billion can have been recommended to this House, with all the implications of that recommendation, and that the Secretary of State not only did not know what alternatives there were, but had never asked. In other words, he has not even done the basic homework that any responsible Minister in a Government Department would do for £50 million. Yet he has committed us to an expenditure of £2·8 billion.
I should like to trace through the answers to the questions that the Secretary of State was unable to give the House, because I have taken the trouble to read the background. When we heard about the financial assistance to be given to British Leyland on 18th December 1974, the Secretary of State quite clearly gave the House the impression that a thoroughgoing review of all the options and alternatives for British Leyland would be undertaken by the Ryder team. I supported him—from this Box—in just that purpose. When the Prime Minister was telling us on 24th April of the conclusions of the Ryder Report, which we had not then had time to study, exactly the same impression was given about the overall comprehensiveness of the investigation and of the options that had been carried out.
It was not until 1st May in a letter to shareholders that Lord Stokes explained the more specific task that was actually undertaken:
The capital investment programme in the report consists, with minor amendments, of figures produced by the corporation for a 10-year concept study requested by the team. The assumptions for the study including the availability of finance and the projected rates of inflation were laid down by the team.
That is a rather weaker position perhaps than that put forward by the Prime Minister and the Secretary of State.
It was not until 7th May that John Barber filled in the precise scope of the terms of reference given to the corporation and upon which the decisions and activities of the corporation in carrying out the work of the Ryder team were based. He told the Expenditure Committee of the House:
We were asked to develop a concept study over ten years on certain assumptions. The two main ones were a rate of inflation and a fairly free availability of cash.
He went on to describe the work and the company's attitude towards it:
It did not pretend to be a plan. As soon as we gave it to the team I set in motion the refinement of that concept study into a detailed plan. I also set in motion to look at an alternative. We came up with a certain amount of money required; and I also set in motion working at lower sums of money in order to reach a plan.
In other words, the Ryder team took a general conceptual plan, British Leyland worked on its refinement into a proper plan and, at lower levels of expenditure, into other plans. The Ryder Report is based only on the first conceptual plan of the British Leyland figures. The alternatives have never been studied by Ryder and have never been provided to the House.
The hon. Gentleman has spoken of the alternative plans put forward by the Leyland Company and of the later plan, the strategic concept, put forward by the Ryder team. Is it not the case that every time the company put forward some projection of the amount of money that it would require for its future operations and as soon as that was accepted, it promptly escalated its demands until it approached the figure with which Ryder has now come forward?
I think that that argument has validity. The British Leyland figures are the figures that Ryder has put forward on the basis of certain rates of inflation and a fairly free availability of cash. That does not sound to me exactly like pressing an examination of all the options available to the company to see which way it should go.
So, what was claimed to be an overall assessment of the company's prospects turned out to be a single calculation for the team on one set of circumstances—and the most expensive and ambitious set. That is the basis of the plan presented to Parliament. There is no evidence at all—indeed, very much the reverse—that any alternative strategies were properly costed or examined. Only the company did that and we have not seen the results. The Ryder team has not asked for them and Parliament therefore cannot examine exactly the implications of the Ryder Report. On his own admission, it has never occurred to the Secretary of State that he should have done so.
It is hardly surprising, against that background, that the Prime Minister should describe the results as one of the greatest single investments in manufacturing industry which any British Government have ever contemplated. On the basis of the preparation that I have outlined, the surprise would have been if it had been anything else. That is the background which obviously comes as a surprise to the Secretary of State for Industry. It is hardly surprising that, having started on so global and unquestioning a basis, once one pursues the detail down the tracks one is carried over the hurdles with hardly a faltering step.
First of all, it was necessary to find out the size of the world market likely to be available over the next decade or so in order to project the part that British Leyland might play. For that sort of information, one has to go to the other motor manufacturers. To be fair, the view of the Ryder team is broadly in line with the forecasts of all the major manufacturers, but not of course in line with the independent European Automobile Industry Data Bank's forecasts, which are more pessimistic. But in judging the validity of the motor manufacturers' forecasts, we should remember that they have succeeded in creating a world capacity of 20 million cars to meet a world demand of 12 million.
Having dealt with the background of the figures against which we are operating, it might be worth while to pursue the arguments about how British Leyland is supposed to respond to that hypothetical and vastly optimistic assessment of the future of the automobile industry. First of all, about 50 per cent. of British Leyland's output is for Britain. Ryder believes that, by 1985, that market will be little different in magnitude from the level of 1·6 million vehicles that it reached in 1973, and which was served by existing capacity. The United States is seen as part of the same pattern. It accounted for 15 per cent. of Leyland's overseas sales and that too, it was assumed, would be catered for by existing capacity.
The biggest upward trend in world markets is seen in Europe, which it is estimated will be about 26 per cent. higher in 1985 than in the peak year of 1973. The target here—apparently a modest one—is to increase the British Leyland share of the car market from 3 per cent. to 4 per cent. Perhaps it would have been more helpful if the Ryder team had spelled out what that meant instead of making it necessary for the Sherlock Holmeses of industrial politics to work it out for themselves with their slide rules. But perhaps I can fill in what it means.
It means that the 200,000 units sold in Europe last year by British Leyland—about 3 per cent. of the present European market—is expected to rise to 400,000, or 4 per cent. of a much larger market of 10 million, by 1985. So that nominal 1 per cent. increase is in fact a doubling of British Leyland's sales in Europe over the next decade.
This is despite the fact that the models are not in operation today to do it, the fact that British Leyland is being forced, for a number of reasons, to abandon part of its dealer network—for example, in Spain, as a result of the contraction of the manufacturing base—and the fact that it is well known that the best way to establish a dealer network is to have the right product and buoyant sales, which gives one the best available dealers. British Leyland, in the context of improving its position in Europe, will have to create a dealer network without the model range upon which alone success can be built, on a scale which completely ignores Leyland's past record in exporting to Europe.
The evidence for this can be found in the issue on motor business produced by the Economist Intelligence Unit for the first quarter of 1975. That shows the magnitude of British Leyland's task. First, the level of British Leyland's exports is now 12 per cent. lower than at the time of the merger in 1968. Then, exports accounted for 397,501 cars, or 48·6 per cent. of output. By 1973 only 347,998 cars or 39·7 per cent. of output was exported. Yet this is the background against which the Ryder strategy sees grounds for assuming a doubling of sales to Europe in what will be the most ruthless and competitive half-decade the motor industry has ever had to face.
A 1 per cent. increase may seem tiny. But in absolute terms of over 200,000 cars it seems wildly optimistic. Nowhere in Ryder does it indicate whether the calculations are based on our continued membership of the EEC or the reverse. The only certainty is that we know it cannot be based on both assumptions. What I should like the Secretary of State to say in committing this £2·8 billion on the strength of the one buoyant market that Ryder sees in Europe is what he thinks the effect will be if we are not in the EEC in a fortnight's time.
What calculations—could he wake up? I wonder whether we could get the Secretary of State to take some miniscule interest in what goes on in this House just for one brief moment. Could he think about the implications of what he is doing and find out whether he knows what the implications of Ryder are in or out of the Common Market? Perhaps he will tell the House whether the Ryder assumptions are based upon us being in or out of the Common Market—[Interruption.] The right hon. Gentleman knows. If not, everyone except the Secretary of State knows that the Ryder assumptions are based upon us remaining in Europe. The whole future of British Leyland depends upon us staying in Europe. Yet the Secretary of State, to plead the narrow, non-governmental view that suits his own case, is trying to tell the people of British Leyland that they will be interfered with by the Commission. He knows that the whole of the strategy he has put to the House is dependent upon this country remaining in the Common Market. I do not wonder that he sits fast asleep on the Government Front Bench.
Earlier the hon. Member referred to chopping off the unprofitable sections of British Leyland as being his idea of dealing with the problem. That must mean that he would chop off the Mini range. That being the case, there would be only one comparable car produced in this country to meet whatever demand there was for such a model, the Hillman Imp. If the Mini went out of production the customer who wanted that size of car could get it only from the Common Market or Japan.
Perhaps I can clarify that. I never in any way suggested that we should do what the hon. Gentleman suggests—chop off parts of the company and therefore close down the Austin-Morris production plants. What I said was that we would be right to isolate the problem of British Leyland which now, as it was in 1968, is Austin-Morris and then seek solutions to deal with that. I will come to what I think the solutions might be.
I come to my next question for the Secretary of State. The Ryder team worked its calculations on the basis of certain rates of inflation. Are those rates of inflation accepted by the Government and if not, where do they come from? If the Ryder team is working on different rates of inflation could we know what are the Government rates so that we can see whether Ryder is pessimistic or optimistic in his assessments? If we do accept the levels of inflation predicated in this report may I ask whether the Government have considered the implications for the whole of British investment based on an environment in which that is the level of inflation?
How is British industry to bridge the gap in those inflationary circumstances between what industry has and what it is in need of for investment purposes? May I also ask whether the Government have considered the implications for the whole pensions industry when numeorus pensions will be unfunded if we have rates of inflation approaching the levels that Ryder has assumed necessary for the purposes of his study?
I move to a number of other serious defects in the report. First, it totally fails to deal with the bewildering spread of factories throughout the United Kingdom from which British Leyland operates. It rightly refers to the need to rationalise the model range. But how can a serious report of this sort do anything more than skirt the immense social and human difficulties of carrying this out in practice? Everyone knows the problems that are to come. How is it that, in all responsibility, a Government or a team, because this was an independent team, cannot deal with the details of the implications for the men and women of British Leyland?
In 1968 British Leyland had 74 plants. It has now reduced that number to 55. I cannot understand why there is no reference in the report to any further necessary contraction of those plants and the implications of so doing. What we do know is that whereas Chrysler operates from 13 plants and Ford from 21, British Leyland still has 55. I do not believe that there is an independent observer of the motor industry of this country who believes that that situation can continue. If it is not to continue, and this is the fundamental issue of the debate, would it not be more frank to explain to the people of British Leyland the implications of that change, show them the way in which the Government can legitimately help and then to call upon them to respond because they have been trusted with the information, rather than leaving them either with the delusion that they can go on as before or with fear that the certainty which it is the impression of the Government to create is illusory?
Equally, I have great reservations about the vague assumptions on manning and productivity. Paragraph 14.11 quantifies £400 million as the contribution from the work force by 1982. The report in no way indicates the number of jobs likely to disappear as a consequence of that quantification. I have written to the Secretary of State setting out six different ways in which those figures can be built up. I do not know whether they are right. I make no claim for them other than that they are arithmetically correct. It is relevant to ask, first, why the Secretary of State has not replied to my letter, and second, why he has not told the House how many jobs are going from British Leyland so that the work force can understand what is expected from them in the clearly stated monitoring, step-by-step process to which the Prime Minister referred in making his first statement to the House.
Since the bulk of the eight years, particularly in the earlier period, will be in circumstances of severe world overcapacity, sluggish markets and ruthless competition, the one thing that cannot be argued is that those jobs will be protected as productivity increases by rising sales. The whole basis of Ryder is that it does not in the early years look for rising sales on any scale. Yet it does look for rising productivity. There is a question-mark of £400 million over the jobs in British Leyland. I think we should tell the people what it means.
A word now about what perhaps those of us who have sat for many long months on the Industry Bill Committee will have found surprising about the remarks of the Secretary of State. We found them surprising for two reasons. The first was that anyone who has studied the Ryder Report and has taken part in the Committee deliberations on the Industry Bill will have been confronted by the stark difference between the information which is to be extracted from British industry, handed over to the trade unions and conceivably released to the four corners of the globe, and the way in which identical information has been deleted from the Ryder Report and kept from this House and the public.
The Government cannot, have it both ways. I have great reservations about the disclosure powers in the Industry Bill. I am perhaps, being optimistic, and taking slight encouragement from what the Secretary of State said this afternoon to the effect that the Government were sensitive to the commercial considerations. Perhaps at last we are beginning to get the message through. While the Ryder Report says that certain details of sales cannot be published, the Industry Bill insists on details of sales over undisclosed periods in the future being published.
While Ryder omits the capital investment programmes in the divisions of the BLMC, the Industry Bill insists that capital investment programmes can be revealed in company after company across the land. The Government cannot have it both ways. It is either dangerous and damaging, as the Secretary of State argues, or it is not, as the Industry Bill argues. I know that the House will insist upon this incredible confusion being clarified at an early date.
The hon. Gentleman has created so many myths in the course of his speech that perhaps I may deal with this one before it escapes from his mouth into the high-speed printing presses. If the Industry Bill went through as drafted, the Minister would have the right to exclude information where confidentiality was necessary to preserve the interests of the company.
There would then be an appeal to an independent committee which would have the opportunity to examine, beyond that, whether it would be damaging to the interests of the company concerned. The editing of the Ryder Committee Report was undertaken by the Ryder Committee, and the Government in endorsing the publication of the report in its edited form were also endorsing the judgment of the Ryder Committee that the information excluded would be damaging to the company and to the country, because British Leyand is a very important company. Therefore, the very opposite of what the hon. Gentleman says is true. The editing of the Ryder Report shows that the Government, despite the provisions in the Industry Bill which yet fall to be considered, are extremely sensitive, and always would be, in the exercise of their judgment not to damage British industry. Thus, all the hon. Gentleman's arguments about disclosure fall to the ground.
It is perhaps indicative of the interest which the Secretary of State takes in the details that at the beginning of his intervention he succeeded in getting the interpretation of the Bill totally wrong. The fact of the matter is that the Secretary of State has no power to prevent the handing over of information to trade unions on the ground of its confidential interest to the company. He has powers to do so only on the ground of national interest.
At the point at which the information is to be handed over to the trade unions, there is an appeals procedure. The House will be familiar with the appeals procedure, in which the trade union is informed of what it is one is not prepared to tell it and then there is argument in front of a committee about whether the information should be given to the trade union. That is a procedure that is likely to cause so much harm and havoc, and so much uncertainty because of speculation about what one is not prepared to say that the amount of commercial security attendant upon that procedure is ludicrous and laughable, and the Secretary of State knows it.
The debate in Commitee on the disclosure clauses has been concluded—once again the Secretary of State for Industry has it wrong. The justification for the clauses put forward by the Under-Scretary of State was not on the ground of the protection of the commercial interests of British companies but on the ground that we have to ensure that the unions are brought fully into the picture and are given all this information because that is what we believe in. For the Government Front Bench to come forward with a distorted representation of what the Prime Minister understands has nothing to do with the original White Paper pledges is simply to fight a last battle in defence of an Industry Bill which is the rape of British industry.
I know that the hon. Gentleman is not often present in Committee and he may therefore have missed the point. If there is a further application to the independent Central Arbitration Committee, as I have explained on two occasions when the hon. Gentleman was absent, that is done in such a way as to ensure complete confidentiality of the information. It will not be revealed publicly, and there will be no revelation of the transactions of the committee which would reveal it publicly. There will be only the declaration of the decision of the committee, so there is no loss of confidentiality.
I realise that I am a relatively insignificant person sitting within three feet of the Under-Secretary of State every time he utters this canard. He is aware, as I am, that anyone in industry who has studied the provisions realises that the appeals procedure is a farce which will lead to a continuing leak of information. It is incredible that virtually every activity of the Department of Industry in dealing with companies is leaked to the national Press before it is announced to the House of Commons. If that happens when Ministers alone are supposed to be in charge of information, what hope is there for British industry when all this information is being dealt with by the appeals procedure to which the trade union is a party? In a whole range of damaging and sensitive areas this procedure will prejudice jobs and investment still further.
The last area of the report with which I wish to deal is the level of profitability that is assumed for British Leyland in future to ensure that the £1·4 billion that is to be self-generated will be achieved. The House will realise that this is a two-way deal in which the taxpayer is being asked for £1·4 billion in inflated money and the company is expected to generate the same amount. The Ryder Report is silent on the level of productivity that is expected, but if one pieces one's way through the details and extracts the relevant facts one can make the calculations for oneself.
Paragraph 14.9 anticipates sales in inflated money of £5,935 million in 1981–82. Paragraph 14.12 tells us that the profits before depreciation and amortisation, interest and tax as a percentage of sales are expected to increase to 11 per cent. by 1981–82. From those two paragraphs it is possible to say that there will be a gross profit of £650 million in 1981–82.
If we take £200 million for depreciation and £184 million for interest, we are left with a net pre-tax profit of £266 million in inflated money. Today's equivalent is £120 million or thereabouts. For the House to begin to understand the significance of that estimate of £120 million by 1981–82 I must first explain that the average of British Leyland's profits since 1968 is £28·5 million.
The House is being asked to believe that in the face of a quite different trading climate, when the main markets open to British Leyland will not have returned to the 1973 level, the company will make four times as much profit in 1982 as it has made on average since its creation. That, I believe, is a very optimistic assumption. Any failure to meet it will be compensated for by adding to the already committed £1·4 billion of taxpayers' money by further increasing the load on the taxpayer.
There are several other areas that must be dealt with beyond detailed criticism of the Ryder Report. I find it incredible that, having committed themselves to the Ryder strategy, the Government should set the internal CPRS to work on a long-term review of the world motor industry. We should at least wait until we have the conclusions from the study of long-term world markets before accepting so expensive a strategy which must be influenced by those conclusions.
There is no attempt made to calculate the effect of allocating so large a part of the available resources for investment in this country to this one company in this one form. For the Government to commit £1·4 billion of taxpayers' money to investment in British Leyland is, in effect, to say that no other manufacturing company in Britain will invest a penny piece for six months. That is the order of magnitude of the commitment, with no calculation of the resource opportunities that are being missed by the Government.
Our duty as parliamentarians is to expose the fact that if we maintain this loss-making company by adding to the burdens already placed upon the taxpayers, we are expanding the burden of tax-financed opportunities and activities and reducing the base of tax-generating activities upon which everything else depends.
I have a Leyland factory in my constituency. Why is the hon. Member for Henley (Mr. Heseltine) such a Dismal Jimmy? My workers are interested in truck and bus production. They are exceedingly optimistic about being able to get down to the task. Why does the hon. Gentleman think that he is doing Britain a great service by adopting this kind of attitude?
I am most grateful for the intervention of the hon. Member for Ealing, Southall (Mr. Bidwell). I hope that he will explain to his constituents the sacrifice that they have made over the past seven years to finance long-run car production at Cowley and Longbridge, which has held back his constituents by depriving them of export opportunities and higher wages. That is the choice in which they were never asked to take a part. That is the choice that the hon. Gentleman is voting for tonight.
The commitment to maintain British Leyland in its present form virtually without question is having an effect on the morale of management and men throughout our manufacturing industry. If this record of mismanagement and this abysmal record of industrial relations is to be supported in this way, what possible incentive is there for anyone to try to maintain a company in a viable form anywhere else in Britain ever again?
If that is not the lesson of the moment, what was the Prime Minister trying to say when he told the strikers of Chrysler that there was not another penny? Was he trying to say that the lessons which had been applied to British Leyland, and which must have had an effect on the attitudes of the Chrysler people, are to be withheld if Chrysler is brought to the same situation as British Leyland?
Why is it that the Prime Minister needs to come in so often to make the sort of statement that I would have thought a Secretary of State for Industry would regard as his responsibility? Was it to the strikers of Chrysler that the Prime Minister was talking when he referred to the politico-industrial ambitions which are bringing that company to its knees, or was it in reality one of his own Ministers that he had in mind? Was that phrase the signal of the end of the road for the Meridens, the Kirkbys, the Bear Brands, the Ferrantis and the steel review intervention? Is that what the Prime Minister was trying to say? [HON. MEMBERS: "No."] We shall see whether it was or was not.
I shall answer the hon. Gentleman's intervention in substance by arguing exactly what I believe the Government should have done and what I believe they should do even at this late hour. First, I reject the concept that we can put a team of outside experts on the task of examining a company, produce a report and then expect management and men to adhere to the standards and objectives of the report. That is the wrong way of going about the matter. The management should have been invited to produce its report and to show the options available to bring British Leyland back to profitability and independence, either in whole or in part and either on its own or in partnership with other private sector companies. That is what should have happened.
The failure to do that, and the approach adopted by the Government of producing the Ryder Report and leaving that as the target for management, has produced for management an alibi for everything that goes wrong in future. It was essential to obtain the support of management and men. That is not what has happened, because the responsibility has now been taken firmly by the Government.
No, I must get on. I believe that the resulting conclusions of a management investigation would have been unpalatable. We shirk our duty unless we make the position totally clear. It would be right to be honest with the people—namely, the unions, the work-people and the management. It would be right to do so in the same way that the taxpayers are to be faced with honesty by contributing to the maintenance of this company. It is clear that no one else is being asked to face his responsibilities.
The standards of monitoring and the checks which the Prime Minister has outlined in his statement should not apply after the first £260 million has been injected; they should be applied before that injection. They should be conditioned upon a proper scheme being produced which can be set up in whatever form is appropriate before the commitment is made. That would give us a real opportunity for a new start for everyone employed in the company, and for a new and urgent attempt to be made to get the company back to a relevant form to cope with the problems that it will undoubtedly face in future.
