Chrysler Uk Limited (Financial Assistance)

– in the House of Commons at 12:00 am on 17th December 1975.

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10.15 p.m.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I beg to move, That this House authorises the Secretary of State to pay or undertake to pay by way of financial assistance under section 8 of the Industry Act 1972 in respect of the business carried on by Chrysler United Kingdom Limited, or any of its subsidiaries, sums exceeding £5 million but not exceeding 162·5 million.

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

I have to inform the House that I have not selected the amendment.

Photo of Mr Michael English Mr Michael English , Nottingham West

On a point of order, Mr. Speaker. I am not allowed to ask you why you did not select my amendment, but if perchance the reason was that selecting it would have killed the debate stone dead, are you aware that that would be in accordance with the will of many hon. Members?

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Because of the noise in the Chamber I am not sure that I heard clearly what the hon. Member said. However, I shall seek to enlighten him in any ignorance from which he may be suffering. Under Section 8 of the Industry Act 1972, which governs the content of the motion, there is no provision for the imposition of conditions by the House in authorising such grants. In those circumstances, stated on page 569 of "Erskine May", the amendment, being outside the provisions of the present statute, may not be moved.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

Yesterday I reported to the House the Government's proposals for Chrysler UK Limited and I said that they would be subject to detailed debate. This evening I am seeking the assent of the House to this motion so that these proposals may be implemented with all possible speed. The House knows that the potential total commitment that the Government face over the next four years is £162–5 million, and that this will cover losses—

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. Too many hon. Members are carrying on conversations in the Chamber. I must ask them to take their conversations outside.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

The commitment will cover possible losses of up to £72·5 million, a model development programme of £55 million, and guarantees for borrowings by Chrysler UK Limited of £35 million. That is the maximum commitment up to and including 1979. In addition to the Government providing guarantees, the Chrysler Corporation is also making guarantees to the Government for a substantial part of these potential commitments. The £35 million borrowing from the clearing banks will be guaranteed by the Government, but the Government, in turn, will receive a counter-guarantee from the Chrysler Corporation.

Furthermore, the Chrysler Corporation will guarantee unconditionally £28 million of the £55 million loan to be made available for the development programme, making a total guaranteed sum of £63 million. The remaining £27 million of the £55 million loan—

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. I made a request to the hon. Members about their private conversations. It now seems that I may have to give an order. This disturbance must stop.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

The remaining £27 million of the £55 million loan will be secured by a charge over the assets of Chrysler UK Limited and its subsidiaries. Drawings under this part of the £55 million facility will be made at any time before 31st December 1979, but only after the £28 million guarantee by the Chrysler Corporation has been fully utilised. Although the total potential commitment is £162–5 million, the House will see that the Government's financial risk, save in exceptional circumstances, is substantially lower than that.

The Chrysler Corporation will also be making a substantial financial contribution to Chrysler UK's activities over the next four years. The Corporation has agreed either to capitalise or to waive repayment of the £19–5 million already borrowed by Chrysler UK from the parent Corporation, and the Corporation will, in addition, be prepared to subscribe cash for new equity in 1976 up to a maximum of £10 million to meet 50 per cent. of the losses by Chrysler UK in excess of £40 million. In later years the Corporation will meet 50 per cent. of losses by way of further new equity or maximum contributions of £10 million, £7·5 million and £5 million in 1977, 1978 and 1979, respectively.

As I reported yesterday, the Chrysler Corporation will extend up to £12 million on the introduction of the C6 at Ryton. Altogether, therefore, the Chrysler Corporation faces total financial commitments, including the counter-guarantees to the Government, of £106 million. That excludes the £19·5 million that will be capitalised or waived.

Briefly, therefore, the Government stand willing, subject to the authority of the House, to enter into a total financial commitment of £162·5 million, which will have the benefit of counter-guarantees from the Chrysler Corporation amounting to £63 million, and the Chrysler Corporation is willing to undertake commitments of £106 million.

I turn to the form of the Government's participation, which I know has exercised many of my hon. Friends, some of whom have tabled an amendment about securing equity stock in the United Kingdom subsidiary. The Government's attitude towards equity participation has been determined by the needs of the Chrysler UK Company. It would have been relatively easy to acquire the whole of Chrysler UK at very little cost, although with substantial liabilities. In isolation, the United Kingdom company, wholly owned as it could have been, could have had no prospects of success. It would have been too small, and the scope too limited. For reorganisation and revitalisation of Chrysler UK to succeed the company must have access to the wider technical, marketing, managerial and development base that only a large manufacturer can provide. In the mass car market scale is of the essence, and without it the necessary economies and competitiveness cannot be achieved.

My hon. Friends may ask why we did not take a lesser stake. In so far as that would have been practicable, the stake would have had to amount to control of the United Kingdom operation or would have placed restraints on the effective involvement of the Chrysler Corporation in the whole range of Chrysler UK's activities. Such participation would have been irrelevant to a soundly-based solution.

I draw to the House's attention the declaration of intent made by the Chrysler Corporation in this respect. Chrysler UK will be treated in all respects on a par with other Chrysler subsidiaries throughout the world. It will have an expanding role in the Chrysler Group, its model range will be planned as an integral part of the Chrysler overall world plans, and new models will be introduced in both the car and the commercial sectors.

I certainly understand the concern of my hon. Friends for accountability when Government funds on this scale are involved. Such accountability is essential, and I hope to explain that we have had some assurances on this matter. Arrangements have been made to provide necessary controls through the right to appoint directors to the board of Chrysler UK. This will also be increased by employee participation in the company—another and no less important form of accountability.

We shall enter into a planning agreement with Chrysler Corporation and the loan arrangements that we shall conclude with both the Corporation and Chrysler UK will provide for the latter to make available management and financial information to the Government. There are a number of procedures by which the Government will be able to monitor the company and to express legitimate interest in its future.

I have briefly covered a number of issues, and I am sure that many comments will be made and questions asked tonight. If they require an answer from me, and if the House agrees, I shall seek to intervene at the end of the debate to reply to them.

10.26 p.m.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

We have had sufficient debates of this kind recently to understand how profoundly unsatisfactory a method it is of dealing with large sums of money. We shall spend £2 million a minute over the one and a half hours that we have for this debate—[Interruption.] The sedentary interruptions of the Minister of State, Scottish Office—the right hon. Member for Glasgow, Craigton (Mr. Millan)—have now cost £1 million.

I have tried since yesterday to understand the implications, for Chrysler UK, of the deal announced by the Government. I can lay no claim to the research facilities of a Government Department, nor can I be sure that the figures that I have put together are totally accurate, but to give the Secretary of State the opportunity to explain why they are not accurate, I had delivered to him this afternoon my projected cash flow. It reveals a substantial deficit in the accounts of Chrysler UK over the next four years. Unless the right hon. Gentleman can explain where the money will come from, or where my calculations are deficient—I am prepared to accept that they may be—to go into the Lobby tonight behind the Order would be an act of irresponsibility.

Perhaps I can take the commitments which we know from the Secretary of State—[Interruption.] Since many of the constituents of the Minister of State, Department of the Environment—the right hon. Member for Birmingham, Small Heath (Mr. Howell)—are losing their jobs under this deal, perhaps he will listen to what I have to say. The commitments into which the Secretary of State intends to enter involve a capital programme of £218 million, built up in the following ways: first, there is to be the tooling up for the Alpine assembly at Ryton, which we know will cost £10 million ; there is the major facelift for the Avenger, which I believe will cost another £15 million ; there are to be three new models introduced in 1977, 1978 and 1979, two of them of cars. Paragraph 39 of the first chapter of the CPRS Report estimates that a new model costs £50 million to introduce, on the most restricted basis. One of these three will be a van/truck, and that may cost £50 million, but it is possible that that is an excess figure.

We must then allow for the annual modernisation programme that any company has to continue simply to replace machinery that wears out. I have allowed £5 million for that. In addition, after 1976 we are to have an increase in the United Kingdom content in the Alpine, from 50 per cent. to 100 per cent., which the right hon. Gentleman has said will cost £23 million.

The right hon. Gentleman has had plenty of notice of those figures. They are either right or wrong, and I should like to know which are wrong. They add up to £218 million over the next four years.

