Motor Cycle Industry

– in the House of Commons at 12:00 am on 7th August 1975.

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12.17 p.m.

Photo of Mr Reginald Eyre Mr Reginald Eyre , Birmingham, Hall Green

The present situation in the British motorcycle industry with regard to unemployment is worrying for many hon. Members, particularly so for those who have constituency interests in the West Midlands. Therefore we are appreciative, Mr. Speaker, of the time you have allotted to this debate.

Whatever may be said in the course of the debate, it has to be acknowledged that the former Conservative Minister of State, Mr. Christopher Chataway, within the restraints then applying, was seeking a genuine viable solution when he called in the Norton Villiers management to apply itself to the task of making a commercial success of the newly-formed NVT.

The most important requirement today, after so much unhappy history—from which we all have to learn—is the vital need for moderation from all the parties involved in the present difficulties. We should concentrate our efforts on finding a sensible and realistic approach because the position is now so much worse for everyone concerned than it was in 1973. However, I emphasise that there is no need for the defeatist stance that appears to have been adopted by the Government.

Government Ministers must keep firmly in mind their true liability, the Government having been so heavily involved and the former Secretary of State for Industry having given such strong assurances to the men at Small Heath. He said: The Government is fully committed to securing the future of the motor cycle industry in this country and of course this involves the success of NTV no less than the co-operative. These words were contained in a carefully-worded letter dated 6th November 1974 addressed to Mr. Checkley, convener of the shop stewards at the Small Heath works. The letter was written in response to anxieties which had been expressed by Mr. Checkley on behalf of the men. Those words were intended to have a profound effect upon the men, and they did.

The statement of the present Secretary of State for Industry on 31st July was a total repudiation of that commitment, and the men feel that they have been misled and badly let down by the Government.

In the Court Line debate yesterday, the Secretary of State for Energy said that that affair fell short of expressions of unqualified confidence.

The words I have quoted do not have that qualification. The question is, did the former Secretary of State for Industry exceed his authority? He said yesterday that he accepted full personal responsibility for all decisions that the Government took last year. However, it seems obvious to those concerned that the Cabinet has reviewed the commitment which the former Secretary of State for Industry entered into and has now decided that he acted unwisely. By its action the Cabinet has said "This is another of his mistakes", and it has shrugged its shoulders and turned away from the industry. It is no wonder that the men are saying that they feel betrayed.

The Secretary of State for Energy also asked yesterday, "How far is too far?" The men are about to lose their jobs, but the Minister still sails on in his job.

I turn to the developing situation of the sit-in. My goodness, how we in this House should feel for those men in Wolverhampton. When talking to their senior representatives one becomes conscious of the fact that they believe in their motor cycle industry. They were a successful profit-making part of it in Norton Villiers and had no reason to doubt that their future was secure under the arrangements made by the former Secretary of State for Industry. All those men are now openly critical of politicians.

In these circumstances, it is the duty of a Minister to tell the truth about the whole situation and to give a positive and realistic lead, not simply to imply that we cannot find a new track when we certainly can. We realise very disturbingly the deterioration in the situation since 1973—the raging rate of inflation which has developed, the high and increasing unemployment in the West Midlands, the huge size of the budgetary deficit, the problems of the balance of payments and the strength of sterling, and the fact that the Government are under enormous pressure to limit their swollen expenditure.

I shall say what I think should be done for the motor cycle industry, but I am not formulating unrealistic demands for the Government to pour huge funds into the industry. I am very conscious that the former Secretary of State has committed the Government to the investment of colossal sums in the motor car industry, and I am conscious of the fears of that industry that a similar reappraisal of the Government's position might take place.

I accept that in these anxious times our only way to salvation as a country is to produce goods or services efficiently enough to attract customers at home and abroad. With this principle in mind, I tell the present Secretary of State for Industry, who has inherited some terrifying problems, that the reasonable and attainable demand now is for a plan for viability for a modified motor cycle industry. I appeal to him to talk to the unions concerned and the NVT management without delay. I know he will also bear in mind that many firms and jobs are involved in the supply of electrical equipment and components to the motor cycle industry. Those firms will want to help in finding a viable solution.

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry North West

The hon. Gentleman used the phrase "modified motor cycle industry". Will he define exactly what he means by "modified"? Does he mean cutting down the existing numbers of men? That will not do anything to solve the unemployment problem. Does he advocate cutting down the volume of production, which would ultimately raise unit costs?

Photo of Mr Reginald Eyre Mr Reginald Eyre , Birmingham, Hall Green

I cannot say precisely what would be the form of a viable industry. I accept that it would be difficult to maintain the employment of the present number of men employed. But I think it is reasonable and sensible to try to save as high a proportion of the jobs as possible in these difficult circumstances.

Let the Secretary of State consult all the people involved with the greatest possible speed. The sit-in at Wolverhampton makes ominous news. A considerable act of leadership by the Minister is required to get men out of what could become entrenched positions from which they can only inflict further defeats upon themselves and their own interests. It would help if it were said frankly that both Governments have made mistakes. Pitched mock battles about ideology, "phoney" class warfare or bigoted attempts to pin total blame on managements or work forces will do no good to anyone involved or to the economy on which we all depend.

What is needed, following the transfer of the former Secretary of State, is for everyone to co-operate in taking a new look at the situation. The aim must be to find the most sensible way of cutting back and finding a realistic basis for the survival of an effective industry, and thus of limiting the hardship involved.

On those terms, I firmly believe that there is a future for a competitive British motor cycle industry. The industry now holds its own in about 50 per cent. of the home market for heavy motor cycles. That in itself is an important contribution to import-saving, and it could be improved upon. The very thought of having no British manufacturer of motor cycles, and of having to import police and Service motor cycles, is most disturbing.

The Boston Report indicated an expected growth of big bike sales next year of 7 per cent. in the United States, 10 per cent. in Canada and 17 per cent. in Europe. We are successful exporters, and can continue to be so and to take our share of those markets. It should be noted, to support that view, that in the United States last year Norton registered the highest percentage increase in sales over the previous year of any motor cycle importer. The American market is particularly difficult at present. It is well known that demand for heavy bikes, which are at the top end of the market, is cyclical there in economic terms as well as terms descriptive of the product. But there are signs that the market is recovering from temporary recession. We have many good friends among the dealers there, who should not be exposed to further uncertainties.

We are building up exports elsewhere in the world. For example, an order was recently received for 300 machines for Government service use in Nigeria, and similar orders have come from public authorities in the oil States. The European market is slow but, as forecast, it is improving—noticeably in Spain, for example. Therefore, if the industry is sensible it can make a useful contribution to our overseas earnings.

Here I wish to make a brief reference to the statement of the Secretary of State for Industry on 31st July, when he said: nearly £24 million of public money has been spent or committed to the motor cycle industry in the past two years."—[Official Report, 31st July 1975; Vol. 896, c. 2060.] It should be noted that £14 million of that total was made up of export credit guarantees—£6 million to the Meriden Co-operative, and £8 million went to NVT. I stress that those sums were in the form of guarantees rather than the provision of cash. I know that the Minister would want to be fair in his presentation of the facts.

Critics of management should take into account that Norton Villiers was formed in 1966 to salvage the business of the old Norton. In the six years to 1972 it had rebuilt the business to a viable and successful level, manufacturing in Wolverhampton and exporting 90 per cent. of its production—and all without any Government assistance. For that reason, Norton Villiers was given the wider responsibility of putting right the failed BSA business in March 1973, but since then there have been almost constant distractions about which we have all heard so much. Norton Villiers has hardly had a fair chance to make a success of what is probably the last opportunity for a British motor cycle industry.

I believe that, to help in the process of survival, compensation is due to NVT for ministerial involvement in time-wasting doctrinal issues over the past two years. The delays incurred, and the production and sales lost in that period, to say nothing of management effort diverted, have cost the company dear. It is entitled to proper recompense.

Every hon. Member will feel sympathy for those who are displaced from jobs at this difficult and worsening time. In addition to redundancy pay they are entitled to every consideration for retraining, because it is essential for our future that we have confidence in our initiative to find ways to make new products with new methods. It is becoming clearer every day that this country needs to set new standards in research, investment, industrial relations, management, sales and service, or we shall never maintain our standard of living.

If the realistic basis that I have described, upon which I hope the Minister will operate, could be established quickly, we should at least save a significantly large number of jobs in the West Midlands and enable the industry to make a substantial contribution to the economy.

12.30 p.m.

Photo of Mr Robert Edwards Mr Robert Edwards , Wolverhampton South East

We are grateful to the hon. Member for Birmingham, Small Heath (Mr. Eyre) for taking the initiative to enable us to have a short debate on this important issue. I congratulate him on his moderate and constructive contribution. It will enable us to follow his example and not to try to assess the blame for this critical situation.