If that approach were adopted, I believe that British Leyland would emerge in a form much more attuned to the competition that it will be forced to meet. All the resources of the State would be necessary to deal with the human and social problems which such an investigation would throw up, and which I am the first to admit have been created for reasons that I have no interest in trying to apportion.
For many years things have not gone as we would have liked. Anyone who wishes to magnify the problem and to try to spread alarm and despondency had better understand that British Leyland has lowered its work force by 17,000 since the beginning of last year and by 6,000 since the Secretary of State first started talking to Lord Stokes.
Matters of redeployment can be dealt with in a humane and reasonable method provided that the Government have the will to deal with the problems. It is true to say that British Leyland lies at the centre of our manufacturing capacity. To create illusions that jobs can be maintained in loss-making circumstances if the price, quality and reliability of the product do not match those of our competitiors will mean that we shall have to accept an ever-increasing burden in future.
If we intend seriously to survive in the modern world we shall in the end be forced to meet the standards of our competitors. I have no doubt that people would rather be told the truth today than to learn it sadly disillusioned by the emerging doubts and difficulties. That truth requires leadership which is not given by the Bill. Its strategy certainly does not provide leadership. For that reason I recommend my right hon. Friends to vote against it.
When one passes from Government into Opposition it seems that there are certain changes in one's personality. The speech that we have just heard from the hon. Member for Henley (Mr. Heseltine) cannot be equated in any way with what I used to hear him say throughout the four years of Tory Government between 1970 and 1974.
Although we can charge the hon. Gentleman with inconsistency, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) stands beside him as a model of complete responsibility in terms of consistency. I have no doubt that we shall be hearing from the hon. Gentleman in much the same vein as we heard from him from time to time between 1970 and 1974 during the office of the Conservative Government of which his hon. Friend the Member for Henley was a member. No doubt he will be telling us that there are simpler, easier and more direct ways of dealing with the British Leyland problem.
Let me take the hon. Member for Cirencester and Tewkesbury back to the course to which his hon. Friend referred a short while ago—namely, the circuit involving the IRC. He said that my right hon. Friend had been round it before and that he had watched him. It was not a flat course. There were a few hurdles and obstacles in the way.
The Tory Government through the hon. Member for Cirencester and Tewkesbury announced their decision to the House to abolish the IRC. I had an Adjournment debate on the subject in 1970 and appealed to the then Government to think again and to save the IRC. I thought, as did most of industry, that it had done a valuable job. Indeed, even the CBI sought to retain the IRC.
However, there was another philosophy in existence at the time, of which the hon. Member for Cirencester and Tewkesbury was one of the arch disciples. It was known as the lame duck philosophy and related to the whole area of competition. It was certainly the case that the IRC fell foul of that philosophy at the time. It was not a philosophy which received any enthusiasm from the hon. Member for Henley. At a later stage, the then Tory Government changed their mind and began to interfere in industry and saved various sectors of it, and the hon. Gentleman was one of the principal supporters of that change of policy.
The IRC was abandoned—and I emphasise that it was a fine instrument of industrial intervention which had operated for some years and had carried out good work. We entered a period of industrial decline—indeed we are now in the middle of it—which resulted in the difficulties with Upper Clyde and Rolls-Royce. The then Government's policy was supported by almost everybody on the Conservative benches. Furthermore, BSA and Ferranti tumbled and now we face the problem of British Leyland.
All those concerns had at their centre one simple reason for falling into difficulty—namely, the failure of all those industries over the years to invest. The Labour Party identified the problem and, through the IRC and other instruments, sought to intervene to put matters right. However, that action never once received the support of the Tory Party, the Press, the media or the CBI.
It is a tragedy that we should now spend so much time talking about that failure to invest when in the past so little attention was paid to warnings on this score. We all know of the enormous investment effort that went into property deals, service industries and similiar activities, most of which are entirely nonproductive. British Leyland and the rest of British industry have had to suffer. Lord Stokes on many occasions referred to the fact that one block of property in London, Centre Point, is worth four times the value of the whole British Leyland empire. That is a sad reflection on the way in which the financial establishment of the United Kingdom looks at the heart of the economy—namely, the industrial sector.
The hon. Gentleman is putting forward a crucial point, but what does he think potential investors of British Leyland should have done when British Leyland achieved a profit of £28 million, at that time its highest profit? The union leaders at that time made a direct public threat that never again would the profit of British Leyland be allowed to exceed that figure. What incentive was there to invest in British Leyland?
I cannot challenge the hon. Gentleman's remarks directly since I am unaware of the circumstances to which he refers, but in my experience no trade union leader of any standing would have made a remark of that nature. I am on very good terms with shop stewards in my constituency and am in almost weekly contact with them. They have the strongest interest in seeing British Leyland put in a profitable situation. I have never once heard them say that they want to remove profits altogether. I believe that the story related by the hon. Gentleman is a complete fabrication.
Does my hon. Friend not agree that the Ryder Report said that year after year British Leyland's profits had been pushed out in dividends? Is it not obvious that that money should have been ploughed back in the company? The trade unions rightly said that they would not stand for that practice because their jobs were at stake.
My hon. Friend only adds weight to the complexity of the subject. This is an extremely complex issue and it is a complex industry. The manufacture of cars is not an easy business. I find it strange at times how politicians on the Conservative benches, who did not do such a brilliant job in Government in running the country, tend to take a certain view of those who are engaged in industry.
It will be a business that is independently run. I believe that with the co-operation of everybody in the company success could be achieved. They will have the resources to do the job—resouces which they have not had in the past. Let me quote from page 29 of the Ryder Report:
In the automotive industry, most machinery is replaced after 8–12 years. In British Leyland more than half the machines and equipment are over 15 years old.
That is the state of British Leyland, a company which is Great Britain's principal export earner. That is a desperate state of affairs and we must do something about the situation. There may be controversy over how we should set about the problem, but the Ryder Report and the Government's intention to implement it offer a method by which we can get to grips with it.
The important consideration of investment is not the only weak factor in the situation. I know the company well and the people in it, and I also have a good deal of knowledge of its industrial relations. Certainly management leaves a lot to be desired. The Ryder Report was critical of industrial relations in every sector of the car industry, not only in the United Kingdom but throughout the world. Its industrial relations are not a mess but, compared with other industries, those relations are extremely bad. I repre-an area of the industry where the industrial relations are good. But in other areas of British Leyland, such as Cowley, the industrial relations are bad. Clearly we must do something about the situation. The overriding factor in the British Leyland story is the inability of the company to command sufficient resources to build modern plant and to create good conditions of employment to allow the employees to go about their job of producing motor cars—which is not a pleasant job—in the best of all possible ways.
In regard to past management of British Leyland, I have always had the greatest co-operation from its members when I have tried to represent industrial fears. Although John Barber has left the company, I must point out that my personal relations with him have always been of the best and I have found him an extremely kind and courteous man. He has always given me the information that I wanted. Although he fell foul of the report, I sincerely hope that he manages to find employment in other directions. Certainly Mr. Barber should not carry the entire blame for what went wrong with British Leyland.
The Ryder report offers a complete break with the past. The amounts to be invested will be greater than those invested in the past. A reorganisation will undoubtedly have to take place on a massive scale. Undoubtedly there must be an improvement in industrial relations. Everybody knows that. Nobody is more aware of it than the trade unions, who will do all they can, within the new structure offered to working people in British Leyland by Ryder, to ensure that industrial relations are better than they were in the past.
Why does the hon. Gentleman think that with 10 years' guaranteed taxpayers' money the trade unions are more likely to improve industrial relations in British Leyland over those that existed in the past 10 years, during which there was a threat of trouble resulting from bad industrial performance?
I do not hold the view that threats hanging over the heads of working people are necessarily conducive to good industrial relations. On the contrary, if working people are given a decent environment in which to work and the opportunity of security there is a much better chance of obtaining good industrial relations. Hon. Members may say that that is a plain statement of faith. I live by that more than anything else in politics. We must put our faith in people. The trouble with British industry over the past 50 years has been the fact that management was not prepared to put faith in the working people. The Government say that they intend to change that attitude so that we put more faith in working people now than we were prepared to do in the past.
British Leyland and its work force recognise that special treatment is being accorded to them. British Leyland will ensure that throughout all the activities of the plant full note is taken of the fact that no other industry in the United Kingdom is receiving such treatment from the Government—or has received such treatment from any past Government—as British Leyland will now receive.
Some members of the Opposition doubt the wisdom of that action. I do not doubt it, nor does the right hon. Member for Worcester (Mi. Walker). He knows that if we allowed British Leyland to go to the wall—that was the only alternative offered to the Ryder plan—our balance of payments account would look a complete mess compared to today's, because we should have drawn in imports and lost the income derived from our exports.
Success or failure rests entirely on those who work within British Leyland. This is probably the last chance. The Government have offered British Leyland management and trade unions the opportunity to put the company on a sound basis. They have offered it security, and the possibility of becoming not only Britain's biggest manufacturer of motor cars but possibly the biggest future European manufacturer.
I have faith in the plan, in the management and in the workforce. I hope that there are sufficient members of the Opposition who recognise how vitally necessary it is for the Government to propose this plan. If the Government had not put it forward there would have been massive redundancies in almost every industiral city in the United Kingdom. I hope that the Bill will be given an overwhelming vote of confidence so that British Leyland will be able to embark on a new future, producing cars which can compete with any produced throughout the world.
The Liberal amendment gives the main Liberal reasons for voting to tonight against the Bill, and the Money Resolution and also the resolution made necessary by the Conservatives' Industry Act 1972. I am glad that there has been appreciation that this gateway will be opened to other hon. Gentlemen, for voting. Those reasons are summarised on the Order Paper. Whatever judgment hon. Members may pass on the Liberal reasons, they will agree that at least they are concise, especially in comparison with the 53 minutes or so which the hon. Member for Henley (Mr. Heseltine) took to expound his point of view.
With its customary understanding the House has realised the difficulties experienced by the spokesmen of the other Opposition parties in the past 12 months in presenting a case of their own in a distinctive way. However, I shall not show lack of consideration by taking a period of time equivalent to that taken by Front Bench speakers.
I do not intend to inflict on the House my own version of the British Leyland analysis, which was developed lengthily by the hon. Member for Henley. The House will understand that out of consideration for other hon. Members I shall not express as deeply as I might wish my feelings about the importance of employment to everybody working in the industry. It will be accepted that no one representing the legendary Socialist Stronghold of Colne Valley could possibly afford to neglect the vital importance of reasonably secure and prosperous employment.
There are two surrounding factors to the debate which will render the outcome inevitably unsatisfactory. First, we are landed in a shotgun situation where an extremely important exporting industry, on which a vast number of jobs directly depend, must be dealt with at very short notice. This is not only unsatisfactory. It could have been avoided. It is an unnecessary situation.
The Ryder Committee was obliged to hurry its work. That work shows many signs of haste, which the members of the committee privately deplored. The committee had to accept a great deal that was shuffled out to it by the existing British Leyland management. That fact was made clear in the recent British Leyland report to its shareholders. The House must deal with a fantastic sum of money at very short notice, when compared with the size of the problem.
This situation has been unsatisfactory ever since the original merger occurred. The accounting record, in terms of the profit and loss account and the balance sheet, has at all times been of an alarm bell nature. Eventually, if the credit of Parliament is to be sustained, we must discover why during all those years such a vastly important British industry was allowed to continue in its desperately dangerous state by successive Secretaries of State, who had overall responsibility.
We wonder what on earth people in positions of responsibility have been doing when year by year it was made manifest that this vast enterprise was doing nothing like enough to provide for the replacement of its plant and machinery. It was in a classically illiterate situation as regards its accounting.
Never, even taking into account the dividends which might have been retained, as the hon. Member for Birmingham, Northfield (Mr. Carter) has said, even if we add back the dividends and assume that the shareholders went without any return, which meant that the company sacrificed every chance of raising money on the market, even so, the net profit of the company, including the exceptional year 1973, was dismal. That figure never reached £30 million in any one year. When we compare a pathetic figure like that with the £2,800 million, required by Ryder, admittedly allowing for inflation, we see how pathetic was the financial record of this company.
As regards the balance sheet position, year by year the company published, apparently to an unheeding Whitehall, net liquid assets of dangerously small amounts and latterly its total operating capital was manifestly not viable in a period of rapid inflation. The last Conservative Government, including the hon. Member for Henley, must bear a heavy load of guilt for that.
The other unsatisfactory circumstance which accounts for the fact that no one on either side of the House can put forward a satisfactory solution today is the lack of a comprehensive budget and, according to the Secretary of State for Industry, the lack of the means for compiling a comprehensive budget, of the likely capital requirements of British manufacturing industry which it cannot hope to generate itself, but which are urgently needed for capital reinvestment.
The rest of the developed world must think us crazy to consider voting the beginnings of such a huge capital sum today without any means whatever of putting this figure into the context of the total needs of all our vital manufacturing industry. There is no hint of what the other priorities might be or of the scale that they will add up to.
I must protest at the attitude of the Secretary of State for Industry in his reference to the Liberal Party's amendment. The right hon. Gentleman said that the Government were not in a position to sit back with time and leisure to compile a budget of the possible calls on the Government for capital investment assistance of this kind. That was the language of manufacturers 30 years ago when I was trying to persuade them to introduce budgetary control. It is a generation out of date. They used to say: "You cannot ask us in our uncertain industry, when we cannot predict from month to month what export orders may come, to compile a year's budget." It took a little time for budgetary control to be adopted in this country after being the accepted thing in the United States for a generation.
The Secretary of State said that we could not expect Her Majesty's Government, with all their resources, regional offices, endless contacts with industry and the questionnaires which they send out, to come to this House with even a rough approximation of the total needs of British industry against which, in an orderly and, I hope, constructive way, we could set the undoubted needs of British Leyland. I cannot accept that antiquated approach by the Secretary of State. I hope that on reflection he will realise that he will drift into deeper and deeper difficulty with both sides of the House if he does not quickly assemble a budget. Indeed, one wonders what Neddy and the other agencies have been doing all these years.
It is not only a Liberal, even an Opposition, feeling that we are debating in an unreal atmosphere because we have no scale of priorities. Yesterday, in The Guardian, the Labour chairman of the Association of Metropolitan Authorities Housing Committees, a formidable figure in local government, Councillor Kevin Gould, said:
there has to be a closer look at priorities.… Closer attention must be paid to other organisations benefiting from Government subsidies and grants. Political adventures in Bristol South-East, Stepney and Huyton must be curtailed. Above all, what is needed
—continues this Labour chieftain—
is for central and local government to plan its financial resources over a five-year programme so that we in local government are not constantly subject to their whims".
In the different context of British Leyland that is absolutely true of our debate today. Without a scale of priorities we are being asked to shoot an arrow at a venture which we on the Liberal Bench are certainly not prepared to do.
As everybody knows—I will not labour the point—we can now see with hindsight that the original merger in the form that it took was a mistake. I am not putting Forward a partisan view that the Leyland part was all right and the Austin-Morris, BMC, part was an unsatisfactory partner. Far from it. The inheritance of Triumph which Leyland brought into the merger was a handicap to the new corporation from the start. Fortunately, there is one ray of hope. There remain today in a more or less indentifiable form some very important and wholly viable parts of this great corporation. The only trouble is that they have been starved of investment.
We readily concede that it is proper that massive help should be given by the Government to the bus and truck division, to the specialist car division and to sectors such as Coventry Climax and Aveling Barford. But there is no evidence, either in the Ryder Report or elsewhere, that, without further investigation, not merely ordinary assistance but massive reinvestment should necessarily and immediately be put into the volume car side of the enterprise.
The Secretary of State in an eloquent passage this afternoon talked about the dehumanising nature of the mass assembly of volume cars. The Ryder Report, unfortunately—no doubt due to the lack of time—deals only with unsupported assertions. For instance, without any argument and without citing any material facts, Ryder states that
vehicle production is the kind of industry which ought to remain an essential part of the United Kingdom's economic base … British Leyland should remain a major vehicle producer …
That dogmatic assertion may be right or wrong, but it is not argued by Ryder.
Again, as another example of Ryder's dogmatism, the report states that the committee has noted that it has been queried whether the Austin-Morris division could posibly cope with the far greater volume production of the major European and Japanese mass producers—Volkswagen, Toyota, Fiat, Renault, and so on.
The only answer given by Ryder is the five dogmatic words,
We do not accept this.
The House is surely entitled to more reasoning than that before devoting rather more than half of this vast projected expenditure to the at least, arguable project of massively re-equipping for many years ahead the mass production of volume produced cars. This is a time at which there is still a chance to pause and take saner counsels. The Ryder Report makes very clear that these different sectors of British Leyland are still identifiable and largely separate. For instance,
it speaks strongly of the loyalty of the workers in the Jaguar division to their particular occupation.
I am interested to hear the hon. Gentleman say that there is still time for this matter to be discussed and for other views to be put forward. There is time if a tranche of money is made available. There is not time if no tranche of money is made available. I understand that the Liberal Party will be voting against the £50 million. Therefore, I cannot see how the hon. Gentleman could find time to get his survey or review carried out.
Out of consideration for other hon. Members, I do not wish to be led astray. It must be understandable to the whole House that we are being asked to press the trigger now on the whole of this vast expenditure. It would be sheer humbug for hon. Members to pretend that tonight's sum of money are only housemaids' babies and there will come another time at which to dig our heels in and say "No further". I was about to come to that point and will come to it immediately.
I have canvassed in the accountancy profession people who are far more up to date than I now am on Ryder's suggestion that this vast sum can be administered in doses, described as tranches, and that at each stage there can be an opportunity to say "No more". The universal reply I have had from my professional colleagues who are engaged in these sort of matters is that this is an unreal suggestion. Most of them said that it would be unreal even in a purely commercial case. Once there is a commitment to a vast modern complex of capital expenditure for a sophisticated industry it is necessary to go on with it and, come muck or nettles, to carry it through.
However, when politics are also involved, who can be so simple—surely not the right hon. Member for Lowestoft (Mr. Prior)—as to suppose that the Government can suddenly, perhaps on the eve of an election, be as sober as a judge and say "It has not worked out. British Leyland has not made the profits we expected. There have been a few strikes and we shall therefore leave the new complex half built and half the new machines missing"? This approach is just not on in the motor industry, and I am sorry that the Ryder Report has fallen below normal professional standards in introducing this unworked-out, half-baked concept of administering a vast amount in separate doses.
The decision is to be taken tonight and we all understand that the vote, if it goes in favour, will be the trigger for the whole operation. It would be possible, if the House rejected the Bill tonight and the Government had to think again, to grant immediately all the capital investment needed, on a crude calculation, to maintain about half the existing British Leyland operation. The other half could then be kept going on a quarter-by-quarter basis. There could be a profound investigation as to whether the mass production of volume cars is an operation in which Britain wants to engage in the long term. Clearly that activity could not be brought to an end in a short space of time.
I was in the process of doing so. I was saying that having given a boost to British Leyland morale by granting all necessary capital investment assistance to half the company, which is indisputably viable although badly in need of re-equipment, it would be necessary to sustain the Austin-Morris operation on a quarter-by-quarter basis. I am not prepared to say how long it would take to go into these matters thoroughly. The House cannot be bludgeoned into a shotgun approach to this operation. Vast ranges of British industry with a record, to put it very cautiously, no worse than that of British Leyland—and most industries would claim that their record was a good deal better—feel that they have an equal claim on the resources of the State for capital reinvestment. I have met deep hostility in my industrial constituency in West Yorkshire that industries which are considered to be far less well managed with a far lower standard of application than those in my area are getting away with support to the tune of £2,800 million, half of which has to come from Government sources, yet an entire industry such as wool textiles, which has an export record as good as British Leyland, is left with only £15 million to re-equip.
This cannot be sustained by the Government, and they will find when they have to go out into the country that this is a matter of very great embarrassment. This factor may have played a part in some of the local election reverses they have suffered. The industry we are discussing is still of doubtful long-term viability, and that such an industry should be able, to use the Prime Minister's words, to pre-empt this disproportionate share of taxpayers' resources and our diminishing borrowing power is an affront to the judgment of the House of Commons.
I deplore the Liberal intention to vote against the Bill tonight. That vote will be a vote in favour of allowing British Leyland to bleed slowly to death. That is why I fervently hope that the Opposition will not have their way, that the Bill will be carried and that we shall be able to sustain British Leyland in the general terms recommended by the Ryder Report.
However, I do not wish to give the Ryder Report a clean sheet or to say that those of us who have been concerned with British Leyland over many years have done our duty adequately in bringing home to the country the fact that the company has been in slow decline over many years. I do not tonight wish to seek scapegoats. I do not want to name those managers who must bear a certain share of the burden of blame. Some of them undoubtedly imagined that by coming home from foreign parts and waving pieces of paper at London Airport saying that they had brought back orders for 100 buses, meant that all would be well in the best of all possible worlds for British Leyland. That has not been so.
