Orders of the Day — Motor Vehicle Industry

– in the House of Commons at 4:13 pm on 1st July 1981.

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Photo of Mr George Thomas Mr George Thomas , Cardiff West 4:13 pm, 1st July 1981

I have selected the amendment in the name of the Prime Minister.

Before I call the right hon. Member for Salford, West (Mr. Orme), I appeal to hon. Members who are fortunate enough to catch my eye to realise that, apart from hon. Members who will rise in their places, there is a long list of right hon. and hon. Members who have already intimated that they wish to take part in the debate.

Photo of Mr Stan Orme Mr Stan Orme , Salford West 4:28 pm, 1st July 1981

I beg to move, That this House condemns Her Majesty's Government for pursuing economic and industrial policies which have had a disastrous effect on the British motor vehicle industry; notes with concern the rapid loss of employment in this vital industry, its effect on specific regions of the United Kingdom and on the total British economy; and calls for a policy to control the level of vehicle imports and of positive Government intervention to regulate the activities of multi-nationals in this industry. The motion is important to our economy. The debate takes place against the background of the Government's current industrial and economic policy, which is having a disastrous effect on the British car industry. The evidence is stark. Since the Conservatives came into office over 100,000 jobs have been lost in the motor vehicle industry. Put another way, since the Secretary of State took up his present position 1,000 jobs a week have been lost over two years and the British car industry is weaker than ever before.

The contraction of the motor vehicle industry is inevitably having profound effects on the industries that supply its components. Here, the dependence of many other sectors on the maintenance of the motor industry can be felt. For example, the foundry industry has been devastated. In great part, this is due to the decline in motor vehicle production. Only yesterday, it became known that Rubery Owen, an internationally known company, was threatened by redundancies and closure.

Photo of David Winnick David Winnick , Walsall North

It is not only a question of the threat of redundancies. Rubery Owen is just outside my constituency and many of my constituents work there. The firm is due to close in September and nearly 1,000 people will be forced on the dole queue.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I thank my hon. Friend for having underlined that sombre fact. The importance of the vehicle industry to the British economy and its survival cannot be overstressed. In a country where the manufacturing base continues to contract, the motor vehicle industry and its employees represent nearly one-fifth of insured people in the manufacturing sector.

I would turn to the Government's overall strategy, but there is no strategy. The Government have allowed the industry to decline. They are muddled in the way that they support British Leyland. They have no policy to deal with the multinationals and their captive imports. They appear to be entirely unconcerned about import penetration by the Japanese and EEC producers. In addition their macro-economic policy is having a disastrous effect on the industry and on employment, at an enormous cost to the public sector borrowing requirement.

The Government's macro-economic policy has been a major contributory factor in the decline of the motor industry. The high-value pound has made it difficult and unprofitable to sell abroad. That is particularly dangerous in the case of an industry that sells 42 per cent. of its output overseas and faces strong competition in the home market. High interest rates have placed a great burden on the motor industry. They, together with falling output, have been a major factor in the fall in investment. Investment in vehicles has fallen by more than one-third in the past two years. The fall in living standards that results from continuing high inflation and rising unemployment is only just beginning to take its toll on the car market.

The Chancellor of the Exchequer is calling for pay restraint in order to save jobs. Workers in the car industry were among the first to suffer pay cuts in the last pay round. However, that has done little to save their jobs, and until the Government change their macro-economic policy there is little hope for the future. It is worth noting that in 1978 the previous United Kingdom president of Ford, Sir Terence Beckett, burst the previous Government's incomes policy by agreeing to a 17 per cent. increase. As secretary-general of the CBI he is now talking about pay increases below 5 per cent. What a change of policy. At the time of the Ford settlement, the Prime Minister, who was then Leader of the Opposition, supported the Ford company. I hope that the House will take note of that.

One question that must worry many hon. Members and that is central to the debate is that of imports. In 1972, the British industry produced nearly 2 million cars. Only 15 per cent. of the cars sold in the United Kingdom were imported. In 1980, the number of cars produced in the United Kingdom had dropped to 655,000 and imports had risen to 56 per cent. Between January and May this year, imports totalled, 53·4 per cent.

I turn to the subject of Japanese imports. On Tuesday 12 May Kenneth Gooding, the motor industry correspondent for the Financial Times, wrote: The Japanese will possibly be the only mass producers of cars by 1990 unless governments in Europe and North America develop complete motor industry strategies. This is one of the major conclusions in the latest world automotive report from the London-based Economic Models group…The gains may be through direct exports or through Japanese assembly overseas of their components. The House must ask whether that competition is fair. I claim that it is not. The Japanese do not keep to voluntary quotas. They exceeded their quotas last year and will do so again this year. The Japanese have not only exceeded their quota for the import of light vans; they have doubled it. What do our European competitors do? France allows a 3 per cent. level of imports and Italy less than 1 per cent.

There is a further problem. President Reagan has said that there will be restrictions in the United States. That means that there will be 400,000 surplus Japanese vehicles on the market. What will we do, and what will Europe do about that? I hope that the Government will tell us about last week's discussions in the EEC on Japanese imports into Europe. From what I have read of the Lord Privy Seal's endeavour, the issue has again been deferred—until the autumn. Have there been any firm agreements about the transfer of surplus Japanese products from the United States to Europe? The House should demand an answer to that question.

Last year, Japanese imports totalled 180,000 cars. British exports to Japan totalled 2,926. Although the Japanese have gone for technology—assisted by their Government—and for robotics, their main competitive edge comes from the supply of cheap components from smaller companies that do not adhere to the "shop-window" labour conditions operated by the vehicle assemblers. Wages are lower, employees are often subject to instant lay-off, working hours are longer and safety standards are lower. Against such competition, we need import controls and ceilings to protect not only British Leyland, but our four major companies and our component manufacturers.

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

Is the right hon. Gentleman alleging that the sale of Japanse cars here is unfair because dumping takes place and the cars are sold here at less than the cost of production in Japan?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I shall explain what I think should be done and how it might be done. The voluntary agreements with the Japanese have not worked. The Japanese are violating them. In addition to the Japanese the EEC is also penetrating the market. EEC imports account for 33 per cent. of total United Kingdom sales. The Government must tackle head on the problem of captive imports.

In 1979 no fewer than 308,000 cars were brought in from the Continent by the big four—237,000 by Ford alone. That accounts for about 32 per cent. of car imports. A change of policy is essential to protect the multinationals' employees in this country.

Photo of Mr Julian Ridsdale Mr Julian Ridsdale , Harwich

Does the right hon. Gentleman agree that if we are to help ourselves against Japan it would be far better to act on a European rather than a national basis?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

That is a fair question. I have asked it of the Secretary of State. Meetings take place but no decisions are taken. When we entered the EEC we were told that we would be able to control the multinationals, but that is not so in practice.

The Ford Motor Company in the United Kingdom last year made nearly 70 per cent. of the total Ford profit. It paid £135 million in dividends and loaned its parent company £229 million. That looks attractive on the surface, but there is a serious threat of major cutbacks in Ford and of an extension of captive imports from Germany and Spain which could undermine the United Kingdom company.

There has been a contraction in the Peugeot company. About 30,000 people were employed here by Peugeot-Talbot in 1976. Now the firm employs only 10,000. We have experienced the loss of one of its major factories. We welcome the new model which is to be produced at Coventry with the creation of 200 jobs. However, that is a drop in the ocean in terms of the figures that I have given.

Recently I met trade union officials and shop stewards from General Motors. They fear that General Motors, which is pursuing an aggressive international campaign against Ford and the Japanese, might transfer European production to Austria and Spain. Perhaps the Minister of State will comment on that later. The fear is that General Motors here will become an assembly unit only with no basic production. That must be opposed.

Photo of Mr Barry Porter Mr Barry Porter , Bebington and Ellesmere Port

Is the right hon. Gentleman aware that James McDonald, of General Motors has said As far into the future as I can see General Motors will be building and selling cars, trucks and automotive components in Britain. Has the right hon. Gentleman any reason to believe that that is not true?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

The trade unions are anxious because they believe that the company will still assemble but not make cars in Britain.

British Leyland has faced an almost impossible task in the last two years. The Secretary of State has given substantial aid with one hand and taken it away with the other. The aid has been given reluctantly and with bad grace. The Secretary of State called it "outdoor relief". That is no way to conduct business with a major British company.

High interest rates, a direct consequence of the Government's overwhelming interest in monetary policy, have ruined much of the car market. The demand for Maxis and Princesses has plummeted. Cowley is working at only one-quarter capacity. Commercial vehicle sales have collapsed, and it was announced the other day that a plant at Wellingborough is to close.

The excessive strength of sterling between 1979 and 1981 cost British Leyland more than £1,000 million in negative cash flow. That must be taken into account, The reduction of demand at home and the Goverment's crazy policy towards petrol prices means that British Leyland is being asked to take part in an obstacle race which it cannot win.

It is interesting to contrast the Government's policy with the statement made before 1979 when "The Right Approach to the Economy" said that business men and mangers were crying: For heaven's sake, get off our backs, stop chopping and changing and monkeying around, and leave us to get on with our jobs in peace! It would be interesting to hear Sir Michael Edwardes' view, or that of the Ford chairman, on the stability produced by the Government in the last 25 months.

The House has spent much time discussing British Leyland. Much has been said about industrial relations. It is worth putting on record that in 1981 to date, over 99 per cent. of available working hours have been free from any form of industrial dispute. That is creditable.

The ability to finance research and development into vehicle design and production technology is vital for the future of the British motor industry. High interest rates and the absence of Government support for R and D on the scale of some Continental countries has prevented British companies from pursuing R and D to the necessary extent. The French, Germans and Italians have initiated substantial programmes into the development of energy-efficient cars. In all three countries such research is sponsored by Government. The British Government must ensure that the United Kingdom motor vehicle industry does not fall behind the other vehicle producing countries, particularly in research and development assistance.

Let us examine intervention. In Western Europe and Japan there is direct Government intervention on behalf of the motor industry. The Governments of our competitors protect their motor industries with import controls and help with research and development. They ensure that a healthy industry is the basis of a modern industrial economy. The Secretary of State washes his hands of all that and says that industry must resolve its own problems. He says that the Government should not intervene, although one firm after another closes.

Mr. David Model:

The right hon. Gentleman referred to import controls and protection. He is advocating a measure of control. Is he advocating import controls on finished vehicles or on the parts? It is vital that we should know whether he believes that controls should be put on parts, because that is bound to jeopardise British jobs.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

When we set import ceilings we shall have to examine both components and cars. I am now talking about cars. I hope that that is a straight answer.

I turn to the question of Labour's alternative economic strategy for cars. We are often criticised for not putting forward an alternative policy. Even if the Government are not prepared to put our policy into practice it is important to spell it out.

Labour's policy for the car industry has four strands. It has a macro-economic policy. It has a trade policy which involves import controls. It deals with the multinationals and with British Leyland.