The Wolverhampton establishment is in my constituency. I must declare two interests. Until January last, I was the National Chemical Officer of the Transport and General Workers' Union. Many of the workers, clerical staff and technicians involved in all three factories are members of that union. In an honorary capacity, I am President of the Industrial Common Ownership Movement, which has 16 establishments organised on the principle of co-operation, so I am greatly interested in the success of the Meriden co-operative. These are two interests but they are not vested interests.

I hope that the Minister will take into consideration the real social problems that will arise in the West Midlands if the motor-cycle industry is allowed to disappear as if it had never existed. That is the serious danger. It is not a question of reducing the industry but of saving it from complete collapse.

In Wolverhampton, I have never known in 20 years' membership of this House quite such indignation and disillusionment in all sections of the community as that which exists today. The chamber of commerce, the whole trade union movement, the trades council and the local authority are all unanimous. Even the Conservative councillors are supporting an appeal to the Government. There is also the sit-in of workers.

Many of these workers have never worked in any other factory. Many of them came out of the Army to the Wolverhampton Villiers factory. Some have worked there for 38 years. Many of them are highly skilled. This establishment has never had an industrial dispute. That is how good and balanced and harmonious has been the relationship between the unions and the management. Yet this establishment, with the best record of production per worker in the motor cycle industry, is in danger of complete collapse and closure.

The Wolverhampton factory was producing 18 motor cycles per worker a year as against 10 at Small Heath—I am not trying to put one section against another—and 14 at Meriden before it was a co-operative. There is a very small firm producing only five motor cycles a week at a cost of £1,200 each. But every one is sold as it goes out of the factory. I therefore refuse to accept the view suggested by the Department that there is no future for this industry.

When are we to call a halt to the wiping out of industry after industry in our country? Seven hundred workers in the Pilkington glassworks at St. Helens lost their jobs because the Japanese can produce television tubes at lower than the production costs in this country. St. Helens is a high unemployment area. Is its story to be repeated in the motor cycle industry and later in the motor car industry?

As an internationalist, I have never subscribed to interfering with free trade across the frontiers of the world. But there are times in our history when we have to take action to protect the employment of our people, and it is now an urgent necessity for the motor cycle industry.

No risk capital is coming into the industry from private enterprise. I hope that the hon. Member for Small Heath will forgive me if I say that the only justification for private enterprise is that it supplies risk capital. If it cannot find that risk capital, it is no longer functioning. That is why the State from time to time has to move in and supply money to maintain British industry. That is why the motor cycle industry if it is to be saved must be brought under some form of social ownership.

We have had the report of the experts. We have never had time in the House to debate it. We could rip that report apart chapter by chapter if we had time, but our time is very limited. But I challenge from my own experience the so-called facts which they give about Japanese production, wages and social conditions.

As chairman of Trade Union International with half a million Japanese workers affiliated to it, I know what they tell me at international meetings about the absence of social wages in Japan. It is time we had a thorough analysis of Japanese working conditions and of how they are able to produce goods at prices lower than the production costs in this country and in Europe. Unless something is done to put a limited restriction on the import of Japanese motor cycles, we cannot save our own industry. This is an urgent job that has to be done, and I believe that it can be done within the principles of GATT in order to save our own industry.

In Wolverhampton we have 5,500 unemployed, which is getting towards 7 per cent. That is higher than the national average. It has never happened before in half a century. We have 1,800 school leavers without any likelihood of work.

The Norton Villiers factory in Wolverhampton is also a very important training centre for the engineering industry. In a small but important scheme, it trains engineering apprentices for 16 different firms. In the West Midlands, firms take in one another's washing as it were. Again, not merely one factory is involved in this crisis. Altogether another 65 are involved in producing spare parts for Wolverhampton, Small Heath and Meriden. We are talking about 12,000 workers, technicians and clerical staff who will lose their jobs.

My right hon. Friend the Secretary of State has a communication from the Wolverhampton and Bilston Trades Council. In it there is a close analysis of the cost if this establishment closes down—for example, redundancy pay running to between £8 million and £10 million, unemployment benefit running into millions more, and the loss on insurance stamps, running into hundreds of thousands of pounds. There would be a loss by way of rent rebates for the local council running into thousands of pounds. If we add up those costs, we can understand the amount of cash required to keep this industry going. That is sensible.

I hope that we shall take another look at this problem of the motor cycle industry. I hope that there will be a holding arrangement and close discussion with the trade unions and management concerned, who have constructive ideas, which I do not have enough time to elaborate in this short debate.

12.41 p.m.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

I agree with the hon. Member for Wolverhampton, South-East (Mr. Edwards) in his expressions of sympathy towards our constituents, who feel the deepest sense of unease and anxiety at what is happening in their industry.

In a period of deepening recession and rising unemployment, everyone is anxious to hold on to his job. It is difficult to persuade anyone that there is no future in subsidised employment. It is difficult to explain that it is only by the security of profit from private industry that people can hope to have long-term jobs. Few of us in any walk of life, whether trade unionists or industrialists, can be totally consistent when we find that our jobs are under attack. I regret that many people who feel themselves under attack believe that Government support—which is the polite, modern way of talking about nationalisation—is an answer to their problems.

The anxieties and resentment of many of our constituents arise as a result of the feeling that they have been conned by successive Governments. So often have they been told that interference by politicians and support by the taxpayers' money will be the answer to their problems that they now believe it. Now, the rug has been whipped from under their feet by the Government who they believed were least capable of doing that.

However, there is great hope for these people. They are men of great intelligence, high skills, ingenuity and determination. They love their jobs and have a capacity for this highly detailed and skilled work.

As long as Britain has any wealth or standing in the industrial world there will be people who want to employ such men. However, no one should tell them that they can expect the same jobs in the same places, doing the same type of work, for the remainder of their lives. In the highly uncertain situation in which this country finds itself, we can only extend from this House our deepest sympathy to them in their moment of great anxiety.

I disagree with the argument that there is no risk capital available. In recent weeks we have seen risk capital going into gilts in a large way and the gambling industry. Risk capital is available, but it is placed to earn the best profit. As long as profit remains a dirty word in this country risk capital will not be attracted into the engineering industry in the West Midlands, which we hope will thrive in the future. The Government must understand that profit decides where risk capital will go. I do not refer to gross profit. Net profit after tax decides where investment will go. When the Government recognise that fact they will be doing more to help British industry than giving short-term aid to our many ailing industries.

Many hon. Members will agree with me in regreting that the hon. Member for Wolverhampton, North-East (Mrs. Short) is not with us this afternoon. She has been extremely active in attacking her own Government for their failure to nationalise this industry. On 5th August she was reported in the Financial Times as saying that she would support a sit-in at NVT's Wolverhampton factory as long as the workers did nothing against the law.

We do not need to be lawyers to understand that a sit-in is unlawful. It is inconsistent to pretend that a sit-in can be anything other than putting a pistol at the Government's head by unlawful methods. It is regrettable that the hon. Lady is not here this afternoon. This is the place where she could argue her case.

Photo of Mr Robert Edwards Mr Robert Edwards , Wolverhampton South East

I am sure the hon. Gentleman realises that the management encouraged this sit-in and is, therefore, violating the law.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

The management made some equivocal comments on the sit-in. I greatly regret that. It must be said firmly that the plant and premises do not belong to the management. They belong to the shareholders. As long as we want shareholders to risk their capital, at the least they must be satisfied that the management is carryling out its proper duties under the Companies Act in safeguarding the legal rights of shareholders in the plant and premises.

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham, Erdington

The management is prepared to tolerate, if not to encourage, the sit-in. There can be nothing illegal about that

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

I hoped that I had made the point clear. The management do not own the assets. The shareholders own the assets. The management has no right to tolerate or encourage a sit-in.

I attempted to discuss the way in which the hon. Member for Wolverhampton. North-East had attempted to encourage the sit-in. I regret the hon. Lady's action. She has a legitimate rôle to play in the House of Commons in trying to persuade the Government to nationalise this industry.

However, I make it clear that I do not agree with nationalisation. I do not agree with it in Wolverhampton any more than in Timbuctoo. But the hon. Lady has a constitutional right to argue her case in this Chamber. It is regrettable that she has encouraged this sit-in, which is not far off mob rule, rather than argue her case in a legal and constitutional manner. I hope that those who may have been encouraged in this sit-in, either by the management or by the hon. Lady, will think again, as I believe that many of them are supporters of the Government. I want this Government to be defeated as quickly as possible in a legal and constitutional manner. I do not wish to see them defeated as a result of their having given in to a sit-in, which I regard as totally unlawful.