The case against the management of British Leyland is that it failed to develop a fundamental strategy for restructuring the company and for enabling it to modernise and re-equip itself and to compete with those abroad who tonight, listening to reports of our debate, will be waiting with relish on the outcome hoping that somehow or other British Leyland will continue in the parlous condition it has suffered for the last several years.
Although the Ryder Report took three months to produce, it has much of the nature of improvisation. After reading it carefully one can see various facts with which we are familiar. There is the old criticism of the illogical distribution of the company's 55 plants. There is the criticism, long developed, of the inadequacy of its plant and equipment, of its lack of modernisation and so on. All that is there and so are the ideas about participation. All of them are valid criticisms which Lord Stokes in his report to the last shareholders' meeting said he had brought to the attention of the public many times in the past. That may well have been the case, but nothing was done about them. The company continued to limp on until it reached the stage at which a massive rescue operation must be mounted.
I was one of the first to welcome the recommendations in the report to help the company. I welcomed them not only because of the vast employment consideration but because of the dominant position which the company occupies in the export and domestic trade. It is a fact, and I did not understand why the hon. Member for Henley (Mr. Heseltine) challenged it, that although British Leyland employs about 167,000 menthe number continues to fluctuate, but it is about that figure—if one includes all the component manufacturers and all the dependent companies related to British Leyland, the total number of people who rely for their livelihoods upon the British Leyland complex is probably nearer 1 million. Therefore no Government, of any complexion, could have allowed a company of this size and importance to the nation to collapse. That is my basic reason for welcoming and continuing to support the general purposes of the Ryder Report.
Having said that, I must add something not yet said in this debate and which will not be welcomed by the Opposition. I believe that the idea of having some sort of hybrid company—a company which is part private enterprise and part Government-participatory—will not work. I believe that in the long run it will not work because the two philosophies inherent in such a company are contradictory. What we should have done, and what we may yet have to do, is to nationalise British Leyland. Just as in the past the Chrysler company came to Britain and took over part of the shares and eventually acquired all the shares of Rootes, so I believe that eventually, because our specific purposes are different from those of private enterprise, British Leyland will have to be taken into public ownership.
It is clearly necessary for the company to be restructured, modernised and re-equipped. It may be necessary for certain plant to be rationalised. For that purpose there will have to be full consultation with the workers, and agreements about the social consequences of that restructuring and of that modernisation and re-equipment, which will result in changes in the pattern of employment.
Where there is a private shareholding which is basically concerned with the profitability of the company and the payment of dividends to those who are shareholders in the company, there are different considerations operating from circumstances where the public interest in the company is concerned, perhaps above all, with the economic and social consequences of that ownership, quite apart from any commercial considerations. That is why I believe it is essential that there should eventually be a form of public ownership which will have full public accountability.
In all these matters, wherever there is any kind of Government participation, ultimately the question is what sort of accountability there is to be to those who put up the money, namely, the public. The Prime Minister has used the new term "monitoring". Concorde has been monitored, yet it has been an open-ended commitment resulting in a disastrous outpouring of public funds for which there has not been adequate public accountability. The RB211 contract was another of those unfortunate undertakings entered into without adequate consideration of the form or means of public accountability. All those great public investments, without accountability to the public, should be awful examples of what must be avoided in relation to the recommendations of the Ryder Report.
In looking to the way in which the company may be restructured, we ought to consider that the traditional capitalist way to deal with these things is to perform surgery with an axe. The speech of the hon. Member for Henley was full of contradictions. One thing which emerged very clearly, however, was that if he had the management or implementation of any form of rationalisation of British Leyland he would simply close down the so-called unprofitable areas of that company, irrespective of the consequences to employment. In other words, the creation of unemployment would be inherent in the strategy which would be adopted by a capitalist management.
Does my hon. Friend agree that the hon. Member for Henley (Mr. Heseltine), who spoke along those lines did not have the political courage to say precisely that—that he hinted at it but that that was his intent?
I am obliged to my hon. Friend and I entirely agree. The hon. Member, when challenged, did not have the guts to stand up and say that in order to make British Leyland profitable, if he had the management of it, he would close down parts of it and create unemployment in order to achieve that profitability.
It should be put on record that what has just been said is a total distortion of the remarks of my hon. Friend, who made clear that our objection is against lumping the whole lot together and that there are successful and vital parts of the enterprise which have suffered by too close an association with the other parts and will continue to suffer under the plan proposed by the Ryder Report. The problem areas should be isolated and dealt with not by closing down but in a special way.
Those are bland words, but we should look at the reality behind what was said. Euphemisms have been used for what is simply the creation of unemployment by hiving off the unprofitable areas and possibly closing them down, turning them into derelict areas and removing them from the general profitable scope of the central parts of the firm.
I now move to another aspect related to my firm belief that this company should be nationalised. It affects the constituencies of all hon. Members in the Midlands and elsewhere in which British Leyland plants are located and where there is much concern about the possibility of nationalising a company such as British Leyland. There have been dire suggestions that somehow or other the nationalisation of British Leyland would be contradictory to the Treaty of Rome, and that somewhow or other the European Economic Community might intervene to prevent such a nationalisation.
I regret very much that my right hon. Friend the Secretary of State for Industry is not here tonight to hear this point, which I should have liked to put to him and which, no doubt, his hon. Friend the Under-Secretary will convey to him. There is absolutely nothing in the terms of the Treaty of Rome to prevent the nationalisation of any British company. I underline this because in a large number of constituencies the canard has been put about—a canard which has not been discussed—by those who are opposed to our remaining in the EEC that somehow or other the EEC would inhibit or prevent the nationalisation of or Government participation in a firm such as British Leyland. I asked my right hon. Friend this very question the other day and did not get a satisfactory answer.
I have considered this point and should like to confirm tonight that Article 222 of the Treaty of Rome clearly declares that the rights of Governments within the EEC to hold property in industry are fully safeguarded, and that there is absolutely no reason at all why a firm such as British Leyland should not be either partly or wholly controlled and owned by the Government.
I do not think that any hon. Member has argued that the Treaty of Rome inhibits nationalisation. Under Article 92, any aid by a member State which distorts Community competition is void, and the Commission can so declare. Our worry is that aid to British Leyland will be declared void.
I am aware of the article concerned with the distortion of competition. Nothing that I am saying is relevant to that point. I am talking of the right of the British Government to take a participatory part in or total holding of a firm such as British Leyland, or of British Leyland itself. It is essential to establish this point, as one of the assumptions of the Ryder Report—although not explicitly said—is that in order to fulfil its projections we shall need to remain in the EEC. The whole emphasis of the Ryder Report is on the Western European market, the fastest-growing market in the whole world.
Therefore, in dealing with the Ryder Report it is important to recognise its underlying assumption that the markets of Western Europe will be available to British Leyland. It is no accident that the leaders of the motor industry have consistently gone on record to declare that entry into that market is essential for the prospects of the British motor industry.
I invite some of my hon. Friends, I hope with total good will, to consider what the alternative would be to membership of the Common Market. If we opted out of the Common Market and the remaining countries within the Community raised an 11 per cent. tariff barrier against our cars and a 23 per cent. tariff barrier against our trucks, I invite my hon. Friends to consider the difficulties which would then lie before the British motor industry and the virtual impossibility of fulfilling the purposes which the Ryder Report describes.
There are two final matters that I wish to discuss. I have said before when discussing this outpouring of public money that there is in this country, unhappily, what might be described as a bran-tub syndrome. There is a collection of illusions leading to the belief that somehow the public purse is inexhaustible, that it is possible to go on dipping into that purse and that there is no end to it. Last night the Prime Minister himself underlined the fact—not too soon—that this is not the case. However, the illusions will persist.
In dealing with this Bill, we should not think in terms of open-ended commitment to any amount of money made available by the Exchequer. I do not hesitate to use the term "austerity". We must have a much more austere attitude to public expenditure. I do not believe that this policy of simply pouring out money because someone has a good idea is the proper way to run the nation's affairs or manage the nation's budget. It is essential in the context of British Leyland to examine carefully what Mr. Gladstone used to call "candle ends". When looking at the "perks" of managements, it is extraordinary to see the golden handshakes amounting to a literally incalculable total being distributed at British Leyland and being determined by its management. It is also extraordinary to see the various "perks" which are available in the form of company houses and so on. All these matters should be examined with great care, and in the monitoring of the money allocated to British Leyland they should all come under the closest investigation.
I come finally to industrial democracy. I am not sure whether this question of industrial democracy was tossed into the Ryder Report as a bone to keep people happy with a view to allowing them to nibble at it indefinitely. The form of industrial democracy is specifically not declared in the report. The Ryder team shies away from any form of decision as to the way in which industrial democracy should be carried out. In only one negative respect is it precise, and that is that the idea of participatory democracy shall not apply to the Special Products Division. I regret that, because it is in the Special Products Division of Coventry Climax that we have seen the greatest enthusiasm by workers for co-operation with the management.
Generally speaking, we have to consider whether there is to be a real form of industrial democracy and industrial participation. I believe firmly that without industrial democracy and worker participation, all the abstractions of the Ryder Report will not work. Unless we have a work force which is prepared to accept the consequences of modernisation and re-equipment and which is prepared to co-operate in improving efficiency and raising productivity, and unless that is sustained by a general industrial democracy, the Ryder Report will not work.
I am optimistic about the future of the company. It is a great company. It may be that in two years the whole motor industry will present a completely different picture. Until then, it is necessary to support British Leyland. For that reason, I shall go into the Lobby tonight in support of the Bill.
In the light of the world situation of the motor industry, in the immediate future there is, in my belief, no choice but to mount a salvage operation of some kind for British Leyland, assisted with public funds. But I have fundamental reservations about the way in which the Government are conducting this present operation, and on those grounds I shall vote against the Bill tonight and withhold positive support for the motion.
The substantial reason for my reservations—it is one which is widely understood in Birmingham—is that I do not believe that the Government can, on the unrealistic basis of the Ryder Report, make safe the jobs of British Leyland employees or of the dependent motor component manufacturers and their work forces.
We should all remember that the Secretary of State does not have a good record in these matters. British Leyland was his own unsuccessful creation in 1966 under the planning of the Labour Government's Industrial Reorganisation Corporation. Yet now, in Chapter 4 of the Ryder Report, it is suggested that the contrived merger of that date bringing British Leyland into existence stood almost no chance of success unless an unprecedented breakthrough in profits was achieved. The ailing BMC was simply not generating enough cash to make the necessary investment. It appears that the same fatal flaw affects the present calculations.
In his report, Sir Don proposes that the Government should provide £700 million in the next three years and a further £700 million if this cannot be provided by the market, making a total of £1,400 million to be injected over the next eight years. But, as is well known, the total design provides for this sum to be matched by another £1,400 million which Leyland may generate out of its own resources over the eight years. How likely is this to be achieved—an investment of £1 million a day over eight years—against the background of the Ryder Report? I fear that this plan is even less likely to succeed than the 1968 effort, for all the reasons spelt out by my hon. Friend the Member for Henley (Mr. Heseltine) in his extremely telling speech and because the report takes practically no account of the motor industry which Britain is likely to need in 1983 and onwards.
If we try to apportion blame fairly for the present situation, it could be argued to apply in the following proportions. About one-third of British Leyland's problems come from the worldwide difficulties of the motor industry. Many expert reports indicate that the car market in the United Kingdom, as in the rest of Europe and the United States, is likely to grow much more slowly than markets in other parts of the world.
Another one-third of the problems arise from failures of management, mainly because essential changes were not brought about quickly enough after 1968. The remaining one-third of the problems come from the unions and industrial disputes. Anyone who studies the history of industrial disputes at Cowley, for example, must have great sympathy with the management which struggled to cope with them.
The Ryder Report, or the censored version of it that we have seen so far, does nothing to deal with the last two problems—management and labour relations—which were the two problems within its capacity to do something effective about. Therefore, I am not inspired with hope for the future, although, as a Birmingham Member, I hope very much that the industry will have a successful future. But I cannot feel the confidence or share the optimism which Government supporters have expressed.
On the credit side the report makes sensible proposals for fewer types of cars, fewer components, rationalised production and better marketing. But all this has been promised before and repeatedly put forward under the old management, which simply could not achieve enough progress of this kind because of the fantastic web of plant and union complications.
Therefore, with all these substantial doubts I cannot accept that the Secretary of State has justified the Government's proposals to embark upon this massive programme of spending which will have to be subsidised by private industry and the individual taxpayer.
There is a special West Midlands view about this matter which is shared by the medium and small companies in that region. In the West Midlands there is a good record of production and complete reliability of working without interruption by industrial disputes. The people in the companies there know that, as a result of what the Government are doing, over the years they will be deprived of resources which they believe they could put to much better use and which, by the Government's redeployment, could endanger the future of the success of those companies.
This point has been discussed widely in the West Midlands. Will the hon. Gentleman accept that much of this investment and the massive figures that we are talking about will not go solely into the British Leyland Company? There will be the spin-off to all the component suppliers whom we have heard about which for a start will take the form of equipment and continuity of work. When we consider the position of the small firms, the picture is not as black as the hon. Gentleman has painted it.
I understand the pleadings of the hon. Gentleman, and there is something in what he says if we consider the tool-making industry. However, I ask him to examine honestly whether all this investment will be aimed at producing a result which is a profit-making industry. Unless on a commercial basis all the investment is related to bringing about a really competitive and effective industry, we cannot guarantee future jobs for people in the West Midlands or the industrial areas throughout the country. The major problem and the crux of our argument is whether the massive sums are wise, effective and productive investment.
I am expressing serious doubt about the basis on which the Secretary of State is making this enormous decision. I emphasise that to produce these enormous resources we have to tax other people and we have to tax other companies. Therefore, no one should think that the Government have unlimited resources for mere job saving exercises in the limited term. A genuine basis for successful and competitive industry must be obtained, otherwise great disillusionment and disappointment for working people will inevitably follow.
It is strongly believed in the West Midlands that the Government have been less than frank about the redundancies which will be brought about in British Leyland factories. Undoubtedly a considerable investment in retraining will be necessary. What worries me is that the Department of Employment's allocation for this vital purpose is less than half of the investment now proposed for British Leyland. I strongly question that allocation of resources, because I believe that there will be a need for a considerable expansion of retraining procedures so that we make proper and effective use of our work force. The Government's approach shows a lack of realistic concern for the redeployment of skills and abilities and also a lack of concern for human and social considerations which follow the necessary changes that take place as industry moves on through modern developments.
Human and effective concern about retraining and other conditions is a prime requirement in our industrial areas today. The Government have got their allocation of priorities wrong, as has been demonstrated.
I am trying to follow the hon. Gentleman's train of thought and his argument. I cannot see the consistency in what he is saying. He is criticising the report and the level of expenditure that will be incurred as a result of it. From what he is saying it appears to me that the alternative would have been to have severely rationalised British Leyland, which, as he knows, would have meant a massive impact on Austin-Morris. For Longbridge and Birmingham, it would have meant massive redundancies. I am sure that the hon. Gentelman would not welcome that. However, he is telling the House that there will be redundancies as a result of the Ryder Report. I can accept that, but I cannot follow his concern for redundancies that arise out of the Ryder Report when, on the other hand, he is demanding that far more drastic measures could have been adopted in place of Ryder.
The hon. Gentleman knows that I share his concern about the future of British Leyland and especially the contribution it can make to the economy of Birmingham and the West Midlands. However, he must not seek to put words into my mouth. I was trying to explain as clearly as I could that I believe that there is an inadequate examination of Ryder which leads me to conclude that the proposals for spending on this scale have not been properly prepared and, therefore, involve a considerable degree of waste of resources. I further said that even if we accepted the Ryder proposals, buried within them is still in any event a considerable amount of redundancy. It would have been reasonable and proper to have used some part of what I regard as wasted resources to make provision for retraining which inevitably will be necessary in view of the Ryder Report, because I believe that we really will have to make very special efforts on retraining to move men to other parts of what can be successful manufacturing industry in the Midlands.
My fear, which stems from the debate this afternoon and from these proposals—and it is shared by many working people in Birmingham—is that after an inadequate examination of the report the Government have embarked upon a short-term job-saving exercise which I fear will fail and that the waste of resources in this way will take us as a country further along the road which leads to an industrial graveyard.
It is my good fortune to represent the township of Leyland in Lancashire, wherein is located the major portion of the bus and track division of the British Leyland Motor Corporation. Indeed, this small town was the birthplace of Leyland Motors. The community of this town is almost entirely dependent on the well-being of this one industry, as is the whole of the surrounding constituency. Many thousands of my constituents are employed at British Leyland factories. Apart from those directly employed in the factories and the plants and the families of those employees, there are a wide range of local shopkeepers and small business men who are well aware that their prosperity or poverty is inevitably linked to the success or the failure of the BLMC.
Quite obviously the decline of the industry has been viewed with deep anxiety by many people of different income groups and political persuasions. They are all influenced and affected by the existence of the British Leyland plant. In our area of Lancashire we have witnessed the withering away of the textile industry and the savage contraction of the coal industry, with devastating consequences to the economic well-being of the whole region. Had the motor industry been allowed to slither into bankruptcy, I believe that the area would have assumed the appearance of an industrial cemetery. Although the bus and truck division is generally accepted as being viable, the Ryder Report has recommended an investment of several hundreds of millions of pounds, and if that investment had not been forthcoming—it would not have been forthcoming under the previous régime—this area, too, would have again gone into deeper decline.
Therefore, the people I represent are overwhelmingly relieved that my right hon. Friend the Secretary of State for Industry and his departmental colleagues have acted so decisively to prevent an economic calamity which would have affected not only the industry but the whole community.
Some of us bitterly resent the campaign of vilification which has been mounted by Opposition Members against the Minister responsible for carrying out one section of Government policy, but we now see that that campaign is beginning to boomerang. It is seen as a squalid manoeuvre, politically motivated and not at all related to the problems of those whose welfare and living standards are interwoven with and directly dependent on the survival and success of this major British industry.
I find it incredible that we still hear objections from those who resent the fact that the industry must become accountable to the public. Surely it must be appreciated by Opposition Members that the shareholder has an entitlement to accountability. The public are providing the wherewithal in this case for the mission of mercy. Surely it cannot seriously be suggested that they are not entitled to accountability. If that were so, I would suggest that those hon. Members who appear to be so desperately concerned about democracy within the trade union movement could well turn their attention to private industry, where that commodity is evidently in short supply.
The Ryder Report contains a damning tale of managerial inefficiency over a long period. There has been huge incompetence. However, that will come as no surprise to those of us who have read "The Leyland Papers", a document which described the ludicrous machinations, manoeuvrings and miscalculations that took place at the time of the amalgamation to create the British Leyland Motor Corporation.
The failure of the corporation to invest in new plant and equipment has been very well ventilated. Indeed, it was ventilated by the right hon. Gentleman who led the previous Tory Government. He had some harsh words to say on that very subject when he was in office. He addressed his remarks to the motor industry. As the Ryder Report states,
To make matters worse nearly all the profit was distributed as dividends instead of being retained to finance new capital investment.
The situation exposes the absurdity and contradiction of relying upon private investment to generate prosperity in industry.
Many industrialists, particularly young industrialists, are now recognising the nonsense of a system which requires them continually to glance over their shoulders to see who is holding the reins and to respond to the urgings of those who have investment powers within their hands. This applies to individuals and institutions that can take their money elsewhere and can take it anywhere when in pursuit of a quick return and a fast buck. It must be terribly difficult for industrialists, relying upon this, and being aware of his background, to secure the necessary investment.
The Ryder Report pays fair tribute to the work force and, indeed, to the trade union movement. They have provided a great deal of the evidence. Much good will has been created. It would be a great pity if that good will were casually squandered. The trade unions have demonstrated that they have a clear understanding of the problems that face the industry and that they are also aware of how best to remedy those problems.
I have often hear the phrase "brain drain" used in reference to people with skill and ability who leave our shores and secure appointments overseas. I think that there is an internal brain drain in this country. We have people of great skill and ability within the country but we do not utilise the massive talents which are apparent and have become evident among the ordinary working people of the nation. If we are to take advantage of them and to harvest these skills, and to take advantage of the recommendations proffered by the Ryder team and of the capital that is to be made available by the Government, we must also avail ourselves of the third ingredient, that ingredient of industrial democracy. By "industrial democracy" I am not referring to changing the colour of a toilet door or the quality of tea in a canteen. There must be genuine participation and consultation.
I am confident that the BLMC in its new and revitalised rôle can generate a tremendous prosperity. The Government must retain their courage and common sense. At long last we can see a situation in which capital can be the servant of labour rather than labour being the constant tool of capitalism. The old system has been tried and found wanting. It is obsolete and obsolescent, rather like some of those who have tried to defend its shortcomings. Perhaps it is a little melancholy to realise that we are simply responding to events rather than shaping what should be the future industrial scene. I hope that in times to come we shall avoid the necessity of having to launch a lifeboat at public expense in order to extract private industry from quagmires of its own creation.