I shall deal with import controls first. A sustained recovery of the United Kingdom car industry cannot be achieved without firm controls on imports. Without such controls, public investment will go down the drain as the home market is cut away. Past experience suggests that to restrict car imports from one country, or even from several countries, would be ineffective, as that country's supply would be replaced by imports from elsewhere. For example, although the Japanese car manufacturers agreed in 1977 to limit their proportion of the United Kingdom market, overall import penetration has continued to rise as imports from the EEC especially have increased substantially. Therefore, we must establish firm import ceilings on all car imports, regardless of origin.

That means not that that we stop all car imports but that we should have quotas with producers and take into account our domestic market. Manufacturers can gear themselves to what they can export to other countries, including the United Kingdom, and we must take our exports into account. There must be a balance. Why, when other countries have such a policy, do we not? The other countries are successful. They still export materials, manufactured goods and cars, and simultaneously control their home market.

The key factor in a macro-economic policy is to ensure that industrial policy is not frustrated by the overall economic policy. Labour will harness industrial policy to increase output and employment. That means more public expenditure to help the manufacturing sector as well as other areas. A sensible policy will ensure that industrial aid, help for public investment and job preservation does not go to waste. That will have a dramatic effect on the home car market.

Labour will seek firm agreements with multinational companies in which the question of captive imports must be subject to negotiations between the Government, the companies concerned and the trade unions. The introduction of planning agreements with statutory powers is essential. Those agreements should not be similar to those made with Chrysler (UK) in 1976, as taken over by Peugeot, which this year have been disregarded. They should be agreements which will not be so easily broken. Some of our Western European competitors can arrange suitable agreements with the multinationals, so why cannot the United Kingdom? That sort of agreement would be in the interests of the multinationals in this country, their products and their employees.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

I am interested in what my right hon. Friend says about import controls and managed trade and also a macro-economic policy, with which I agree. Is it not a fact that as long as we remain in the EEC it will not be possible for us to pursue that sort of policy? We shall not be able to impose import controls and, as we have already seen with assistance to British Leyland, the Commission as well as the Government are getting on the industry's back. Can I have my right hon. Friend's assurance that we shall deal with that by withdrawal from the Common Market?

Photo of Mr Stan Orme Mr Stan Orme , Salford West

I cannot write the manifesto at the Dispatch Box—[HON. MEMBERS: Why not?]—but under pressure, I shall have a go. I think that the EEC policy is detrimental to the British economy and to manufacturing industry. I hope that when the next Labour Government are elected we shall withdraw from the EEC at the earliest opportunity.

Inward investment is a little problem that the Minister and I have discussed on a previous occasion. We are not opposed to it, but we believe that the country has the right to make an agreement which is in the interests of the economy as a whole. If the proposed Nissan investment is to help the survival of the components industry, at least 80 per cent. of the company's components should be manufactured in the United Kingdom. That is a positive proposal and I am sure that the Japanese would make such a proposal were our positions reversed. When the Minister of State made his original statement he spoke about local involvement as being between 60 per cent. and 80 per cent. We did not realise then that local involvement meant the EEC as well as the United Kingdom.

Continued Government support for British Leyland is essential, for the loss of what in world terms is a medium-sized car firm would have a devestating effect on British employment and the economy. We are completely opposed to selling sections of BL—the so-called winners—which would speed up the demise of the company. We welcome the link with Honda, but there must be firm controls over components so that there is a working agreement.

It is worth mentioning that, directly and indirectly, over 700,000 jobs are at stake in the survival of British Leyland. As a nation we cannot allow that company to fail.

I have presented a coherent policy to the House, which consists of an expansion of our economy, coupled with negotiations with our trading partners to limit import penetration, planning agreements with multinationals and sustained support for British Leyland. That is a positive alternative strategy to the policies being pursued by the Secretary of State and his disastrous Government.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East 4:58 pm, 1st July 1981

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House supports the Government's economic and industrial policy; regrets the British motor vehicle industry's long decline in competitiveness which reflects the past performance of managements arid work-forces as well as the interventions of previous Governments; notes that Her Majesty's Government have provided substantial funds to the industry at the expense of taxpayers and ocher sectors of industry and commerce"— did I hear the hon. Member for Norwich, South (Mr. Garrett) laughing at taxpayers? They are the people who pay the subsidies— welcomes the industry's recent improvements in productivity, the investments in the United Kingdom by multi-nationals, and the voluntary restraint agreement with the Japanese; and believes that jobs and prosperity in the industry can only be assured if managements and workforces satisfy sufficient customers with the quality, price and design of their products. The amendment answers the shallowness of the Opposition motion and brings out some of the main features that we should be debating. I apologise for the length of the amendment, because it outnumbers the words used by the right hon. Member for Salford, West (Mr. Orme) to describe the Opposition's policy, as he called it, towards the motor vehicle industry. He had the effrontery to claim that the few words that he used relatively casually at the end of his speech met the problems. The House will probably agree that he shirked every problem in those brief and superficial remarks. They give no explanation of what, heaven help us, a Labour Government would do. The right hon. Gentleman evaded the issue totally.

The right hon. Gentleman's speech was delivered in an agreeable and patently sincere manner, as is characteristic, because he is a man whom we all like. But it failed to recognise the central issue of our vehicle industry. I refer to competitiveness—in design, in quality, in price, in services and in delivery. In short, I mean competitiveness in value for money. I know that the right hon. Gentleman will agree that today's world, especially for the vehicle industry, is a very tough, competitive place.

We could debate happily for several days who was responsible for the decline in competitiveness. But there are three principal competitors for responsibility for the decline. They are successive Governments, successive managements and successive work forces. In one situation, it is a mixture of the three. In another situation, it is one or two of those three. But I do not think that anyone can deny that we have been losing competitiveness steadily in most of our vehicle industry for years.

It is no use the right hon. Member for Salford, West lambasting the present Government's policies. The decline of the vehicle industry has been going on for years. Through all economic weathers—strong pound and weak pound, economic squeeze and economic boom—the British vehicle industry has declined in competitiveness. Year after year, for the last six years, vehicle production has fallen, our exports have declined and imports have risen. However, demand has stayed relatively and almost surprisingly buoyant. The productive capacity has been there with, it is true, varying vintages of investment. But British customers have chosen to buy smaller and smaller quantities of British-produced cars. Our share of our own market and of the world market has fallen.

I am the first to agree that life for British industry has been very difficult for many years, and not least for the vehicle industry, in which I include car, commercial vehicle, bus and component manufacturers. But I do not believe that the Opposition can dismiss the problem as one of inadequate investment. Investment has been relatively substantial, including the contribution by multinationals to meet the losses of their British plants.

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford

What about the Ryder report?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I said "relatively substantial", bat not altogether satisfactory investment. During the years which the Ryder report covered, there had been significant, substantial investment, but, as so often happens with British investment, it had been overmanned and underused.

Scope for cutting costs in the British vehicle industry and in some cases for paying more heed to new models has been very large. In general, overmanning has been rife, and overmanning must reflect on management, but it also reflects the shortsighted policies of unions and shop floor representatives sanctioned by strikes and the threat to strike.

The days lost by strikes in the British vehicle industry during the period in office of the last Labour Government ranged from five times the industrial average to 15 times the industrial average per annum. This was during a period when the pound was low and a period when the pound was high, and when a Labour Government were in office.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

We are debating the present Administration's policies and performance and not those of the previous Government. Will the Secretary of State explain why, in two years of a buoyant market, with a very low percentage of strikes, a massive increase in productivity and a massive elimination of restrictive practices—and that is the view of Sir Michael Edwardes—British cars have still not been able to take full advantage of the market? The answer is that the Government are wrong and that sterling and interest rates have been far too high.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

They have cost British Leyland £1,000 million.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I fear that the progress which BL still has to achieve reflects the failure of past managements to introduce new models and the depth of the failure of competitiveness in BL from which the company is only just beginning to emerge. All concerned deserve full credit for the improvement.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

Will the right hon. Gentleman answer the question?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am answering the question. I shall repeat what I said in case the hon. Gentleman did not hear. If the company had had a full range of new models and had productivity been less low, from which I am delighted to say some recovery has occurred, British Leyland would have been able to sell more cars at home and abroad, despite sterling, and perhaps even to make a profit.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The jobs which have been and are being lost in the British vehicle industry perhaps should never have existed. If they had not existed, if overmanning had been resisted and if restrictive labour practices had been dealt with earlier, the firms would have been more competitive, would have sold more products and would have made a profit. What is more, other and more jobs would have come into existence in the car industry and in other industries and services.

I turn to an aspect of this lack of competitiveness which is especially sad. The right hon. Member for Salford, West referred only briefly—I make no criticism, because he covered a great deal of ground in his speech—to what has happened in Scotland and on Merseyside.

It is poignant that vigorous regional policy implementation, by Tory Governments more often than not, steered the car industry to areas with high unemployment. There were very high hopes in Scotland and on Merseyside, and there was bitter disappointment in the West Midlands about IDC controls sincerely implemented by successive Governments, including Tory Governments—we now see, perhaps, over-implemented. There was bitter disappointment in parts of the country where the companies concerned probably would have preferred to expand or invest. Today we witness the results. Alas, the high hopes in Scotland and on Merseyside have been disappointed, and I say that with no joy.

It is not possible or sensible to put all the blame on management for those disappointed hopes. I start on the assumption that no one is perfect. Managements are not perfect, and they vary in their skills. But in a wide-ranging speech the right hon. Member for Salford, West scarcely referred to trade unions, other than to say that they would be partners in new planning agreements.

The right hon. Gentleman's speech was very much weakened by his failure to recognise the part that imprudent policies by unions and shop floor representatives had played in the decline of the competitiveness of the British vehicle industry. I say again that it is not reasonable to put all the blame, always and only, on Governments and on managements. Above all, overmanning and bad working practices have been most to blame for the decline. Especially am I not omitting the failure to bring in new models, which clearly is a management responsibility, though it must have some relation to the profit which firms were allowed to make after the wage claims and the working practices had taken their toll.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

Before the right hon. Gentleman leaves the subject of Linwood, I should tell him that I went to Scotland when the firm was threatened with closure—it has, of course, since closed—and found that production, productivity and co-operation there were of a high level. So that could not be blamed on the unions or the management.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The right hon. Gentleman is absolutely right, certainly in recent years. However, before the improvement that took place in recent years, there was a long story of disasters, when industrial relations and co-operation between management and work force were desperately bad.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

The Minister said that past Governments, including Tory Governments, steered industry to different regions, and he mentioned Scotland and Merseyside. We know that the right hon. Gentleman is a purist in these matters—or at least he was when he was in Opposition; now he is not quite so much a purist, but is rather blurred at the edges. Although we know that he has got rid of certain regional policies, but not all, I hope that he will now tell the House unequivocally that this Government will do no more steering of industry in future.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I must ask the hon. Member to read the two-hour investigation on me that the Select Committee conducted on regional policy. We have kept the requirement for IDCs for projects of over 50,000 sq ft precisely so that the Government can make a decision in each case that involves a large investment. However, in general, we all recognise that the ban on developments in areas where managements and investors particularly wanted to go may have damaged the regions, as well as the chosen areas, by reducing the vitality and health of the whole economy on which the regions most depend.