As the two previous administrations were partly defeated as a result of attacks by the trade union movement upon them, if the Government were to give in to a sit-in at Wolverhampton the country as a whole would be tottering nearer to being ungovernable. Such a defeat of the Labour Government by unlawful action would diminish not only the Labour Government but all Governments.

A successful sit-in could not be to the advantage of the men concerned. I assume that above all else the men are anxious that the plant should remain a viable organisation producing motor cycles for the NVT organisation or for some other organisation which may buy the shares, plant and premises. I hope that that will happen, but let there be no doubt that if there is a prolonged sit-in at these premises it will produce a great deal of delay and the result will be that many organisations which might be interested in the plant will be put off.

It will also mean that Wolverhampton may do to Small Heath what Meriden has done to Wolverhampton. There can be no doubt that had there been no sit-in at Meriden, the Meriden plant and premises would have been sold. Indeed, it can be seen from page 16 of Mr. Poore's Blue Book that at the time the Meriden site was first offered there were 32 inquiries for it. Had there been no sit-in, that site could have been sold at a time of high industrial activity and the money could have been used to create a viable motor cycle industry in Birmingham and Wolverhampton.

I understand the deep anxiety of the people of Wolverhampton, but do they want to do to Birmingham what Meriden did to them, since it was unlawful action at Meriden which created the present tragic situation in the motor cycle industry?

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

As one of the negotiators on behalf of the Meriden Co-operative, may I ask the hon. Gentleman, as Triumph has already sold Meriden to the Co-operative, how he can still think that the sit-in at Meriden has some effect on what NVT is doing? Meriden is no longer part of NVT.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

The sit-in at Meriden delayed the sale for 18 months. It tied up plant and equipment which could have been sold. It lost throughout, it lost an enormous amount of money in bank charges and, above all, it missed the market. The plant and the premises could have been sold at a time when shares were high, when the value of the industrial plant and premises was high and and the money could have been reinvested. Everyone now believes that had that money been invested in the Wolverhampton and Birmingham factories, the Wolverhampton and Birmingham factories might now be viable. I do not say that they would be viable, because I speak here as a politician and do not pretend to make a commercial judgment, but I do say that had there been no sit-in at Meriden that cash would have been available for investment in the two remaining factories. That is the moral argument.

There is also a legal argument concerned with the behaviour of components suppliers throughout the whole of industry. There are about 60 firms which are suppliers of components and which are owed about £2 million by the Wolverhampton factory. Why do they allow a factory which they know to be in difficulty to create a debt of £2 million? Those components suppliers allow such a debt to arise because they know that under the law of bankruptcy, if the worst comes to the worst, the company to which they have supplied those components can be made bankrupt, and the plant and premises can be sold and the proceeds of the sale will in part go to those who have supplied components.

If a sit-in at Wolverhampton succeeds, those component suppliers throughout Wolverhampton and the West Midlands will have to go without their £2 million. Therefore, there will be a further and totally unjust exaggeration of the unemployment which is about to occur at Wolverhampton. It will also mean that in future when any supplier of components to any individual factory which is believed to be in financial trouble asks himself whether he should continue to supply that factory and run the risk of having to take this chance under the bankruptcy law, he will refuse to do so, because if the company went into liquidation he could be sure that there would be a sit-in encouraged by a Labour Member of Parliament who could not bother to come to the House of Commons to argue his or her case in a constitutional manner. If that sort of mob rule is allowed to spread throughout the country, there will be total dislocation of all commercial contracts.

I hope that the message that goes out from this Chamber this afternoon will be one of deep sympathy and of clear understanding of the anxieties which are being felt in Wolverhampton and Small Heath. I hope also that when there has been a proper period for consideration everyone in Wolverhampton and Small Heath will show that they depend for their very being upon the independence and the integrity which is part of the West Midlands philosophy of life. Let them remember their distrust of the South-East. Let them remember their sturdy independence, their belief that Birmingham and the West Midlands are best, and let them forget the transitory phase in which they have come to trust politicians. It is not possible to trust politicians of any hue. Their only trust should be in profit, the profit which comes from properly run private business.

Several Hon. Members:

rose

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. I did not expect to have to make an appeal from the Chair for brevity in speeches, but it looks as though I shall have to do so now. If all hon. Members who wish to take part in the debate are to have a chance to speak we shall have to have 10-minute speeches, because this debate must be finished at 2.30 p.m.

12.58 p.m.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

The House can see that the hon. Member for Wolverhampton, South-West (Mr. Budgen) has learned at the feet of his right hon. predecessor. I only hope that the Wolverhampton Express and Star reports faithfully and accurately every word he says.

I have two interests to declare. I am a member of the Transport and General Workers' Union and I was one of the original co-architects of the scheme to set up the Meriden co-operative. I was directly involved in the initial negotiations with Mr. Poore.

It would be ill-fitting for me to use my position of privilege in the House to make personal attacks on people outside the House. It would, however, be fitting for me to give the House some of the facts of those early negotiations which have not often been given either to the House or to the outside world.

In doing so I wish to stress to my right hon. Friend the Secretary of State for Industry the need in the immediate future for the establishment of a holding position for this industry. That is what we in the Midlands want. We do not want the redundancies to go ahead. We want the immediate establishment of a holding position, and I wish to suggest later one or two ways in which that might be done. I hope that my right hon. Friend will re-examine the ways in which, apart from liquidation, apart from receivership and even perhaps apart from the immediate future regarding nationalisation, we can establish some sort of holding operation so that Mr. Poore and the Norton Villiers Triumph management is not enabled to push through its plans for redundancies.

The hon. Member for Wolverhampton, South-West is right when he says that the key factor in this situation is the loss of the American market. I am glad that the hon. Gentleman referred to that, and I am glad that I managed to prod him into saying so. I shall attempt to explain why the American market was lost in the 1974 and 1975 peak seasons. I do not blame my right hon. Friend for losing the American market. He has been put in a very difficult position. I sympathise with him for the extremely difficult and precarious balance of forces over which he has had to adjudicate and on the difficult decision that he has had to take.

I do not blame the setting up of the Meriden Co-operative for what has now come to pass. All I can say to the hon. Member for Wolverhampton, South-West is that as one who was involved in the negotiations, and as one who had to negotiate with Mr. Poore, I believe that I am a tiny bit more qualified than many to pronounce on some of the initial factors in the negotiations and on some of the events which may have come to pass.

Mr. Poore and the Norton Villiers Triumph management were hailed by the quality Press and the media as the people to save the motor cycle industry. I well remember the plaudits and all the applause in the Financial Times, The Times and all the other so-called establishment newspapers. They said that Mr. Poore was the man to do the job. The first thing the NVT management did was to turn its back on the detailed Cooper Brothers study, which recommended that production at Small Heath should cease forthwith and that production should be concentrated forthwith at Meriden. Lord Shawcross, when Chairman of BSA temporarily, had even gone to the extent of sacking 3,000 workers at Small Heath to set the transfer to Meriden in progress. Mr. Poore and the NVT management totally turned their backs on that recommendation and on everything that had been set in train.

One of the preconditions upon which Mr. Poore accepted the chairmanship of NVT, with the Conservative Government's backing, was that Meriden had to close. When the man who is supposed to be the saviour of the British motor cycle industry turns his back on a very detailed consultants' study and recommendation, I believe that some searching questions should be asked. At the time of closure Meriden had more than 1,500 orders for Bonneville and Meriden motor cycles from all parts of the world, excluding America. When I returned from the United States after completing my market research on behalf of the co-operative I brought back orders for a further 5,000 Meriden-produced motor cycles, yet Mr. Poore was still determined to close down the factory. He was determined to go ahead on that course with an order book containing orders from all round the world.

It is worth stressing to the House what Mr. Poore used to say to us in the early days of negotiations. He used to point out that it was vital to get the American market supplied, and particularly for the spring 1974 peak buying season. In this House I negotiated with Mr. Poore, on behalf of the co-operative, an agreement which would have enabled Meriden to keep going, which would have reduced labour loading and waiting time-rates and which would have given Mr. Poore a great deal of flexibility. Indeed, the agreement included the conditions which he had put forward and which a mass meeting at Meriden had agreed.

The agreement was made in the interests of keeping the Meriden factory going to supply the spring 1974 peak buying season in the United States. Mr. Poore wanted to keep the American market supplied, but when I had been to the United States and I telephoned back I found that Mr. Poore had gone back on the agreement in that he refused to sign it.

What I found in the United States was interesting. It became clear that Mr. Poore and Norton Villiers Triumph International had totally put in jeopardy the United States distributors' network. Not only was it proposed to shift the headquarters of the network from the East Coast to the West Coast, despite the fact that the majority of Triumph dealers were on the East Coast, but Mr. Poore was at that time talking about Small Heath supplying approximately 120,000 Tridents. At least, that was the kind of production which was supposed to emanate from Small Heath. It was intended that Small Heath should produce 120,000 3-cylinder motor cycles per year. The only trouble was that I did not find one dealer in the United States, even at that time, who wanted many Trident motor cycles.