Along with those whose livelihoods depend directly on the existence of a striving motor industry, I welcome the Bill and look towards the emergence of a healthy, prosperous and democratic industry as a consequence of its provisions.
It would have been quite wrong if the hon. Member for Chorley (Mr. Rodgers) had not taken part in this debate. After all, as the representative of Leyland itself, he is almost what the Greeks would have called the eponymous Hero of the occasion.
It is, of course, right that the House should remember not only the anxieties of the thousands upon thousands directly affected by the fortunes of British Leyland but also the sense of relief which they are bound to feel when they suppose that the action of the Government, of this House and of the taxpayers will alleviate or remedy those anxieties.
A week ago, in another context, the Secretary of State for Industry reminded hon. Members that the fear of redundancy is something which is not known to us in the sense that it is ever-present to many of our fellow citizens. I thought it was unreasonable that his observation should have been so angrily received in certain quarters of the House, for certainly when we discuss economic policies of which the consequences may well be—indeed, must be—substantial redundancy and the movement of large numbers of people from one group of employments to another, we in this House ought to do so with a due sense of humility. But we ought not to be deterred by fear of the pointed finger from saying what we believe is in the long-term interest not only of the economy as a whole but of the very people who may have to change their employment and may suffer in the process of adjustment.
The Secretary of State—and it is a pity that he has had to desert us through most of our deliberations—quoted a remark I made in the context of another firm, I think only a week ago, when I invited him to agree that the official Opposition could neither defend nor propound capitalist enterprise unless they were prepared to declare that there was no substitute for bankruptcy. But today I wish to argue that it is not only Her Majesty's Opposition who need to recognise, and recognise much more frankly than I think has happened yet, that there is no substitute for bankruptcy.
We are concerned, in this report and in this debate, with the prospects of profitability, the prospects of what is called viability. The Government's case, the Bill, the motion and the Ryder Report all rest upon speculation about the future profitability of an enterprise. Now, bankruptcy does not occur, the liquidator does not go in, unless and until intensive consideration has been given to the future prospects of the undertaking in question, unless those whose business it is to scrutinise and weigh acidly the prospects and probabilities have given their best attention to the likelihood of the enterprise in question, by an infusion of capital, by a further extension of credit, by alterations in the management, by reorganisation, becoming profitable within a manageable and foreseeable future.
I am no uncritical admirer or adulator of experts, certainly not of experts when they go outside the sphere in which they are experts. The bankers, the financiers, the investors, the whole range of people whose judgment is brought to bear before bankruptcy occurs, are highly fallible not only when they go outside the sphere where their experience lies but when they are themselves responsible, directly or indirectly, for the rightness or wrongness of their forecasts. No human judgment is fallible; and I suppose that theoretically, there would be no bankruptcies if it were not that the prospects of future profitability are misjudged by those whose business it is to judge them rightly. To be human is to err; but what we are concerned about is to minimise error, and the process of which bankruptcy is a part is a process which, humanly speaking, minimises error in the assessment of future prospects for the profitable employment of resources.
When bankruptcy does occur—that is to say, when rightly or wrongly the judgment is given that the prospect of profitability does not exist, that there is no means which would be justifiable of opening up the likelihood of future profitability—then what bankruptcy brings about, and it does so harshly, is to make it possible for the resources which have been devoted to making a loss to be reapplied in ways which are more likely to make a profit.
We use the terms "loss" and "profit"; but they disguise a much cruder reality—and that cruder reality is destruction and creation. When men are employed in an undertaking which, year after year, is making a loss, those men—who are the last people to blame—are actually destroying that which their fellow workers are creating. Less is going out than comes in; they are involuntary parasites upon the economy. The benefit which bankruptcy confers, the benefit which makes it indispensable, is that it enables resources which would otherwise be locked in the work of destruction to be released for different applications, different combinations, different circumstances, in which they can again be creative.
Immediately, however, public money comes upon the scene, immediately public money is to be injected into an undertaking, all the criteria which would otherwise be brought to bear fly out of the window and are replaced by a very different outlook. The private, cautious, calculated, experienced, almost cynical estimation of the likely prospects for the future is replaced by the public commitments, by the political pressures and by the freedom from responsibility which come of spending public money, money which is there to hand.
I do not suppose that one can have a context in which misjudgment upon the prospects of future profitability is more likely than that in which public money is being injected into industrial activities. The whole tendency—the very pressures we have seen in the course of this debate—will not be to put money where it is likely to produce a profit but to put it where it will be politically profitable, where it will answer the immediate anxieties which press upon us as politicians from our constituencies, where it will earn the sort of harvest which, as politicians, it is our business to garner if possible—the harvest of votes.
But there is more to it than that. The commitment of public money is a public act and Ministers, public men, have to stand up and make predictions upon which they claim to base their decisions that the public money shall be applied. The temptation is almost irresistible, first, to overestimate those possibilities, to fudge the prospectus, to paint it in warm colours, and, secondly, having once made it, to stick to it through thick and thin by throwing more good public money after that which it appears has been wasted.
There is a clear example in this debate and in this report of the sort of motivation which inevitably comes in with public money. The right hon. Gentleman paraphrased accurately the Ryder Report's statement that "Britain ought to have an automobile industry". That is not an economic statement; that is a political statement. It is a statement which does not arise from calculations of maximising return to capital employed and to the effort of brain and hand. It is a statement about prestige, about an entity, Britain, which is not even an economic entity but is a political entity.
So once we move away from the area of bankruptcy by the infusion of public money we substitute for the process which is most likely to guess the future aright the process which is most likely, which is almost designed, to guess the future wrong.
The Labour Party believes—and it is the purpose for which it exists—that there are many ways in which the power of the State can beneficially be used in industry, that it can be used beneficially to social ends, that it can be used beneficially to economic ends. In consequence of that, Labour Members naturally tend to welcome further introductions of public money, control and ownership—the two should go hand in hand—into the British economy. One should make no criticism of that: it is for that proposition that they have stood and it is on that proposition that they have been elected.
However, I wish to put this to the Government and to the Labour Party. What they do not intend to do, but what they are in danger of doing, is to be led on, by virtue of infusing public money first into one and then into another activity where, by definition, the prospects of successful creative activity are poor or non-existent, into a position where the State presides over an area of the economy which is parasitic upon the rest, where the men employed—and I repeat, they are the last people who are or would be to blame—are destroying what an ever-diminishing profitable sector of the economy is creating.
If the Labour Party, in the pursuit of its philosophy and its objects, is to escape that danger—it is certainly a danger that it cannot wish to court—it must use, and it can as little as anyone dispense with, the disciplines which bankruptcy exerts. It must be able to use and apply the criteria which the sort of judgment that lies behind bankruptcy and liquidation brings to bear. So it is not only for the defenders of capitalist enterprise, if there are still such people—I am never quite sure—it is for the Labour Party and the Government, indeed, it is for the nation which has to make its way in a cruel and competitive world, that bankruptcy is indispensable and that there is no substitute for the judgment of bankruptcy and for the liberating power of bankruptcy.
Many people believe that the expression "mixed economy" is one of those terms whereby politicians enable themselves to climb out of tight corners, that it is a method of papering over cracks inside a party or of avoiding coming to grips with the logical consequences of the policies we are advocating. However, there is a sense in which a mixed economy and the preservation of a mixed economy—that is to say, preservation of an economy in which the discipline of bankruptcy exists and is effective—is entirely in the interest of the purposes of the Government and the Labour Party.
This is a debate, therefore, in which these facts should be openly recognised. I shall vote—I do not think there will be a frisson of astonishment as I complete this sentence—not only against the Bill but against the motion which follows it. If we are not to go down the path of infusing more and more public money on a probability upon which no one would commit his own money or the money of others for which he was responsible—except in the sense that we are responsible for that of the taxpayer—it will be more effective, kinder and will give more leadership to the country if we take the decision now.
I was sorry that the official Opposition were unable to bring themselves to state clearly that the only logical alternative to the policy they were attacking was, preferably through liquidation, to ensure that the resources in such portions of this enterprise as could not be profitably employed were diverted to other uses. The time has to come when the realities of public ownership, of a mixed economy, and of the disciplines which they require of hon. Members have to be recognised. Perhaps that recognition may have the effect not of dividing both sides of the House more sharply, but bringing us both to recognise that, deep though our ideological differences may be, there are many respects and many areas in which our duties to our constituents coincide.
I shall not follow the argument of the right hon. Member for Down, South (Mr. Powell) who made his learned contribution on economic viability and short-term and long-term solutions. I make my contribution on the basis of my understanding of the Leyland factories in my constituency and the people who work in them.
I welcome the Bill and what it offers to do in ensuring the continuance of a British motor car industry, the saving of many hundreds of necessary jobs and the removing of uncertainties from many families.
I support some of the main points made in the Ryder Report. I welcome and support what that report says about industrial relations and their special significance in this difficult situation. The Ryder Committee comments that throughout its inquiry, although it was aware that there were many proposals to make British Leyland competitive, such as fewer models, improved facilities in design, solutions to engineering and production problems and changes in organisation and management. British Leyland's success would depend most of all on the skills, efforts and attitudes of its 170,000 employees.
The report does not subscribe to the view that all the ills of British Leyland can be laid at the door of a strike-prone labour force. Quite a lot has been said by the Conservative Party about this. It has been pointed out that the man-hours lost in 1973–74 represented only 3 per cent. of the total of some 300 million man-hours in that year. Indeed, in the first nine months of 1974 British Leyland's record was better than Ford's or Chrysler's. Nevertheless, it is clear that if British Leyland is to compete more effectively in the future in a market which is subject to increasing competitiveness, man-hours lost must be reduced.
I am sure that all hon. Member will understand that not all man-hours lost are due to industrial disputes. The report says this in no uncertain terms. It mentions the breakdowns in plant and equipment and shortages of materials, which make their contribution. It is important that these points be made because British Leyland, as a company, has suffered a good deal in recent years from adverse publicity about its work force. Its strike record has been the subject of large areas of newsprint and many stories about serious overmanning. Those reports have damaged British Leyland, its reputation and its ability to compete overseas. This trend must be reversed. Whatever hon. Members say about industrial relations, cynicism will not help us to sell cars overseas.
We should welcome also the fact that the report says that industrial relations are of major importance. The essence of its proposals is to promote a deeper sense of commitment among the workers to the success of the enterprise on which their livelihood depends. While specific measures have to be taken to deal with improvements in payments systems—there is a good deal of dispute about that—and in collective bargaining procedures, the most crucial feature of improving industrial relations is the committee's strong recommendation of significant progress towards industrial democracy. The report says:
Means must be found to channel the ideas, the energy and the enthusiasm of workers in planning the business on which their livelihood depends.
The trade unions have made submissions to the committee, which it welcomed. The readiness of union representatives to consider the creation of joint management-union committees is a great step forward. Their development will need much time and patience and no doubt the Government's help will be readily available. There is a new and progressive development in British industry and a new attitude towards solving industrial relations problems. The responsible rôle adopted by Leyland unions over the disputes of recent months is symptomatic of that new attitude and should be welcomed.
The report goes into some detail about co-ordination within the car business and between that business and British Leyland's other activities. As it says, the car divisions are responsible for five plants manufacturing components. Although they supply many components to the car industry, in many instances they supply only part of Leyland's own requirements. The rest are supplied by other component firms. Many thousands of workers, apart from the 170,000 employed by British Leyland, will find their jobs in danger, too. These are the workers in the components industry.
I support the report's recommendation that a senior executive should be responsible for the manufacture of parts and the co-ordination with other agencies. The British car components industry is a large one, much affected by Leyland's fortunes. In this appraisal the manufacturing side of Leyland and the components industries should be brought closer together. Those employed in the components industry have been on short time for months. They are always affected by the fortunes of the motor industry.
I support the Leyland campaign to get people to buy British, but I invite the Government to share my concern for the components industry and to use their influence—they will certainly have more than they had—to ensure that Leyland uses British components, so that its cars are British in the strictest sense. A number of components firms in the West Midlands, Birmingham and elsewhere have been badly affected by the company's use of foreign components. Leyland should practise what it preaches in this instance.
I support the Bill, which is in the best interests of British industry. British Leyland workers and those thousands of other workers who are affected by the fortunes of the motor industry.
The hon. Member for Birmingham, Yardley (Mr. Tierney) was right in one thing at least—that the nationalisation or virtual nationalisation of British Leyland will in due course affect the situation in the car components industry. That is the first recognition of the fact that what we are doing today will lead to the control and ultimately the public financing of the components industry by the State.
What has happened in other industries which have been nationalised? As the area in which men have to be responsible both for their action and for the use of other people's capital contracts, so more and more wish to join that area where they hand responsibility over to the State. We shall see that the car component workers will find it attractive to cede their independence in order to pass on their responsibility for the efficient use of resources to the State, just as the car industry has done.
But, as industry after industry, firm after firm, activity after activity, passes its responsibility for running its own affairs properly and using capital effectively to the State, as our individual responsibility is destroyed, so the State acquires an ever greater collective responsibility. It is this growing collective responsibility which hon. Members are not prepared to face up to, which they prefer to ignore.
I was flattered last week, when I spoke in the debate on the Adjournment, by the Lord President, who told me and the hon. and learned Member for Montgomery (Mr. Hooson) that because we had dared to talk about the state of the pound and measures to support it, we were knocking the currency, being unpatriotic. But in truth, the publication of the Ryder Report and this Bill have done far more harm to this country's economic prospects than anything that the hon. and learned Member and I could ever say. Indeed, would that I had such economic power that I could rival the overwhelming, overburdening effect of the publication of this report upon the confidence of foreigners in the maintenance of the parity of sterling.
The truth is that the economic consequences of this report have not been discussed. They will be conveniently discussed tomorrow, when all hon. Members will say that something must be done about the economy and the deterioration in our finances. But there will be not a word today. Today is solely for talking about the jobs of the British Leyland workers. It will be tomorrow, when the Bill has safely been given a Second Reading, that we shall seek to say that something must be cut, that there must be some sacrifices, that the standard of living must be held down or reduced—but nothing specific.
I want to spell out the economic consequences of this Bill. First, it will cost £1,400 million of public money plus presumably the other £1,400 million which will not be earned in profits by the company, and in the next financial year £265 million and more. This sum has not been allowed in the Estimates and it will swell the Budget deficit. It will cause the already overburdened printing presses of this country to work more overtime. That will be the growth industry as a result of the Bill—because the money is not there.
Labour Members talk as if we had some savings in the bank and not to release them to this company was due to some stinginess, a lack of compassion and inhumanity. I would respect those who support the Bill if they were prepared to say, "Yes. Let us allocate this finance, but to make way for it let us raise taxation by an equivalent amount or cut this programme or this welfare service or some other activity so that at least we have the money." At the moment they have not got one penny and they never will have. The money does not exist.
This Bill might swell the money supply by a per cent. or two as a result of putting the Ryder Report into action. That in turn will rest upon the collective responsibility of all citizens because they will have to bear the slightly higher rate of inflation which it will cost. But that is not the main argument. The main argument is that if this company can be rescued with all the enormous costs involved, why not the next one also? It is not necessary to increase the money supply to pay for higher wages which will be claimed. But if higher wages are claimed and if they threaten the solvency of other major employers and finally bring them down, the commitment is there as clear as can be that the State will intervene to rescue them and to inject money.
This action will cause wages to be demanded on an ever greater scale, causing a need for ever greater printing, ever greater deficit financing. I do not believe for one moment that any single worker in the Chrysler company believed the Prime Minister when he said last night at some banquet—how many Chrysler workers were at the banquet to hear him I do not know—that no one should take the BLMC rescue as a precedent for their company.
I remember making that statement when I was a junior Minister. The only difference was that I meant it—and that I still mean it. I believe that this is at the heart of our economic problems. The Prime Minister no more means what he said then than he has ever meant anything that he has said, if I may use the phrase, in a solemn and binding form—for instance his declarations over his intentions towards the Common Market.
Great play has been made about the export performance of this company. The Secretary of State's main argument for the rescue, apart from jobs, was the enormous contribution the company makes by way of exports. Yet he misunderstands, because if the deficit is, as it is, £9,000 million now, to rise to perhaps £9,500 million as a result of the Bill, that printed money represents money in the pockets of the people which is not backed by the production of domestic goods and services.
This causes them, in spending that money, to find that they cannot obtain the resources at home which they demand. As a result, imports are increased. Imports or exports are not therefore caused by the failure or success of British manufacturers, by the cleverness or otherwise of workers and salesmen. They are caused by one thing only—an excess of demand for goods over the domestic supply. If we have heavy car exports, we have equally heavy imports of oil, timber and other raw materials. It is the total balance at which we should look. That total balance can be achieved and improved only if there is a reduction in the excess of domestic demand.
Whether or not we do something to save British Leyland will not affect the export performance of this country except in this way. If we print more money, that will put into the pockets of the people more money than is represented by goods and services. That money will be spent and will cause more imports to be sucked in, which will make the balance of trade even worse. The effect of this Bill is quite different from the effect which the Secretary of State suggested. He spoke about maintaining a growing, exporting motor car industry. The effect of the Bill will be to cause demand pressures and to suck in more imports.
I do not believe there are any halfway houses. I say this to my right hon. and hon. Friends on the Opposiition Front Bench. We cannot get out of this dilemma by saying that there should be more strings attached to the Ryder Report or that it has been done the wrong way or that there are other ways of looking at the future of the industry which have not been properly gone into. The overriding, overwhelming force of the argument is that actions of this sort are not only damaging in themselves to our economic prospects but are cumulative and are the cause of ever-worsening economic situations.
We must either say that we are prepared to go along with this sort of action and devise such machinery as we can for improving the mechanisms and be prepared to see both an ever greater State sector, growing faster and growing more inefficient—as the right hon. Member for Down, South (Mr. Powell) said, a greater parasite upon the profitable sector—or we must take a firm stand and say that this is not the way forward.
I do not see what strings can be put upon the spending of this money which would be meaningful and realistic. Only red tape will be put upon it, and red tape can snap very easily. What British Leyland has done is to consume its existing capital. It has eaten up all the money invested in it. What is to stop it consuming all of its new capital which the Bill gives to it? What is to stop that new capital going even before it has been paid, because the mere mention of the £2,800 million will surely whet the appetite of those who work in this company? Although there can be two accounts, one called revenue and one called capital, the fact that one goes deeper and deeper into deficit and the other looks healthy is in encouragement to those who can read balance sheets and understand accounts. More information will also, happily perhaps, have to be disclosed to trade unions but there is no check upon where this money goes.
What should have been done? I would not be honest if I did not say that I believe we should have appointed a receiver. I want to make this distinction. That is not declaring the company bankrupt, as the Secretary of State has said. Bankruptcy would have meant bringing in a liquidator. I spoke of a receiver. The receiver would have run the company for several months as he ran Rolls-Royce. If necessary, he could have been given a little money by the Government to make sure that he had enough time. He could have used that time to sell off those parts of the enterprise which were profitable and which people would have sought to buy. He could have taken other parts of the enterprise and made them efficient. Some parts he could have closed down. He would have proceeded in this way until he had produced a company which was using its capital and labour effectively instead of ineffectively.
I am not an expert in receivership or in industrial management and it is not for me to say what would have happened, how many jobs would have been lost, how many would have been saved, which companies would have gone where and what would have been the result, but I have no doubt that "a million jobs lost" is an absurd and rather dishonest epithet to stick on this course of action, because clearly more than half the jobs in British Leyland are viable and more than half of the supplies jobs are viable—perhaps many more.
I do not know what would have been the redistribution of labour from unprofitable enterprises into more profitable enterprises nearby. As my hon. Friend the Member for Henley (Mr. Heseltine) said, there are plenty of jobs in the part of the country which I represent which are unfilled. That is the right way to deal with the problem.
We must not talk only about investment. Investment of £2,800 million requires perhaps a return of £300 million a year, to put it conservatively, just to service that investment. Where this company with its record will find profits of £300 million simply to service the investment which we seek to put into it is a little puzzling, to say the least. It may be that the investment is much too large and that we should seek first to use more effectively the existing equipment and small quantities of new equipment. If British Leyland has been unsuccessful in the past, that could in some measure have been because it did not use effectively such equipment as it had.
It is dangerous for the Secretary of State always to say that what is required is more investment, as if every pound put into investment will automatically do him good, instead of saying that what is required is better investment and better use of existing and future investment. That is what is needed throughout the whole of British industry.
Of course the Secretary of State cannot say that, because he has done a disservice to the cause of productivity. He has deliberately sought to force a State industry—the British Steel Corporation—to retain more jobs than it says it needs. I notice that the right hon. Gentleman is talking gaily through my speech It would be a good idea if he gave me his attention. I should like him to listen to this: he has done great disservice to the cause of productivity by telling the British Steel Corporation that it should keep more jobs than it needs The purpose of the Bill and the Ryder Report is also to insist upon there being more jobs in British Leyland than there should otherwise be. It is wrapped up in the word "investment", but investment means fewer people, proper manning schedules and higher productivity, and the right hon. Gentleman is not prepared to take that part of the coin.