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

Does my right hon. Friend agree that the West Midlands is disadvantaged not only by the effect of the IDCs but by the effect of the grants that are given to the regions? In view of the tears that my right hon. Friend shed a moment ago, are we to understand that those grants are now to diminish?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

No. We have said that we are keeping the main outline of our regional policy during this Parliament. So grants are being maintained. The House is aware that we have redrawn the map of assisted areas.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

I asked the Secretary of State to be unequivocal. He wants to give the House the impression that damage is done when industry is steered to the regions—with specific reference, in this case, to the car industry. There is plenty of evidence to show that steering is taking place. Where does the right hon. Gentleman stand?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I have made it plain that we have largely abolished the requirement for industrial development certificates. There is no ambiguity about that. We have kept the grants in the regions. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) rightly said that those grants have an effect on location decisions. There is no ambiguity about that whatever. My own judgment is that our present mix of policies is not the optimum, and we may have to consider a change. However, that is our policy at present.

I come now to the saga of British Leyland. I pay tribute to the Labour Government for their approval of the excellent appointment of Sir Michael Edwardes as the chairman of that company.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

No, I must get on.

The Labour Government acknowledged that BL was overmanned. It is a shame that that Government did not encourage the then management to reduce the overmanning at a time when jobs were more plentiful. Successive Governments have spent hundreds of millions of pounds of taxpayers' money over the past 20 years in encouraging and helping the vehicle industry. Those hundreds of millions of pounds were only a proportion of the total amount of money spent by the firms in the vehicle industry, and more taxpayers' money in commitments that have already been made still has to be paid.

That spending of taxpayers' money is not costless in terms of jobs. Every extra pound that is raised from the taxpayer for investment in the vehicle industry reduces by £1 the buying that the taxpayer would have done elsewhere in the economy, and somewhere in the economy a job is marginally more precarious because of that shift of money. When one is dealing with hundreds of millions of pounds, the jobs that are being created by the extra spending may well have been balanced by the jobs lost by the extra taxation or the increase in interest caused by the higher borrowing.

The Government decided to back BL. It seemed, on balance, that there was a prospect of a change for the better. Now there is increasing evidence that a change for the better is occurring before our eyes. We can be encouraged by the punctuality and the quality of the new investment in Roadtrain—the group of trucks—and the new Metro. British Leyland kept to its dates. It produced a quality of investment that has been widely admired by people who are competent to judge.

The design of both Roadtrain and the Metro has met widespread approbation. Roadtrain was born at a time when the market for trucks had fallen savagely. Therefore, I cannot talk with much satisfaction about the market share that it has won. However, as a product, Roadtrain has been welcomed. Metro has established its place by a substantial market share, and I am sure that we all hope that it will hold it and improve it. Now the company has set in hand investment for the mid-car—I think that the code name is LMIO—and for a new Jaguar model. We hope that they will be as successful as the Metro and Roadtrain appear to have been.

There is further evidence of a change for the better, other than the new models. There appear to be more sensible work practices in BL and more sensible pay settlements. There appears to be rising productivity. I understand that in the first five months of this year BL produced the same output as in the first five months of last year—here I think I am talking about cars—with 20 per cent. less labour. So there is a significant increase in productivity. Of course, I recognise, as the right hon. Gentleman said, that the exchange value of the pound has made trading more difficult. However, BL is rightly making determined efforts to achieve the plan. As a result of those determined efforts to become profitable, viable and to cease to be a burden on the taxpayer, painful decisions are having to be made.

The House will want to know what is happening about disposals. Sir Michael Edwardes and his colleagues have committed themselves to a policy of seeking disposals and collaboration for part or, indeed, perhaps the whole of their business. The Government are firmly of the view that decisions about what to dispose of, at what price, when and to whom must be left to management. The House will be aware that Prestcold has been sold. An example of collaboration is the work with Honda on the Acclaim, which will come to fruition in a new model later this year.

I turn briefly to other parts of this huge subject. Commercial vehicles used to be a thriving part of the British industrial scene. They are now suffering from the obsolescence of their models—I refer especially to the gap that British Leyland has recently filled with the Road train—and by an especially sharp decline in demand all over the world. That sector is also grappling with the need to improve productivity. Other car and truck companies are—as is BL, although from a less worrying base—striving with falling demand and fierce competition. They have scope for improved productivity and lower unit labour costs. Some achievements have been registered, but there is much more to be achieved.

As the right hon. Gentleman rightly said, the supply industries are suffering as their clients suffer. The foundry industry is an example of that. The supply industries depend desperately upon the success of the vehicle industry. They must hope, as we all hope, that BL and the other vehicle groups will, through higher productivity and greater competitiveness, re-establish a proper and profitable share of the market.

I turn to components, which is an important sector of our industry. It is going through the same struggle but is still, I am glad to say, registering a large trade surplus. I am not a technical man, so I cannot stand up to questioning on the details. I understand that there are some impressive innovations in the components sector—for example, Lucas has a market lead in diesel fuel injectors with its Microjector. We are all glad to know that Cummins is developing a large expansion of diesel engine production at Daventry. I have only picked out two of many to which I could have referred.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I shall not give way to the hon. Gentleman as I did not give way to the hon. Member for Workington (Mr. Campbell-Savours).

One factor was not mentioned in the right hon. Gentleman's speech, and I wish to ensure that the House pays proper heed to it. It is not only important that there should be secure jobs and that there should be competitiveness; it is crucial that there should be profit. It is from profit that security, investment and expansion come. It is indirectly from profit that the pay of those who sit in the House—including the hon. Member for Bolsover (Mr. Skinner), who is always intervening from a sedentary position—ultimately comes.

The right hon. Gentleman referred to the importance of research and development. He was right. He said that other countries put a great deal of taxpayers' money into research and development. We cannot compete with other countries that are more prosperous, successful and competitive. However, we have helped research and development. We have schemes—some of which we kept from the right hon. Gentlemen's time in office—which enable us to contribute 25 per cent., or some such portion, to research and development schemes proposed by firms, including vehicle firms, largely on the basis of the use of their own money.

I hope that despite the gloomy picture from which we began—

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am anxious to continue. I am in danger of keeping the House too long.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

I wish to raise a point about imports..

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The hon. Gentleman has made his point. I am about to turn to the subject of imports. I have several more pages of notes.

I hope that in our home output we are witnessing the beginning of a trend towards profitable competitiveness. The continuation of that trend will depend upon the Government not relaxing their general policies, upon management continuing to strive effectively, upon management tirelessly explaining the facts of economic life to their work forces, and upon work forces continuing to realise that the security of their jobs and the scale of their earnings depend precisely upon being competitive enough to attract more British buyers for the products that they help to make.

I turn to the so-called bogy men—namely, the multinationals. They are not bogy men at all. On balance, multinationals are highly beneficent organisations. I am not claiming that their purpose in life is only to be beneficent. I am claiming that, in general, they can make the profit on which they depend for the savings of investors and our pension funds only if they serve the customer and those who work for them. I am not claiming that every multinational, in every one of its activities, is perfect. However, I claim again that on balance they are highly beneficent.

It is unavoidable that multinationals, in deciding where to locate and expand their investment, are bound to take into account the relative efficiency of different sources of supply. It would be odd, and an ill service to our pension funds that invest in the multinationals, if they did not take account of the efficiency and profitability of sourcing from different countries. Once again we return to the basic importance of profitable competitiveness. That should be the theme of the debate.

The right hon. Gentleman uncovered a formidable weapon. He said that any future Labour Government—heaven help us—would deal with multinationals by planning agreements. I ask the House to recognise that in a turbulent trading world, with turbulent exchange rates and turbulent conditions, asking companies to commit themselves to precise production and investment targets several years ahead cannot be realistic. Companies would not have the resources to carry out their commitments if they were foolish enough to make them.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The hon. Gentleman intervenes once again from a sedentary position. Not everyone in the House is desperately in favour of the CAP, is he? We would not wish to commit ourselves to imposing upon our vehicle industry the regulations that govern the CAP.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

On the subject of multinationals, will the right hon. Gentleman address himself to the fact that countries such as France, Austria and Italy can arrive at agreements with multinationals that are in the interests of both their economies and the multinationals? Why cannot we make similar agreements?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I am not absolutely convinced that we wish to emulate Italy. The French have done very well economically during the past 20 years—very well indeed. But that is because their successes exceed their failures. A number of their failures have been associated with attempts to corral and control multinationals investment. We have absolutely no way to make multinationals come to Britain, or to make them stay here. We know that, even if some hon. Members are not always in favour of every multinational, the people, local authorities and the unions of Britain give a warm welcome to new multinational investment in Britain. The welcome given even to the announcement that Nissan would be considering an investment in Britain indicates that what I am saying represents the facts. Nissan would be widely welcomed if it decided to come here, provided that it sourced an acceptable amount of its requirements locally in EEC terms. That must be considerable to be acceptable.

Photo of Mr Barry Jones Mr Barry Jones , Flint East

Is the right hon. Gentleman aware that his right hon. Friend the Secretary of State for Wales is reported as having said yesterday in North Wales that he did not think that Nissan-Datsun would locate in Wales? Is he aware of the mass unemployment in my constituency and the great interest in the location of Nissan-Datsun? Can he give us any information about the proposal?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

We genuinely do not know what Nissan will decide about investing in the United Kingdom and, if it does, where it will decide to invest.

The right hon. Member for Salford, West referred to import controls. Statutory or legal import controls would be self-defeating. The right hon. Gentleman would be quick enough to complain if large numbers of employees working in exporting industries were driven out of work and lost their jobs because of barriers erected as reprisals for import controls set up by the British Government. Moreover, if it be true—I do not think that anyone can deny this—that our problem is lack of competitiveness, is it likely that protecting firms that should be improving their competitiveness will encourage them to become competitive? We should become industrial cripples and poorer and poorer with fewer and fewer decent real jobs if we embarked upon the route of import controls.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Many of us think that it is not good for the economy to have import controls except where they are thoroughly justified temporarily by providing time to adjust. We accept that there are instances where time to adjust is needed. That is why we welcome the voluntary restraint agreement that our vehicle industry has aquired at with Japan.

I was asked by the right hon. Member for Salford, West about the reaction in Europe to the announcement that the Americans and the Japanese have reached a voluntary restraint agreement and that the surplus of cars that has gone to America might be unloaded to Western Europe. The Japanese are aware of the growing anxiety in Europe about increasing imports of cars from Japan and of the pressures for protection that are beginning to mount. We should much prefer to see the problem tackled by Japanese investment in Europe than by legal import restrictions that could endanger present international trading arrangements.