I have the order sheets which I brought back from the dealers in the United States. In the autumn of 1973 all those dealers told me that they did not want most of the motor cycles which Mr. Poore proposed to make. It is no wonder that bikes are stockpiled in the United States and that Mr. Poore cannot sell the product from Small Heath and Wolverhampton. The United States dealers told me that they wanted Bonneville twin-cylinder machines and Tigers—namely, Meriden-produced bikes. Indeed, they were prepared to back the co-operative with their own money to ensure that they received supplies of the twin-cylinder machines that Meriden was supposed to make.

When I returned from the United States I told Mr. Christopher Chataway, the Minister then responsible, everything that I had been told. Dealers had flown in from all parts of the United States to talk to me, including dealers from the North-West, Washington State, California, Florida and Boston. I talked to representative dealers along both coastlines. It was clear that they were not really interested in Mr. Poore's 3-cylinder motor bikes. They wanted the famous "Meriden Twin". To say that Mr. Christopher Chataway was unmoved by all this is to pay him a compliment. The fact is that he did not want to know. I told him what I had found, and to reinforce what I said one of the dealers, Mr. Bob Myers, came over to see Mr. Chataway, only to find that he would not even see him. It was all I could do to force upon Mr. Chataway a 10-minute interview with Mr. Myers. During that interview Mr. Myers pointed out that the bikes that Mr. Poore had in mind would not sell in the United States. To reinforce the point, there was a flood of cables from United States dealers to the effect that they did not agree with Mr. Poore's plans because they could not sell 3-cylinder bikes.

If the House or my right hon. Friend has any kind of doubt about what I am saying, let me point out that all the orders, all the cables and the notes of the meetings are still in the files. Of course, I appreciate that my right hon. Friend cannot study the papers of a previous administration. As I say, Mr. Christopher Chataway was totally unmoved.

It is also interesting to note that it was Mr. Chataway who presided at the meeting of 11th November 1973 and who was responsible for the original draft of the setting up of the Meriden co-operative. In other words, it was under Mr. Chataway's own auspices that the blessing was given for the setting up of the co-operative. A Tory administration accepted in principle the need for a three-factory motor cycle industry. The only trouble was that although the agreement had been initially drawn up on 11th November, it was not until the eve of the February election of 1974 that Mr. Poore told us that it would not proceed. As a result of his refusal to sign the early agreement and the agreement of 11th November, the 1974 peak selling season in the United States was totally lost.

I could go on at length, but I wish to give other speakers a chance to have their say. I could certainly go on to elaborate how the procrastination of Mr. Poore and the NVT management were also responsible for the loss of the 1975 market. Why was it that in principle, in the middle of 1974, we had an agreement to sell the Meriden co-operative but it was not signed until the beginning of this year? All through last year, however, Mr. Poore said that we had to keep the 1975 American market. If Mr. Poore was so keen on keeping the market in the United States, why did he delay signing an agreement from the middle of July 1974 until the beginning of this year? If we want to examine the reason why NVT lost the 1974 and 1975 American markets, we need to look no further than the present management of NVT.

Photo of Mr Reginald Eyre Mr Reginald Eyre , Birmingham, Hall Green

Was it not a fact that the co-operative was not in a position to produce the money in completing the transaction of purchasing the property? Was not that the cause of the delay?

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Again I am at some advantage because I was involved in the negotiations. The co-operative had money from various sources from the beginning of 1974. Therefore, the money at that time was not the principal issue in the negotiations.

The Boston Report records what I regard as a total condemnation of management in British industry and of the investment strategy of NVT. It is a question not only of craftsmanship and pride at Meriden but also of the situation at Small Heath and at Wolverhampton. It is not an industry that produces 60 cars an hour but it is an industry in which men and boys—indeed, fathers and sons—have worked in the same factory ever since they left school. That is the situation in Wolverhampton and Meriden and that is where the craftsmanship and pride resides.

I know from my contacts with the trade union movement that the men are willing to co-operate to see what can be done to save this industry. Shortly we shall see London Metropolitan Police and Army dispatch riders on Yamaha and Honda machines. The prospect sticks in my throat, and I am sure it will stick in the throats of workers throughout the country.

We have still a chance to save this concern, but as a precondition of so doing I urge the Government to evacuate the present management as quickly as possible, having done that, why not put the matter in the hands of Lord Ryder, the Government's industrial adviser? Let him get together with the unions to see what can be done. We need not talk about sums of £50 million or of mass injection of capital immediately, but let us examine the industry to see what we can save, otherwise it will involve not only the West Midlands or the people in the factories but the whole country, since we shall lose yet another industry to the Japanese.

1.16 p.m.

Photo of Mr Hilary Miller Mr Hilary Miller , Bromsgrove and Redditch

I should like to pay tribute to the right hon. Gentleman the Secretary of State for Industry for being with us this afternoon and for the courage and generosity with which he handled his difficult statement last week and indeed for the manner in which he defended his right hon. Friend.

We are confronting a difficult situation and I should like to pay tribute to the hon. Gentleman the Member for Wolverhampton, South-East (Mr. Edwards) and my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) whose approach was forward-looking and helpful. Therefore, it was regrettable that that trend was reversed in more recent contributions.

The situation is that the Conservative Government recognised that something needed to be done about the motor-cycle industry and took steps to give it aid and to assist in its reconstruction. I do not wish to weary the House with past history or with quotations from Hansard. It was made plain at that time to the Government that there could be a two-factory system at a cost of so much and a three-factory system for so much more. That was quite clearly put in the report at the time.

The position that we now face is a three-factory industry.

Photo of Mr Hilary Miller Mr Hilary Miller , Bromsgrove and Redditch

It is no good the hon. Gentleman saying that we have not a three-factory system. The hon. Gentleman in his speech cited Meriden, Wolverhampton and Small Heath. They exist, although they may not be in the same ownership. However, I was not dealing with that point. I was suggesting that there are three existing factories and that there is not enough money to make the thing work.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I know that the hon. Gentleman has not been in the House for very long and therefore may I try to put him right on the present situation. Norton Villiers Triumph has sold the Meriden plant to the co-operative and the co-operative is no longer part of NVT, except for marketing purposes.

Photo of Mr Hilary Miller Mr Hilary Miller , Bromsgrove and Redditch

I have never attempted to discuss the position of the co-operative. I merely stated that there are three factories. I was not dealing with who owned them. I accept that the co-operative with the aid of public funds has paid the NVT for the Meriden factory. Since the hon. Gentleman has pressed me on this matter, I should like to know why it was, if as the hon. Gentleman suggested there was money available to the co-operative, that the public was asked to provide money last summer.

We have three factories at present with inadequate finance and there is an inadequate volume of sales and inadequate export credit cover. I hope that the Secretary of State for Industry in his reply will explain how, at this critical juncture, his right hon. Friend the Secretary of State for Trade allowed £4 million of export credit guarantee cover to be withdrawn as recently as last month, which seriously prejudiced the amount of working capital available to NVT.

We have before us the Boston Report. There are not many hon. Members who can absorb such a report in a week and base a convincing judgment on it. This is one of the difficulties which hon. Members face in seeking to deal with reports on industrial problems. This was also the case over the Ryder Report on British Leyland. We are presented with those reports without adequate opportunity for a critical examination. Although there is a need for speed, there is also a need for some procedure to assess such reports before we debate them. This case provides a microcosm of a great number of industrial problems which now confront the nation. There are certainly lessons to be learned here for the British Leyland situation, which is still by no means clear.

I do not think that the people who have been making inquiries in the industry, and particularly Members representing constituencies in the area, accept all the findings of the Boston Report or the basis of its comparisons. It is not satisfactorily established that we are comparing apples with apples. The report refers to the levels of production and productivity in Japan. But the Japanese are making a different machine; they have a different set-up. Several hon. Members have spoken as if we are presiding over the death throes of the motor cycle industry in this country. I do not accept that the industry is finished. This industry has 50 per cent. of the home market for the super bikes and we have a basis on which we can build.

However, we need a clear statement from the Government, not only on their policy regarding finance, but about where they propose to take us from here. The Minister has said that £24 million or £25 million of public money has been made available to the industry by way of credit guarantee as well as grant. Is the right hon. Gentleman implying that he is prepared to let all this go? His answer yesterday to the Written Question which I tabled to him was far from clear. He simply referred to the Boston Report and his statement. But people want to know, and they have a right to know, what is to happen to the public money which has been put in the industry. Is no attempt to be made to safeguard it, quite apart from the question of the loss of the jobs and skills to which the hon. Member for Wolverhampton, South-East (Mr. Edwards) paid glowing tribute?