I am listening intently to the hon. Gentleman, who speaks with great clarity and seriousness on these matters, but the more I listen to him the more I am utterly convinced that his argument leave,, out pf account that there is not only the balance sheet but the ballot box. He speaks of people as if they can be moved at the behest of the owners of industry without regard to the political and social factors which are the basis of our standing in the House. If the Government of whom the hon. Gentleman was a member reversed their policies, it was because even they recognised that the people represented through the ballot box intend to exercise, and do exercise, a countervailing power to the use he would wish to make of them as pawns in a financial game.
The right hon. Gentleman has given the game away. He now admits that what he is after is not the profitability of industry but the ballot box. He said that over and over again. He is not trying to get prosperity with this money, he is not trying to get a return on capital, he is trying to buy votes. When my hon. Friend the Member for Henley accused him of political corruption, he denied it, but he has now admitted that this is so.
The hon. Gentleman should recognise that we adopted parliamentary democracy in this country to give to those without money power equal to that possessed by those with money. That is the strength of Parliament. To attempt to ignore the rights of people expressed through the ballot box, as does the hon. Gentleman, is not only immoral but unrealistic.
The hon. Gentleman is again wrong. He ignores the fact that the way to prosperity, stable prices, profitability in industry, harmony and happiness is through efficiency.
I am prepared to advocate in my constituency, the views that I have here advocated, and on some occasions I have been returned at the ballot box by the votes of more than half the electorate. So I am not accepting that comment from the right hon. Gentleman. If he insists on putting unprofitability and the wastage of national resources as one of his main platforms in appealing to the electorate for support for his Government, the only answer is to point out to him and to the electorate at large that, although that approach may appeal superficially and in the short term to a small section of the population, the rest of the people will turn the Government out, because, the Government are destroying the economy upon which we are trying to earn our living and have our enjoyment. It is only by using our resources, our capital and our assets profitably that we can hope to look the people in the eye and say "We have done the right thing by you".
If the speech we have just heard from the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) delights the farmers of his constituency, it certainly does not delight the car workers of Nuneaton and Coventry. I welcome the hon. Gentleman's contribution and the contribution made by the right hon. Member for Down, South (Mr. Powell), because they at least have the courage and the honesty to spell out the alternative. When the hon. Member for Henley (Mr. Heseltine) spoke from the Opposition Front Bench—presumably we shall get the same sort of fudged speech when the debate is wound up—he did not have the courage to spell out the alternative. The alternative which the Opposition Front Bench are thinking up is the selling off of the profitable parts of British Leyland and, presumably, the near obliteration of parts which they do not think will make a profit.
What the hon. Member for Cirencester and Tewkesbury and the majority of the Conservative Party have in mind is the disappearance of the part of British Leyland we know as Austin-Morris. The consequences of that in terms of the balance of payments deficit, import penetration and the future of the British motor industry would be devastating to investment, to the working people of this country and, above all, to the economic situation.
The hon. Gentleman is repeating something that has already been clearly contradicted. It is arrant nonsense to suggest that the only two options which the House faces are the Ryder Report in toto or the total abolition of Austin-Morris. That shows a lack of commercial understanding and intelligence that I should not expect from him.
I wish the Opposition would invent a strategy themselves. So far we have not heard precisely the kind of strategy that the Opposition or the Liberal Party would like to put forward for the salvatio—and I suspect otherwise—of Austin-Morris.
I represent 20,000 constituents who are involved in Jaguar, Triumph, Morris engines, Coventry Climax, and component manufacturers which serve British Leyland and other car manufacturing companies in Coventry. I recognise that the strategy which has been adopted by my right hon. Friend is the right one. I have always felt that British Leyland should be preserved in its entirety. However, I do not agree with all the Ryder recommendations. I suggest that the Austin-Morris Division should be saved. If that does not happen, the smaller and medium end of the British Leyland range will be open completely to Fiat, Renault, Volkswagen and, above all, the Japanese manufacturers. If we are to do something about turning our balance of payments around and about stopping import penetration of foreign producers, one of the best and most effective ways of doing so would be to ensure the preservation of the Austin-Morris Division.
I applaud the strategy which my right hon. Friend has adopted, but I say quite frankly that I do not think that merely putting money into British Leyland will save the British car industry. We must adopt additional policies. For example, we must seriously examine the possibility of short-term import controls.
Like the hon. Member for Henley, who is no longer in the Chamber, I feel that the Ryder Report's market sales and profitability projections are optimistic. The National Economic Development Office published a thorough and comprehensive study of the motor trade in January 1974. It referred to up to approximately 2·3 million new registrations a year and to labour shortages in key skills in the car industry. I am sure that many hon. Members on both sides of the House recognise that with the oil embargo and energy constraints the situation has changed dramatically since those thorough and comprehensive forecasts were made. That is why I query the projection made in the Ryder Report that we shall return to the 1973 peak of 1·6 million new registrations by 1980. I query the projection which has been made of aspiring once more to 1·7 million new registrations by 1985.
I cannot help feeling that, just as we have been rather optimistic in some of the market projections, we have also been too optimistic in some of the labour requirement predictions. The Ryder Report should have been much more positive and definite about the kind of labour requirements that the British motor industry will have in future. According to my calculations, if we are to put nearly £3,000 million of working and fixed capital into British Leyland by 1982 we shall give the company about the same sort of capital-output ratio as Datsun. Although Datsun might have a similar output to British Leyland, if we examine the manning figures it is obvious that at that level of capital British Leyland will require only about half of the manning and half of the labour which is at present proposed.
The Ryder Report should have been much more candid about the labour consequences and the manpower consequences of injecting such a large sum of fixed and working capital into the company by 1982. When the report mentions that some £400 million will be saved as a result of better industrial relations, better manning procedures and more mobility, I fear the job consequences for my constituents. If we are investing in new equipment and in new machinery, presumably that will mean more productive machinery which will need less labour. That surely must mean fewer jobs for my constituents.
Although I welcome the large amount of financial assistance that the Government intend to put into British Leyland, I do not think we can ignore the possibility that it will be labour-saving investment. My constituents should not be deceived into thinking that the number of jobs that we now have in the British Leyland combine will exist in future, given that level of capital investment.
I also worry about some of the Ryder market projections as regards sales of 1·6 million and 1·7 million by 1980 and after. Already we have a situation in which the Shah of Iran has announced that there may be another OPEC increase at the end of this year. Similarly, we have a situation where neither the Treasury nor the Transport and Road Research Laboratory have yet calculated what I would call a planning price for energy resources over the next 10 years. I am bound to say that in asking the Central Policy Review Staff to try to project the British car industry's sales over the next 10 years, we have asked them to do an unbelievably impossible task. In these days of fluctuating oil prices, and, as we have yet to establish a planning price for energy consumption, I do not think we can make market projections that far ahead.
I submit that market forecasts of worldwide demand for cars are very uncertain. When the Ryder Report suggests that British Leyland will maintain 33 per cent. of the domestic market and that it is hoped that it will increase its share in the European market from 3 per cent. to 4 per cent. in 1985, I cannot help feeling that many of the calculations of the other major manufacturers have been ignored. No doubt similar optimistic calculations have been made by Volkswagen, Fiat, Toyota, Mazda and Honda. What account has been taken of all these optimistic forecasts?
Has account been taken of the way in which Ford, in this country, managed to increase its market share at the expense of British Leyland during the 1960s? What account has been taken of the fact that in April of this year import penetration amounted to 38 per cent. of new registrations? What account has been taken of the fact that this last month Dat-sun alone imported 10 times as many cars into this country as it did in the same month of the previous year? What account has been taken of the fact that Nissan, Toyota, Mazda, Honda and all the major Japanese producers have almost doubled their import penetration over the first quarter of this year compared with the same period last year?
I welcome the total commitment contained in the Ryder Report. I do not disagree with that, but I wonder whether we are not being too optimistic in our overall market forecasts. Are we not being too optimistic as regards British Leyland's share of the market? I suggest to my right hon. Friend that merely putting money into British Leyland will not be sufficient. The Government should now be seriously examining the policy of short-term import controls.
I know that my right hon. Friend the Secretary of State for Industry will say that we do only about 2 per cent. of our trade with Japan. He will add that the visible deficit which Britain has with the Japanese is more than compensated for by an invisible surplus. But to make sense of the Ryder Report and to provide confidence for our car workers and some security for my constituents' jobs, the Government should seriously examine the possibility of import controls in the short term to assist in the implementation of the Ryder strategy.
I wish to refer to one more point which has been alluded to by the hon. Member for Henley, unfortunately in the usual grossly over-critical manner to which we have become accustomed from him.
Paragraph 3·8 of the Ryder Report says bluntly:
The fact that British Leyland is represented in all the major sectors of the car market is a potential strength.
That seems to represent the adoption of what I call the "George Turnbull philosophy", because his philosophy of running British Leyland lay in attacking all the sectors of the market. The opposite theory might be called the "John Barber theory"—namely, that one adopts less ambitious sales strategy, goes for volume production as opposed to mass production and tries to shift the whole range up-market. I wonder whether the Ryder proposals are not a little too ambitious in going for that total commitment to all sectors of the market. I should have liked to see far more examination of the philosophy that British Leyland should aim at being competitive in all sectors of the market.
Paragraph 3·10 of the report says that British Leyland:
cannot match the very high volumes of the major European and Japanese producers, notably Volkswagen, Toyota, Nissan, Fiat and Renault.
I fear that in going for such an ambitious total commitment British Leyland could be in danger of losing out at both ends of the range. If we look at the import penetration made by Fiat, we see that that company has a tremendous domestic base, including a fast-growing market in southern Italy. We have also heard about Japanese import penetration and have only to look at the model range of Volkswagen and Renault and the way in which they are tooling up.
Is it intended as a result of the implementation of the Ryder proposals to tool up British Leyland to match that kind of productive capacity? Is it intended to compete with Fiat, Volkswagen and Datsun? We must remember that in that range we are obviously talking about large mass production. We are talking of producers who can produce 2 million units a year compared with 800,000 units of total production by British Leyland in recent times. That is a large commitment and I wonder whether the Ryder forecasts are too optimistic.
I should like finally to refer to the larger end of the range—namely, to Jaguar, Rover and Triumph in Coventry. I understand that the strategy on which British Leyland will produce cars in future will be highly integrated, based on a strategy involving five basic body shells. If the strategy is to amalgamate Jaguar and Rover and if it is intended that the next Rover car will simply have a Jaguar badge on the front, I am sorry to say that I fear that the market carved out by Jaguar could be eaten into by Mercedes, and that the market which Rover has successfully captured could be eaten into by BMW. I fear that if we try to amalgamate and integrate on too great a scale, the market carved out by Triumph may be lost to the continental producers.
It is undoubted that Jaguar, Rover and Triumph cars have a particular niche in the market. They have been successful components of British Leyland. I recognise that things may have to change, but we should not try to integrate these into other parts of British Leyland since I regard them as the brightest jewels in the British Leyland crown.
There is a supplementary point which I should like to make about Jaguar cars. Under the auspices of Geoffrey Robinson, a unique experiment in labour relations and productivity has been conducted. Any manager or chief executive who can reduce labour turnover from 1·75 per cent. to 0·67 per cent. in 18 months, or who can reduce disputes from 23½ shifts lost in 1973 to only one shift lost in 1974, or who can increase Jaguar's share in the market from 0·7 per cent. in 1972 to 1·1 per cent last year when there was a large slump in the domestic market; any chief executive or management and labour unit who can notch up that kind of performance, deserves encouragement and should be kept together. What worries me and many of my constituents is that such a unique experiment in industrial participation may be lost if the intention is to produce the successor to the XJ6 as a Rover with a Jaguar badge on the front.
Therefore, I believe that in going for the strategy of covering the whole market and the whole range the Ryder Report is too ambitious. Of course there must be a total commitment to British Leyland. Let me summarise my remarks by saying that I want to see Austin-Morris reorganised. I do not want to see that part of the concern put into receivership—and on that point I certainly disagree with the hon. Member for Cirencester and Tewkesbury. I believe that there is a future for the whole of the British Leyland range.
My hon. Friend said that he believed in a total commitment to British Leyland. Is he aware that British Leyland has not a total commitment to British industry? It buys all its glass for vehicle production from abroad, and this means that many of my constituents who work in the glass industry are on the unemployed register?
I am sure that if I were to go into a British Leyland factory in Coventry I should find not only foreign glass but machine tools made in Germany and Italy. I appreciate my hon. Friend's point.
I welcome the report and applaud its strategy of support and aid to British Leyland. I believe that it is possible to assist British Leyland only as a whole rather than in parts. But I wonder whether we are not being too optimistic in our projections and whether there should be the kind of complete and total integration of which the report speaks. I ask my right hon. Friend whether it is not possible for Jaguar, Rover and Triumph to maintain a certain amount of independence and status. I hope that there will be no attempt to damage or destroy some of the brightest jewels in the British Leyland crown.
Many of the contributors to this debate represent parts of industrial Britain. When we deal with the subject of employment, we are talking of the deepest fears and frustrations of our fellow citizens. Therefore, we must deal with these matters extremely carefully.
Not only do I represent a Midlands constituency but I come from a family which has worked for three generations in the Black Country and which understands some of the scars which unemployment leaves in the subconscious of many of our fellow citizens. Indeed, my brother works for British Leyland.
Surely each of us, in approaching this grave problem must not seek short-term popularity in his or her constituency or family. We must avoid trying to persuade frightened people that there is a short-term cure for their deep fears. Most of all we must avoid trying to delude them into hoping that there is security where there is no security. For all the reasons which I shall shortly put, I shall vote against the Bill and the subsequent motions.
I believe that the only solution to the problems of British Leyland is that it should go into receivership. I believe that that must be said in a word, because any other solution would be unfair. First, it would be grossly unfair to the employees of British Leyland. The Secretary of State said that their work was unpleasant, boring and monotonous. I agree with that. Surely the logical extension of that argument is that we want people to cease working in such demeaning conditions.
Would any humane man want to see his fellow citizens working hour after hour on the production line at Cowley? Would any humane man say "Let us subsidise that activity so that not only their children but perhaps even their grandchildren may continue that horrifying work"? Is it not clear that if men work in such horrible conditions they are bound to need high wages to compensate them for those disadvantages? If I were employed in such work I should immediately become a militant trade union leader. Why perpetuate this misery?
The subsidy and the proposed nationalisation constitute a grave insult to the men concerned, because their vigour, their ability and their stamina will ensure that they find alternative jobs very soon.
Perhaps in the short term those made redundant at British Leyland would find that they must accept employment at slightly lower wages. Perhaps they would find an advantage in that compared with the unpleasant conditions in which they worked at Long-bridge or at Cowley. I know not. Surely men of that ability are not so lacking in self-confidence as to think that they must lie on the scrap heap for ever. Those are the people for whom employers throughout the West Midlands are crying out.
The argument with regard to British Leyland is slightly different from that concerning Chrysler. Most of the factories employing British Leyland men are situated in areas of high employment and varied industrial activity. I believe that the proposals are unfair to the British economy because the subsidy prevents men, plant and capital being used in a profitable way elsewhere. They lock men, plant and capital into a loss-making enterprise. Most of all they prevent steady, organic change in British industry.
My hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) put that argument well. This is what worries small employers in Wolverhampton. They cannot see how the perpetuation of a loss-making industry can in the long term help British industry or the West Midlands.
This proposal is also grossly unfair to the British taxpayer. If the Budget is ever to be balanced, if the present £10 billion borrowing requirement is ever to be reduced, there must be vast cuts in public expenditure. In the short term, however, there will be no way of balancing the Budget except by an increase in taxation. This Bill means that in the first year under these proposals £265 million will be loaded on the back of the British taxpayer. This means that companies which are at present profitable may become unprofitable or loss-making. It may also mean that the hard-hit, small, self-employed business man may be pushed out of business. The Government propose that we should take chances with the remainder of British industry to subsidise the loss-making part of British Leyland at Morris and Austin.
The proposal is also unfair to the other industries which will not be subsidised in future. Look, for instance, at the argument put forward by the Chrysler workers. The Prime Minister told them that they must abandon their politico-industrial ambitions. But why should they? Look at the arguments advanced to justify this subsidy and nationalisation. Chrysler can use the argument that it is engaged in manufacturing industry. If Britain should have a stake in the production of British Leyland cars, I suggest that there is no reason why the British should not have a stake in the production of Chrysler cars. Chrysler has many important export contracts. Chrysler can produce a subsidiary argument which is not open to the employees of British Leyland. Many of the plants at which Chrysler personnel are employed are situated in areas of high unemployment. Therefore, those Government supporters who accept the argument have a much stronger case in respect of Chrysler than in respect of British Leyland.
The precedent of subsidising and nationalising British Leyland creates a great area of unfairness. That leads me to the proposition that these proposals are not merely unfair but are dangerous. Most of all, the proposals are in breach of the rule of law. The rule of law is not only a narrow concept of lawyers. It requires first that there should be equality under the law. Secondly, I accept the definition put forward by Hayek. "Stripped of all technicalities, this means that the Government in all their actions are bound by rules fixed and announced beforehand, which make it possible to foresee with a fair degree of certainty how authority will use its coercive powers in given circumstances and to plan our individual actions on the basis of that knowledge."
Adherence to this principle of the rule of law as so defined is vital to our survival in the perilous times ahead. The single most difficult task that any Government have for the future is to be able to say "No", to mean it and to act upon it. The Government must be able to say "No" to important and powerful interest groups. The alternative to the rule of law is arbitrary, political, discretionary interference. Such interference leaves the Government open to every form of pressure. It gives substance to the belief, which is now widespread, that the Government will always give way as long as the pressure is sufficiently strong or even violent.
This is an important moment in the history of the Tory Party. It is no secret that the official position of the Tory Party is plainly a compromise. It will not be the first time—I dare say that it will not be the last—when we shall see the Tory Party divided between the Liberal free traders and the Tory paternalists. I find this division reflected in myself.
By deepest inclination I am a Tory paternalist. I recognise that Tory paternalism, with its muddled, inconsistent decency, has done more than anything else in our society to bridge the gaps that divide this House and the nation. After all, it is the Tory paternalist who most of all strives towards the ideal of one nation.
Equally, by intellectual conviction, I am a Liberal free trader. I recognise that the harsh logic of Liberal free trade has brought most of the wealth and power that this country has at present. If there is a single concept which may bridge the gap between the paternalists and the free traders, it may be the rule of law. I believe that as we stagger towards hyperinflation, as we try to rebut the suggestion that Britain is now ungovernable, it may be only by the rule of law that we shall be saved.
I hope that the hon. Member for Wolverhampton, South-West (Mr. Budgen) will forgive me if I do not follow him on the rule of law, Hayek and the road to serfdom. The hon. Gentleman was advocating increased unemployment. I have been brought up to believe that one aspect of serfdom is unemployment.
At least we have had more candour from the Opposition back benches than from the Opposition Front Bench. At least from the back benches we have been told that some hon. Gentlemen would like to see a receiver appointed for British Leyland and for the receiver to make his dispensations. Those sitting on the back benches have had the intellectual courge to follow that argument through to its logical conclusion.
What would happen if a receiver were to move in? The profitable parts of British Leyland—that would definitely exclude the Austin-Morris Division—would be sold off and the receiver would be left with the Austin-Morris Division.
The hon. Member for Henley (Mr. Heseltine) was unwilling and did not have the courage to face that situation. If the receiver were left with the unprofitable Austin-Morris Division, as he would be, the only realistic choice would be either to sell it for scrap or to offer it for sale to the Government. The Government—even a Tory Government—would probably be forced to buy the Austin-Morris Division rather than allow the receiver to sell it for scrap. We would have the same kind of situation as with Rolls-Royce But the profitable parts of British Leyland would have gone to private industry and the Government would be left with the unprofitable part. I believe that the Opposition would have gained more in respect if they had put forward and followed the logical consequences of their argument.
I am glad to have this opportunity to speak in the debate. I got the impression—I make no criticism—that the British Leyland problem related solely to the Midlands. In Llanelli there are two British Leyland factories employing 4,500 people, and I calculate that another 1,000 are dependent on the existence of those factories. The stark reality of the situation is that if Austin-Morris had been allowed to become bankrupt or had been sold for scrap, the unemployment rate in my constituency would have increased to about 25 per cent. That would have been a rate of employment far higher than anything we have seen since the war. We would have to look back to the 1930s for such a high rate of unemployment.
I assure the hon. Members for Wolverhampton, South-West and Cirencester and Tewkesbury (Mr. Ridley) that there are no other jobs in my constituency to which those 4,500 workers could go. They would be thrown on the dole. They would be unemployed.
I welcome the Ryder Report, the Bill and the plan to inject into and invest massive sums in British Leyland. But I recognise that the provision of money alone will not solve British Leyland's problems.