Perhaps I can tell the House the other assumption that I have made. I have assumed that the total losses over the four years amount to the figure that the Government have announced they are prepared to share, in some measure or other, with the Chrysler Corporation. In other words, there are losses of £105 million over the four years. It is no use right hon. Gentlemen shaking their heads. The £105 million is their figure. It is the figure in the statement made by the Secretary of State for Industry yesterday.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

I think that we should understand quite clearly what it is. The first arrangement is for £40 million next year, which is for the Government account. If any right hon. Gentleman wants to question that, he may do so. That is the Government's figure. They then agreed to accept 50 per cent. sharing, up to an additional £65 million, with the Chrysler Corporation. The right hon. Gentleman is shaking his head.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

I believe that the statement says £65 million, but let us assume that it is £60 million. I think it is £65 million, because it is £32·5 million each. However, it is £40 million in the first year and £32–5 million each—

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

That refers to the first year.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

I said £40 million in the first year, which is not the £30 million. It is £40 million in the first year. I am so glad that the right hon. Gentleman agrees with the figure. It is £40 million in the first year and £65 million in the following three years, divided fifty-fifty between the two. In other words, as I said three minutes ago—I do not know why I need to explain it to those who negotiated the deal—[Interruption.] If I am wrong I shall give way to the right hon. Gentleman.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

It is only a minor point, but it is £65 million extra in the four years, including the first year.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Central

It is £40 million and £65 million for the four years.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

That is correct. That is £105 million, by anyone's standards. That is all I am saying. Therefore, the losses are budgeted—we now have total agreement—up to £105 million. [Interruption.] I am getting more concerned every second as I listen to hon. Gentlemen. I do not think there is any point in the House waiting for the Secretary of State to reply. What is the total budget loss over four years in absolute total figures, as envisaged in the statement that the right hon. Gentleman made yesterday? Is it £105 million, or is it £40 million? It is a very simple question. What is the figure? Is it £105 million, £65 million or £40 million over four years?

This is an example of the reason why this House is increasingly held in ridicule. I am only trying to find out one figure, which all hon. Members opposite must know. Why will the Government not tell the House. If they would only do that it would be possible for me to move on to the rest of my speech. I should not need to press this point.

I want to help the Secretary of State. I shall now read from the right hon. Gentleman's statement. He said: For next year it forecast a loss of £40 million".

Photo of Mr Tom King Mr Tom King , Bridgwater

Right hon. Gentlemen should write this down.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

For next year—one year—£40 million. Perhaps right hon. Gentlemen will make a note of that point. We have offered to meet this"— that means that the Government are going to pay— in addition to meeting half of additional losses, if any, up to limits of a further £20 million next year, £20 million in 1977, £15 million in 1978 and £10 million in 1979."—[Official Report, 16th December 1975; Vol. 902, c. 1166–67.] Does that add up to £105 million, or does it not?

I hope that Labour Members below the Gangway will vote for the sort of answers that we are getting tonight! I hope that for not even a single percentage point of equity they are prepared to support this sort of total inability to answer the most fundamental questions on the deal. [Interruption.] I do not want the deal.

Perhaps I may revert to the aggregate totals. We have a capital programme of £218 million. We have assumed that we have losses of £105 million, and we have a reduction of overdrafts from creditors of £35 million. This is a total bill of £358 million. Where is it coming from? If I may refresh the Secretary of State's memory, we have his statement to tell us where it is coming from.

It will come first from the Government's contribution to losses of £72·5 million in total. It will come next in Government loans to finance capital expenditure of £55 million, in addition to the £72·5 million. I am assuming that the depreciation from the Chrysler UK cash internally generated will be the same as it has been over the past four years, that is, £5 million a year, giving an additional £20 million. We know that the parent United States company is committed to producing £33 million for the development of Ryton, and we know, further, that the Government are going to underwrite a clearing bank loan of £35 million. That adds up to £215 million—but we need £358 million. I should like to know where it is coming from.

I can understand the argument that £32·5 million is to come from the Chrysler Corporation if there are losses in excess of £40 million, so the deficit is not £142 million but £110 million. That is the deficit on the cash flow in the next four years.

I do not claim that those figures are right; I merely believe that we are entitled to a detailed explanation showing where they are wrong, before any hon. Member goes into the Lobby tonight, because if I am right, or even partially right, we shall be back here to vote for more money within the next two years.

It may help right hon. and hon. Members on the Government side of the House to understand that those figures, which show a deficiency of over £100 million, assume a number of factors that might stretch credulity rather far. First, no cost was included for moving the Avenger to Linwood. There is just a wave of a wand, and it will be done without charge. Secondly, there is no charge for increased working capital as this company expands. But perhaps most serious of all, the figures are based on the assumption that the annual rate of inflation in each of the next four years is zero. That is the assumption about inflation—no inflation at all. We are still £100 million short.

I gave the Secretary of State notice of this matter because I thought that it would be right to let him have the opportunity to give me the figures in advance, at the Dispatch Box. I thought that the right hon. Gentleman might try to reply to what I thought was a helpful way of briefing him. I do not know how often Ministers at the Dispatch Box have sent their opposite number details of what they intended to say four hours before saying it, so that full replies could be given.

What is apparent is that the Secretary of State will not answer my questions. He will try to bluster his way through in the last 10 minutes of the debate. I hope that Labour Members who are thinking of voting for the motion will listen carefully to his explanation of the way in which that deficiency will be made up, or where any calculations are wrong.

Photo of Dennis Skinner Dennis Skinner , Bolsover

I shall tell the hon. Gentleman where the money, or some of it, is coming from. Some will come from payments of millions of pounds that would otherwise be made in social security benefits, earnings-related benefits and redundancy payments. Perhaps the hon. Gentleman will understand that many of us on the Labour Benches who have witnessed the return of the Crown Agents' £400 million that has been lost to property speculators are prepared to ensure that those who would otherwise be thrown on to the ever-lengthening dole queues will be rescued from them for as many years as possible.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

I find the hon. Gentleman's intervention curiously helpful, as always. In saying where the money will come from, he admits that it will be needed, which is all that I am saying—that an extra £100 million will be needed. Perhaps the hon. Gentleman and his colleagues have a semantic explanation to give to the 14 million people out of work, showing why between 10,000 and 12,000 people should be in a privileged position while they are not. I shall be interested to hear it.

The hon. Gentleman should understand that we are not talking about curing unemployment, or about protecting people's jobs ; we are talking only about which jobs we shall protect. It is a question only whether it should be the Chrysler jobs or the jobs of the 35,000 people made redundant every month. It will be necessary to explain to railway workers, steel workers and others losing their jobs all over the country that they are expected to tighten their belts, to give a year for Britain, while the Chrysler workers are not. There may well be arguments for that—

Photo of Ms Audrey Wise Ms Audrey Wise , Coventry South West

Will the hon. Gentleman join some of us on the Government side of the House in opposing all those cuts and redundancies? Will he explain what benefit it is to the 1 million unemployed to have other people added to their numbers?

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

It is my wish to go further than the hon. Lady has in mind. I shall certainly take her place on the Government Benches, and she will take my place as quickly as possible.

Yesterday we debated the broad sweep of the Chrysler deal. I cannot remember—I doubt whether any other hon. Member can—a reaction across the nation so complete in condemning what the Government have done. Every national newspaper this morning—

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

Perhaps I can help the Minister of State by quoting some of the newspapers that normally support his party. It so happens that, by a curious coincidence, I have with me the Sun. [Interruption] I am happy to choose the Daily Mirror if it helps—[Interruption.]

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. The Chair is having great difficulty in hearing the hon. Gentleman's speech. The Chair appeals for order.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

I was saying that I have no objection to taking the lead story in the Daily Mirror, which says that The bill for every job at Chrysler is £20 a week. Chrysler workers could well be subsidised by more than £20 a week under the Government's rescue plan. Or one could quote from The Guardian, which referred to the company as The lamest duck on the pond. Or one could quote Welsh newspapers or Scottish newspapers in the same vein, because the story was exactly the same wherever one looked throughout the entire nation. The national Press, without exception, has condemned what this Government have done.

When the CPRS, the Select Committee and every newspaper have indicated that the Government have now abandoned the one strategy which, a month ago, it was claimed was likely to bring the country back to a state of prosperity, there should at least be the possibility that the House should understand that the nation believes that we are totally out of touch with what they are longing to see and hear from the present Government.