We should not jump to rapid conclusions as we have been in the habit of doing on the basis of reports such as the Boston Report and Ryder Report. Let us have from the Government a statement of the philosophy which they are trying to develop for the future industrial strategy of this country. Statements in support of the Industry Bill such as those made by the hon. Member for Walton (Mr. Heffer) are not sufficient foundation on which to build that strategy, nor has it been satisfactorily explained to the public or to the work force.

I turn to the question of the workers, particularly those at the Small Heath plant. The hon. Member for Nuneaton said that under the previous BSA management a consultants' report suggested that Small Heath should be closed and that about 3,000 sackings were made at Small Heath. The hon. Gentleman will be aware of the extreme bitterness at Small Heath about the total lack of co-operation or response at that time from Meriden. He will also be aware that correspondence appeared in The Times recently on the subject of the consultants' report and the recommendation by a previous director which was answered by the present management.

However, the Government—and I am not indulging in a personal witch-hunt—decided, largely for political reasons, to support the Meriden co-operative against the majority advice of the advisory board. It is no good the hon. Member for Nuneaton denying that, as he attempted to do on a television programme with me the other day. The Secretary of State for Trade made it plain in the Department's Press notice for 29th July 1974 that that step was taken. It was a political decision of the sort which we discussed yesterday in connection with Court Line.

It may be thought that there is not room for maladministration in such a decision, but having established the cooperative with public money, insufficient finance was made available to support the other two factories. The only conclusion that one can draw from that is that either private risk capital would have to be made available, which the hon. Member for Wolverhampton, South-East has made plain could not be made available, or there would have to be a reduced level of activity at the other two factories unless additional support was forthcoming.

It is easy to castigate management. It is just as easy for me to draw attention to the behaviour of the work force at Meriden prior to the sit-in. Mr. Johnson admitted that the record of industrial disputes at Meriden had been very damaging and the workers had not understood the consequences and damage which they would cause.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I am sorry to keep intervening, but the hon. Gentleman will appreciate that I have spent about two years dealing with this subject. Mr. Poore was originally given almost £5 million by the then Minister, Mr. Christopher Chataway, for the so-called restructuring of the motor cycle industry. He received a further almost £5 million from the sale of the Meriden plant to the co-operative. Therefore, in all, Mr. Poore has received almost £10 million. What has he done with it?

Photo of Mr Hilary Miller Mr Hilary Miller , Bromsgrove and Redditch

It was made plain originally that the three-factory solution—I said this in the House and it was not contradicted by the hon. Member for Nuneaton or by the hon. Member for Walton, who had the courtesy to reply to the debate—required a public investment of £30 million to £40 million.

Having set up the third factory, and having failed to provide adequate finance for a three-factory solution, the then Secretary of State and the Government— I do not say that it was a personal decision; it was a Government decision and was debated in the House on that basis—could not get the workers, particularly at Small Heath, to sign the agreements with the Meriden co-operative because they were concerned about their future and jobs. Pressures were brought to bear on the company and on the work force to sign the agreements. The research development grant was specifically and admittedly withheld for that purpose.

My constituents were not satisfied and were given assurances in writing and orally, notably by the Confederation of Shipbuilding and Engineering Unions, to which my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) has referred. There is a clear possibility of people sustaining injustice as a result of maladministration by a Government Department, and, therefore, at the request of my constituents, I have referred the matter to the Ombudsman for a determination.

Apart from the future of the country's industrial policy, to which I hope the right hon. Gentleman will be responding, we have here also to decide what is to be done about the present situation and those who have suffered loss in it. Therefore, I hope that the Secretary of State will be able to shed some light on this aspect, which concerns solely the motor cycle situation. But, apart from the broader questions of industrial policy, this unhappy situation in the motor cycle industry has a great deal to offer us by way of example when we consider the motor car industry and other industries as a whole.

1.30 p.m.

Photo of Mr John Lee Mr John Lee , Birmingham Handsworth

I am grateful for the opportunity to take part in this debate. Small Heath is, in constituency terms, on my doorstep, I am chairman of the West Midlands group of Labour Members, several of whom are intimately concerned with this matter, and like my hon. Friend the Member for Nuneaton (Mr. Huckfield) I am a member of the Transport and General Workers' Union—indeed, a sponsored Member—so I have a threefold involvement in this matter.

By way of an opening remark, I wish to refer to the hon. Member for Birmingham, Hall Green (Mr. Eyre). In this House, we tend to be either elaborately polite or excessively rude to one another. Therefore, when I say that I want to express my warm appreciation of the fact that he raised this matter and of the manner in which he raised it, I mean that with utter sincerity. We have had debates on industrial matters in the past few weeks which have been noticeable for their vituperation. The hon. Gentleman's speech was notable for its moderation, good humour and positive approach. All of us, whatever our divisions politically, are extremely grateful to him for his approach to this matter.

We are also grateful to the hon. Gentleman for his brevity. If I seem to be sounding off a little, it is because I was one of the victims during the debate on the Consolidated Fund Bill recently when Scottish Members suffered from verbal diarrhoea for six hours. I hasten to add that I do not make that charge against all Scottish Members on the Opposition benches. Indeed, one of my hon. Friends was a chief offender.

We face a very sombre situation. Whatever the Minister does, he is bound to be judged wrong. If he proceeds with this policy, the axe falls on the jobs of quite a large number of people, not only those obviously and immediately affected in Wolverhampton, but, because of the intimate interrelation of component manufacturers and their employees, upon others as well. It will have even wider repercussions because of the general vulnerability of the West Midlands to unemployment.

If my right hon. Friend tries to reverse this decision, I suppose that he will be attacked by the Poujadist element in this House for throwing more Government money on to the amounts already supplied for a variety of ventures.

As for the unemployment situation in the West Midlands, perhaps I might remind the House of its vulnerability. I have the relevant figures for March. Undoubtedly they are out of date to a considerable extent. But at any rate in March of this year in the West Midlands metropolitan county there was a total of male unemployment of 53,000. In the processing, making, repairing and related metal trades, there were 7,700 unemployed as against 2,000 odd vacancies. Against the total of 53, 000 men registered as being unemployed, there were unfilled vacancies of just over 6,000. That puts into perspective the acute situation facing us.

The West Midlands is vulnerable in another way. My right hon. Friend knows that I am not castigating him, because we discussed the matter only the other day. But the West Midlands is peculiarly vulnerable because we are dependent on a very few large firms such as Leyland, Alfred Herbert and so forth, and on large numbers of very small firms and, paradoxically, at the moment they both suffer from acute liquidity problems.

The bigger firms are extremely vulnerable to the vagaries of foreign markets and to the intrusion of imports. The small companies, for a variety of reasons, about some of which there is a great deal of controversy between the two sides of the House, suffer from acute liquidity problems. Exactly how it comes about matters not, but there is great danger.

The hon. Member for Wolverhampton, South-West (Mr. Budgen) made a good Poujadist speech. However, it is all very well relying upon market forces, but what happens in the case of small productive firms, as I have seen in my constituency in relation to other matters, is that they fold up, and if they are replaced at all, it is often by non-productive enterprises which are not oriented to exports. If the Government apply the principle of commercial viability, at any rate in a short and medium-term context, at the end of the day the grim logic is that there will be very little British industry left.

One Government after another have recognised this. Whatever the monetarists and financial purists on the Opposition benches may say, there were massive infusions of money into the aircraft industry throughout the 1950s. At the behest of Lord Duncan-Sandys, whom no one will accuse of being a Trotskyist, we had the Concorde saga, which was much more disputable in terms of merit and which is still open-ended. That has absorbed funds on a far larger scale than anything that could possibly be in contemplation in the case of the motor cycle industry.

But the significant matter is the counter-argument that is advanced. How do we know that we can ever make a commercially viable industry? We do not know. The Minister does not know and will not know for a long time whether at the end of the day, the enormous sums of money spent on the Concorde will prove to have been a commercially justifiable endeavour. I have the gravest doubts about it.

During one of our debates on Leyland, my hon. Friend the Member for Nuneaton said that the infusion of the very large sum involved—although compared to the Concorde it was modest—had been made on the basis of commercial judgments and of suppositions which to say the least were questionable. Certainly they are totally improvable, and they are not likely to be proved one way or the other for a number of years to come.

If we pursue the logic of saying that if we cannot see a segment of British industry being viable within a comparatively short time we shall withdraw financial assistance from it and face the logic of its collapse, which is almost certain to happen, one British industry after another will be a casualty, and we shall end up as a sort of ruralised peripheral fringe territory of the Common Market.