One of the major fears in my constituency was that the Ryder Report would recommend as a way of solving British
Leyland's problems that factories on the periphery of the central operations of the company should be sacrificed in the interests of the greater whole. I am glad that the report came out clearly in page 28, paragraph 8.5, saying that British Leyland must
live with its existing plants.
There is no evidence that the proliferation of factories has contributed to the economic difficulties of British Leyland.
Llanelli has the best industrial record of all the factories within the British Leyland complex. Indeed, this point has been singled out in the report. I do not know whether this measure of decentralisation and the fact that we can decide things for ourselves is the reason for our good industrial record. But I am glad that the report has recognised that factories on the periphery must not be sacrificed to try to achieve better economic viability.
My constituents accept that within that basic framework there will have to be changes in the nature of the work carried out at factories on the periphery. It does not make sense to move goods from one end of the country to the other. Therefore, there will have to be some rationalisation on that basis.
I appeal to the Government and to everybody concerned that, before any decisions are taken, the people working in those plants should be fully consulted and allowed to participate in decisions which may affect their livelihood. There is nothing worse than for a man to go to his place of work and find that decisions taken miles away in other factories affect his job and livelihood. If we can explain the reasons for decisions, I believe that we shall get the co-operation that we desire.
The importance of industrial democracy seems crucial to the whole venture on which the Government are embarking. If we cannot set up proper machinery in British Leyland to enable the men to participate in decisions which affect their future, I believe that this bold venture may not succeed.
I implore the Government not to wait for changes in the structure of company law before setting up some machinery within British Leyland to solve the problem of industrial democracy. The TUC has put forward some imaginative proposals for the reform of industrial democracy within British Leyland. The Ryder Report did not accept them all. However, I think that there is a basis for agreement. I implore the Government, as a first step towards getting British Leyland back on its feet, after consultation with the trade unions and management, to set up a framework of industrial democracy with joint committees at plant, department and division level so that people may know the reasons why decisions have been taken. I believe that if they could see the reasons they would co-operate and the inevitable consequences of this kind of investment would not be as traumatic as might otherwise have been the case.
There is finally the question of the Common Market. My constituents fear genuinely that as a result of the operation of certain articles in the Treaty of Rome the money which the Government have earmarked for British Leyland might be stopped or greatly reduced by the European Commission and the court in Luxembourg. Article 92 will be a considerable stumbling block if we vote to stay in the EEC. It sets out quite clearly that aids which distort competition are incompatible with the Common Market and are void. The EEC Commission has acted under Article 92 in the past and there is a considerable body of case law from the last 10 or 15 years as a result. The latest decision was in December last year when the Commission prevented the Italian textile industry from receiving Government support because, it was decided, that was an aid which would distort intra-Community trade.
I want the Government to say that they will do their best, but if the country decides to stay in the Common Market the final decision on whether British Leyland will get this massive investment will lie not with the British Government but with the Commission in Brussels and the nine judges who sit in Luxembourg. This has nothing to do with the nationalisation issue. The Treaty of Rome does not forbid nationalisation, but it forbids aid whether to a nationalised body or to private industry which distorts competition. If Britain stays in the Common Market the issue will be decided outside the ambit of this House and outside the power of the British Government.
It has been said that the injection of funds into British Leyland will not solve its problems, and I agree with that. The only way to solve these problems is to promote a radical, practical system of industrial democracy within British Leyland so that the people there can see why the money has been put in. They will then co-operate in these decisions. If we do not press ahead with industrial democracy the British Leyland venture might fail, and if that happens it will spell the end of the British motor industry, with consequent damage not only to our economy generally, but to our balance of payments in particular and to the rest of our manufacturing industry.
The hon. Member for Llanelli (Mr. Davies) will forgive me, I hope, if I say that I remember his town better for Stradey Park than for its contribution to British Leyland, and I carry with me still a pair of cauliflower ears to prove it.
Tonight the Secretary of State for Industry was uncharacteristically restrained. He was restrained in providing the House with a good deal of the facts surrounding the genesis of the Ryder Report and the part played by the EEC and the rest of Western Europe in the plans on which the future of British Leyland has been based in that report.
I have a strong constituency interest in British Leyland. I pay my tribute to the skills and endeavours of all who work in that great enterprise. However, I recognise full well the fears expressed by other West Midlands Members, notably by my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) at the very mixed feelings excited by the motor industry in the West Midlands. This is because very largely employment in it is of a highly cyclical nature. Orders from suppliers are suddenly cut off for indeterminate periods and without warning, and suddenly there is a demand for those orders not only to be reinstated but in some cases to be doubled.
When business improves, labour has to be sucked into the factories and the only way that can be done is by greatly increased rates of pay with consequent damage to other firms in the West Midlands. Those rates of pay are not sustainable when the level of activity falls, which is part of the cause of British Leyland's present trouble.
I want to consider the question of investment, some of the assumptions in the Ryder report, the question of management and, finally, the Government's purchase of shares, which has excited a great deal of rhetoric on both sides of the House.
In dealing with investment, I should like to pay tribute to the clarity of thought of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), even if I do not follow him the whole way. The Government have a naive and primitive belief that investment and what they call industrial democracy will solve all the problems of British industry. These are the twin pillars, to quote from Shelley's "Ozymandias":
… Two vast and trunkless legs of stone Stand in the desert …
Nothing beside remains.
Nothing beside remains of Government policy except these
two vast and trunkless legs of stone.
Investment by itself will not prove the cure-all for the problems of British Leyland. Indeed, there is very good reason for supposing that the industry has over-invested since the boom year of 1964. There has been an excess of capacity that has not been utilised. That is one of the reasons for the company having such high unit costs and for its product becoming uncompetitive. Part of the reason for the under-utilisation can be ascribed to the disputes of various sorts among the suppliers or among the motor factories, but there has been excess capacity. Therefore, an increase in investment to increase that capacity is by no means the answer.
Let not the Secretary of State pretend that investment of the order proposed in the report is intended merely to refurbish or replace the outdated equipment about which so much play has been made. Investment of that order must mean considerable investment in new capacity, as anybody who is familiar with figures of this magnitude will be aware. I am fearful, therefore, that investment will not prove all that helpful in solving the problems of British Leyiand.
It will also undoubtedly mean, as was made plain by the hon. Member for Nuneaton (Mr. Huckfield) in a very thoughtful contribution—which would have come much better from the Government Front Bench, if I may say so, showing some real understanding of the problems involved—that this re-equipment investment must mean fewer jobs. Could we have, please, from the Government Front Bench an indication of the order of jobs involved? It is not fair to anybody and it is highly misleading to pretend, as so many Government Members have attempted to pretend, that this investment will necessarily protect the existing level of employment, because it will not.
One of the reasons for the machinery in parts of British Leyland being outdated is exactly that in this fluctuating industry—its fortunes have fluctuated very often as a result of Government policy, and I shall turn to that subject shortly—it has often been more efficient to have less capital-intensive equipment and a greater reliance on labour, which has up to now been laid on and off and caused a great many of the problems in the industry, particularly in industrial relations.
It is not just a matter of the management deliberately failing to replace equipment with the most up-to-date equipment available. There is a very real problem, to which my hon. Friend the Member for Hall Green was very right to draw attention, of the need to assist the mobility of employees in the motor industry at present, and the only result of the investment in British Leyland on the scale proposed will be to increase the need for retraining.
I referred earlier to the under-utilisation of capacity. It is significant that in the Ryder Report the figure of 20 per cent. loss of production owing to disputes was given for the last quarter of 1974. Apart from the manning levels, there is a need to get to grips with work practices and with absenteeism. Until there are some concrete assurances on that score, I do not see how this House can be justified in voting the huge sums of money involved in this case.
I turn briefly to the Ryder Report. The Secretary of State was less than frank with the House about the genesis of the forecasts in that report. I hope that I shall be corrected if my understanding is wrong, but I have been led to believe from sources at a high level inside British Leyland that the Ryder team went in and asked them for their most optimistic "blue skies" forecast over the next 10 years assuming no restraints on money, no restraints from industrial disputes and no restraints on the market.
The hon. Member for Nuneaton pointed out some of the constraints on the market which are most likely to arise. Other hon. Members have referred to the fact that the public purse is by no means bottomless and that there is a real need to consider how many resources can be made available to the motor industry. That is the other deficiency of the Ryder Report. It does not consider the motor industry as a whole. We have no case here of sectoral planning. We are trying to deal with the problems of one firm in isolation without regard to what is happening in the rest of the industry.
It is wrong that the Government should bring forward this measure without a considered opinion from, for instance, the Central Policy Review Staff or even a report from the Select Committee of this House which currently is investigating the motor industry. We need to consider the industry as a whole because, as the hon. Member for Nuneaton said, all the manufacturers are making their own assumptions and the probability is that they will all be over-invested, as happened before, in 1964 and onwards.
Another extraordinary feature of this affair is that the Ryder Report in its entirety was not made available even to the British Leyland Board—at least, not at the time that its representatives last gave evidence before the Select Committee, which was only a week or two ago. It is quite extraordinary that a committee should be commissioned to inquire into a company and that the company should not have the elementary right of seeing what that report contains.
I want now to take up one or two of the remarks of the hon. Member for Nuneaton about the model policy and the market strategy. How is the current market penetration of British Leyland to be maintained by a reduction in the number of models on offer? This is a real problem which has been skated over in the report. But the hon. Member for Nuneaton dealt with it fairly fully, so I shall not detain the House further by enlarging upon it. However, we need some answer about it from the Government.
This House has become rightly suspicious of these broad-brush strokes across the canvas about the need for greater investment, the regeneration of British industry and industrial democracy. We need to examine closely the implications of these.
I leave the Ryder Report with the comment that its assumptions about inflation pass all belief. I hope that the Under-Secretary will refer to those assumptions, especially the assumptions that wages will not outstrip prices and that the British rate of inflation will remain the same as that across the world or will be equalised out in exchange rates. We need to hear a great deal more about the background to those assumptions.
I turn now to the management of British Leyland. In his evidence before the Select Committee, Lord Stokes made is quite plain that at the time of the formation of British Leyland he well understood the problems and what was needed to rationalise the number of plants and the production processes. He also made it plain that in the current political climate, following Weinstock's operation on GEC, he doubted whether it would be politically acceptable. That was the point which the Secretary of State was trying to make rather unsuccessfully when he intervened in the speech of my hon. Friend the Member for Circencester and Tewkesbury. This is something we must face, and we cannot just buy our way out of it. It is dishonest to pretend that industrial democracy will also wish it away.
I turn to the position of Mr. Barber, his strategy and his management of the company. He has been quite strongly criticised in the Ryder Report for his views on how the management of the company should be organised. I defy any industrialist or any manager, in a situation where a company is losing money as fast as British Leyland was losing money, not to take a tight grip on affairs. It is essential in a situation of such danger to have an effective central control.
To have a successful car company it is necessary to have successful models, and these are the result of the flair of an individual and not of a committee or a delegation here and there. Somebody has to be reponsible for the model policy. Mr. Barber has shown, by his introduction of a new 18–22 series, a very successful grip on that policy. A head had to roll, and he was most unfairly chosen as the scapegoat.
The problem of the Austin-Morris Division is that it is a volume car producer that is not producing volume on European terms. Therefore, the only future for that division, a large part of which rests in my constituency, is to evolve an up-market policy. That is what Mr. Barber has been trying to do with the 18–22 series and the Allegro.
I turn to the more controversial subject of the Government's purchase of shares as proposed in the Bill. I start from the premise that the Government—indeed, Governments of both complexions—have been largely responsible for the fluctuating fortunes of the car industry by their manipulation of demand. The effect of that can be clearly seen in the home sales and the home production of the domestic manufacturers since 1964.
Apart from these fluctuations and their effect on capacity and utilisation, the Government have also encouraged inflation, as the right hon. Member for Down, South (Mr. Powell) was at pains to point out. Moreover, there have been the interest rates which have also resulted from Government action.
The combined effects of inflation, interest rates and loss of production from disputes made British Leyland unprofitable. It is nonsense to suggest, as the Ryder Report tries to suggest, that it was merely the dividends paid to shareholders, many of whom were employees of British Leyland, that made the company unable to provide for necessary re-equipment.
The company has been driven near to bankruptcy by Government action. The Government have also induced a climate in the country in which private investment for industry, not only for this company but for many others, simply cannot be found. Therefore, I see no realistic alternative to the provision of Government money in such circumstances on strict bench marks for strict periods, which we have not had laid down for us in the report or in the Secretary of State's presentation this afternoon.
It is idle to pretend that the accountability of a company is increased in any way by its being nationalised. We have before us the example of countless industries already nationalised, and all hon. Members must be constantly aware from their mail of exactly how unaccountable those industries are to the public in any shape or form. Hon. Members are also well aware how impossible it has proved to exercise in this House any effective control over nationalised industries, despite the efforts of the Select Committee.
I believe that the ownership of shares as such is no longer a real issue. What is an issue is the question of management. Taking the example of Shell, I believe it to be idle to suppose that the management of Shell is in any way really responsible to the shareholders, because Shell generates so much internal funds that its management is able to pursue policies without call on the shareholders, who are so widely spread that they cannot form any effective opinion. I believe that the argument truthfully is no longer about the ownership of shares. It is about the management of the company.
Therefore, I conclude that the Secretary of State has shown himself this afternoon as wildly over-optimistic as any car manufacturer has shown himself to be. He has, indeed, joined the club. Apart from that, however, he has deliberately set out to mislead thousands of ordinary people in this country by suggesting that merely by nationalisation, merely by public investment, their employment will be safeguarded.
The hon. Member for Nuneaton asked that the Opposition should deploy a strategy. I shall try to give him an answer. What we need is a short-term holding operation such as is provided for by the monetary motion on the Order Paper, for which I shall be voting, and thereafter we need to get down to a critical examination of the Ryder Report—not just a Second Reading debate on a one-clause Bill. We need to establish bench marks, we need to have commitment and we need to have a statement from the Government of the resources which are really available before we come to a decision.
Therefore, I shall not be voting for the Bill and I shall be voting for the motion for a holding operation.
The hon. Member for Bromsgrove and Redditch (Mr. Miller) talked about two vast and trunkless legs of stone. There is no doubt that if the ruthless advice highlighted by the hon. Member for Wolverhampton, South-West (Mr. Budgen), the market philosophy, were followed, that is about all I should have left in my constituency, because I have there plants belonging not only to BLMC but to Alfred Herbert, and many hundreds of my constituents work for Chrysler. Therefore, I have them all. If they were all advised to seek pastures new, as the hon. Member for Henley (Mr. Heseltine) was advocating, there would need to be a mass exodus from Coventry in order to fulfil the philosophy outlined today by Opposiiton Members. The hon. Member for Henley said "They opt to work in the car industry but there are plenty of jobs in the rolling Chiltern Hills around there". He still seems to be suffering from the idea that lots of people go to work to wear out their old suits and do not work to earn money. Since people have only their labour to sell, they will do the same as investors do with their money—they will invest it where it brings the greatest return.
I must admit that in the car industry this often produces false horizons because of the wildly fluctuating demand, well away from the present situation. This means in ordinary times that in any given year it is wrong only to look at hourly rates. It is far more sensible to examine what people get for a full tax year. Some hon. Members might be surprised if they examined the full year's pay. It might even persuade some people in the car industry to look instead for some of those jobs in the Chiltern Hills. However, people in the car industry are eternal optimists, and although some parts of the Ryder Report may appear to be optimistic, those of us who have worked in the trade would hesitate to say that it was entirely wrong in being so optimistic.
The hon. Member for Henley was concerned about the disclosure powers in the Industry Bill and the confidentiality aspect. He suggested that the information would be spread on the four winds to the far corners of the earth. Anyone who knows the car industry will be surprised by that comment. Over the years, as new models have been produced, the employees engaged in developing them have deliberately, for their own benefit, made sure that the details were not common knowledge outside the firm. I do not think that they would take much convincing that any information they were given which might be helpful to their competitors should be kept as carefully as in the past.
An unjustifiable scare is being raised about the disclosure powers and the confidentiality attached to them. We on this side of the House wish British Leyland every success under the new proposals, but I get the impression that while hon. Members opposite may wish it success, they are doing so with tongue in cheek, on the basis that at some future stage they may be able to say, "I told you so".
While the car industry is monotonous to work in, if the work people are given a full involvement, whereby they feel that they are part of the company and there is an identification with it, a great deal of the monotony can be tolerated because they will feel that they have a stake in the company. The participation which can take place under the Government's proposals will, I believe, yield great dividends in better industrial relations.
The hon. Member for Henley said that the management should have produced this report, not outside people. I have watched the situation in British Leyland for a long time—indeed, before the different firms became British Leyland. I watched the in-fighting that went on between the managers of the various parts which went to make up that empire. It would be hardly surprising if some of the bad habits of the management in refusing to co-operate and co-ordinate—people who want to remain barons in their own right—had not rubbed off on to the workforce. I agree that Lord Stokes was managing to get a better climate of opinion. The proposals outlined in the Ryder Report to weld this into an efficient, economic, profitable unit will see British Leyland assume, once more, its rightful place in our industry.
I do not want to follow the examples of my hon. Friends the Members for Llanelli (Mr. Davies) and for Coventry, North-West (Mr. Edelman) in developing the Common Market argument on this subject. In or out of the Common Market, British Leyland must become efficient and profitable. It has every possibility of doing so, provided that it has the willing co-operation of the workers.
I underline the point made by my hon. Friend the Member for Nuneaton (Mr. Huckfield) when he made a plea that in driving towards this situation we should not snuff out entirely the identity that has been established, particularly in the Jaguar range of cars. That would be a great pity and would take away a vital ingredient in ensuring the full co-operation of the workers at that plant.
It is true that Opposition Front Bench spokesmen have offered no solution. Other hon. Members who followed them were more straightforward. I was completely shattered at the comments of the hon. Member for Colne Valley (Mr. Wainwright) when he referred to a quarterly review of the situation. This revealed a total ignorance of the car trade which was quite astonishing. To suggest that any car firm could live from quarter to quarter and endeavour to arrange supplies from the thousands of suppliers who produce the parts that make up a modern car, is beyond the bounds of all credulity. The hon. Member could not have been thinking about what he was saying. It would not work.
I welcome the Ryder Report, in spite of all its weaknesses. It contains the possibility not only of retaining and reviving this vital sector of the industrial scene in this country but of giving a further opportunity to show that if we release the talents of the work people within these plants, some of the predictions and forecasts in the report may not be as optimistic as some hon. Members believe.
When the hon. Member for Coventry, North-East (Mr. Park) said that there were some Conservative Members who might be disposed to say "It did not come off, I told you so", may I tell him that no one on this side of the House would wish the scheme to fail if it goes through. However, many of by right hon. and hon. Friends feel that this is not the right scheme and should not be attempted.
If it is the will of Parliament that it should go through, we shall accept that will and try to make the scheme work, because we are parliamentarians and believe in Parliament being able to say what is right and the Government implementing that decision. I hope that the hon. Gentleman will not think that some hon. Members take a different view.
Strangely enough, I have a constituency interest. I notice from the Ryder Report that the coachworks at Lowestoft is one of the few works that the team did not visit. If they had, they would have found a long-suffering and hardworking labour force in a works in which, as far as I know, there has been no investment for the last 20 years. How my constituents have stuck working for such wages and under such conditions for the last five or 10 years, I do not know.
A little unfairly, I thought, two hours before I was scheduled to pay a long-arranged visit to the works on one occasion, the shop stewards had been informed that the works was going on to a three-day week. They had been given no indication and I got the thick end from my constituents. So I have some sympathy with those parts of the report which throw doubt on the quality of British Leyland management. I know that some of my hon. Friends could tell similar stories.
I have heard no one from this side of the House pay a warm tribute to Sir Don Ryder and his team. I think that Sir Don has an absolutely unenviable task. I cannot understand why he took it on—and probably he cannot understand it now, either. But he is a public-spirited man. He thought that there was a job to do and that he could do it. We should pay tribute to public-spirited men who are prepared to stick their necks out in this way. I pay my tribute to him and his team. I do not agree with everything in the report, but at least we can go that far.
I would also say a word of support for Lord Stokes who has for some years headed this great firm—a leading exporter and employer—which has brought a great deal of employment and prosperity. Whatever one may say about the way in which he has managed, I should have thought that, thinking back to the enthusiastic days when he took control, he probably wishes that he had remained with Leyland and never got mixed up with BLMC. Lord Stokes and Mr. Barber have been very much in the firing line. We do our industrialists no service if we spend our time pulling them to pieces. It is probably easier to pull to pieces the management and competence of British Leyland than to put it together.
The Secretary of State was more restrained than usual today. Perhaps he was a little tired from his outside activities. He seems singularly out of touch with events in the House, and some of us can understand the reason. He failed to make the case for the Government and the Ryder Report, and was ill informed when questioned about it.