The reality is that our people are longing to be told how to solve our problems, and in what way the Government intend to lead the nation out of those difficulties. Until the Government are prepared to follow consistently one policy for one month at a time, there is no way that we shall combat the problems that undermine the strength of our economy. Everybody knows that, except a small group on the Labour Back Benches which totally refuses to allow the Government to uphold the action they should be taking.

If Labour Members believe that a solution to our problems is to be found by spending what Ministers say will be a figure of £162 million and what by other calculations could be nearly double that figure in trying to save 12,000 jobs in a company whose products are not wanted and a company that is going downhill, I fail to understand what is meant by the Government's phrase "industrial strategy".

Surely here was an opportunity for the Government to pursue a policy that would have commanded the widest conceivable consensus. They have missed that opportunity, and have done so for the narrowest form of mean party advantage in Scotland. They will pay the price for it. That I do not mind. What concerns me is that the price will be paid by the increased unemployment and inflation which those policies are unquestionably causing every day.

It was characteristic of the Prime Minister to say that Mr. Riccardo had put a pistol to his head. What a gross exaggeration of the situation that was. Why should he conceivably undertake the risks associated with manslaughter when he can get away with daylight robbery scotfree?

The reality is, as we know beyond doubt, that when the Prime Minister is faced with an intractable position he seeks without any question the lowest common denominator and clings to it like a drowning man clinging to a raft. Until the right hon. Gentleman is prepared to bring a sense of national leadership to our problems there will be no solution to these problems, or to our national industrial demands.

10.51 p.m.

Photo of Mr Eric Moonman Mr Eric Moonman , Basildon

There is certainly one problem that is of the Government's making tonight, and that is the fact that we are discussing this complex issue in a certain amount of confusion. That is a massive understatement. It would have been more sensible if this important issue had been deferred until after the Christmas Recess.

There are three points that I wish to raise. The first relates to the extraordinary document known as the declaration of intent. I am sure that the Secretary of State has given more information than was contained in the document, but he will not be surprised if many of us feel distressed about having to make do with six brief paragraphs which are generalised statements, prepared, as far as I can gather, by the company although they commit the Government.

My right hon. Friend said that this operation will permit the company to go for the mass car market. What is clear to anyone who understands the motor car industry is that the profit sector is not in the assembly but in the initial production. Assembly has certainly been a problem in many companies and one which is recognised in the Ford Motor Company in my constituency. Paragraph 4 of the declaration of intent is particularly relevant. In this paragraph, in only one case out of the five references by the company is there any reference to "production." This is to do with the improved Avenger: to be produced late next summer. In the other cases we are talking about "assembly" and "introduction," whatever that means.

Since no one can take the trust and good will of the Chrysler company too seriously the thought must be in all our minds that this could turn out to be an assembly operation and the people in this country could end up merely assembling cars.

Turning to the strategy mentioned by the Secretary of State, I am led to wonder why we did not take over the company. One of the implications in the fact that we did not is that we did not have faith in British management. If there had been an opportunity to take over the company, perhaps on a joint basis with the Iranians, the move would have made good sense.

My third point deals with the credibility of Mr. Riccardo and the binding nature of this arrangement upon the American board. The evidence is that this company does not have a successful track record in the United States and world-wide. The Government's policy lays much trust on the way in which this company will function world-wide in the next five years.

It would have been more acceptable to me and my colleagues if, in any of the Government statements—and there have been several in the past 24 hours—there had been some reference recognising the way the company had behaved and showing that consideration was being given to formulating guidelines for the operation of multinational companies in this country. It is clear that Chrysler—whether or not it had a pistol at the head of the Prime Minister—has managed to come into this country, has given us little option, and has said that it is prepared to move out.

I hope that during the debate some reference will be made to the way in which we want to encourage companies from the United States or anywhere else to come into this country and take up the responsibilities essential in dealings between Government and industry. While there has obviously been tremendous financial flair in the way this deal has been put together, what is clear is that there has been a lack of management assessment.

That is a most difficult matter for any of us to accept. The proposal lacks a management understanding of how the proposal will fit together. That point must be dealt with before we conclude the debate. We must know that management understand the position of the Corporation's establishments in this country vis-à-vis those overseas under the proposals. If the Government do not get that right, Chrysler UK will be merely an assembly shop for the rest of the Chrysler organisation.

10.56 p.m.

Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby

I am happy to speak after the thoughtful contribution by the hon. Member for Basildon (Mr. Moonman), not least because he has many Ford workers in his constituency, while my constituency reaches to within a dozen miles of the Ryton plant, and I have many Chrysler workers as constituents. I make that point not because I wish to make a constituency speech: I believe that this issue is far too important for that. The national interest is at stake. I mention my constituency interest, however, to make clear that not every hon. Member with Chrysler workers as constituents wants to get his hands into the pork barrel in the short-term interests of those constituents, while disregarding the immense long-term detriment that the proposals will cause.

This motion has nothing really to do with unemployment. The real reason for the motion is to enable the Government to pay Scotgeld. That will prove as futile a policy as paying Danegeld. I reckon that with 41 Labour Members from Scotland, and the £162·5 million in this motion, it is costing about £4 million per Member in a vain attempt to save their seats. They are expensive fellows, and I am sorry that more of them are not here to show their gratitude at what is being done for them. We have heard that Mr. Riccardo put a pistol to the Government's head. Alas, that is not true. What happened was that the Government put their head to Mr. Riccardo's pistol.

This whole scheme is unnecessary, as was proved by the arguments advanced by the Secretary of State for Industry, both tonight and yesterday. He says that it will save jobs, although the figures vary. Sometimes it seems that 17,000 jobs will be saved—the 1number left at Chrysler after the 8,000 redundancies—and sometimes the number is alleged to be 40,000. He has also said, however, that the industry as a whole will run down anyway, and by more than that number. At the very most, therefore, he will save jobs in Chrysler temporarily, but those jobs will be lost elsewhere in the motor industry. The right hon. Gentleman tells us that he wants a slimming-down operation, not the amputation of one limb. That is nonsense, but there is further nonsense, because there are many opportunities for jobs at this time—

Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby

The hon. Member does not read his local newspaper. If he did he would see the job vacancies.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Like myself, the hon. Member for Blaby (Mr. Lawson) has a large number of constituents who work in the Coventry area. Redundancies are pending at British Leyland, at GEC, at Alfred Herbert and at several other concerns—

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

They have not arisen only under a Labour Government. They started under the Conservatives. Where does the hon. Member for Blaby think his constituents will find other jobs?

Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby

First, the hon. Gentleman should look at the job vacancies listed in the local newspaper in his constituency. I do not seek to deny the hardship that is caused by unemployment, but there are jobs available all the time. Second, if the hon. Gentleman studies the figures produced by the Department of Employment he will realise that even in these depressed times about 300,000 people leave the unemployed register and go into employment each month. That is a fact based on the official figures published by the Department of Employment. It is right that we should put these matters into perspective.

Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby

The next matter that must be borne in mind is the nature of the jobs that are to be kept. The Chrysler workers will be constantly looking over their shoulders and wondering when the next crisis will take place. They will be worried because they will have no security. They will be wondering whether they will be able to pay the next mortgage instalment. Within a year, the 8,000 workers who are now to be laid off will be the lucky ones. They will be envied by the 17,000 who remain. The 8,000 will find jobs elsewhere, while the 17,000 will remain in insecure employment at Chrysler.

Stress has been placed on the unemployment pay saved as a result of the Chrysler deal. This point has been taken up by the hon. Member for Bolsover (Mr. Skinner), the Secretary of State for Industry and the Secretary of State for Employment. They say that the Government have made a good deal because, if Chrysler were not saved, unemployment pay would amount to £100 million a year, or more. That is also complete nonsense. First, one-third of the work force is in any case to be declared redundant, so we need consider only the remaining two-thirds. Moreover, the truck division, which employs 3,000 people, is perfectly viable. If a receiver were brought in he would be only too happy for it to be sold to Volvo or Vauxhall, for example. That division would remain in business.

Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Luton West

Will the hon. Gentleman take it from me that when I asked the managing director of Vauxhall whether his company was interested in buying the concern he said that it was not, although it might buy the land. He said that Vauxhall was not interested in the Chrysler operation.

Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby

I do not believe that the managing director of Vauxhall would reveal his strategy to the hon. Gentleman.

We have to consider the amount of unemployment pay that would be paid to two-thirds of the work force. Are the Government saying that they will run the economy so that everyone who goes on to the unemployment register will remain unemployed for a year? If so, that is a terrible deterioration. The average time spent on the unemployment register at present is less than six months but the Government are basing their calculations on an average of 12 months. That is an interesting piece of information. If we base our calculations on an average duration of unemployment of six months for two-thirds of the work force we arrive at about £30 million at most, instead of £100 million. That has to be measured against £162½ million.

The Iranian order has also been used by the Government. We know that it is profitable, so arrangements could have been made to cover it in any event. We know from the CPRS that it is a wasting asset. But the most important lesson to be learned from this argument is that if a company is on the verge of insolvency it must approach a foreign country, preferably an Arab country or at least an oil producer, and obtain a huge order from its Government. If that is done the present Government, come what may, will mount a rescue operation. All that any large industrial organisation in difficulties has to do is to obtain an Iranian or Saudi Arabian order. If it does that it has no need to worry, as the British taxpayers, through the Government, will be forced to pay the bill.

Photo of Peter Viggers Peter Viggers , Gosport

Perhaps my hon. Friend will ask the Governmen: exactly what contact they have had with the Iranian purchasers of CKD parts, and whether they have direct contact with the Khayami family, who are basically responsible for the purchase of those parts, or have relied on the word of the Chrysler organisation?

Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby

I hope that the Secretary of State will answer those important questions.

But the real cost is not to be measured simply in these financial terms. As has been said—it needs to be said again—the real cost is that the Government's so-called new industrial strategy has been totally undermined.

When I read the White Paper called "Approach to an Industrial Strategy", I had not realised the significance of the word "approach". They approached, but then they drew back. But we are told in more homely terms than those of the White Paper what the new industrial strategy is. According to the Prime Minister, … what we are looking at really is supporting, fortifying and strengthening the valiant and the brave for the future and also providing resuscitation for wounded heroes. Where does Chrysler fit on this roll of honour? Again according to the Prime Minister, … the situation we have been presented with is something which, I am sure, when all the facts are known, will turn out to be distasteful to hon. Members in all parts of the House."—[Official Report, 11th November 1975; Vol. 881, c. 1137.] Let us hear these distasteful facts. The Prime Minister said that there was a history of Luddism on both sides of Chrysler, and that it was a lousy company. Let us hear from the Secretary of State why this lousy company, condemned in every way by the Prime Minister, is now a wounded hero.

The Chancellor of the Exchequer cannot remain unscathed in this affair, either. What has been undermined is not merely the Government's industrial strategy but their whole economic policy. I waited today to learn what compensating public expenditure cuts would be announced to make way for the £162·5 million, or even for the initial £72·5 million. We were told about not a penny of cuts.

The Government's decision on Chrysler has undermined the whole of their economic policy. It has undermined, too, all remaining confidence either at home or overseas that the Government are in earnest about curbing inflation. That is why there was such a catastrophic effect on the foreign exchange market yesterday as soon as the arrangement was announced.

It is up to this House now to retrieve the situation by refusing to pass this motion. This is a turning point in the brief history of the Government. It is like Upper Clyde Shipbuilders were in the history of the Conservative Government, and it will have the same adverse effects on this Government as that decision had on the previous Conservative Government.

This is the Government's last chance to be told by Parliament to learn sense, since they cannot learn it by themselves.

11.7 p.m.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

We on the Liberal Bench share fully the concern of the hon. Member for Basildon (Mr. Moonman) that this second part of the deal should be put through the House tonight before there has been any time for reasonable analysis of the extremely complicated and, in my view, very mysterious figures that the Government gave us yesterday.

I return to the question that I asked the Secretary of State yesterday at the end of his statement. How does he reconcile the grandiloquent and very expensive declaration of intent from Chrysler with the figure that he has put into this motion? The hon. Member for Henley (Mr. Heseltine) gave his version of the substantial discrepancy that he found in that figure. According to the advice of the Bristol University Motor Industry Research Group, the discrepancy between the grandiloquence of Chrysler's intentions and the figure for which we are asked tonight is at least £110 million. Therefore, from two sources, working quite separately and admittedly on estimated figures, this substantial discrepancy is thrown up. That must be explained, if it can be.

But even if that is to be explained, we come to the second element of fraud in this figure, namely, that there is no provision for the inflation that will inevitably occur during the next three years. The House should realise that it cannot be more than 18 months before we are back here being asked, at someone's pistol point, to vote even more in order to save more redundancy payments, and the rest.

Finally, because I owe it to the House to be very brief, we come to the appalling position that will be reached if the company is still in existence by the end of 1979, when it will cease to be generating any profit cash and will go back to a substantial loss position. What a reward for all those taxpayers' money—to ruin the Government's industrial strategy and to bring the Chancellor's financial strategy into grave danger. What a reward, at the end of 1979, to be left with a company which is quite incapable of generating any of the capital or finding any capital from the market, which is necessary to make it viable by the early 1980s.

Even if the figure were £162½ million, we on the Liberal Bench would vote against the motion, but since, in our view, during the next five years it will be infinitely more than £162½ million, we regret that the Government have not come clear about it.

11.11 p.m.

Photo of Mr John Lee Mr John Lee , Birmingham Handsworth

Although political memories tend to be short, the hon. Member for Blaby (Mr. Lawson) will have cause to regret the light-hearted way in which he seemed to treat the problem of unemployment. Although many of us on the Government side of the House have misgivings about many aspects of this deal, none of us would feel other than a sense of disgust at the light-hearted and almost frivolous way in which the hon. Gentleman and some other hon. Members seem to regard this whole Chrysler affair.

Having said that, it is only right that I should say that there is an element of desperation about certain aspects of the situation. I must say that I voted for the Government last night with considerable reluctance, and I shall be voting with considerable reluctance again tonight. As one who has helped lower the Government's majority to the lowest that it has been so far in this Parliament, nobody can accuse me of lacking in ability to abstain or to vote against my own party. I have done so on previous occasions and I have no doubt that I shall do so again.

I want to ask one or two questions to which hon. Members below the Gangway have a right to know the answers. It is bad enough that there is no buying in of an equity share in this company. This situation is fraught with uncertainty. There is no certainty that the operation will succeed. We hope it will, but there are many aspects about it which are disturbing. The prognosis upon which the rescue operation was based is somewhat optimistic, in many respects. When one has to set that against this situation, in which, inevitably, to a considerable extent the rescue operation will be in competition with British Leyland and must make the Leyland operation that much more difficult to achieve than would otherwise be the case, one cannot be too optimistic about the outcome.

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Oxon Mid

The hon. Gentleman, like myself, represents many workers in British Leyland. Has he considered the fact that this operation will substantially undermine the much greater operation involving British Leyland in terms of investment and jobs? We have had no information on that subject. How can it be possible for Lord Ryder to tell British Leyland that it will get no more public money without an improvement in industrial relations, while large sums of public money are proposed to be made available to Chrysler—

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. The hon. Gentleman must not make a speech. He may only make an interjection.

Photo of Mr John Lee Mr John Lee , Birmingham Handsworth

The hon. Gentleman will have to make up his own mind whether he wants to make an intervention or a speech when the time comes.

As I was saying, this is bound to make the Leyland operation that much more difficult. One does not need to say more than that. The Minister must realise that many of us on the Government side of the House share the hon. Gentleman's misgivings. It may be a matter of degree how seriously this will impinge on the other operation, but that it will impinge on it to some extent is inevitable.

The main purpose of my intervention is to ask my right hon. Friend what the two Government-appointed directors are to do. Will we find ourselves in a situation similar to that which arose with the Government-appointed directors on the board of BP? Those directors took no notice of the energy policy introduced by the then Prime Minister, the right hon. Member for Sidcup (Mr. Heath). They found themselves in a minority interest on a board that otherwise allowed itself to be governed by private commercial considerations.