I shall not tempt myself to say anything about that. When I consider Members of the Scottish National Party, however much I may disagree with their arguments, I sympathise with the exasperation of the electors who have sent them here. We could find ourselves politically in a similar position if that situation were allowed to prevail.

My right hon. Friend knows perfectly well that, compared with the sums of money that the Government have been prepared to provide for other industries on the basis of commercial judgments which are far from being proved or provable, the sum necessary in this case would be mere peanuts. To add £50 million to the £24 million already spent is nothing compared with what has been committed to Leyland.

Hon. Members who have greater knowledge than I about this matter, such as the hon. Member for Bromsgrove and Redditch (Mr. Miller), who took a reasonable line, although I disagree with some of the points he made, and my hon. Friend the Member for Nuneaton, were referring, in the context of the Boston Report, to our own domestic market or the North American market.

However, we must look further ahead to the pent up demand for exports generally which must arise in the underdeveloped world starting with the oil enriched Third World nations, but remembering that there will be others to follow. The under-developed countries will not remain under-developed for ever. Many parts of the under-developed world are already breaking through from a position of being hapless and poverty stricken recipients of open-ended economic aid which seems to have no impact. If we look further ahead than the writers of the Boston Report, who have been myopic in their approach, surely there must be a demand for motor cycles, and, indeed, for many goods in time to come.

At a time when oil prices will increase—there is no doubt that the OPEC countries will be forcing them up still further—one knock-on effect will be that people who have large cars will be obliged to have smaller cars, and many of the people who would normally have smaller cars will be induced, because of comparatively low petrol consumption, to move to motor cycles. That might give a further boost to the market.

My principal quarrel with my right hon. Friend and the Cabinet arises from the fact that theirs is a short-term approach to the situation. In the light of the willingness and boldness of my right hon. Friend's predecessor and the Cabinet—a boldness which I am prepared to justify—to provide large sums of money to all areas of the country to sustain and modernise British industry, it is wholly inconsistent to cavil at the expenditure of what I believe, in the context of the sums of money with which modern economies are concerned, is a modest sum. I beg my right hon. Friend to reconsider the situation.

1.43 p.m.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I should like to refer to the remarks made by the hon. Member for Birmingham, Handsworth (Mr. Lee) and, indeed, to much that has been said in this valuable debate. However, I should like first to make what I believe is a procedural point but which is of wider application to all situations of industrial distress and failure and typically to the motor cycle industry. I believe that Mr. Christopher Chataway was wrong to put money into this industry in the way he did. The present Government were also wrong to follow that money with more money in the fashion they did. These remarks have nothing to do with the merits or otherwise of Government money but are concerned with the way that it should be provided.

In every situation where there has been a Government rescue by simply giving money to an existing company, there have been appalling problems for all concerned. The hon. Member for Nuneaton (Mr. Huckfield) said that nothing in this method causes the managers to be brought to book or provides the opportunity for bad managers to be removed. In my humble opinion, the management of the motor cycle industry has been shown to be wildly defective and should have been changed a long time ago. However, that cannot be done simply by providing money to an existing company.

The second point concerns the creditors. In every instance in history—Rolls-Royce, Beagle, UCS and NVT—there has been a serious problem for those who have extended credit for supplying the industry or firm concerned. We have almost reached the stage where we can coin the word "Bennkruptcy" to deal with the situation which was implicit in yesterday's debate on Court Line. If the Government seek to put money into a company and have to state an opinion about their future liability, that opinion will either lead or mislead would-be suppliers of extended credit. On every occasion on which it has been done the Minister has had to answer an awkward, uneasy and vituperative situation just as we saw yesterday. Of course, the Government are in no position to take the responsibility off the directors' shoulders and say whether in their opinion viability is achieved or not. Governments cannot take over that responsibility simply by putting money in. Therefore, the answer is that they should not have done it that way.

The disillusionment, distress and hardship that have been caused to all workers in the motor cycle industry as a result of what has been done has been a common theme in all speeches in the debate. I add my own sympathy to what has already been expressed. This has happened because the industry has been misled in the same way as the creditors have been misled by the Government seeking to assume the responsibility of directors under the Companies Act for saying what the future will be. The Government cannot know and in no sense have the legal responsibility for an industry in the private sector.

I should like to refer to shareholders. If there is any section of people who should lose all in industrial failure, it is the shareholders. By putting money into industry in the way we have done in this case, it is often the shareholder who is partially bailed out. This, of course, is quite wrong. The answer is that we should always use the Official Receiver, because he is in a position to guard against all these problems. Official receivership is designed to provide a period of time to see what the assets are worth, what the future of each is and whether the people will take them on, to give the creditors such of their due as is available and to take away all the value of the shares unless there is some residual value after the creditors have been paid out.

We have become so frightened of the words "Official Receiver" that we are failing to use this very sensible procedure. The hon. Member for Nuneaton dismissed this proposition out of hand as if it were some awful thing that caused everybody employed to be immediately put on the streets. That is not official receivership. That is compulsory liquidation, which is not what I am advocating. It is now firmly in the minds of most people that the sensible mechanism of using the Official Receiver simply means putting everybody out of a job immediately. In fact, it means the reverse.

I go further and make a constructive suggestion. This position will arise again with other companies. Let the Government study the whole matter of official receivership and see whether there are any defects in it. I think that there might be defects even in keeping an Official Receiver going with public money to give more time to allow thought to take place about the future of an industry. Hon. Members may be able to suggest other defects. It may be necessary slightly to adapt procedure to provide the vehicle necessary to deal with such situations, albeit with the injection of public money if that were thought right. Even then, if we are going back to using the concept of the Official Receiver, as suitably modified, it is essential that steps be taken to secure the accusations of bad faith and so on which have been hurled across the Floor of the House will no longer have cause to arise.

My second point relates to the motor cycle industry. Grave damage has been done to it by the amateur way in which, first, Christopher Chataway and, secondly, the present Secretary of State for Energy put money into the industry without bothering to discover what the future viability of the industry was.

I have read the Boston Report with the greatest of interest. I wonder whether every hon. Member who has spoken in this debate has read the report. It contains one of the clearest, most explicit and most damning condemnations of British industry, albeit a small sector of it, that can be read. The hon. Member for Wolverhampton, South-East (Mr. Edwards) dismissed it too cavalierly and in a way which was irresponsible, because sooner or later we shall have to read the Boston Reports that come out and we shall have to learn the lessons from them.

The Boston Report says that the investment decisions have been totally wrong, that market research has been fatally absent, that design has been deficient, that productivity is lousy and that the proper use of machinery and other modern industrial techniques is absent.

All that is borne out by hon. Members who talk about craftsmanship in motor cycles. However, we do not want craftsmanship. We want modern, automated, efficient industry. The motor industry has become a craft. However, productivity in Japan is four or five times greater than it is here. This is the reason for the failure.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

I wonder whether on consideration my hon. Friend wants to make remarks such as "We do not want craftsmanship". It would seem that by making such remarks he is making an industrial judgment and a commercial judgment, whereas I should have thought that his philosophy was that we in the House should not be making such judgments but should leave it to the operation of the market.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I shall come to that. I agree in part with what my hon. Friend says. This is where I come to what the hon. Member for Handsworth said. We have to do a motor cycle industry rescue which will in the end be viable if we are to do it at all. There may be room for hand-made, tailor-built cycles in the world market. I do not know enough about it. I do not know what the market is. The hon. Member for Nuneaton knows a great deal about it. He talked with apparent great knowledge of what the potential for motor cycles has been and is. I would never dream of assuming that I knew what was right and what was wrong for this industry.

The essential element for success is that a team of people come together who say "We will set up the designs, the market research, the productivity and the use of machines through the trade unions co-operating. We will set up a show which will beat the Japanese at their own game and sell profitably, cheaper than them." Without that, there is no future for the motor cycle industry.

To test whether that exists, it is necessary to go to a merchant bank or to a stockbroker who will issue equity or rights to raise the capital. It is this test of the use of capital which determines whether private money is available. It has been said in this debate that risk capital was not forthcoming. Of course it was not, because it was a bad risk. It has been proved to be the worst risk that one could have taken. Anyone who put his money in would have lost it. That is why risk capital was not forthcoming.

However, risk capital can be forthcoming if the project which is put up is sound. The danger is that every time the Government, whether they be Tory or Labour, prove to be a soft touch, they provide a way round the essential discipline as to whether risk capital should properly be employed and whether the management and the workers in the concern can be trusted to use it properly.