This debate has been carried on against a background of unreality. In by far our most serious economic situation since the war, we are gaily, in an almost empty House, preparing to spend £2,800 million. I sometimes doubt whether the seriousness of our economic situation is properly appreciated by Labour Members, let alone by people outside this House. Time and again we have sat here and heard Governments of both parties saying how much money they intended spending on this, that and the other—on programmes that were rolled forward year after year. All the while the money has not been there to carry them through. The first question we have to ask is; will the money be there to carry through this grandiose scheme put forward by the Government? Or is it the case, as the Secretary of State for the Environment tells us, that the party is over?
I had intended to compliment the hon. Member for Nuneaton (Mr. Huckfield) on what I am told—I did not hear it all—was an interesting speech. It no longer seems to be the custom in this House for hon. Members to come back and listen to the closing speeches, even though some hon. Members have spoken in the debate earlier. I sometimes wonder why we bother.
There has been a chorus from Labour Members, including the hon. Member for Nuneaton, asking what we would do about British Leyland and in particular about Austin-Morris. A good deal of debate has centred on this because the presumption is that if Austin-Morris were split from the rest of British Leyland there would be, in what remained, a viable operation which could if it wished obtain money from the market and make a profit.
It is right therefore to concentrate on what should happen to Austin-Morris. That is not an easy question to answer. We have had no clear answers from the Government except for a blind adherence to the Ryder Report. The Ryder Report makes it difficult to decide what should happen. We know that Austin-Morris has never been properly integrated. It was never properly integrated when the two firms originally came together, let alone within British Leyland. As my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) pointed out in an extremely interesting speech, Mr. Barber was trying to up-market Austin-Morris cars, to go for the Allegros and the higher-priced cars rather than concentrating on volume production.
We know that there was over-manning at Austin-Morris. That comes through clearly in the report. One of the difficulties Mr. Lowry had when he introduced the new system of payment was that he could not get agreement for measured day work without accepting over-manning. We also know that there has been a good deal of under-investment. We know, too, that the lion's share of investment went into Austin-Morris rather than into the other car, lorry and coach-building businesses which might have earned a greater return. I often think that if only we could have produced those extra Land Rovers and Range Rovers we might have had a rather better profit story from British Leyland.
One complaint about the report is that there has been no consideration or published evidence dealing with the other options open to the Government and to Parliament. It is not good enough for the right hon. Gentleman to say that other inquiries have been made—of which we have no details—but that the Government have decided to accept the Ryder Report. What about the CPRS report which is due later in the year? Why did the Government wait until a few weeks before the Ryder Report was due before setting up the CPRS study? What good will the study do if the Government have already committed themselves to follow the line of action suggested by Sir Don Ryder? Will the CPRS report be published? Will the facts be made available to us so that we can all judge? What will happen if the report is strikingly less optimistic than is Sir Don Ryder?
We have said that Austin-Morris is overmanned and under-invested. It is also losing a lot of money and the volume car market seems to have many difficulties. It is surprising, for example, that a loss is made on every Mini that is produced.
The right answer for Austin-Morris is to run it at a lower level of production, with a lower level of manning. During last year, this year and next year Volkswagen will have reduced its labour force in Germany by between 45,000 and 50,000 by means of early retirement, natural wastage and—as pointed out by my hon. Friends the Members for Birmingham, Hall Green (Mr. Eyre) and Bromsgrove and Redditch—by providing cash not just for investment in an industry which is overmanned and too large but for anyone in Germany who is prepared to set un a new industry to take labour away from Volkswagen. That is a much more profitable approach than freezing the level of employment in a particular industry.
The right policy for Austin-Morris is lower production, the phasing out over a period of the overmanning which undoubtedly exists and the carrying out of rationalisation to achieve lower production. It is not a question of all or nothing. There are other options available within those two approaches. It is possible to go for lower production rate and still keep a profitable motor industry at the lower end of the range.
The right hon. Gentleman talks of curtailing production in certain lines. Is he aware that if the production lines is shortened the unit cost will rise and the motor cars will become less competitive? Is not the problem of the British motor industry precisely that the production lines are too short to enable a reduction to be made in the unit cost?
Not entirely. That is one reason why I am in favour of producing a better quality car. I am by no means certain that we in Britain are well suited to producing a people's car. There are other companies that succeed in this. What is important is investment.
The Government cannot have it both ways. They are saying that we shall have this great investment in British Leyland and maintain the present labour force. All of us know that that is not possible or true. We do no service to the employees of British Leyland or the component manufacturers by trying to pull that sort of wool over their eyes. We know that that is not possible and they know it as well.
I confirm what my right hon. Friend is saying by giving an example of what happened in the package tour end of the travel industry last year, when there was too much availability of space and two companies went bust. As a result, there was a reduction in the labour force and an increase in price. The package tour end of the travel industry is now more successful than it has ever been.
My hon. Friend confirms the point I am making.
To return to the car industry, the tendency within the industry at the moment is for new investment to take place in Eastern European countries or in the developing countries. It is significant that when there was a row within Austin-Morris last year and Mr. Turnbull was dismissed, he went to South Korea to help start up its car industry. The truth of the matter is that it is the developing countries and the countries with cheap or cheaper labour which are developing their car industries. They will be the countries which will mass-produce cars.
I have a tremendously high opinion of the British worker. I hope I shall not be ruled out of order if I say that on the whole I think he is a pretty bloody-minded person. He is independent and he likes to get his own way. I do not think that he is temperamentally suited to slogging it out on the assembly line. That is not the sort of job he should be doing. It is not really the sort of job that a highly sophisticated country should be doing which has to use its brains and its skills to survive. We should be using our skills in a better way than that.
What worries me about the Government's attitude is that they are trying to freeze the industry into the present employment position. If they had sought to freeze the agriculture industry as it was in 1959 the industry would now be employing approximately 325,000 more people. In the mining industry we would be employing nearly 400,000 extra people, there would be 230,000 extra people in textiles and 200,000 extra people on the railways. If in 1959 any of us had been brave enough to say that in the following 16 years we would reduce our labour force in those basic industries by that amount, it would have been said in the House, and particularly by the Labour Opposition at that time, "You ruthless so-and-sos. You are throwing all these people out of work." But all those people have left those jobs and they have found others. At least, that was the position until the right hon. Gentleman came into office. Not only that, an extra 1·3 million people are now employed who were not employed in 1959.
It is quite wrong to try to freeze the pattern of employment in the way that Labour Members want to do.
Surprisingly enough I would agree with some of the right hon. Gentleman's projections, but if my constituents are not to make cars in Coventry and if workers are not to make cars in Birmingham, the Midlands and the rest of British Leyland's factories, and they are to be thrown out of work as the right hon. Gentleman appears to be suggesting, what else can they do?
That is a serious point and I want to deal with it in a serious way. I am not prepared to stand at this Dispatch Box or to sit on the Opposition Front Bench or anywhere else on this side of the House and hear Labour Ministers slam my party, the Conservative Party, for being the party that wants to see unemployment. We do not take that view. If we look at the record of the Conservative Party since the war, we find that we have a considerably better record of employment than have any Labour Government.
The hon. Gentleman talks about the three-day week. There are very many people who, as a result of the policy of the Secretary of State for Industry, are now on a no-day week.
I do not believe it would be right—and this is the whole basis of our case—to put the company into receivership and suddenly to close great sections of the motor car industry, whether it be Austin-Morris or any other part of it. I believe that these matters must be agreed by consultation, and should involve voluntary redundancies and natural wastage. I also believe that over a period of time we should seek to build up other industries to take the place of those which are being run down.
One of the great problems is that very many of our older industries are centred on certain areas and that if they are reduced too quickly it will result in large-scale unemployment. It is not such a difficult problem in the South-East of England, as GEC discovered when it closed down certain works since its employees were able to find alternative employment. However, it would not be so easy in the West Midlands—although it would be easier in that area than in certain parts of the country where other jobs would be extremely difficult to obtain.
Furthermore, we must face the fact that we shall have a smaller manufacturing industry. As the country gets richer—and we hope that over the years we shall get richer and more prosperous—many people will be employed in service industries rather than in manufacture. I understand that in the United States the balance between manufacturing and service industries is now about fifty-fifty. This must be a long job and should be tackled compassionately.
Of course one cannot throw people in their thousands on to the streets. I want to make it absolutely plain that it is no part of our policy that that should happen. I do not agree with the Secretary of State for Industry on the question of requiring the signing of agreements with the unions before investing large sums of money. I believe that the unions can deliver the goods and should sign on the dotted line. I do not take the right hon. Gentleman's view—namely, that it is only a piece of paper which can be torn up overnight. I believe that the unions should sign such documents, and if those signatures are obtained I believe that it will help enormously in getting the situation right.
I have one or two questions which I should like to put to the Government and to the Minister who is to reply. What do the Government intend to do about Chrysler? I believe that the Government are committing a great mistake over Chrysler. The whole tendency at present is to blame the workers at Chrysler. They are being blamed because it is being said that they are on strike since they know that the Government will bail them out. Why blame the workers for taking that view? Does not the blame lie with the Secretary of State for Industry and his governmental colleagues? I see that the right hon. Gentleman the Secretary of State is yawning away, quite bored with the House of Commons. Is not he the person who is responsible for allowing those people to think that all they have to do is to strike, bankrupt their company and the right hon. Gentleman will come along and take them over? Is that not the impression he gives? Is it not that which is so wrong? We know, and he knows, that that is not possible and never could be possible.
No, I cannot give way to the hon. Gentleman. There are some people—the Prime Minister said this—who are under the false illusion that if they strike, or if they are not satisfied with their employers, sooner or later the Government will bail them out and take over their firms. I have every reason to believe that the right hon. Gentleman has done his best to encourage that attitude over the years.
The right hon. Gentleman ended his speech by calling for a new spirit and a new approach. We can do with that. Both parties in their periods of office have not been entirely successful in running British industry. Indeed, British industry has steadily declined during the whole of this century. It has declined more rapidly in the past 30 years largely because of under-investment, which has come about because of lack of profit. Until we allow industry to make reasonable profits, the necessary investment will not be made. That is true of large sections of British industry.
No party has done more harm to the cause of investment—which they now wish to espouse and to encourage—than the Labour Party by their constant, tedious repetition of their attacks on profit. [HON. MEMBERS: "Too long."] The Opposition need not worry. The last speaker also over ran his time. I am allowed a minute or two extra.
I hope that the Opposition will now stop knocking those companies which are successful and make profits, and start praising them instead. The more profits which are made, the less companies will find themselves in the difficulty now experienced by British Leyland.
I believe that the wholehearted approach of Government supporters to British Leyland and to the Ryder Report is mistaken. I understand the view expressed by some of my hon. Friends, who feel that no more money should be invested and that a receiver should be brought in, but I believe that that approach is unrealistic. The right approach is to put more money in while a proper plan is worked out for Austin-Morris, and while the rest of British Leyland is allowed to stand on its own feet. It is only in that realisation, the realisation of the state of the British economy and the problems created if we allow inflation to go unchecked, that we shall at last start to make sense in Parliament and in the country.
I hope that my right hon. and hon. Friends will vote against the Bill but will allow the order to go through, so as to allow the Government time for second thoughts and to produce a proper policy for Austin-Morris.
The right hon. Member for Lowestoft (Mr. Prior) ended his speech by referring to the need for a new approach. Many of us have been looking to the Conservative Party for a new approach tonight. Even before this debate the Opposition declared their intention to oppose the Government's proposals for British Leyland. We therefore await with considerable eagerness the new Conservative philosophy of ambulant therapy.
The Ryder team and the Government have been accused by the Opposition in this debate of lack of realism in their approach to such fundamental issues as manning levels—on which most of the Opposition speeches have exclusively concentrated—and on productivity, markets, and the return on investment. In addition the Government have been accused, both here and elsewhere, of being over hasty in their acceptance of this report.
If we had thought that a cohesive alternative policy would emanate from the Opposition between the hard line lame duck shooters, on the one side, and the faint heart members of the RSPCA, on the other, we would have been greatly disappointed.
We have not heard any seriously considered assessment of the plan for revitalising British Leyland. We have heard only a patchwork of criticism which has been presented under the guise of safeguarding the taxpayer or of second thoughts which are little more than concealments of wide gaping divisions which have been glaringly obvious amongst hon. Gentlemen opposite.
Will the Under-Secretary deal with a realistic aspect of the matter? The Secretary of State for Industry was asked to say whether the assumptions in the Ryder Report were based on Britain being in or out of Europe. Since the situation would be seriously affected by this decision, will the hon. Gentleman confirm that the assumptions in the Ryder Report are based on the proposition that Britain remains in Europe?
Sir Don Ryder made it clear to the Trade and Industry subcommittee that it made very little difference to his estimate of export penetration in to Europe. The Opposition may not accept his view. I am giving the view of the author of this report who had undertaken an examination of these matters with a thoroughness which they certainly have not shown. It is also a matter of the arrangements which would be made if we were to come out. It is predicated by that.
The hon. Gentleman said that it is predicated by the arrangements that we make if we come out. Will he explain the basis of the arrangements which would have to be made to validate the Ryder conclusions?
I suggest that the hon. Gentleman addresses the question to Sir Don Ryder. [Hon. MEMBERS: "No."] It is the report of Sir Don Ryder.
It is not the Government's report. It is the report of Sir Don Ryder. The hon. Gentleman should understand a little about this report which he purports to have read.
If the hon. Gentleman pretends to have read the report carefully, he ought at least to have read the opening page. It is not a Government report. It is a report prepared independently without any influence or control from the Government. That is its value. I am repeating what the author of that report said.
I turn, first, to the charge of haste. The right hon. Member for Lowestoft asked why the Government were going ahead with some haste. I remind the House that the Government set up the Ryder team before Christmas last year. Sir Don Ryder and his team began work on the report immediately. The House knows that the report was prepared very speedily. But it is important to remember that the team, which was aided by a whole group of professional advisers, spent three months on detailed examination of British Leyland's activities and had full discussions with the management, the work force and all other parties involved. Subsequently the Government spent nearly four weeks in detailed consideration of the report.
In contrast it took the Leader of the Opposition only 10 days to reach the view that the Government were wrong and that the recipe for success was to provide piecemeal assistance to British Leyland with no clear assurance about the future of the company. The views which we have heard from the Opposition this evening and the views of the right hon. Member for Finchley (Mrs. Thatcher) make it clear where the charge of over-haste and superficiality lies.
The hon. Member for Henley (Mr. Heseltine) made two points. Whatever views one may have about slimming down British Leyland, the hon. Member's very long speech could have done with a good deal of slimming down. The first was the very important one of whether Ryder had reviewed other alternatives. The hon. Member makes great play of having studied the report, but he does not appear to have got even to page 3, because paragraph 12 makes it clear that the Ryder team examined the following issues:
The hon. Member's other point concerned export penetration at projected levels of profitability. Of course, his allegation of over-optimism in the targets to which he drew attention was based on the obvious but fatal flaw that the forecast was based on a static view of the company and on past performance. There is no point in a comparison of forecasts with past performance, because past performance—this was the whole point of the Ryder Report—was the result of inadequate investment. Inadequate productivity inadequate model succession and inadequate effort in overseas marketing.
It is absurd to make a comparison of future profitability purely on the basis of all that past inadequacy. Obviously the aim and the whole reasonable expectation of making this massive investment is to increase significantly the company's productivity and competitiveness in the markets so that these targets can be achieved.
Will the Under-Secretary say what the situation would be if there were a decline in the world demand for cars and if in present circumstances there were a great increase in production by British Leyland and other car firms? What would they do with all those cars? Is not the quickest way to bankruptcy to produce far more than can be sold?
The hon. Member's case is the usual one based on slimming down the company because of the existence of a poor current market. It takes a long time to equip for an upturn, which is certainly coming and is widely expected here and abroad. It is necessary to re-equip now.
My central and overriding criticism of the hon. Member for Henley is that he entirely failed to come clean with the House on what alternatives he is offering. He spoke of dividing off the profitable Jaguar, Rover and Triumph sectors and concentrating attention on the unprofitable Austin-Morris complex.
That leads me to put two questions to the hon. Gentleman. So far, he and many of his hon. Friends have slid around them. Is he proposing that the profitable sectors of the company should remain in private enterprise while the loss-maker should go into public ownership as a result of receivership? If so, this is really Rolls-Royce Mark II, with the unprofitable aero-engine company brought into public ownership and hiving off the profitable part into private ownership. If that is all the hon. Member is suggesting, his party has learned nothing and forgotten nothing in two years.
The second point I wish to put—because I do not think that that was the intention of what the hon. Gentleman was saying—[Interruption.] I think that what he was really saying—he can speak for himself, and I shall be glad to give way to him—is that he would hive off Jaguar, Rover and Triumph and close Austin-Morris. Will the hon. Gentleman come clean and tell us? Is he proposing to bring merely the loss-maker into public ownership, or is he proposing to close Austin-Morris? Will he give the House an answer?
It is all too clear. I am well aware that the right hon. Member for Lowestoft suggested a different and third solution and that many of his hon. Friends suggested other solutions. The right hon. Member for Lowestoft suggested that the proper answer was to reduce Austin-Morris, to slim it down. He made no answer to my hon. Friend's perfectly proper riposte that there will be higher unit costs if it is separated. It will lead to much less viability, and this means less security for the jobs of the workers in those firms. It will mean higher imports. The right hon. Gentleman himself said that he had a preference for moving up-market. That is in the opposite direction to the way the market is going—towards smaller cars.
If the Under-Secretary now admits that all is profitable except Austin-Morris, and since Austin-Morris accounts for only about half the labour force of British Leyland, will he now say once and for all that the figure of 1 million unemployed, which the Prime Minister and the Secretary of State keep putting forward, is totally false?
The kinds of schemes put forward by the hon. Member for Henley would be certain to lead to redundancies, when one takes into account the suppliers, amounting to several hundred thousand, and it could be up to 1 million.
As the Government have accepted the strategy, and as the Ryder Report quantifies the redundancies at £400 million, how many lost jobs does that represent?
I am coming to the points made by the hon. Gentleman, who has a passion for redundancies and for setting down the exact figures. The Ryder Report is an independent report, and as a result of that we are expecting the action on it to be taken by those whom it concerns. I know that the hon. Gentleman is always talking about Government interference in private industry. In this case it is not so much a matter of saying that the man from Whitehall knows best how many will lose their jobs. It is the man from Conservative Central Office who knows how many jobs will be lost.
In his speech the hon. Gentleman did not seem to understand the urgency of the situation and the loss of confidence which would follow from the further delay he seemed to want by providing merely a little help here and there and seeing how we get on. He predicted that the right measures, as he saw them, would be unpalatable, but immediately, when there was an intervention, he rejected very strongly the idea that his proposals would mean the end of production of the Mini. I suggest that his views are inconsistent and that he is unwilling to face the consequences of what he is proposing.
The Ryder Report stressed clearly the conclusion that vehicle production is the kind of industry we ought to retain and that British Leyland should remain a major vehicle producer. That is a view which is held on both sides of the House.
In answer to my hon. Friend the Member for Nuneaton (Mr. Huckfield), who was concerned about Jaguar losing its identity, perhaps I should say that although the Ryder team recommended that the whole of British Leyland's operations should be better integrated, and although the Government accept that view, the report says that this need not detract from the distinctive identities of specialist cars.
In his interesting and important speech, my hon. Friend the Member for Nuneaton also asked whether a full model range was too ambitious. The Ryder Report specifically considers whether British Leyland should withdraw from the small and light sector, which would mean no replacement for the Mini. It concludes that this would be wrong both on commercial grounds, because it is important for marketing reasons to have a full range, and also on national economic grounds, because of the immense increase in imports which it would lead to in this sector.
Since my hon. Friend has referred to Jaguar, although he says that Jaguar should be able to maintain its independent entity, if the integrated management of the Browns Lane and Radford plants are already split up, with the result that Jaguar is being managed by the same management as Rover, how can he say that Jaguar should be able to keep its independence?
The management question, as a result of the reorganisation of the structure carefully mentioned in the report, is one about which there will have to be a great deal of further discussion. But I do not think my hon. Friend believes that the reorganisation of the management structure, which is what he was talking about, will lead to any reduction in the distinctive nature of one sector, namely, the specialist cars to which he referred.
The right hon. Member for Down, South (Mr. Powell) made his own forthright contribution to the debate, rejecting the main proposals in the Ryder Report and getting a good deal of support from his former colleagues, though they were a great deal more mealy-mouthed about it. However, even the right hon. Gentleman has not yet applied his very stark economic theories about the indispensability of bankruptcy and the need for bankruptcy and rebirth in the case of the British Leyland of Northern Ireland, namely, Holland and Wolff.
If the right hon. Gentleman is consistent even in that case, I pay tribute at least to his consistency if not to his wisdom.
There is a sentence in the Ryder Report which in my view has received far too little serious attention. It reads:
If the UK were to opt out of vehicle production, it is not easy to see where the process of opting out would end.