I was asked by the right hon. Member for Salford, West why Britain does not control imports while other countries impose controls. Britain is far more dependent on external trade than any other large trading community. We export two and a half times as much as a proportion of our gross national product as the Japanese.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

We export a huge proportion of our GNP and we still have a substantial net export in manufactures.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The fact that other countries have import controls perhaps reflects a lack of trading exposure compared with that faced by Britain. In some instances the operation of controls might be unwise in terms of their own interests.

I return to the central issue of profitable competitiveness. There are faint signs, which we must not exaggerate, that the climate in the vehicle industry is conducive to a move back towards the desirable goal of profitable competitiveness. We must hope that that trend will continue until the vehicle industry becomes, as its talents enable it to become, profitably competitive. When that happens, we shall have more secure jobs and a much healthier economic base.

I ask my right hon. and hon. Friends and Opposition Members to compare the motion with the amendment and to reject the motion and to vote for the amendment.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West 5:36 pm, 1st July 1981

I am sure that it was a pleasure for the House to hear the Secretary of State in a more relaxed and less tortured frame of mind. We had that pleasure this afternoon. However, I cannot allow his speech, which was tolerant in its tone and forthcoming in its content, to pass without a correction. It is a sad reflection on the performance of our manufacturing industry that we are no longer a major net exporter of manufactures. That marks a serious trend for a country that must live on its exports and manufactures in the long term. A serious situation has already eventuated.

Secondly, it is pleasing that the right hon. Gentleman now understands that there can be three parties to an industrial problem—the Government, management and the unions. The House will welcome the right hon. Gentleman's conversion and the fact that today he did not choose to allocate blame. He seems to be making some progress. On 28 January, in a speech to a London seminar on profits and sources of investment, he said without equivocation that primary responsibility for the lack of performance rests on trade unions. We congratulate the right hon. Gentleman on the progress that he is making towards understanding our industrial problems.

The purpose of the motion is to allocate blame, and the blame rests with the Government's policies over the past two years. Mercifully, the right hon. Gentleman did not try to tell us about the world recession and every country suffering the consequences to the same extent. That myth has been largely exploded. There has been massive destocking and companies have suffered from that. The NIESR estimates reveal that the growth of world trade to the second quarter of 1981 was nearly 9 per cent. Retail car sales over the past three years have averaged an all-time high. In 1978 there was an increase in retail sales in the United Kingdom of 5·6 per cent. In 1979 it was 4·6 per cent. In 1980 it was 0·06 per cent. The figures indicate that to May 1981 there was an increase of 2·5 per cent. There is no real evidence of a massive recession apart from the destocking that has taken place, which is not the whole story.

Why is it that Britain uniquely has suffered to such a massive extent from unemployment and reduced output? There are two interlinking reasons, stemming from the Government's policies, that explain the difference between Britain's performance and the performance of our major European competitors with which it is most appropriate to draw comparisons. First, there were the lunatic high interest rates that were pursued for two years, which have only recently been reduced, and the high rates of sterling that went with them. I note that some Conservative Members dissent, but I think that there is general agreement, including even the City, that the policy was damaging.

The Secretary of State does not have to take my word for that accusation. He and Conservative Members generally may find time to read the Greenwell bulletin. It makes it clear that during the Government's first year, interest rates should have been reduced much more quickly. Greenwell and Co. is a bastion of monetarist policy and its bulletin cannot be said to form part of the Labour Party's admirable programme to which my right hon. Friend the Member for Salford, West (Mr. Orme) referred. The remarks of the Governor of the Bank of England suggest that a hand is needed on the tiller to bring down interest rates.

What has happened to sterling? There is no industry or company that could have survived with sterling at $2·45 or $2·40. I understand that it is at $1·91 to-day. $2·45 was the high point of sterling in the first year of the Government's policies on interest rates.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The hon. Gentleman says that no company could have survived with sterling at $2·40 or $2·45. It is not that many years ago that sterling was at $2·80 and companies survived. The hon. Gentleman had better ask himself what has happened to our competitiveness in the meantime, and who was responsible.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

We are dealing with this Government's policies. It is as simple as that. That is what the motion is about. Let us go back to the previous Tory Government, when the rot started to set in. Let us go back to 1956, when the Germans overtook us, and to 1960, when the Japanese overtook us. There have been 13 years of Tory rule, and where has it got us? We are dealing with policies——

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

It is getting us into a serious situation.. I shall explain the reason to the hon. Gentleman, if he has the courtesy and patience to listen. We are establishing that the reason why he have had a massive rise in unemployment and a massive drop in output in the motor car industry is this Government's policy on interest rates and the exchange rate. I shall take any intervention from the hon. Gentleman, but he does not have to listen to me. He should listen to Sir Michael Edwardes, who, after all, is the darling of the Prime Minister. His performance has been extolled by the Secretary of State. I shall qualify my remarks about sterling to the extent that few companies could have continued to survive at $2·45.

What has been the effect of the Government's policies? My right hon. Friend the Member for Salford, West gave the figures for the country as a whole. He quoted the figures of 100,000 redundancies in the industry, which included the component-related sector. Last year alone, there were redundancies totalling 37,200 in the motor vehicle industry in the country as a whole, which is about 7 per cent. of the total work force. In the West Midlands, which I have the privilege to represent, there were 11,242 redundancies in that industry, which represents 15 per cent. of the total redundancies in the West Midlands, so heavily is our area committed to and dependent on the car sector. If one allows for the normal correlation of one person employed in the component sector for every person employed in the car sector, that figure is doubled, and one finds that no less than 30 per cent. of redundancies in the West Midlands are accounted for by the redundancies in the car industry, which are directly related to this Government's policies.

I shall now specify the argument and deal with Leyland alone. The Secretary of State needs to address himself to the question why, despite a 30 per cent. increase in productivity and the fact that only 1·4 per cent. of man-hours were lost last year through strikes, between 1979 and 1980 than was a 20 per cent. reduction in production. With sterling where it was, interest rates where they were and despite their being good models on the market, they could not be sold and therefore there was a dramatic drop in production. The drop in production is mirrored not just in the car industry but in industrial output as a whole, in which there was an unprecedented drop of 15·5 per cent., which is worse than was reached in the two worst years of the world recession—1929 and 1931.

If we take the United States Department of Labour statistics, which are the only ones that give a comparative basis for all countries, we find that unemployment in the United Kingdom now stands at 11·7 per cent. compared with Germany at 4·3 per cent., France at 7·7 per cent.;and Japan at 2·2 per cent. Does anyone in his right mind believe that any other country would allow its industrial output and employment to be so adversely affected in any two-year period as has happened under this Government? It defies belief that we could have accepted that.

What do we have from the Government by way of a reply to this disastrous and tragic period in our national industrial history? We have the fatuous remark in the Government's amendment to the motion that they deplore the interventions of previous Governments. Does anyone believe that we would still have a motor industry had it not been for the interventions of previous Governments? Does anyone believe that the motor car industry would not have gone exactly the same way as the motor cycle industry, or that the motor car industry would be here but for the Government money that has gone in in the wake of the failure of the private sector? Let that be clearly recognised. That industry was like the aircraft industry and most of the other industries that have been nationalised. It is only when private management has failed to invest, produce and to develop the new products that the Government are called in to bail out an industry. That is happening in the machine tool industry. It happened in the motor cycle industry. We came within a hair's breadth of that happening when the Labour Government stepped in for the motor car industry.

I believe that we can find common ground, in that the Opposition do not believe that labour relations and attitudes reflect a real and genuine improvement, much though we would like to see it. This is particularly the case amongst those in the car industry, especially at British Leyland, who have had to take wage settlements below the national average and have seen their position in the wage league drop from being average a couple of years ago to only 90 per cent. of the national industrial average. There has been a confrontational policy and an acquiescence. There has been a drop in strikes. Those things have led to certain improvements in certain areas. We urge upon the management of Leyland, which has had a remarkable series of confrontational successes, as it sees it, that now is the time for conciliation. Now is the time for the management seriously to sit back and think about the next stage in labour relations. If some form of just and inevitable retribution is not to come, we warn it that the attitude on its side must change to conciliation and compromise.

That is one essential element that will be needed to make a success of British Leyland, which is the only nationally owned motor vehicle manufacturing company. We must ask ourselves what it will need to succeed. Two fundamental, further points are needed. It will need a form of protection—for want of a better word—and a form of control on imports. It is no good Opposition Members saying that we should control or bash the Japanese, and all our problems would be solved. It is not as simple as that. We know that this year and perhaps in previous years the Japanese have exceeded their quota of cars a little. It has been more or less effective. I believe that the quota has been set at too high a level and that it should have been decreasing. Nevertheless, it has worked well, more or less.

The real problem comes from the rest of the world—from the East Europeans and the EEC. It is inevitable for cars, as for the rest of our manufactured goods, that we should have a system of variable import ceilings. That is an inherent part of the Labour Party's programme. Those ceilings will have to come if we are to build on the success that is beginning to emerge as, at last, Government investment is being put into the industry. Let us not forget that the French, the Japanese and the Italians also have import controls. Let us not forget also that the Japanese built up their stunningly successful industry behind a tariff wall of no less than 40 per cent.

The other aspect of the motion that we are debating is the problem of the multinationals. I would not wish to associate myself with the Secretary of State's view of multinationals. However, there is no way that we shall get rid of them. We must learn to live with them. It is worth recalling to the House precisely how important they are in our national economy. I take the top 100 companies, which will give an idea of the extent of industrial concentration in the United Kingdom, which is higher than in Germany, France and Italy—typical economies in Europe.

The top 100 companies in the United Kingdom make up 40 per cent. of our total output. That is an enormous amount of concentration, and of that top 100 per cent., 25 per cent. are now foreign-owned companies. The 25 per cent. in turn account for no less than 25 per cent. of our total national sales. That shows how important to us the multinationals are. Any Government will have to come to terms, by way of agreement, with the major multinational enterprises.

What have the Government done? They have reached a perfectly good planning agreement—in principle—with Datsun. Let us hope that they will be able to implement it. It is an agreement that Datsun should come here in exchange for certain things that we can offer them. I would define it as a perfectly good planning agreement, provided that Datsun will agree to invest in this country under certain conditions. [Interruption.] If the Minister of State is seriously suggesting that this investment by Datsun in the United Kingdom did not eventuate from repeated and serious high-level official visits to Japan to solicit investment in this country, he is deluding himself.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The hon. Gentleman should be speaking in the conditional tense. No decision has yet been made by Nissan to invest here.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

I am grateful to the Secretary of State for that intervention. If the Secretary of State will look at Hansard he will see that I expressed the hope that he would be successful. Having had the opportunity of negotiating with the Japanese and making three visits to Japan last year, I know how difficult it is. Provided the conditions attaching to the agreement are the correct ones, I shall be the first to congratulate the right hon. Gentleman unconditionally on it. But a series of conditions must be attached to the agreement. The most important of them is that the investment will lead to a real transfer of technology to this country.