Will these directors be genuine Government representatives? There are many Government-appointed directors scattered around various organisations, but their performance, to say the least, has not been distinguished by the extent to which they have made themselves accountable to the Government. In the absence of an equity holding in Chrysler the least we can expect from my right hon. Friend is a clear indication of what the directors are meant to do.

My hon. Friend the Member for Coventry, North-East (Mr. Park) put that question to the Secretary of State yesterday. The Secretary of State for Scotland—perhaps he had not time—did not reply to it. Therefore, I put the question again and ask my right hon. Friend to answer it.

Photo of Mr Ian Mikardo Mr Ian Mikardo , Tower Hamlets Bethnal Green and Bow

Does my hon. Friend realise that his question, whatever answer he may elicit, is not the important question in this debate? Irrespective of what these Government-appointed directors do—even if they do all the things that my hon. Friend would like them to do—the question of what Chrysler cars are made, and where, will be decided not by those directors, and not at 1 Victoria Street, but in Detroit.

Photo of Mr John Lee Mr John Lee , Birmingham Handsworth

My hon. Friend is right. But at least we should know what those directors are there to do. Are they to monitor the working of the operation? If the commercial decisions are to be taken in Detroit in any event, the least we can expect is that those directors shall monitor the way in which the company functions.

A disturbing feature of a number of British companies of considerable size and of multinationals has been that apparently prosperous organisations have suddenly plunged into insolvency within months, and everybody has been surprised. I think that we should have an indication that the Government-appointed directors will report back to the Secretary of State and that he, in turn, will be that much better informed of what is going on inside Chrysler.

The limitations of the Companies Act are extensive, but surely directors are basically responsible to the shareholders. At least let us be sure that the Government-appointed directors carry out some of the functions that would have been expected of them had the Government bought an equity share in the company as many of us wanted them to do.

I do not think that my hon. Friends below the Gangway have any great confidence that we shall get a satisfactory answer. The least for which we can hope is a clear answer, even if it turns out to be disappointing.

11.18 p.m.

Photo of John Stanley John Stanley , Tonbridge and Malling

I suggest that, whatever the financial defects of this deal, there are good parliamentary grounds alone for rejecting the motion.

The Government know that every time they wish to have more than £5 million passed from public funds to Chrysler, they must, if they do it in individual tranches, seek the approval of the House in the way that they are seeking it tonight. Despite the fact that this entire deal hangs on nothing more substantial than a declaration of intent, the Government have lumped together all the known and contingent liabilities for next year, the year after that, the year after that, and the year after that, into one big bumper bundle of £162·5 million, to ensure that there can be no guaranteed parliamentary debate at any time over the next four years on how the deal has progressed and whether the House should approve any additional expenditure.

The House would be well advised to reject this motion on the ground that we are being deprived of any future opportunities to review the expenditure we are committing tonight. Once again, the Government are taking the maximum amount of public money with the minimum amount of parliamentary debate, and that should be resisted on all sides of the House.

The motion should also be rejected on financial grounds. The Secretary of State for Industry told us that Chrysler and the Government will have an equal share in the profits of Chrysler UK, though he omitted to say in which decade these profits would start to arrive. If there is to be equal sharing of the profits there ought to be equal sharing of the risks and, despite what was said by the Secretary of State for Employment in winding up the previous debate, nobody looking dispassionately at this deal could suggest that there is equality of risk-sharing between Chrysler and the Government.

Risks fall into two categories—the certain liabilities, the losses piling up year after year and the contingency risks represented by capital expenditure, which can be deferred if the company chooses. The real test is how the losses are to be shared. We know that Chrysler is forecasting a loss of £40 million for next year and the British taxpayers' liability is the entire £40 million. Chrysler's liability is precisely nil. Over the four years to the end of 1979, the taxpayers' share of the losses will be £72·5 million and Chrysler's share only £32·5 million. By any standard, the British taxpayers are taking the lion's share of the real risk in this deal while the Chrysler Corporation, with the Government's agreement, is being shielded from the main risk.

We must also look at the difference in the degree of commitment of the two parties. The British Government and taxpayers are locked irrevocably into this deal for as long as Chrysler UK continues. They are locked into a maximum liability of up to £162·5 million. Chrysler, on the other hand, is merely bound by a declaration of intent, which has no contractual force. Chrysler can withdraw, modify or say that the declaration of intent can no longer be implemented fully. The Government and the taxpayers are firmly on the hook in this deal, and Chrysler is not on the hook at all. That is another good reason for rejecting this arrangement.

A significant amendment, which was not called for debate, was tabled by the hon. Member for Nottingham, West (Mr. English) and a number of other hon. Members opposite. It called for a share in the ownership of Chrysler as a condition of the provision of public money. I did not agree with it and would not have voted for it, but those hon. Members who have tabled it have at least been totally consistent in the case that they have been arguing for nationalisation, and their very consistency starkly exposes the total inconsistency of Government Ministers and the shallowness of the arguments that they have been advancing in a number of nationalisation debates.

Time after time, those of us on the Opposite side of the House have been attacked for not accepting the Government's argument—expressed in tones of righteous indignation—that where public money was spent on the private sector, nationalisation must follow. That argument was used in debates on British Leyland, Ferranti, Alfred Herbert, the National Enterprise Board and the nationalisation of the shipbuilding and aircraft industries. Yet tonight we are asked to vote £162½ million of public money and not one share is changing hands.

I agree that the Government are right in not accepting a single share in Chysler, because it would not be worth their while to do so. But no member of the Government has any longer the right to tell us that a certain company or industry should be nationalised because public money is going into it. That argument is exploded and is shown to be totally fraudulent by this motion.

11.25 p.m.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

The debates and votes of yesterday and today are in many ways bogus. We have been asked to approve a total package that we agree with or disagree with in total. There has been no opportunity of raising the question whether certain aspects are acceptable or unacceptable. In many ways it is a pity that the amendment was not selected, because at least it would have allowed an expression of opinion on one part of the package. Instead, we are asked to vote either in favour of 8,000 redundancies or in favour of saving 17,000 jobs. That is a ridiculous question to put to the House of Commons.

We were told yesterday by the Secretary of State for Industry that redundancies will fall most heavily in the Midlands. When I questioned him about that, he did not answer me, but, according to the figures I have, 43 per cent. of the jobs in Scotland will be lost at Linwood, as compared with 30 per cent. in Chrysler as a whole. The Scottish people are entitled to an answer tonight.

I must declare an interest. I, in the elegant words of the hon. Member for Blaby (Mr. Lawson), am perhaps one of those responsible for this payment of "Scotgeld", as he called it. It is perhaps the first time in history that money is being paid by England to Scotland out of what is owned by Scotland. The future of the workers at Linwood could be secured by three days' oil revenues from Scottish oil. [Interruption.] That does not please hon. Members, but the people of Scotland understand it and the workers at Linwood do.

The hon. Member for Henley (Mr. Heseltine) goes on about what the Press says, but it is the English Press that he quotes. Did he read the Daily Record today? It does not say "So many thousand jobs saved". It says, "3,000 Linwood jobs lost". The Scotsman, in its editorial, describes the Chrysler deal as a black day for Strathclyde. Hon. Members will have to realise that people in Scotland see these things differently from the view from London.

We believe that there is a future for Linwood—a future in a Scottish context within the concept of a Scottish motor corporation which will bring together the elements of the motor industry in Scotland. [Interruption.] Hon. Members are great at sneering and jibing at Scotland, but they do not sneer and jibe at Sweden with its successful motor corporation. There is no reason why we should not do the same thing in Scotland.

We want concrete answers tonight. What is the explanation of the cut-back in jobs? What new models are there in this declaration by Chrysler for 1977, 1978 and 1979? Can the Secretary of State give a categorical assurance that one of them will be allocated to Linwood? If he cannot, there is no guaranteed future for the workers at Linwood.

11.30 p.m.

Photo of Mr Tom King Mr Tom King , Bridgwater

This is the second time in two days that we have debated a matter that is of great importance not merely to Chrysler employees but to the motor industry and our national economy. Yesterday, the hon. Member for Basildon (Mr. Moon-man) said that if we all make constituency speeches on this subject the nation has not a chance. He could not be more right. My hon. Friend the Member for Blaby (Mr. Lawson), who has many Chrysler workers in his constituency, recognised the damage that this operation will do to the whole industrial framework of the country.