Photo of Mr John Lee Mr John Lee , Birmingham Handsworth

We all agree with what the hon. Member is saying about the need for modernisation, modern investment and proper organisation. What I do not understand —I should be grateful if he would explain this—is why he is so confident that a collection of bankers or stockbrokers are capable of making the technical judgments that are necessary to be followed by putting their money where their mouths are whereas, according to the hon. Gentleman, it seems that the Government, with all the resources for monitoring at their disposal, were not capable of doing so.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I cite in return the example of the motor cycle industry. The private sector did not think that it was viable. The civil servants thought that it was viable. Who was right? The private sector was right. The bankers, using their own money, have to adopt a great deal of scepticism and care. They often say "No". What the Labour Party so often fails to understand is that when the bankers say "No" they do so for good reasons. Too often the Labour Party seeks to say that it is the fault of the bankers that money has not been advanced, whereas in reality it is the fault of the risk which has been brought before the bankers.

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham, Erdington

Is the hon. Gentleman saying that private risk capital will be forthcoming only when there is no risk?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

That is not what I said. Those who are expected to incur the risk must be allowed to determine whether they think that it is reasonable.

I believe that there is much to be said for the co-operative at Meriden. My criterion of a group of people who come together to do what is necessary to make a viable motor cycle industry is demonstrated possibly by the workers at Meriden and those helping them. If they can produce plans which convince the bankers that another £40 million should go in, that would be one of the best things that ever happened, but it would be no good their convincing the Government, because the Government would be taken for a ride for political reasons, whatever happened. The people concerned must convince someone who is professional at lending risk capital.

If the same thing happens at Wolverhampton or Small Heath I do not mind. I do not mind whether the initiative comes from the workers, from another group or from another company, or from people who, as with Aston Martin, think that they would like to have a go. It does not matter where it comes from. The more we can encourage this to happen, the more likely we are to get an industry which will be viable in future.

In the end it comes down to people. If the people of this country want another industrial revolution, they have got to come forward and justify the investment of risk capital in what they are going to do. That is the lesson for the motor cycle industry.

2.1 p.m.

Photo of Mr Tom King Mr Tom King , Bridgwater

This debate follows the grave statement made by the Secretary of State last week. I know that the whole House is grateful to my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) for giving us this early opportunity, through the kind offices of Mr. Speaker, to debate a very serious and urgent matter before the House rises.

I think all hon. Members recognise that the debate has been marked, with one or two small exceptions, by very serious responsible and moderate speeches on an acutely worrying situation. I thought that my hon. Friend the Member for Hall Green introduced the debate in a most responsible way. If I may say so, I think that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made a very brave speech. It is very easy in this House, as a simple elected Member of Parliament, to adjust one's views to every passing situation in one's own constituency and trim to every wind.

We know my hon. Friend's views. I hope that every word of his remarks will be printed and not taken out of context. His speech was utterly coherent, genuine, and sincere on a problem which greatly concerns the overwhelming majority of his constituents. It was a brave speech to make in an appallingly difficult situation.

The hon. Member for Nuneaton (Mr. Huckfield), who has now returned to the Chamber, made something of an apology for Meriden. If I may say so, I think he has something to apologise for. He speaks as a great authority on this subject. One knows a little of the work in which he has been involved. I know that the current situation is an acute embarrassment to the people of Meriden. One has heard of how Mr. Myers is going to solve the sales problems of Meriden. But my information is that Mr. Myers' total orders for motor cycles has been three since the hon. Member's intervention, which does not look as if he is going to solve the British motor cycle industry's problems single-handed.

This debate marks the end of an instalment of a long saga of Government involvement. The problem did not start with the arrival of the new Government. This point has already been made. We recognise that there was already a problem. But the hon. Gentleman must accept that the Government, since they took over, have done absolutely nothing to resolve the problem and, indeed, have made the situation very much worse. They took over a complicated situation but we now see that it has been allowed to deteriorate. We have seen all these different incidents which have been marked by muddle all the way down the line. We have watched, month after month, a motion, permanently positioned on the Order Paper, dealing with NVT.

The Government must make up their minds. We have had the problem of trying to resolve the situation at Small Heath. There was the letter to which reference has been made and the assurances given by the Secretary of State for Energy in his previous capacity. I do not know whether that is now clarified by what the Secretary of State last night called a colloquial guarantee. It is quite clear from the speech of the hon. Lady the Member for Wolverhampton, North-East (Mrs. Short) that that was taken as an undertaking from the Government and it was accepted as such.

Mr. Poore, the Chairman of Norton Villiers Triumph, said: In the face of these arguments, the Small Health unions were left with virtually no alternative and agreed with some reluctance to lift their veto against the co-op in the belief that by so doing they were putting their future in the hands of the Government and were not cutting their own throats as would otherwise be the case. Their throats have now been cut. The speech by the hon. Lady contradicted what the hon. Member for Nuneaton said. There is no doubt about the feelings of the people of Wolverhampton, and that they put their trust in the Government on the assurance given by the right hon. Gentleman's predecessor, but they have been let down.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

My hon. Friend keeps referring to these remarks as having been made in a speech. In fact they were made in a Question. The opportunity to make a speech would have been today.

Photo of Mr Tom King Mr Tom King , Bridgwater

I accept that. I am not privy to the hon. Lady's reason for not being here today. This whole atmosphere of muddle that has marked the Government's handling of the case in these last two months reached an ultimate farce when the Minister in another place made his statement. When the statement was made, part of the Minister's copy was missing; the last two pages had to be supplied by the Opposition, and they were read in the wrong order, which marked a high spot of farcical inefficiency.

Even then, when the Government have muddled around, when they have left the industry in a situation in which it has got to fight back by itself, whether it be a co-operative, whether it be Small Heath or Wolverhampton, it seems outrageous that Lord Shepherd can say in another place: It is indeed regrettable that as a consequence of this decision Britain…will not have an industry."—[Official Report, House of Lords, 31st July 1975; Vol. 363, c. 1200.]— writing it off like that as though it was already an established fact, so that the news would go out from Parliament that there would not be an industry at all. What authority did he have for making that statement?

I am sorry that the Secretary of State did not help the situation when, in a supplementary answer, he said that the problem was that NVT had 13,000 motor cycles in stock in various countries with no sales prospects. I understand that that statement is quite incorrect. There have been temporary problems. There has been a temporary overstocking. The American market has not collapsed. My hon. Friend the Member for Hall Green said that there was a temporary overstocking situation, but the predictions for this year and next year are of an increased market. Yet the Secretary of State and Lord Shepherd are both seen to be going out of their way further to damage the industry in which enough damage has been done by the Government already.

I have already said that the whole background is very unhappy. I have admitted that the situation did not start with the present Government. Their predecessors created the original situation. I also accept that in the final situation there was clearly no alternative for the Secretary of State or the Cabinet if it was put forward as "£50 million or no" or "£30 million or no", and that it was not a practical proposition to say that the money would be put forward, certainly against the extremely gloomy forecasts of the Boston Report. The payback situation envisaged in the Boston Report, with no payback before the year 2000, was most unattractive.

We are pleased that the Secretary of State consulted the Industrial Development Advisory Board. It was a pity that the board's advice was not taken originally. Had the advice been taken, this situation might not have arisen. The statement says that the creation of the co-operative in no way affected the situation. But this cannot be true. I understand the concern of the members of the co-operative. The fact is—my hon. Friend the Member for Wolverhampton, Southwest made this point—that this concerns not only the ownership of the factory. There is an industry. There are a number of brands of motorcycle. A number of overheads are involved, which have to be taken into account with the costs of the product and the sales value of the motor cycles.

What has been understood all the way down the line is that this was a situation in which two factories could have been viable. This was said by Mr. Poore and accepted by the previous Secretary of State for Industry when he gave the go-ahead to put Government money into the co-operative. The tragedy of the present situation is that if the facts had been recognised in 1973 or even 1974, the people now being affected would already be in other jobs. August 1975 is about the worst possible time to try to tackle this situation.

When Mr. Christopher Chataway made his statement, there was talk of a shortage of skilled labour in the Birmingham area. Hon. Members said that these workers were needed in many other profitable industries. The strategy followed by Mr. Chataway was right. I say that not simply because I was involved and working as his PPS at the time. It could have worked, but it was severely frustrated by the sit-in and never had a chance to get going and to take advantage of the market on favourable terms.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

The hon. Member says that the Poore and NVT strategy would have worked. He knows, because he attended some of the meetings that I attended, that this strategy was to manufacture 120,000 bikes a year at Small Heath, particularly in the 3-cylinder range which cannot, apparently, now be sold in the United States. Does he still think that that original strategy would have worked?

Photo of Mr Tom King Mr Tom King , Bridgwater

The first concept of the strategy was to concentrate on the one management with a proven track record. It had taken over a part of the business which had previously gone into liquidation and re-created a viable British motor cycle industry. If it had been allowed to develop that strategy without frustrations and delays and had been able to get access to funds which could have been invested, it could have been made to work. The hon. Gentleman's memory is very faulty. I cannot remember attending a single meeting with him. Maybe that casts some doubt on his other memories as well.