We have fallen behind in technology. We have not produced the same number or quality of engineers as most of our competitors over a number of years. The Minister of State recently made a statement on the possibility of the Datsun agreement. I hope that I did not read too much into the conditionality of his remarks. In reply to my question whether the investment would lead to a real transfer of technology, he said: On the transfer of technology, it can only benefit British technology to have an extremely advanced factory in Britain, with British workers and engineers"— these are the key words— operating, repairing and maintaining robotic systems."—[Official Report, 29 January 1981; Vol. 997, c. 1082.] That is the Minister of State's view of the transfer of technology—that the cream of our engineers should be set to operating, repairing and maintaining highly advanced manufacturing systems that are researched, developed and produced elsewhere. That is the very opposite of the transfer of technology. The transfer of technology must involve access to the drawings and to the informed engineering intelligence that is inherent in those machines. The arrangement to which the Minister of State referred would do nothing more than turn us into an assembly factory for the Japanese. If that one point can be brought home to the Minister of State the debate will not be wasted.

I am aware that many other hon. Members wish to take part in the debate. I hope, therefore, that I have been appropriately brief. We are discussing the Government's economic policies and their effect on the motor industry—and in particular their effect on employment in that industry.

I should like, in conclusion, to quote from a speech made at lunchtime today by the right hon. Member for Sidcup (Mr. Heath). He was talking to business men, and what he said is very relevant to the Government's policies: Whether you talk to business men or workers, they don't understand…what is going on. It is extremely dangerous in any democracy not to understand what policies are being pursued—even if they are monetarist. What they also lack is any indication whether there's any better sort of life for them at the end of these incomprehensible policies". Those are the remarks of a former Prime Minister and a member of the Conservative Party. They are remarks with which I—and I am sure, all my colleagues on the Opposition Benches—would wish to be associated. It is entirely due to the Government's policies that we have the enormous rise in unemployment and the enormous drop in production in the whole of the manufacturing sector—and in the motor car sector in particular.

Photo of Mr Malcolm Thornton Mr Malcolm Thornton , Liverpool, Garston 5:55 pm, 1st July 1981

In view of the large number of hon. Members waiting to speak I shall try to improve on the intended brevity of the hon. Member for Coventry, North-West (Mr. Robinson).

No one can doubt the importance of the debate or of the car industry to this country. No one can doubt, either, that the debate reflects our concern over the high level of unemployment and the effect that it may have if we lose any more jobs. Perhaps in this respect I am well qualified to talk about the loss of jobs and the effect on the car manufacturing industry, because in my constituency there is considerable interest in that industry.

In the industrial heartland of my constituency there is a monument to all that is bad in the British car industry. I refer to the empty Speke factory of British Leyland—a factory which closed three or four years ago, with the loss of 3,500 jobs. It is a factory which resulted from the regional policy to which my right hon. Friend the Secretary of State referred. It resulted from the tendency at that time to try to pick winners—to take highly labour intensive industries and drop them into areas of high unemployment. That was done with catstrophic effect in Speke.

Indeed, at the time that the policy was first initiated, when the factory was put into Speke, there were people who said that it had no chance of success. There were forces abroad in Merseyside—I shall not call them trade unionists, because I do not think that the trade unions would want to have anything to do with them—who said that they would close the factory in five years. They did rather better than that; they closed it in three and a half years. So picking winners does not work a policy in the car industry. It certainly did not work in Speke, and the high hopes that we had on Merseyside were cruelly dashed.

The policy does not work against market trends. What sense can there be in manufacturing one part of a car at one end of the country and then transporting it hundreds of miles to marry up with other parts of the same vehicle? That is marketing nonsense, and anyone who believes that that policy can succeed is deluding himself.

I should like briefly to consider the reasons why some of these things happened. I have already said that there were certain forces in Merseyside that were determined that the policy should fail. At the time of the general election, when I was talking to people who had lost their jobs, they told me that they had been led by the nose—that they had not seen what was happening around them.

Perhaps one of the greatest failures of the motor car industry—not just on the part of the work force, but on the part of management also—has been the failure of people to see what has been happening around them in other countries in the world. It is nonsense to suggest that the decline of the British motor car industry has occurred in the last two years and that it is all the fault of this Government. The attitudes that have led to the industry's decline have been prevalent for a long time.

Perhaps I may consider three factors with which I have become familiar in my relatively short time in the House as a Member representing a constituency with a car manufacturing industry. These are matters that have been brought to my attention—and to the attention of other hon. Members on each side of the House—relating to the performance of the industry.

I refer, first, to what is called in the industry first-run capability—the number of cars that come off the line ready to go out to the public. The figures for the British industry make pretty horrific reading. That was certainly the case two years ago. The Government had been in office for only three or four months when I was shown the figures. The signs of a major decline were already evident. Toyota was quoting a first-run capability in excess of 95 per cent. At some car plants in this country the first-run capability was as low as 60 per cent. The best achievement of any car plant in the country was only 80 per cent. That is the sort of statistic that has caused us to lose our competitive edge.

The other question worth mentioning, and to which my right hon. Friend referred, is overmanning. I was shown comparative figures of manning levels in factories in this country and in factories of our European competitors, leaving aside the bogy men of Japan. Within the EEC there was a 3, 4 and 5 to 1 ratio of excess manpower in British manufacturing car plants. Is it any wonder that we cannot compete?

The most difficult issue with which to come to terms is the disruption of production. There has been massive disruption in our plants. If we are to retain our share of the market, it is essential that we produce cars regularly, to customers' specifications and when they want them. Most hon. Members will, I am sure, agree that, given a choice, in terms of price, quality and delivery the vast majority of people in this country would much prefer to buy British rather than foreign vehicles. If, however, we cannot match foreign competitors in any of those areas it is small wonder that we see greater penetration of the home market by our competitors. They provide the vehicles that people want, at the price they want, and when they want them.

The right hon. Member for Salford, West (Mr. Orme) tried to put the blame on the high level of the pound and the fall in investment. That is not true, particularly in regard to investment. In my constituency I have not only an empty factory but a very busy factory—Ford, at Halewood. It is one of the most modern car manufacturing plants in Europe. It has seen massive investment in the new Escort, which, by any definition, is a world-beating vehicle. It is a vehicle that people want and that, if it can be produced in sufficient quantities, can be sold. There have, however, been problems.

As this factory is located only just down the road from the large empty monument to failure that I have already described, it seems necessary that the attitudes that must be changed are changed quickly. Much of my time, together with that of Opposition Members who share a constituency interest in Halewood, is spent talking to both unions and management to try to see that problems are resolved.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport (Monmouthshire/Gwent)

I am following the hon. Gentleman's argument with interest, I cannot reconcile how one of the two factories in his constituency can be highly successful while the other, nearby, has been closed as a result of the disruptive tactics on the part of certain work people. How is that cordon sanitaire drawn between the two? I fail to understand.

Photo of Mr Malcolm Thornton Mr Malcolm Thornton , Liverpool, Garston

The hon. Gentleman obviously did not listen to my earlier remarks. There is an essential difference. In the Halewood plant a vehicle is produced from start to finish. In the British Leyland plant there was marketing nonsense. The plant was making bits of cars to go elsewhere. That was a major factor.

We are talking about a situation that started nearly a decade ago. I believe that there has been a significant improvement in attitudes at Halewood, which is causing things to turn upwards. I believe that this process will continue. It is certainly my hope that it does so.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

Does the hon. Gentleman agree that the principal reason for the closure of the British Leyland plant was bungling by the management? Does he agree also that there is a real danger that Halewood could go the same way unless people tackle the disease that can cripple Merseyside? That disease is the temptation to strike ourselves out of existence, through the mindless militancy of people who are unrepresentative of the greater part of the Merseyside work force.

Photo of Mr Malcolm Thornton Mr Malcolm Thornton , Liverpool, Garston

Much of what the hon. Gentleman says is true. I do not, however, agree that the major factor in the closure of the British Leyland factory was management failure. I believe that it was due to a combination of factors.

I agree that much of the image of Merseyside that is so prevalent in people's minds, that attracts so many headlines both in this country and abroad, and that does so much damage to the image of Merseyside, results from the mindless militancy of a few people who are so unrepresentative of the real people of Merseyside that it is not true.

I conclude on a slightly hopeful note—hopeful in one sense, but perhaps rather sad in another. The British Leyland component in Speke consisted of two parts. The future of the component that remains—the Pressed Steel Fisher factory—is currently in some doubt. I spoke in a debate on the Adjournment of the House of the potential unemployment problem that will be created in Speke. The factory has had a first-class industrial relations record for the last four years and has learnt considerable lessons from the closure of its sister plant. I believe that those within it could look forward to continuing employment under the policy of Michael Edwardes, which, in his own words, is one of throwing work at factories that have a good track record.

It is sad and perhaps salutary that the lesson has been learnt a little too late. However, in the case of Ford, the future is there for it to take. It has a world-beating car which, if it can be produced in sufficient volume, will bring an ever-increasing share of the market. I am encouraged by two remarks that emerged from a conversation in which I engaged last week with the Ford management. I was told that a shop steward came to the management and said "We have a problem". Previously, it had always been "You have a problem". I was also told by the management that the same number of cars had been made this month as in the previous month, and that although the target was perhaps not being achieved what was significant was "the way that we made them".

The signs indicate improvements. The signs indicate that attitudes are changing. If this change of attitude within the British car manufacturing industry continues it has a future. If these attitudes do not change, investment will not be forthcoming, our competitiveness will continue to go down and we shall be able to look forward to nothing in the way of a British car manufacturing industry.

Photo of Mr George Park Mr George Park , Coventry North East 6:08 pm, 1st July 1981

Hon. Members speak in the House as they find. I would, however, urge the hon. Member for Liverpool, Garston (Mr. Thornton) to contact the personnel manager at Talbot, who said recently that the notion of the car worker as a lazy layabout looking for the least excuse to stop work was completely outdated. That may be the situation within his experience. It contrasts with the experience related by the hon. Member for Garston.

The first fact that has to be faced when discussing the motor industry is that, world-wide there is over-capacity in car and commercial vehicle production. It follows that competition is fierce and will get fiercer. If we are to continue to have a motor industry it is essential that the terms of trade should be fair and equal. It is no good castigating our motor industry if at the same time we expect it to start 10 yards behind the scratch-mark.

The Government have signally failed to achieve fair trading terms. The Secretary of State for Trade is still talking about voluntary restraint on imports, and yet at the meeting with the CBI on 9 June he conceded that Japan's concentration on her export efforts in narrow sectors made it virtually impossible for industriea—not only the car industry—to compete effectively.