This Government do not intend to preside over the descent towards a tourist economy. [Interruption.] The views expressed by the right hon. Member for Lowestoft were recommending a degree of rationalisation, slimming down and cutting back, which is indicative of that kind of approach.
We do not accept the views of those who would abdicate what we believe is properly the responsibility of a Government to some vaguely-defined concept of natural commercial forces. Criticis of this kind misread the essentially temporary setbacks which have affected this industry throughout the world. Serious though the circumstances are, I deplore the suggestions which have come from some quarters in the debate today that the right course for the Government is simply to stand on the sidelines acquiescing in the destruction of such a valuable national asset for all those who work in it.
Is the hon. Gentleman aware that he is asking the House to sign the biggest single cheque in history? Is he aware that in doing so he owes not only to this House but to the British people some pledge of security or some safeguard that can be offered in return for the extremely risky investment that he is asking us to approve tonight?
Of course this is a very major investment, but there are enormous ramifications throughout the whole economy. This is not concentrated on one single company. It is not concentrated only on the motor industry, crucially important though that is to the engineering industry. Fifteen per cent. of employment throughout the engineering industry is in British Leyland. When one takes into account the ramifications of this, one can appreciate that we are providing a security, and those who oppose the Bill and the following motion will have a great deal to answer for to the people of this country.
Sir Don Ryder's report does not cover one of the most important component parts of British Leyland motors and buses, and that is glass. Before we decide this issue, will my hon. Friend give an undertaking to the House that in exchange for this large sum of money there will be an inquiry as to why British Leyland imports foreign glass for all its vehicles?
My hon. Friend is quite right to raise on behalf of his constituents the issue of the importance of the work which they provide through the Pilkington factory for motor cars. I wholly respect that point. My Department is extremely conscious of this matter. If I had more time in this debate, I would discuss the negotiations which are in progress in order to preserve work in the Pilkington factory at St. Helens.
The report rightly pinpoints that the success of British Leyland in the next decade will depend mainly on the skills, efforts and attitude of its employees. This will apply to everyone—
—from the shop floor up to top management. The report identifies as the most crucial factor in improving industrial relations the need to make real progress towards industrial democracy. The report makes specific proposals for the establishment of a new structure of joint councils, committees and conferences in which the shop stewards will have a major rôle.
The Government believe that this now provides an opportunity, for the first time for this company and, indeed, for the first time in this industry's history, for a new spirit of partnership to emerge in British Leyland.
We firmly believe that those who work in the plant on the shop floor and have shop floor responsibilities, as well as full-time trade union officials, should have the opportunity—indeed, the obligation—in the light of their deep knowledge and experience of this industry to contribute constructively to the solution along the lines that this team has put forward, in particular in accordance with the proposals in the Industry Bill for planning agreements. We intend that workers will be able to participate in matters relating to the general strategy of the company, industrial investments and export markets, from which until now they have always been excluded.
I believe that the Bill is very important and a major move in the Government's plans to regenerate British industry.
This is not a time, contrary to what the Conservatives have indicated, for doubts and delays. The Ryder Committee has recommended a clear line of development. The Government for their part have responded with real urgency and a willingness to face up to the problem. I therefore strongly recommend to the House that we pass
|Division No. 215.]||AYES||[10.0 p.m.|
|Allaun, Frank||Edwards, Robert (Wolv SE)||Kelley, Richard|
|Anderson, Donald||Ellis, Tom (Wrexham)||Kerr, Russell|
|Archer, Peter||English, Michael||Kilroy-Silk, Robert|
|Armstrong, Ernest||Evans, Fred (Caerphilly)||Kinnock, Neil|
|Ashley, Jack||Evans, Ioan (Aberdare)||Lamborn, Harry|
|Ashton, Joe||Evans, John (Newton)||Lamond, James|
|Atkinson, Norman||Ewing, Harry (Stirling)||Leadbitter, Ted|
|Bagier, Gordon A. T.||Faulds, Andrew||Lee, John|
|Bain, Mrs. Margaret||Fernyhough, Rt. Hon. E.||Lestor, Miss Joan (Eton & Slough)|
|Barnett, Rt. Hon. Joel (Heywood)||Fitch, Alan (Wigan)||Lever, Rt. Hon. Harold|
|Bates, Alt||Flannery, Martin||Lewis, Arthur (Newham N.)|
|Bean, R. E.||Fletcher, Raymond (Ilkeston)||Lewis, Ron (Carlisle)|
|Bann, Rt. Hon. Anthony Wedgwood||Fletcher, Ted (Darlington)||Lipton, Marcus|
|Bidwell, Sydney||Foot, Rt. Hon. Michael||Litterick, Tom|
|Blenkinsop, Arthur||Ford, Ben||Lomas, Kenneth|
|Boardman, H.||Forrester, John||Loyden, Eddie|
|Booth, Albert||Fowler, Gerald (The Wrekin)||Lyon, Alexander (York)|
|Boothroyd, Miss Betty||Fraser, John (Lambeth, N'w'd)||Lyons, Edward (Bradford W.)|
|Bottomley, Rt. Hon. Arthur||Freeson, Reginald||Mabon, Dr. J. Dickson|
|Boyden, James (Bish Auck)||Garrett, John (Norwich S.)||McCartney, Hugh|
|Bradley, Tom||Garrett, W. E. (Wallsend)||MacFarquhar, Roderick|
|Bray, Dr. Jeremy||George, Bruce||Mackenzie, Gregor|
|Brown, Hugh D. (Provan)||Gilbert, Dr. John||Mackintosh, John P.|
|Brown, Robert C. (Newcastle W.)||Ginsburg, David||McMillan, Tom (Glasgow C.)|
|Brown, Ronald (Hackney S.)||Golding, John||McNamara, Kevin|
|Buchanan, Richard||Gould, Bryan||Madden, Max|
|Butler, Mrs. Joyce (Wood Green)||Gourlay, Harry||Magee, Bryan|
|Callaghan, Jim (Middleton & P.)||Graham, Ted||Mahon, Simon|
|Campbell, Ian||Grant, George (Morpeth)||Mallalieu, J. P. W.|
|Canavan, Dennis||Grant, John (Islington C.)||Marks, Kenneth|
|Cant, R. B.||Grocott, Bruce||Marquand, David|
|Carmichael, Neil||Hamilton, James (Bothwell)||Maynard, Miss Joan|
|Carter, Ray||Hamilton, W. W. (Central Fife)||Meacher, Michael|
|Carter-Jones, Lewis||Hardy, Peter||Mellish, Rt. Hon. Robert|
|Cartwright, John||Harper, Joseph||Mendelson, John|
|Castle, Rt. Hon. Barbara||Harrison, Walter (Wakefield)||Mikardo, Ian|
|Clemitson, Ivor||Hart, Rt. Hon. Judith||Millan, Bruce|
|Cocks, Michael (Bristol S.)||Hatton, Frank||Miller, Dr. M. S. (E Kilbride)|
|Cohen, Stanley||Hayman, Mrs. Helene||Miller, Mrs. Millie (Ilford N.)|
|Concannon, J. D.||Healey, Rt. Hon. Denis||Molloy, William|
|Conlan, Bernard||Heffer, Eric S.||Moonman, Eric|
|Cook, Robin F. (Edin C.)||Henderson, Douglas||Morris, Alfred (Wythenshawe)|
|Corbett, Robin||Hooley, Frank||Morris, Charles R. (Openshaw)|
|Cox, Thomas (Tooting)||Horam, John||Morris, Rt. Hon. J. (Aberavon)|
|Craigen, J. M. (Maryhill)||Howell, Denis (B'ham, Sm H.)||Mulley, Rt. Hon. Frederick|
|Crawshaw, Richard||Hoyle, Doug (Nelson)||Newens, Stanley|
|Crosland, Rt. Hon. Anthony||Huckfield, Les||Oakes, Gordon|
|Cryer, Bob||Hughes, Rt. Hon. C. (Anglesey)||Ogden, Eric|
|Cunningham, G. (Islington S.)||Hughes, Mark (Durham)||O'Halloran, Michael|
|Cunningham, Dr. J. (Whiteh)||Hughes, Robert (Aberdeen N.)||O'Malley, Rt. Hon. Brian|
|Dalyell, Tam||Hughes, Roy (Newport)||Orbach, Maurice|
|Davidson, Arthur||Hunter, Adam||Orme, Rt. Hon. Stanley|
|Davies, Bryan (Enfield N.)||Irvine, Rt. Hon. Sir A. (Edge Hill)||Ovenden, John|
|Davies, Denzil (Llanelli)||Irving, Rt. Hon. S. (Dartford)||Owen, Dr. David|
|Davies, Ifor (Gower)||Jackson, Colin (Brighouse)||Padley, Walter|
|Davis, Clinton (Hackney C.)||Jackson, Miss Margaret (Lincoln)||Palmer, Arthur|
|Deakins, Eric||Janner, Greville||Park, George|
|Dean, Joseph (Leeds West)||Jay, Rt. Hon. Douglas||Parker, John|
|Delargy, Hugh||Jeger, Mrs. Lena||Parry, Robert|
|Dempsey, James||Jenkins, Hugh (Putney)||Pavitt, Laurie|
|Doig, Peter||Jenkins, Rt. Hon. Roy (Stechford)||Peart, Rt. Hon. Fred|
|Dormand, J. D.||Johnson, James (Hull West)||Pendry, Tom|
|Douglas-Mann, Bruce||Johnson, Walter (Derby S.)||Perry, Ernest|
|Dunn, James A.||Jones, Alec (Rhondda)||Phipps, Dr. Colin|
|Dunnett, Jack||Jones, Barry (East Flint)||Prentice, Rt. Hon. Reg|
|Dunwoody, Mrs. Gwyneth||Jones, Dan (Burnley)||Prescott, John|
|Edelman, Maurice||Judd, Frank||Price, C. (Lewisham W.)|
|Edge, Geoff||Kaufman, Gerald||Price, William (Rugby)|
|Radice, Giles||Spriggs, Leslie||Watkins, David|
|Reid, George||Stallard, A. W.||Watkinson, John|
|Richardson, Miss Jo||Stewart, Donald (western Isles)||Weetch, Ken|
|Roberts, Albert (Normanton)||Stoddart, David||Weitzman, David|
|Roberts, Gwilym (Cannock)||Stott, Roger||Wellbeloved, James|
|Robertson, John (Paisley)||Strang, Gavin||Welsh, Andrew|
|Roderick, Caerwyn||Strauss, Rt. Hon. G. R.||White, Frank R. (Bury)|
|Rodgers, George (Chorley)||Summerskill, Hon. Dr. Shirley||White, James (Pollok)|
|Rooker, J. W.||Swain, Thomas||Whitehead, Phillip|
|Roper, John||Taylor, Mrs. Ann (Bolton W.)||Whitlock, William|
|Rose, Paul B.||Thomas, Jeffrey (Abertillery)||Willey, Rt. Hon. Frederick|
|Ross, Rt. Hon. W. (Kilmarnock)||Thomas, Mike (Newcastle E.)||Williams, Alan (Swansea W.)|
|Rowlands, Ted||Thomas, Ron (Bristol NW)||Williams, Alan Lee (Hornch'ch)|
|Ryman, John||Thompson, George||Williams, Rt. Hon. Shirley (Hertford)|
|Sandelson, Neville||Thorne, Stan (Preston South)||Wilson, Alexander (Hamilton)|
|Sedgemore, Brian||Tierney, Sydney||Wilson, Gordon (Dundee E.)|
|Selby, Harry||Tinn, James||Wilson, Rt. Hon. H. (Huyton)|
|Shaw, Arnold (Ilford South)||Tomlinson, John||Wilson, William (Coventry SE)|
|Sheldon, Robert (Ashton-u-Lyne)||Tomney, Frank||Wise, Mrs. Audrey|
|Short, Rt. Hon. E. (Newcastle C.)||Torney, Tom||Woodall, Alec|
|Short, Mrs. Renée (Wolv NE)||Urwin, T. W.||Woof, Robert|
|Silkin, Rt. Hon. John (Deptford)||Varley, Rt. Hon. Eric G.||Wrigglesworth, Ian|
|Sillars, James||Wainwright, Edwin (Dearne V.)||Young, David (Bolton E.)|
|Silverman, Julius||Walden, Brian (B'ham, L'dyw'd)|
|Small, William||Walker, Harold (Doncaster)||TELLERS FOR THE AYES:|
|Smith, John (N Lanarkshire)||Walker, Terry (Kingswood)||Mr. Donald Coleman and|
|Snape, Peter||Ward, Michael||Mr. John Ellis|
|Adley, Robert||Drayson, Burnaby||Howell, David (Guildford)|
|Aitken, Jonathan||du Cann, Rt. Hon. Edward||Howell, Ralph (North Norfolk)|
|Alison, Michael||Durant, Tony||Hunt, John|
|Amery, Rt. Hon. Julian||Dykes, Hugh||Hurd, Douglas|
|Arnold, Tom||Edwards, Nicholas (Pembroke)||Hutchison, Michael Clark|
|Atkins, Rt. Hon. H. (Spelthorne)||Elliott, Sir William||Irvine, Bryant Godman (Rye)|
|Awdry, Daniel||Eyre, Reginald||Irving, Charles (Cheltenham)|
|Baker, Kenneth||Fairbairn, Nicholas||James, David|
|Banks, Robert||Fairgrieve, Russell||Jessel, Toby|
|Beith, A. J.||Farr, John||Johnson Smith, G. (E Grinstead)|
|Bell, Ronald||Fell, Anthony||Jones, Arthur (Daventry)|
|Bennett, Sir Frederic (Torbay)||Finsberg, Geoffrey||Jopling, Michael|
|Bennett, Dr. Reginald (Fareham)||Fisher, Sir Nigel||Joseph, Rt. Hon. Sir Keith|
|Berry, Hon. Anthony||Fletcher, Alex (Edinburgh N.)||Kaberry, Sir Donald|
|Biffen, John||Fletcher-Cooke, Charles||Kellett-Bowman, Mrs. Elaine|
|Biggs-Davison, John||Fookes, Miss Janet||Kershaw, Anthony|
|Blaker, Peter||Fowler, Norman (Sutton C'f'd)||Kilfedder, James|
|Body, Richard||Fox, Marcus||Kimball, Marcus|
|Boscawen, Hon. Robert||Fraser, Rt. Hon. H. (Stafford & St)||King, Evelyn (South Dorset)|
|Bowden, A. (Brighton, Kemptown)||Freud, Ciement||King, Tom (Bridgwater)|
|Boyson, Dr. Rhodes (Brent)||Fry, Peter||Kirk, Peter|
|Braine, Sir Bernard||Galbraith, Hon. T. G. D.||Kitson, Sir Timothy|
|Brittan, Leon||Gardner, Edward (S Fylde)||Knight, Mrs. Jill|
|Brotherton, Michael||Gilmour, Sir John (East Fife)||Knox, David|
|Brown, Sir Edward (Bath)||Glyn, Dr. Alan||Lane, David|
|Bryan, Sir Paul||Godber, Rt. Hon. Joseph||Langford-Holt, Sir John|
|Buchanan-Smith, Alick||Goodhart, Philip||Latham, Michael (Melton)|
|Buck, Antony||Goodhew, Victor||Lawrence, Ivan|
|Budgen, Nick||Goodlad, Alastair||Lawson, Nigel|
|Bulmer, Esmond||Gorst, John||Lester, Jim (Beeston)|
|Burden, F. A.||Gow, Ian (Eastbourne)||Lewis, Kenneth (Rutland)|
|Butler, Adam (Bosworth)||Gower, Sir Raymond (Barry)||Lloyd, Ian|
|Carlisle, Mark||Grant, Anthony (Harrow C.)||Loveridge, John|
|Carr, Rt. Hon. Robert||Gray, Hamish||Luce, Richard|
|Chalker, Mrs. Lynda||Grieve, Percy||McAdden, Sir Stephen|
|Churchill, W. S.||Grist, Ian||McCrindle, Robert|
|Clark, Alan (Plymouth, Sutton)||Grylls, Michael||Macfarlane, Neil|
|Clark, William (Croydon S.)||Hall, Sir John||MacGregor, John|
|Clarke, Kenneth (Rushcliffe)||Hall-Davis, A. G. F.||Macmillan, Rt. Hon. M. (Farnham)|
|Clegg, Walter||Hamilton, Michael (Salisbury)||McNair-Wilson, M. (Newbury)|
|Cockcroft, John||Hampson, Dr. Keith||McNair-Wilson, P. (New Forest)|
|Cooke, Robert (Bristol W.)||Hannam, John||Madel, David|
|Cope, John||Harrison, Col. Sir Harwood (Eye)||Marshall, Michael (Arundel)|
|Cordle, John H.||Harvie Anderson, Rt. Hon. Miss||Marten, Neil|
|Cormack, Patrick||Hastings, Stephen||Mates, Michael|
|Corrie, John||Havers, Sir Michael||Mather, Carol|
|Costain, A. P.||Hawkins, Paul||Maude, Angus|
|Critchley, Julian||Hayhoe, Barney||Maudling, Rt. Hon. Reginald|
|Crouch, David||Heseltine, Michael||Mawby, Ray|
|Crowder, F. P.||Hicks, Robert||Maxwell-Hyslop, Robin|
|Davies, Rt. Hon. J. (Knutsford)||Higgins, Terence L.||Mayhew, Patrick|
|Dean, Paul (N Somerset)||Holland, Philip||Meyer, Sir Anthony|
|Dodsworth, Geoffrey||Herders, Peter||Mills, Peter|
|Douglas-Hamilton, Lord James||Howe, Rt. Hon. Sir Geoffrey||Miscampbell, Norman|
|Mitchell, David (Basingstoke)||Renton, Rt. Hon. Sir D. (Hunts)||Stanley, John|
|Moate, Roger||Renton, Tim (Mid-Sussex)||Steel, David (Roxburgh)|
|Molyneaux, James||Rhys Williams, Sir Brandon||Stewart, Ian (Hitchin)|
|Monro, Hector||Ridley, Hon. Nicholas||Stokes, John|
|Montgomery, Fergus||Ridsdale, Julian||Stradling Thomas, J.|
|Moore, John (Croydon C.)||Rifkind, Malcolm||Tapsell, Peter|
|More, Jasper (Ludlow)||Rippon, Rt. Hon. Geoffrey||Taylor, R. (Croydon NW)|
|Morgan-Giles, Rear-Admiral||Roberts, Michael (Cardiff NW)||Taylor, Teddy (Cathcart)|
|Morris, Michael (Northampton S.)||Roberts, Wyn (Conway)||Tebbit, Norman|
|Morrison, Hon. Peter (Chester)||Rodgers, Sir John (Sevenoaks)||Temple-Morris, Peter|
|Mudd, David||Ross, Stephen (Isle of Wight)||Thatcher, Rt Hon Margaret|
|Neave, Airey||Rossi, Hugh (Hornsey)||Thomes, Rt. Hon. P. (Hendon S.)|
|Nelson, Anthony||Rost, Peter (SE Derbyshire)||Thorpe, Rt. Hon. Jeremy (N Devon)|
|Neubert, Michael||Sainsbury, Tim||Townsend, Cyril D.|
|Newton, Tony||St. John-Stevas, Norman||Trotter, Neville|
|Normanton, Tom||Scott, Nicholas||Tugendhat, Christopher|
|Nott, John||Scott-Hopkins, James||van Straubenzee, W. R.|
|Onslow, Cranley||Shaw, Giles (Pudsey)||Vaughan, Dr. Gerard|
|Oppenheim, Mrs. Sally||Shelton, William (Streatham)||Viggers, Peter|
|Osborn, John||Shepherd, Colin||Wainwright, Richard (Colne V.)|
|Page, John (Harrow West)||Shersby, Michael||Wakeham, John|
|Page, Rt. Hon. R. Graham (Crosby)||Silvester, Fred||Walker-Smith, Rt. Hon. Sir Derek|
|Pardoe, John||Sims, Roger||Warren, Kenneth|
|Parkinson, Cecil||Sinclair, Sir George||Weatherill, Bernard|
|Pattie, Geoffrey||Skeet, T. H. H.||Wells, John|
|Percival, Ian||Smith, Cyril (Rochdale)||Whitelaw, Rt. Hon. William|
|Peyton, Rt. Hon. John||Smith, Dudley (Warwick)||Wiggin, Jerry|
|Pink, R. Bonner||Speed, Keith||Winterton, Nicholas|
|Powell, Rt. Hon. J. Enoch||Spence, John||Young, Sir G. (Ealing. Acton)|
|Prior, Rt. Hon. James||Spicer, Jim (W Dorset)||Younger, Hon. George|
|Raison, Timothy||Spicer, Michael (S Worcester)|
|Rathbone, Tim||Sproat, Iain||TELLERS FOR THE NOES:|
|Rawlinson, Rt. Hon. Sir Peter||Stainton, Keith||Benyon and|
|Rees, Peter (Dover & Deal)||Stanbrook, Ivor||Mr. Spencer Le Marchan|
|Rees-Davies, W. R.|