This House and the Government are in a very difficult moral situation in relation to Manganese Bronze and NVT. They were invited to take over BSA, which was in a serious financial situation and in danger of closing down. The Boston Group report shows a loss of £5·7 million. Part of this will be taken by other shareholders and part will stand against Manganese Bronze. When Mr. Chataway made the original statement, my hon. Friend the Member for Oswestry (Mr. Biffen) said he was against the taxpayer becoming a pillion passenger for Mr. Poore. That pillion passenger got on the NVT motor bike, took it miles out of its way and used all its petrol. It has now jumped off the bike and is not prepared to do anything to get it on its way again. The case for compensation for Manganese Bronze and NVT must be taken very seriously. There are also serious lessons to be learnt about the dangers of Government intervention. I am not in favour of non-intervention in all cases, but this is a classic example of where dangers can arise.

The Secretary of State for Energy talked last night about the worries of companies in relation to statements made by Ministers, but he should realise that they are far more worried in situations like this. Companies that are asked by the Secretary of State to co-operate in particular circumstances in future will be very concerned. We cannot put in £50 million or one of the lower figures at this time, but I understand that there has been no attempt to have a constructive dialogue about alternative methods of tackling the problem. There has been considerable delay and the company has been pushed to the brink. There have not even been discussions on what would be a second-best possibility of an orderly run-down in the business. I understand from the company that this is the situation and it is most unfortunate. The Cabinet is faced with putting in either the money or the receiver.

We should understand that a receiver and a liquidator are not the same person. They provide very different functions. Some form of interim arrangement might be the best way of tackling this matter. Something must be done, and there is no question of putting in the substantial sums of money suggested by the Boston Report. Every speech in this debate has recognised the serious problem faced by the people of Wolverhampton. It is particularly poignant that they were the people in the profitable part of the business and they now find themselves about to lose their jobs.

With their background of involvement in the company, the Government have an obligation to see whether a way can be found, short of putting in these unrealistic substantial sums, to help these people in the very difficult situation they face.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Before I call the Secretary of State for Industry, I should remind him that, in order to be fair to others, this debate must finish at 2.30 p.m.

2.18 p.m.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I shall keep to your instructions about the ending of the debate, Mr. Deputy Speaker. I thought it right that as many hon. Members as possible should speak, because this is a matter of great concern. I welcome the debate as an opportunity to expand on the statement I made last Thursday. I fully understand the concern expressed by all hon. Members. They are reflecting the anxieties of their constituents. I had the opportunity to meet some of my parliamentary colleagues a day or two ago and I know how they feel.

The hon. Member for Bridgwater (Mr. King) has suggested that we have been dragging our feet in reaching a decision, and that there has been procrastination and delay. This is not the case. In the seven weeks and two days since I was appointed Secretary of State for Industry I have had four meetings with the men and their representatives, and three with NVT management, on a tripartite basis or separately. We have taken into account all their views in coming to a decision pretty quickly. Not a day has gone by without papers relating to the motor cycle industry coming across my desk. Of course the Government were anxious not to give up, without a fight, an industry which, as my hon. Friends have said, demonstrates British skills and has earned valuable exports. We took all these factors into account when reaching our decision.

The consultants' report shows how costly and risky it would be to attempt to support the industry at its present size. Some hon. Members will have had the chance to study it completely and will have had time to reflect how difficult this decision was for the Government. It is necessary to remind the House of the origin of the consultants' report. It was commissioned by my predecessor, paid for out of Government funds, and undertaken with the full knowledge of both management and workers in the industry.

At the very heart of this problem is the question of the way in which the Government are to develop an industrial strategy with limited resources and how we use those limited resources to best advantage. I shall probably have something to say about the figure of £50 million that has been referred to. We are not faced here with a problem for the West Midlands alone. This morning I have been dealing with problems affecting Hull, where there is a male unemployment rate of between 8 per cent. and 9 per cent., Merseyside, which has a comparable rate, and West-Central Scotland where it is very high, too. It all boils down to the criteria that we use in supporting British industry at this difficult time.

This industry has received considerable support over the past two years. To hear some people one would almost think that the Government had received an application for assistance and had done nothing about it. Over the last two years successive Governments have committed nearly £24 million to the industry, either in the form of finance or guarantees, and almost £18 million of that has been spent. There is no question of withdrawing support, as some newspapers have suggested; it is a matter of trying to examine the risks and prospects for the industry in the future.

There are market problems, too. The consultants' report highlights the way in which the British industry has been driven out of the market, or, at least, how its dominance has been taken over by the Japanese. I am not here to praise the Japanese industry. It is a matter of great concern to me that this should have happened. In 1968 the United Kingdom had about 70 per cent. of the United States market and the Japanese had virtually nil. In 1974 the Japanese had about 70 per cent. and our share was down to 10 per cent. to 12 per cent. cent.

My hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) has far greater experience than I of international trade union relations, but I must ask him to accept that there is no evidence of a direct subsidy by the Japanese Government to their industry. If there were, we should take a different view of the matter.

Then there is the question of the super-bikes. The British industry has had to retreat continually into the super-bike range, and we now find that there is nowhere else for it to go. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and my hon. Friend the Member for Nuneaton (Mr. Huckfield) had very strong words to say about the failure of management in the British motor cycle industry. I think that their criticism is fair. The blame lies with successive managements, going back 10 or 15 years, for their concern for short-term profitability, which culminated in the present problems. The consultants' report shows that investment in the industry has been about £1,500 per man, while in Japan over a comparable period it has been about £5,000 per man, and productivity bears no comparison.

Of course, it was not only the consultants' report that brought the Government to the conclusion that we had to take the decision we did; we had, too, the advice of the Industrial Development Advisory Board. Both the board and the Government examined all the alternative strategies, but found that none was likely to be viable. The IDAB actually asked the consultants to have another look at the industry to see whether there were other prospects for it, on the basis of direct employment for 3,000 to 3,500 people. None of the strategies appeared viable. I must explain here that the IDAB is the enlarged board. In the past there have been criticisms that the board was set up by the previous Conservative administration, and perhaps that was the reason its advice was not followed in all previous cases. Now, however, the board has been enlarged—some people might say reconstituted—and it has serious trade union leaders as members. No one would describe them as Right-wing lackeys of British capitalism.

Photo of Mr Tom King Mr Tom King , Bridgwater

On the point about strategy, did the Secretary of State ask the board to study the apparent contradiction in the Boston Group report, which referred to up-market, low-volume production of only 16,000 when the group admits that BMW, which is marketing exactly that product, is expected shortly to move up to 45,000?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

All I can say is that the IDAB has considered all the alternatives.

There is one other important matter, concerning the so-called "Checkley" letter written by the Secretary of State for Energy when he held my job. It was quoted at great length by the hon. Member for Birmingham, Hall Green (Mr. Eyre). I have talked to my right hon. Friend about that letter and I have checked the records of the time. I do not want to say too much about this, because the hon. Member for Bromsgrove (Mr. Miller) has told us that he is referring the whole question to the Ombudsman. I do not know whether this question will fall within his jurisdiction, but access to departmental papers will be provided. My right hon. Friend wrote the letter on 6th November 1974. The Small Heath workers actually rejected it when he went to visit them. I can send the hon. Member Press reports of what my right hon. Friend said at that time. On 9th November 1974 he was reported in the Birmingham Post as saying: I have not got the power to guarantee anyone a job. In the Daily Telegraph of the same date my right hon. Friend was reported as saying that he would be deceiving Small Heath workers if he gave the guarantee they sought, five years free of redundancy. With world business in its current state that was impossible, he said. I hope, therefore, that hon. Members will not rely too much on that aspect of the matter. The commitment to the industry, referred to by my right hon. Friend, relates to the ongoing commitment by the previous administration, the commitment to the £8 million under the Industry Act for NVT and the commitment to the Meriden co-operative.

The other matter referred to by the hon. Member for Hall Green and by the hon. Member for Bridgwater concerned the position of NVT, and the question whether, if there was liability, there should be compensation. I reject that entirely. NVT entered into commitments on its own commercial judgment. There is no question of the Government having to compensate NVT for its involvement. I have given the most careful scrutiny to all these matters. I have again considered them with my colleagues. Whilst we fully appreciate the deep anxiety of those in the industry, we see no possibility of establishing it on anything approaching a competitive basis, and accordingly must reaffirm that there are no grounds for making further Industry Act assistance available to NVT. We say that after our deep examination of the very difficult problems that face the industry, and in the light of the consultants' report and the advice we have received from IDAB.

Our decision, of course, was taken with bitter regret. We are sickened by it. We are worried stiff for the workers in the industry, and we know how concerned they are. We have to stand by the decision that I announced to the House last week, although we take no pleasure from it.