The Secretary of State is worried about the effect of protectionist measures on the general agreement on tariffs and trade. Our worry, as my right hon. Friend the Member for Salford, West (Mr. Orme) said, is that we seem to be the only country playing the game according to the rules. All the other countries adjust them according to the situation as they find it.

Our industry continues to be eroded while other countries reach agreement or tell Japan, for example, the percentage of vehicles that they will allow into their countries. But the threat is not confined to Japan. We allow imports of cars from Spain with a 4 per cent. import duty, while our manufacturers have to climb over a 36 per cent. barrier to get cars into that country. How can we compete on that basis?

Anomalies such as those have contributed to our share of world car production falling by two-thirds, and in the process we have lost a quarter of all the jobs. Only four of the major car manufacturers in this country made a profit this year. Vauxhall attributed its record loss of £83 million this year to three main factors, which my hon. Friend the Member for Coventry, North-West (Mr. Robinson) touched upon. It blamed the recession, which made for lower demand, but it also stressed that high interest rates and the strength of sterling were contributory factors. That was said by management, not by Labour Members.

However deeply held is the conviction that companies should fend for themselves we cannot ignore the fact that most Governments except the British Government intervene, by one means or another, to protect their industries. Countries such as Japan and Spain, which are most vociferous about free trade, have nurtured their car industries behind high tariff barriers.

A major difficulty is that the Government have no coherent industrial strategy and rely on constantly urging industry to become more competitive. They also have a resolute belief in monetarism. I would interpret being more competitive as producing the same amount or a greater amount with the same amount of labour or less labour. Too often workers in industry find that not enough work has gone into the other side of the coin—determining whether there will be an outlet for the increased productivity. When that is not done they are in effect working themselves out of a job.

I come back to the Government's resolute belief in monetarism. Resolution is to be admired, until it degenerates into donkey stubbornness. We must face the fact that traditional Conservative notions on free and fair trade have to be modified in the light of changed conditions. The Government must accept—the Secretary of State has on occasion accepted it—that they must create an environment in which our industry can compete on equal terms. To that end there are various aspects on which they could take action, in addition to those mentioned by Vauxhall.

First, the Government could review the pricing of energy in the United Kingdom compared with energy prices available to our principal overseas competitors. Secondly, they could abolish the 10 per cent. car tax, which applies only to cars and motor cycles. Thirdly, they could relax the hire-purchase controls, which require 33⅞ per cent. minimum deposit and repayment of the balance within two years. No other goods face such stringent control. Fourthly, they could iron out the anomalies that I referred to earlier on import-export duties. Fifthly, they could move away from the voluntary understandings with Japan, which are not kept—in spite of what the Secretary of State said—and take the stand of countries such as France and Italy on imports, and impose limits. Sixthly, they could emulate the help given by West Germany to Volkswagen for research and development. Any or all of these steps would give a boost to a flagging industry.

Reference has been made to competition between different areas in Britain to attract the Nissan project. This is understandable in the light of the disastrous unemployment, but there would be little point in creating 5,000 Nissan jobs if in the process we lost 25,000 British jobs. To avoid that there would need to be prior agreement on the level of British components to be incorporated into the Nissan cars and their export, and the British-assembled Nissans should not be additional to those exported from Japan.

Photo of Mr James Pawsey Mr James Pawsey , Rugby

Does the hon. Gentleman agree that there is a risk that if we hedge Nissan around too much with restrictions it will move its proposed car plant to Belgium, Germany or elsewhere? It could then export its cars freely to the United Kingdom under the umbrella of the EEC, which would do even greater damage to the United Kingdom car market.

Photo of Mr George Park Mr George Park , Coventry North East

That is a risk that we have to take. Whether one has a bad burn or is scalded, it is still very painful. We must have agreement from the word "Go", and if Nissan does not want to accept it, it will have to move elsewhere.

Directly or indirectly, the car industry accounts for about 11 per cent. of total manufacturing employment, and we should recognise, as other countries do, that if it is to remain an essential growth point in our economy it has to be nurtured and protected against unfair terms of trade. That should be the concern of Government. It is outside the scope of management.

Central to any discussion of the United Kingdom motor industry is, of course, British Leyland, if only because of our national stake in it in terms of money and jobs. The wish of some Conservative Members to sell it off without any real understanding of the consequences is still prevalent. The need for British Leyland to continue as a high-volume, full-range producer is part of the attempt to arrest the slide of the United Kingdom economy into an offshore processing and warehousing facility, swinging to the vagaries of multinational companies. If British Leyland goes we can be sure that Ford and Vauxhall will not be far behind in shifting their enterprises to the Continent and operating from there.

Under Sir Michael Edwardes a slimming down plan was accepted after a postal ballot in 1979. Even while the ballot was going on he was altering the situation, but that is by the way. The process of slimming down has continued up to the present time, to the point of anorexia, which is fatal, and there are suspicions that Sir Michael may be preparing the ground for decisions which the Government cannot face politically.

Quite apart from BL itself, it must be remembered that each 10 per cent. drop in BL orders to its 10 biggest components suppliers results in an additional loss of about 3,600 jobs in the components industry. A further 960 redundancies were announced today at Darlaston by a company supplying components to British Leyland.

A recent bombshell for the West Midlands, whose disastrous unemployment levels were referred to by my right hon. Friend the Member for Chesterfield (Mr. Varley) in the debate on 24 June, was the decision to close the purpose-built facility at Solihull, which I believe cost about £140 million. The production there is to be transferred to Cowley. Part of the reason given is that it would be more efficient if the assembly were alongside a body and paint shop. I should not have thought that it needed a managerial genius to see that before the millions were poured into Solihull, but now the production is going to Cowley, and more millions will be spent there.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

I think it is correct to say that there is a fully integrated body, paint and trim assembly plant at Solihull.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

I am sorry. My hon. Friend is right. The bodies come from Cowley.

Photo of Mr George Park Mr George Park , Coventry North East

I had experience of this in Coventry on an earlier occasion. It happened to take place in the constituency of my hon. Friend the Member for Coventry, North-West. Jaguar came to the city council, of which I was then leader, and asked for planning permission to put a paint shop alongside the Jaguar assembly. We thought that that was a sensible idea. Despite great opposition from people in the area we bent over backwards to help and Jaguar was given the necessary planning permission. The steelwork arrived and was lying on the ground when the decision was taken to transfer the plant to Castle Bromwich.

Photo of Mr George Park Mr George Park , Coventry North East

I shall tell my hon. Friend that in a minute. We now understand that it is coming back to Coventry because the paint facility at Castle Vale may be closed down.

Situations of that kind constantly occur. The TR7, to which reference has been made, was transferred from Canley, in Coventry, up to Merseyside and then brought back again. It was then transferred temporarily to Cowley. Finally, it was killed off, along with the MG, so there are now no sports cars in the range.

An engine and foundry facility at Courthouse Green, in my constituency, has been steadily run down. We are supposed to have all the machinery for joint consultation, and so on, but the work force has no clear idea of its future. All we know is that each time there are redundancies active trade unionists are picked off, despite the fact that the plant has an excellent industrial relations record. Every time we make inquiries about these changes of thought and decision, the blame is placed on a previous management. It is always the fault of the management before Sir Michael. When is the second guessing going to stop? We must surely run out of previous management decisions before too long.

The only really bright spot seems to be the Metro, but Conservative Members should not expect the investment that launched the Metro to do much more than support its derivatives, and certainly not the continuing need for new models across the range, which cost between £300 million and £400 million for each model and need a gestation period of about five years. By supporting the new Jaguar the Government are beginning to appreciate those facts. The production of the LM/LC 10 models by 1983 is even more important to the future of BL than the Metro.

The need to go to Honda to fill a gap in the model range was due at least in part to the dispersal of design and engineering staff in earlier redundancies. Now there is doubt about the local content of components for the Acclaim, as it is called. Certainly all the high-value items come from Japan—the engine, gearbox, transmission and most of the electrical components—so the claim that it is 70 per cent. British made is misleading, to say the least.

The project is currently in phase 1. In the next phase of production, component manufacturers in this country, so far as I can see, will need to put in joint quotes, as they will be unable individually to tender for one of the kits into which the car is split up and which comprise about 20 components. Very often our manufacturers cannot quote for the whole range of 20. One must ask whether that will be allowed or whether it will turn out to be yet another demonstration of the methods used by Japan to protect its interests. We know all about that. We remember the engine stamping that was 1 millimetre out of place, so that a whole consignment had to be returned to this country. The Japanese are very good at that.

The basic idea of a partnership or an arrangement with another company recognises that the motor industry has become internationalised, and that concept should be pursued by BL. I believe that there were tentative moves with Volkswagen, beyond the purchase of gearboxes for the LM10, but I doubt whether the co-determination of policy by workers and management that applies at Volkswagen would be to the taste of BL or the Government.

To conclude on a brighter note, I welcome the decision of Peugeot to invest a further £10 million at its Ryton plant, near Coventry. I welcome also the grants that have been made under section 8, which will benefit the Stoke factory. I believe that these have been achieved on merit, through the work of the people on the shop floor and the willingness of management to consult and inform regularly and to generate a climate of confidence, which is different from the constantly impending calamity that seems about to descend on BL.

The employees at Ryton will appreciate that the production from the new facilities still have to be sold. They may recall the exchange between Henry Ford and Walter Reuther, the American trade union leader. Henry was showing Walter the latest machines. When he asked Walter what he thought of them, the trade union leader asked "How many cars will they buy?"

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills 6:28 pm, 1st July 1981

I wish to make one or two general rather than detailed remarks about the car industry. Like other hon. Members, I am grateful for the opportunity to discuss the car industry as it has an immediate and important effect, certainly on the economy of the West Midlands and on that of other regions. It exercises our concern greatly because of its effect on jobs.

Recently, in the county hall of the West Midlands a group of Members from both sides of the House, with other concerned in involved parties, gathered to consider the ways in which something could be done to assist the British car industry. As my right hon. Friend the Secretary of State said, the central and crucial issue facing us is competitiveness. I do not wish to allocate blame or to identify the reasons why we came to be uncompetitive. The truth—and the statistics provided by the county council bear it out—is that our uncompetitiveness is so great that it poses grave questions about whether our industry can survive for many more years.

In the brief supplied by the West Midlands county council, the section on productivity states: The final factor in shaping the development of the industry, the search for increased productivity, also stems from the need to reduce cost and improve competitiveness. In some cases the greatest problems arise from operating below capacity production levels (Austin-Morris, Cowley, about 30 per cent., Rover Cars, Solihull, about 27 per cent.). However, even Britain's latest and best, the Metro production line, has a target of 32 cars per man/year (which is very high by European standards) when the Japanese industry average is 45 cars per man/year, with 'best practice' plants giving 67 cars per man/ year". The order of the differential in competitiveness is massive, and those figures toll anxiety not just for us but for Europe.