When the Secretary of State winds up the debate I hope that he will do the House the courtesy of explaining the figures. Not many Ministers in his position have been shown the courtesy of being given four hours' notice by the Opposition spokesman of the figures that he would produce in the debate, with a request for clarification. The hon. Member for Colne Valley (Mr. Wainwright), working from an entirely different source, produced virtually identical figures.

The Government have entered into a commitment for £260 million and are asking the House tonight for only £160 million. Before this matter came forward for consideration there were leaks to the effect that the operation would actually cost the country £300 million, but that it would be dressed up to look like £150 million. There are ominous signs that those leaks were correct. I hope that the Secretary of State will tell us just what are the figures. The declaration of intent will look extremely hollow unless we know where the money is to come from to implement the intentions. If those figures are right, the cost per job will have gone up to nearly £16,000.

Other elements are still unresolved. I understand that it is a requirement of Chrysler and of the Government that the money will not be available from either party unless there is full union agreement to new manning levels at Ryton and Linwood and achievement of the French Simca level of productivity. Did the Secretary of State receive those commitments from the unions at his meeting with them today? If he did not, what is the point of proceeding with the operation, as the other parties are not prepared to proceed without those commitments?

Will the Secretary of State tell us the truth about the Iranian situation, as requested by my hon. Friend the Member for Gosport (Mr. Viggers)? The Government tell us that 8,000 jobs will be lost and that if they had let the business go 55,000 jobs would have been lost. They do not mention any multiplier, or any added factor. How many jobs are lost from importing knock-down kits from France? Is the number additional to the 8,000? The Government have a duty to come clean and tell us the honest facts.

My hon. Friend the Member for Blaby referred to pistols at people's heads. The Secretary of State must have had a pistol at his head to get him here on two consecutive days, and I have some sympathy with him. Holding the office that he does, he has a duty to answer the debate and give the House and the nation the full facts. Members of the Labour Party seem to have had heavy-barrelled revolvers pointed at their heads to persuade them how to vote tonight. If the speech made by the hon. Member for Birmingham, Handsworth (Mr. Lee) was an illustration of the voice of a real rebel, it was the most pathetic attempt I have heard for a long time. He was told, with that acid quality we remembers from the days of the Industry Bill, by the hon. Member for Bethnal Green and Bow (Mr. Mikardo) what the Government-appointed directors would actually do for the future of Chrysler.

With the need for this debate the House has a last chance to answer the cry that echoed through the country yesterday, when the first news of this matter came, and when the Sun newspaper, for instance, said, in effect, "Is no one in the Government willing to face the truth?" Will the Government now tell us the truth and let us judge the facts? When the truth is known, I trust that the whole House will join in rejecting the Order.

11.35 p.m.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

From what we have heard tonight, people would be forgiven for thinking that we are doing what we are doing under the modestly controversial Industry Act 1975 and not the Industry Act 1972. But of course we are doing it under the Act passed and actively supported by all the right hon. Members on the Opposition Front Bench. The hon. Member for Tonbridge and Mailing (Mr. Stanley) suggested that we had lumped everything together, that we are dealing now with the £162½ million contingent liability so that we need not come back to the House again.

My hon. Friend the Member for Basildon (Mr. Moonman) suggested that we might have considered the matter after Christmas. It was not possible to do either of those things under the Industry Act of the last Conservative Government. Under Section 8 (8), when the Government enter into a commitment and the Secretary of State pays or undertakes to give financial aid, the matter has to come before the House. There is no practicable way in which I could provide £20 million before Christmas and £142 million after Christmas—

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

It is not rubbish at all, as the hon. Member would know if he had studied the Act.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

The right hon. Gentleman must know that that is exactly what the Government did with British Leyland.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

It is not what the Government did with British Leyland, because that was done under a different procedure. It was done under a special Act—

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I do not know why the hon. Member shouts "Rubbish". He was not even in the Chamber when that Act went through, so let us have no nonsense from him.

It has been suggested that the Government could have acted in a different way. It is true that we could have delayed signing this agreement with Chrysler, and escaped, if you like, until the recess. We could have said that we did not want to go through the parliamentary procedure. The Conservative Industry Act says that if money is urgently needed at a time when the Secretary of State is satisfied that it is "impracticable "to obtain the approval of the House of Commons, … in that case the Secretary of State shall lay a statement concerning the financial assistance before each House of Parliament. It would have been perfectly easy. It would have been a device, and it would have been disgraceful, but we could have delayed the decision to lay a statement, allowed the House to go safely into the recess, and then laid the statement—and there would have been no further parliamentary action. We are condemned for doing the honourable thing, in accordance with the Conservative Industry Act.

The hon. Member for Aberdeenshire, East (Mr. Henderson), who speaks for the Scottish National Party, asked for important information about that country. If I had time I would go through the actual redundancies, but I can tell him that 6,400 redundancies will arise in England as a result of this operation. In Scotland the level of employment in August 1976, when there is a pick-up of work following the transfer, will be 1,500. It is true that the immediate redundancies at Linwood will be 3,000, but when the Avenger work is transferred there will be a pick-up of work. I do not want to mislead the hon. Member's party: the level will go back to about 5,500.

The hon. Member for Aberdeenshire, East asked about models for Scotland, and mentioned the declaration of intent. The declaration of intent says that a new small conventional-drive car will be introduced in 1977. That will be produced in Scotland, as also will be the new light car to be introduced in 1979. I hope that that is the information that the hon. Gentleman required.

I turn to the point raised by the hon. Member for Henley (Mr. Heseltine) who, as he said, informed me about the points that he wanted to raise in the debate. He has got the arithmetic completely wrong. He has used speculative figures, which are not related to the facts or to the information that we obtained from the Chrysler Corporation—information that has been agreed with the leading and respected international consultants, Coopers and Lybrand. The hon. Gentleman wrote to me claiming that there was a shortfall of £142·5 million between the requirements of Chrysler UK and the funds available. However, the hon. Gentleman has not taken into account the commitment of the Chrysler Corporation to contribute £32–5 million towards the losses.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

The hon. Gentleman has overestimated the product development programme. He puts that at £175 million, when it is £65 million.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

The figures are £55 million for model development and £10 million for tooling up Ryton for the Alpine.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

Is the Secretary of State for Industry seriously telling us that we shall get the tooling up of the Alpine, a major facelift for the Avenger and three new models for £65 million when the CPRS Report, in Chapter I, paragraph 39, says: It costs around £50 million to bring out a new model, assuming that an existing engine can be used, and about £25 million to tool up for a major facelift"?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

That does not alter the situation one iota. It is not usual for this Government or for any Government to be so forthcoming over the information they receive. I have already told the hon. Gentleman—I hope he accepts it—that Coopers and Lybrand looked at the figures and agreed them. I would also point out, if it is of any help to the hon. Gentleman, that the CPRS, which has been associated with this exercise throughout, agrees with the figures I have produced and those mentioned in the Order.

I go further. If the hon. Gentleman will submit his letter to me in the form of a Question, I shall arrange for it to be itemised in the Official Report so that the whole House can join in this debate rather than the hon. Gentleman and myself.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

There are many other questions that need to be answered, Mr. Deputy Speaker.

As a result of the proposals that we have put before the House, I hope that hon. Members will recognise that we have been fair and forthcoming. We could certainly have slipped this matter through during the recess if we had wanted to. That would have been tantamount to a parliamentary scandal. However, we have been open with the House on every occasion. The Conservative Party realises that every time we have been concerned about a situation we have attempted to save jobs in a realistic and practical way that ensures that there is an ongoing Chrysler UK commitment here.

My hon. Friends have asked why there could not be an equity stake. As I have already explained, it could have been a 100 per cent. British company, but we could not have got it properly knitted into the world-wide operations of Chrysler UK. There will come a time when the agreement will be signed, and I am certain that there will be demands by a Select Committee for that agreement to be laid before the House of Commons. I give the House the assurance now—

It being one and a half hours after the commencement of Proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

The House divided: Ayes 287, Noes 266.