On reflection, rather than experiencing a world recession I believe that we are witnessing a recession in European competitiveness. Its competitiveness has declined vis-a-vis the new companies of the Far East and the old responsive industries of North America. Even allowing for that, last year, for the first time, the Japanese car industry overtook the American car industry.

Where is the responsiveness in all this? We have talked about lack of investment in the British car industry, but the Metro plant is the most modern plant, enjoying the greatest cpaital investment that we have been able to provide in recent years. Yet according to the figures provided by the West Midlands county council, its target—not yet its achievement—is 32 cars per man/year. We should consider how that compares with the best practice plants in Japan. We are talking about something that underlies our ability to respond to challenges elsewhere.

When confronted with the same problem of cars coming into its economy the United States car industry responded on two levels. First, there was an endeavour to restrict industrial imports that are basically more competitive—which is the natural response of us all. Secondly, the American industry decided to reinvest so that it could respond to the challenge and beat the competition on its own terms. I understand that the reinvestment programme of the United States car manufacturing industry will be about $80 billion over the next five years.

Like many hon. Members, the Americans realise that without a major car industry, or at least new major industries replacing it over the coming years, we shall see long-term high structural unemployment in areas that have contributed not only traditional skills but significant wealth to our economy.

I am personally deeply pessimistic about our car industry, because, unfortunately, I feel that Europe is not showing the responsiveness that characterises the industry in America. According to the European Commission, over the next five years Europe will invest about $20 billion in the European car industry. I am not sure that that gives us the basis on which to respond to the challenges of Japan.

I am also concerned because it now seems that the British market is viewed as a soft one. Our foreign, Continental and Japanese competitors are pricing up to meet our cost-related prices. A Sunday newspaper recently undertook an exercise that showed that it is now cheaper to buy British model ranges practically anywhere in Europe other than in the home market, and that even allowing for duty—

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

That is because of the exchange rate.

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills

I shall refer to that in a moment. Even allowing for the duty and VAT contribution, we are talking about £1,000 on the Metro and, I understand, about £1,500 on a Volkswagen Golf automatic.

Much is said about the exchange rate, and in part that has been a factor. However, the exchange rate average for last year was $2·30. So far this year, it is about $2·08. Therefore, the exchange rate has not been the only factor. British Leyland has priced down for Europe to maintain its market share and distribution, but basically we are still acknowledging the fact that costs of production in the United Kingdom are much greater than those of our Continental competitors. That makes us a soft market.

Perhaps there is nothing that we can do to redress the balance, short of some form of import control. That has been suggested as part of the Opposition's industrial strategy. I would not necessarily be against import control, if it were argued that it was to protect infant industry, that we were looking at our own car industry as if it were starting up from nothing, and that we were trying to build a strong home market that enabled it to be competitive in production.

My gloom about that possibility is reflected in the figures published for the Metro itself. Even on the latest production runs, we are talking about only 32 cars per man, year. How do we propose to produce cars in competition with Japan? At the end of the day, import controls mean that the British public must pay more for a product than they need otherwise do.

By virtue of its external tariff the European Community asks us to do just that. My constituents—I am sure that this is true of others—when making their choice in a free market as free individuals, are choosing to buy foreign models. Therefore, I am not sure whether the answer is import control. I fear that that would direct our scarce home resources into uncompetitive industries that provide perhaps only temporarily major employment, as a consequence. That is the dilemma that we all face.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

From the investment comparisons that the hon. Gentleman has just made between Europe and Japan, and from his cost comparisons between the United Kingdom and the rest of the EEC—which I do not accept—the logic of what he is saying is that we should not have a car industry. Is that the hon. Gentleman's conclusion?

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills

I was trying to rehearse the arguments as I see them and to highlight the dilemma that confronts everyone who has to make a judgment on the future of the British car industry. There is no easy answer, nor is the problem explained away by the exchange rate, productivity, manning levels and the relationship between management and unions. On the basis of the allocation of resources there may well be a case for saying that there will not be a British car manufacturing industry in the medium-term future. I do not know.

In May, an analysis by Economic Trends suggested that there may not be major manufacturing car industries in the United States and Europe, and that Japan may become the central car producer of the 1990s. That is a real worry that we must consider.

I have heard no argument from the Opposition to suggest that we can regenerate our car industry so that it can stand on its own in competition with Japan. If such an answer were forthcoming there would be much greater confidence by myself and many of my right hon. and hon. Friends in our response towards the British car industry.

We are talking about an activity that consumes great resources. The Government, perhaps agonisingly, are investing a great deal of money in it. But even in our best production plants, such as the Metro, there is still a great shortfall in output per man/year. I am not sure how we can bridge that gap so that we do not distort the British economy by pushing resources into car production at the expense of something that is more viable and lively. That is the issue to which we must address ourselves. That is why I believe that the Opposition's motion is misjudged and too simplistic by far. That is why I confidently support the Government's amendment.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill 6:39 pm, 1st July 1981

In a perceptive and realistic speech the hon. Member for Aldridge-Brownhills (Mr. Shepherd) summed up the dilemma facing hon. Members when they consider the car industry. It was with some sadness that I looked at the Opposition motion. I came to the conclusion that it did not say sufficient about the problems of the car industry, and left us with the same old disputes about whether we should have import controls. It did not look at the fundamental causes of what has plagued the car industry for so long. For that reason I decided that I could not support the motion.

I looked at the amendment and I listened carefully to the Secretary of State. With the reservation that I should like to hear the Minister's answer to my points, I am in broad sympathy with much of what the Government say. Broadly, they are getting things right for the British car industry.

This morning's newspapers mentioned two events that illustrate the dilemma to which the hon. Member for Aldridge-Brownhills referred. The first event was that yesterday Vauxhall recorded a loss of £83 million in the last financial year. It was interesting to note that the chairman and managing director put the loss down to the world recession—from which we cannot escape—and to under-utilisation of facilities.

The motion avoids that problem. Perhaps the Opposition have fallen into the trap which, for once, the Secretary of State appears to have avoided. Often the right hon. Gentleman has laid the blame at the feet of the trade union movement. That is not necessarily where the blame lies. Perhaps the Opposition have fallen into the same trap by laying the blame at the feet of management and by saying, in simplistic terms, that the answer lies in sheer crude import controls.

The hon. Member for Liverpool, Garston (Mr. Thornton) spoke about British Leyland's decision to put part of its TR7 manufacturing plant on Merseyside. That illustrates the type of bad management decision that has led to the closure of similar firms on Merseyside. The decision was mistaken. Nevertheless, as the hon. Gentleman pointed out, in parts of Merseyside there is still such mindless militancy that one wonders whether some people wish to strike themselves out of existence. I cannot understand why they do that when unemployment in parts of my constituency is as high as 40 per cent. In Liverpool, unemployment stands at 16 per cent. I do not understand why people do not adopt a more enlightened view when considering management and trade union relations.

I deal next with profits and the Opposition's usual attack on multinationals. That is not the answer. Profit is not a dirty word. What is important is how that profit is used and shared, and what incentive is given to people to feel that they share in the rewards of their labours and efforts.

I hope that the Minister will deal with an important question that has been raised. In the quarterly journal of the Finance Houses Association, Credit, it was stated that if terms controls were eased an additional 22,500 cars—about 4 per cent. of the British market—could be produced each year. It suggested that that could be done by extending the period of repayment from 24 to 36 months and by cutting the down payment in an instalment credit from 33⅓ to 25 per cent. Perhaps the Minister will let us know the Government's attitude to that suggestion.

In general, I am in favour of continuing substantial public investment in the British car industry. We must continue to do that over the next five years in order to safeguard the industry and to ensure the direct and indirect employment of hundreds of thousands of British people. A prosperous car industry is vital to the economy of the United Kingdom in several respects.

Let us consider the unemployment situation in Britain. The effect of a sudden closure of British Leyland, for example, could result in about 700,000 people becoming unemployed. At present, 130,000 people are directly employed by British Leyland, and for each of those workers there are at least three or four workers in component manufacturers and other services who are dependent upon British Leyland. When that is taken into account it is reasonable to say that the closure of BL could push unemployment in areas such as Birmingham or Coventry—hon. Members who are more qualified to speak about those areas have already made this point—up to about 30 per cent.

Coupled with the problem of the unemployment that would be created by a diminishing interest and investment in the car industry is the serious effect that that would have on Government revenues. For instance, we would begin to see increasing revenue losses from rates and taxes, and at the same time a necessary and major outlay of public funds to pay for the usual round of social security benefits and redundancy entitlements and to set up jobs creation programmes for those adversely affected. In addition, the hidden social costs would have to be paid for. I refer not least to the additional health and local authority service costs, to the cost of extra staff to cope with increased unemployment benefits and to the loss in morale among the unemployed.

From those consequences alone, it is obvious that continued public investment in the car industry would be very cheap indeed compared with the dastardly effects that a lapse in the investment of public funds would create. It would be an injustice, as well as an insult to the people of the United Kingdom, to force the country into a situation where an industry's and a people's productivity level could be measured only by that industry's profit margin. Unfortunately, that sometimes appears to the public to be the criteria that governs the Government's attitude.

The effect on Britain's balance of payments is another significant factor that will have to be borne if the car industry is not given adequate financial support by the Government. Any decrease in public investment could kill off the last vestiges of the British car industry, making it necessary for Britain to import hundreds of thousands of additional vehicles every year, without seeing a corresponding number of exports. All right hon. and hon. Members will understand the serious nature of such a gross imbalance.

The answer to the car industry's problems does not lie in import restrictions or in governmental intervention to regulate multinational companies involved in the car industry. Last year, along with other Merseyside Members, I met Sir Terence Beckett, secretary-general of the CBI and former chairman of Ford. He said: Import controls are Stone Age stuff". Import controls are also part and parcel of a tremendously insular society which refuses to recognise the positive contributions to technology that other countries can make.

In that respect, I refer to the other piece of news in this morning's newspapers. I refer to British Leyland's decision to launch its new car, the Acclaim, in October. That is an indication of how the technology of our trading partners can be used to benefit our car industry and to ensure that jobs remain here.

After all, we in Britain must have, as our first concern, the production of the best possible commodity for our consumers. Consequently, we must realise that that often means a willingness to benefit from improved technology, which we can use to improve the quality of jobs in the car industry. It is for that reason that I applaud the Japanese Government's good will in agreeing to voluntary restraint agreements with Britain. I hope that they will continue, because those agreements, rather than rigid import restrictions, are the way to rectify and bolster the British car industry. In its turn, the Department of Trade must conduct a more vigorous campaign to persuade the Japanese Government to remove their restrictions against British exports.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

The hon. Gentleman seems to be saying that the Liberal Party does not need to have a policy for the car industry. In the first part of his speech he said that he basically agreed with the Government's strategy. The Secretary of State told us that the Government's strategy was to reduce public investment in the car industry. With the exception of the last part of his speech, the hon. Gentleman spent his time saying that he wished to increase public investment in the car industry. Where does he stand?