Division No. 20.]AYES[11.45 p.m.
Abse, LeoCraigen, J. M. (Maryhill)Golding, John
Allaun, FrankCrawford, DouglasGould, Bryan
Anderson, DonaldCronin, JohnGourlay, Harry
Archer, PeterCrosland, Rt Hon AnthonyGraham, Ted
Armstrong, ErnestCryer, BobGrant, George (Morpeth)
Ashley, JackCunningham, G. (Islington S)Grant, John (Islington C)
Ashton, JoeCunningham, Dr J. (Whiteh)Grocott, Bruce
Atkins, Ronald (Preston N)Davidson, ArthurHardy, Peter
Atkinson, NormanDavies, Bryan (Enfield N)Harper, Joseph
Bagier, Gordon A. T.Davies, Denzil (Llanelli)Harrison, Walter (Wakefield)
Bain, Mrs MargaretDavies, Ifor (Gower)Hart, Rt Hon Judith
Barnett, Rt Hon Joel (Heywood)Davis, Clinton (Hackney C)Hattersley, Rt Hon Roy
Bates, AlfDeakins, EricHatton, Frank
Bean, R. E.Dean, Joseph (Leeds West)Hayman, Mrs Helene
Benn, Rt Hon Anthony WedgwoodDelargy, HughHealey, Rt Hon Denis
Bennett, Andrew (Stockport N)Dell, Rt Hon EdmundHeffer, Eric S.
Bidwell, SydneyDempsey, JamesHenderson, Douglas
Bishop, E. S.Doig, PeterHooley, Frank
Blenkinsop, ArthurDormand, J. D.Horam, John
Boardman, H.Douglas-Mann, BruceHowell, Denis (B'ham, Sm H)
Booth, AlbertDuffy, A. E. P.Huckfield, Les
Bottomley, Rt Hon ArthurDunn, James A.Hughes, Rt Hon C. (Anglesey)
Boyden, James (Bish Auck)Dunnett, JackHughes, Robert (Aberdeen N)
Bradley, TomEadie, AlexHughes, Roy (Newport)
Bray, Dr JeremyEdge, GeoffHunter, Adam
Brown, Hugh D. (Provan)Edwards, Robert (Wolv SE)Irvine, Rt Hon Sir A. (Edge Hill)
Brown, Robert C. (Newcastle W)Ellis, John (Brigg & Scun)Irving, Rt Hon S. (Dartford)
Buchan, NormanEnnals, DavidJackson, Colin (Brighouse)
Buchanan, RichardEvans, Fred (Caerphilly)Janner, Greville
Butler, Mrs Joyce (Wood Green)Evans, Gwynfor (Carmarthen)Jay, Rt Hon Douglas
Callaghan, Rt Hon J. (Cardiff SE)Evans, Ioan (Aberdare)Jeger, Mrs Lena
Callaghan, Jim (Middleton & P)Ewing, Harry (Stirling)Jenkins, Hugh (Putney)
Campbell, IanFaulds, AndrewJenkins, Rt Hon Roy (Stechford)
Canavan, DennisFernyhough, Rt Hon E.John, Brynmor
Cant, R. B.Fitch, Alan (Wigan)Johnson, James (Hull West)
Carmichael, NeilFitt, Gerard (Belfast W)Johnson, Walter (Derby S)
Carter, RayFlannery, MartinJones, Alec (Rhondda)
Carter-Jones, LewisFletcher, Raymond (Ilkeston)Jones, Barry (East Flint)
Cartwright, JohnFletcher, Ted (Darlington)Jones, Dan (Burnley)
Clemitson, IvorFoot, Rt Hon MichaelJudd, Frank
Cocks, Michael (Bristol S)Ford, BenKaufman, Gerald
Cohen, StanleyForrester, JohnKelley, Richard
Coleman, DonaldFowler, Gerald (The Wrekin)Kerr, Russell
Colquhoun, Mrs MaureenFreeson, ReginaldKilroy-Silk, Robert
Concannon, J. D.Garrett, John (Norwich S)Kinnock, Neil
Conlan, BernardGarrett, W. E. (Wallsend)Lambie, David
Cook, Robin F. (Edin C)George, BruceLamborn, Harry
Corbett, RobinGilbert, Dr JohnLamond, James
Cox, Thomas (Tooting)Ginsburg, DavidLatham, Arthur (Paddington)
Leadbitter, TedPadley, WalterSummerskill, Hon Dr Shirley
Lee, JohnPalmer, ArthurSwain, Thomas
Lestor, Miss Joan (Eton & Slough)Park, GeorgeTaylor, Mrs Ann (Bolton W)
Lever, Rt Hon HaroldParker, JohnThomas, Dafydd (Merioneth)
Lewis, Ron (Carlisle)Parry, RobertThomas, Jeffrey (Abertillery)
Lipton, MarcusPavitt, LaurieThomas, Mike (Newcastle E)
Litterick, TomPeart, Rt Hon FredThomas, Ron (Bristol NW)
Luard, EvanPendry, TomThompson, George
Lyon, Alexander (York)Perry, ErnestTierney, Sydney
Lyons, Edward (Bradford W)Phipps, Dr ColinTinn, James
Mabon, Dr J. DicksonPrentice, Rt Hon RegTomlinson, John
McCartney, HughPrice, C. (Lewisham W)Torney, Tom
MacCormick, IainPrice, William (Rugby)Tuck, Raphael
McElhone, FrankRadice, GilesUrwin, T. W.
McGuire, Michael (Ince)Reid, GeorgeVarley, Rt Hon Eric G.
Mackenzie, GregorRoberts, Albert (Normanton)Wainwright, Edwin (Dearne V)
Maclennan, RobertRoberts, Gwilym (Cannock)Walden, Brian (B'ham, L'dyw'd)
McMillan, Tom (Glasgow C)Robertson, John (Paisley)Walker, Harold (Doncaster)
McNamara, KevinRoderick, CaerwynWalker, Terry (Kingswood)
Madden, MaxRodgers, George (Chorley)Ward, Michael
Mahon, SimonRodgers, William (Stockton)Watkins, David
Mallalieu, J. P. W.Rooker, J. W.Watkinson, John
Marks, KennethRoper, JohnWatt, Hamish
Marshall, Dr Edmund (Goole)Rose, Paul B.Weetch, Ken
Marshall, Jim (Leicester S)Ross, Rt Hon W. (Kilmarnock)Welsh, Andrew
Mason, Rt Hon RoyRowlands, TedWhite, Frank R. (Bury)
Maynard, Miss JoanSandelson, NevilleWhite, James (Pollok)
Mellish, Rt Hon RobertSedgemore, BrianWhitehead, Phillip
Mendelson, JohnSelby, HarryWhitlock, William
Millan, BruceShaw, Arnold (Ilford South)Wigley, Dafydd
Miller, Dr M. S. (E Kilbride)Sheldon, Robert (Ashton-u-Lyne)Willey, Rt Hon Frederick
Miller, Mrs Millie (Ilford N)Shore, Rt Hon PeterWilliams, Alan (Swansea W)
Molloy, WilliamShort, Rt Hon E. (Newcastle C)Williams, Alan Lee (Hornch'ch)
Morris, Alfred (Wythenshawe)Silkin, Rt Hon John (Deptford)Williams, Rt Hon Shirley (Hertford)
Morris, Charles R. (Openshaw)Silkin, Rt Hon S. C. (Dulwich)Williams, W. T. (Warrington)
Morris, Rt Hon J. (Aberavon)Sillars, JamesWilson, Alexander (Hamilton)
Moyle, RolandSilverman, JuliusWilson, Gordon (Dundee E)
Mulley, Rt Hon FrederickSkinner, DennisWilson, Rt Hon H. (Huyton)
Murray, Rt Hon Ronald KingSmall, WilliamWilson, William (Coventry SE)
Newens, StanleySmith, John (N Lanarkshire)Wise, Mrs Audrey
Noble, MikeSnape, PeterWoodall, Alec
Oakes, GordonSpearing, NigelWoof, Robert
O'Halloran, MichaelSpriggs, LeslieWrigglesworth, Ian
O'Malley, Rt Hon BrianStallard, A. W.Young, David (Bolton E)
Orbach, MauriceStewart, Donald (Western Isles)
Orme, Rt Hon StanleyStoddart, DavidTELLERS FOR THE AYES:
Ovenden, JohnStott, RogerMr. James Hamilton and
Owen, Dr DavidStrauss, Rt Hon G. R.Miss Margaret Jackson.
NOES
Adley, RobertCarr, Rt Hon RobertFletcher, Alex (Edinburgh N)
Aitken, JonathanChalker, Mrs LyndaFletcher-Cooke, Charles
Alison, MichaelChannon, PaulFookes, Miss Janet
Amery, Rt Hon JulianChurchill, W. S.Fowler, Norman (Sutton C'f'd)
Atkins, Rt Hon H. (Spelthorne)Clark, Alan (Plymouth, Sutton)Fox, Marcus
Awdry, DanielClarke, Kenneth (Rushcliffe)Fraser, Rt Hon H. (Stafford & St)
Baker, KennethCockcroft, JohnFreud, Clement
Banks, RobertCooke, Robert (Bristol W)Fry, Peter
Beith, A. J.Cope, JohnGalbraith, Hon. T. G. D.
Bell, RonaldCordie, John H.Gardiner, George (Reigate)
Bennett, Sir Frederic (Torbay)Cormack, PatrickGardner, Edward (S Fylde)
Bennett, Dr Reginald (Fareham)Costain, A. P.Gilmour, Rt Hon Ian (Chesham)
Benyon, W.Craig, Rt Hon W. (Belfast E)Gilmour, Sir John (East Fife)
Berry, Hon AnthonyCritchley, JulianGlyn, Dr Alan
Biffen, JohnCrouch, DavidGodber, Rt Hon Joseph
Biggs-Davison, JohnCrowder, F. P.Goodhew, Victor
Blaker, PeterDavies, Rt Hon J. (Knutsford)Goodlad, Alastair
Body, RichardDean, Paul (N Somerset)Gorst, John
Boscawen, Hon RobertDodsworth, GeoffreyGow, Ian (Eastbourne)
Bottomley, PeterDouglas-Hamilton, Lord JamesGower, Sir Raymond (Barry)
Bowden, A. (Brighton, Kemptown)Drayson, BurnabyGrant, Anthony (Harrow, C)
Boyson, Dr Rhodes (Brent)du Cann, Rt Hon EdwardGray, Hamish
Bradford, Rev RobertDunlop, JohnGrieve, Percy
Brittan, LeonDurant, TonyGriffiths, Eldon
Brocklebank-Fowler, C.Eden, Rt Hon Sir JohnGrimond, Rt Hon J.
Brotherton, MichaelEdwards, Nicholas (Pembroke)Grist, Ian
Bryan, Sir PaulElliott, Sir WilliamGrylls, Michael
Buchanan-Smith, AlickEmery, PeterHall, Sir John
Buck, AntonyEyre, ReginaldHall-Davis, A. G. F.
Budgen, NickFairbairn, NicholasHamilton, Michael (Salisbury)
Bulmer, EsmondFairgrieve, RussellHampson, Dr Keith
Burden, F. A.Fell, AnthonyHannam, John
Butler, Adam (Bosworth)Finsberg, GeoffreyHarrison, Col Sir Harwood (Eye)
Carlisle, MarkFisher, Sir NigelHastings, Stephen
Havers, Sir MichaelMaudling, Rt Hon ReginaldSainsbury, Tim
Hawkins, PaulMawby, RaySt. John-Stevas, Norman
Hayhoe, BarneyMaxwell-Hyslop, RobinScott, Nicholas
Heath, Rt Hon EdwardMayhew, PatrickShaw, Giles (Pudsey)
Heseltine, MichaelMeyer, Sir AnthonyShelton, William (Streatham)
Hicks, RobertMiller, Hal (Bromsgrove)Shepherd, Colin
Higgins, Terence L.Mills, PeterShersby, Michael
Holland, PhilipMiscampbell, NormanSilvester, Fred
Hooson, EmlynMitchell, David (Basingstoke)Sims, Roger
Hordern, PeterMoate, RogerSinclair, Sir George
Howe, Rt Hon Sir GeoffreyMolyneaux, JamesSkeet, T. H. H.
Howell, David (Guildford)Monro, HectorSmith, Cyril (Rochdale)
Howells, Geraint (Cardigan)Montgomery, FergusSmith, Dudley (Warwick)
Hunt, JohnMoore, John (Croydon C)Speed, Keith
Hurd, DouglasMore, Jasper (Ludlow)Spence, John
Hutchison, Michael ClarkMorgan, GeraintSpicer, Michael (S Worcester)
Irvine, Bryant Godman (Rye)Morris, Michael (Northampton S)Sproat, Iain
Irving, Charles (Cheltenham)Morrison, Charles (Devizes)Stainton, Keith
James, DavidMorrison, Hon Peter (Chester)Stanbrook, Ivor
Jenkin, Rt Hon P. (Wanst'd & W'df'd)Mudd, DavidStanley, John
Jessel, TobyNeave, AireySteel, David (Roxburgh)
Johnson Smith, G. (E Grinstead)Nelson, AnthonySteen, Anthony (Wavertree)
Johnston, Russell (Inverness)Neubert, MichaelStewart, Ian (Hitchin)
Jones, Arthur (Daventry)Newton, TonyStokes, John
Jopling, MichaelNott, JohnStradling Thomas J.
Joseph, Rt Hon Sir KeithOnslow, CranleyTapsell, Peter
Kershaw, AnthonyPage, John (Harrow West)Taylor, R (Croydon NW)
Kimball, MarcusPage, Rt Hon R. Graham (Crosby)Taylor, Teddy (Cathcart)
King, Evelyn (South Dorset)Pardoe, JohnTebbit, Norman
King, Tom (Bridgwater)Pattie, GeoffreyTemple-Morris, Peter
Kitson, Sir TimothyPenhaligon, DavidThatcher, Rt Hon Margaret
Knight, Mrs JillPercival, IanThomas, Rt Hon P. (Hendon S)
Knox, DavidPeyton, Rt Hon JohnThorpe, Rt Hon Jeremy (N Devon)
Lamont, NormanPink, R. BonnerTownsend, Cyril D.
Lane, DavidPowell, Rt Hon J. EnochTrotter, Neville
Langford-Holt, Sir JohnPrice, David (Eastleigh)Tugendhat, Christopher
Latham, Michael (Melton)Prior, Rt Hon Jamesvan Straubenzee, W. R.
Lawrence, IvanPym, Rt Hon FrancisVaughan, Dr Gerard
Lawson, NigelRaison, TimothyViggers, Peter
Lestor, Jim (Beeston)Rathbone, TimWainwright, Richard (Colne V)
Lewis, Kenneth (Rutland)Rees, Peter (Dover & Deal)Wakeham, John
Lloyd, IanRees-Davies, W. R.Walder, David (Clilheroe)
Loveridge, JohnRenton, Rt Hon Sir D. (Hunts)Walker, Rt Hon P. (Worcester)
Luce, RichardRenton, Tim (Mid-Sussex)Walters, Dennis
McAdden, Sir StephenRidley, Hon NicholasWeatherill, Bernard
McCrindle, RobertRidsdale, JulianWells, John
McCusker, H.Rifkind, MalcolmWhitelaw, Rt Hon William
Macfarlane, NeilRippon, Rt Hon GeoffreyWiggin, Jerry
MacGregor, JohnRoberts, Michael (Cardiff NW)Winterton, Nicholas
McNair-Wilson, M. (Newbury)Roberts, Wyn (Conway)Wood, Rt Hon Richard
McNair-Wilson, P. (New Forest)Rodgers, Sir John (Sevenoaks)Young, Sir G. (Ealing, Acton)
Marshall, Michael (Arundel)Ross, Stephen (Isle of Wight)Younger, Hon George
Marten, NeilRoss, William (Londonderry)
Mates, MichaelRossi, Hugh (Hornsey)TELLERS FOR THE NOES:
Mather, CarolRost, Peter (SE Derbyshire)Mr. Spencer Le Merchant and
Maude, AngusRoyle, Sir AnthonyMr. Cecil Parkinson.

Question accordingly agreed to.

Resolved,That this House authorises the Secretary of State to pay or undertake to pay by way of financial assistance under section 8 of the Industry Act 1972 in respect of the business carried on by Chrysler United Kingdom Limited, or any of its subsidiaries, sums exceeding £5 million but not exceeding £162·5 million.