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

In my opening remarks I made it clear that the six lines of the motion could not prove to me, or to any other thinking Opposition Member, that we should give our blind support to a policy that seemed to rely on knocking multinational industries and on the rigid imposition of import controls. I also said that I had several reservations about what the Secretary of State said. I have tried to deal with them in my remarks, and I hope that the Minister will reply to my points.

The amendment notes that the Government have provided substantial funds to the industry at the expense of taxpayers and other sectors of industry and commerce. I do not believe that throwing money at problems will make them go away. We must consider using more sophisticated methods. In the past, we have fallen into the trap of throwing money at problems and of putting poultices on them. We have not cured them.

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

Does the hon. Gentleman agree that in the short time that I have attended this debate——

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

—the hon. Member for Nuneaton (Mr. Huckfield) has sought only to make party political points in an otherwise serious debate. When my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) made his serious and thoughtful contribution, the hon. Member for Nuneaton turned to his right hon. Friend the Member for Deptford (Mr. Silkin) and said that my hon. Friend had a marginal seat. Now, the hon. Member for Nuneaton is trying to make further party political points against another serious and thoughtful contribution, this time from the Liberal Party. Does that not underline, as Disraeli said, that import controls are not a policy but an expedient? Does it not underline also the expediency behind the motion and the hon. Member's interventions?

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

I agree. The rigid imposition of import controls will never be a cure for our economic problems. We have to trade with the rest of the world. If we want to become a country that floats out into the Atlantic and drifts endlessly into oblivion, nothing will achieve that more successfully than the Opposition's proposals.

That policy would also lead to a weakening of the Western Alliance and a breakdown of our trade relations, not only with Japan, but with other countries. Import controls are no way to revitalise our industry or further trade relations. Voluntary restraint agreements are far more appropriate at this time. They will ensure the best consequences for all.

We in the Liberal Party acknowledge the Government's attempt to honour their commitment to invest in British Leyland, and the efforts of Sir Michael Edwardes to rejuvenate BL. However, we call for a continued commitment of funds to the British car industry, because its decrepit plant and machinery must be modernised if it is to compete against the countries about which the hon. Member for Nuneaton (Mr. Huckfield) complained.

Furthermore, we believe that the further outlay of funds through social security and unemployment benefits is no way to use taxpayers' money. It would be better to invest in the car industry, so that it can provide jobs and prosperity. We believe in voluntary restraints on imports rather than on protection, so that we can democratically come to an understanding with our trading partners. That will enable us to have the benefit of improved and new technology, while ensuring the integrity and continuation of our motor vehicle industry.

We cannot, therefore, vote for the motion. What the Opposition propose will cost consumers more and deny freedom of choice. On the other hand, the Government seem to be asking us to give them a certain amount of carte blanche to go on throwing money at problems without ensuring value for taxpayers' money and without a long-term strategy for facing the need for further automation, the need to tackle the consequent unemployment, the need to create a modern industry that can compete in a free market with our international competitors, the need for profit-sharing and worker involvement and the need to create an ordered system of wage settlements that will remove confrontation and chaos from the British workplace.

Photo of Mr James Pawsey Mr James Pawsey , Rugby 6:52 pm, 1st July 1981

I was impressed with what the hon. Member for Liverpool, Edge Hill (Mr. Alton) said about the need for profits. He said that "profit" was not a dirty word. At least he has grasped that it is from today's profits that tomorrow's jobs come.

In any debate on a major industry it is difficult to avoid the thought how are the mighty fallen. About 15 or 20 years ago the motor industry was paramount among manufacturing industry in the United Kingdom. It was, as Aneurin Bevan said, one of the commanding heights of the British economy.

There are four basic reasons for the motor industry's decline. The first is the record of strikes, lost man/hours and low productivity. The second is poor management decisions, the third Government interference, and the fourth the impact of imports, particularly from Japan.

Let us consider industrial disputes. In 1973, for example, there were 297 separate stoppages involving 441,000 employees. In that year, 2,082,000 days were lost. How any industry can maintain a competitive edge when faced with such an appalling record is beyond imagination. Even as late as 1979 there were 165 separate stoppages, involving 367,000 workers, with 3,710,000 days lost. That is the size of the self-inflicted wound.

Throughout the 1960s and 1970s the British motor industry increasingly lost its reputation for both quality and quantity. Its work force achieved the unenviable reputation of being prepared to strike for the most trivial reasons. Industrial relations were maintained on the basis of two opposing sides. Misunderstanding and suspicion became the order of the day.

That, indeed, is reflected in the nicknames of some of the central figures of that time—the "Mole" at Cowley and "Red Robbo" at Longbridge. There was the remarkable case at Linwood when the entire work force went on strike because a single worker was suspended for urinating against a wall. The motor industry became a byword for unreliability and the tea-break car became a fact. I accept that all that was in the past and that a new sense of realism is, at long last, coming into the motor industry. That sense of realism is illustrated in my constituency of Rugby.

Rugby contains the Talbot plant at Ryton. Only this week a £10 million investment programme was announced by George Turnbull, its managing director. That is an investment in the future, in the product, and in the work force and management at Ryton. That investment follows in the wake of a 25 to 30 per cent. improvement in productivity in the last 18 months. It shows what can be achieved in the British motor industry when management and work force sink their differences and decide to work together.

I do not say that management is always right and unions are always wrong. However, the trade union movement must accept a considerable responsibility for the state of the British motor industry. Senior management has also made far too many mistakes. It is extremely difficult, for example, to justify the original decision that led to the formation of British Leyland, even when one recalls that it was formed during the era of biggest being best. The way in which British management has too often decided to abdicate control of its factories and plants to purchase peace at any price is an indictment of British management techniques.

The decisions to build car factories far from the centres of component production defy the basic laws of geography. The original Linwood decision, which was questioned by so many in the Midlands motor industry, is but one case. We must now hope that British managers have the confidence and drive to take and implement the difficult decisions necessary once more to introduce volume and quality car production into the British motor industry.

Management must understand that it, and not the unions, must take the basic decisions. Of course, there must be consultation, but the operative word is "consultation" not "abdication."

Successive Governments have grossly interfered. That is best illustrated by the way in which hire purchase has been used as a regulator. Governments have moved hire purchase deposits up and down and shown a complete lack of understanding of the realities of mass production. Successive Governments have appeared to think that production can be turned on and off like a tap. I have had seven years' experience in the British motor industry. People who have worked in the industry know that a considerable lead time is necessary to ensure that components arrive at the right time in the right quantity and at the right price.

Adjustments to purchase tax, with their consequent effects on sales and production, disrupted this finely-tuned mechanism and were responsible not only for lost production but for much of the frustration felt by workers in car plants. Workers, through no fault of their own, saw the demand for their products falling and, through that fall in production, saw the money in their wage packets falling too. That frustration was reflected in some of the stoppages that occurred. The regulator that I have described was but one of the many sticks that the Government have constantly used to beat the British motor industry. For example, the tide of legislation that has poured from this House, albeit with the best of intentions, all made it more difficult for British motor companies to operate at a profit. Employment protection and health and safety at work legislation all helped to reduce the competitive edge of British industry. Whether or not the Opposition choose to hear it, investment will come only from profit.

I accept that throughout the 1960s and 1970s investment was low because profitability was low. The current massive investment in the British motor industry, specifically in British Leyland, comes not from profit but from a direct investment by the State—an investment which is being paid for by the profitable private taxpaying sectors of the economy. It is worth repeating that Leyland's price is being paid by the increasing liquidations and redundancies of the private sector.

Then there is the impact of imports, especially from Japan. It is extraodinary how the Japanese share of the vehicle market in Western Europe has grown since 1970. It has risen from just over 100,000 in 1970 to 808,000 in 1979. What is worse, Japan is deliberately gearing itself for a major assault on the markets of the rest of the world. The Japanese motor industry is now, without doubt, the largest and the most efficient in the world. Last year it became the largest volume producer of passenger cars. Output totalled over 7 million units. That staggering achievement came at a time when the majority of the other car producers in North America and Europe began to move into recession. The drive by Japan has penetrated all the markets where it has not been deliberately restricted.

The hon. Member for Coventry, North-East (Mr. Park) made a good point. He said that France had been particularly successful in restricting Japanese imports to about 3 per cent. of registrations. In Britain the equivalent figure is about 11 or 12 per cent.—four times greater than France, our partner in the EEC. It is expected that by 1985 Japanese production capacity will increase to about 14½ million vehicles, with the overwhelming number of those vehicles being produced for export.

Japanese effectiveness will be measured in job losses. The British motor industry expects that the total number of jobs lost in Western Europe as a direct result of Japanese penetration will be about 500,000. That is the reality of the Japanese challenge and the problem that faces us.

It is also noteworthy that the CBI, which has long held a free trade stance, is now calling for a limit to be imposed on Japanese imports. Currently the United Kingdom's deficit of trade with Japan is in excess of £1 billion. Britain's total visible trade deficit with Japan has increased from £278 million in 1975 to £1,100 million in 1980. It could reach £1,400 million this year. I am aware that it is argued that should we impose import restrictions on Japanese goods there would be retaliation, but what form of retaliation can equal the disastrous problem currently facing this country and Western Europe? I am firmly convinced that we would not have a great deal to lose if we were to impose a strict quota on Japanese goods.

That, then, is the problem, but there is a solution. We should impose a five-year moratorium on Japanese imports, which would protect the British motor industry. Without a moratorium our motor industry will go the same way as the motor cycle industry, the radio and television tube industries and others. It is worth remembering that the Japanese motor industry developed behind technical and tariff barriers, which still exist. As an earlier speaker said, fewer than 3,000 British vehicles are being exported to Japan. If we could achieve a five-year breathing space, that could be used to increase productivity, to step up production to reduce unit costs and, above all, to improve the quality of the products of our motor plants.

I make three constructive suggestions. First, we should increase the rate of capital allowances to companies purchasing motor cars from the present 25 per cent. to 40 per cent. I suggest that because the majority of fleet purchases are British motor cars. That would specifically help the British motor industry.

Secondly, we must hope that the Government's Green Paper on industrial relations will pave the way for more constructive legislation this winter. I hope that that will deal with the closed shop, secondary blacking and the need for secret ballots before industrial action is taken. I appreciate that there is a new sense of realism on the shop floor, mainly engendered by the present rate of unemployment, but whatever the reason, this could be our last chance to strike a balance between the power and responsibility of trade unions.

Thirdly, we should be commencing a major "Buy British" campaign, funded by the Government—specifically by the Department of Industry. An analogy can be drawn with the road safety campaign mounted by the Department of Transport. That campaign has saved lives. A campaign designed to buy British goods would save jobs. Current high imports can be likened to a latter-day Trojan horse, for as imports increase so the number of jobs fall. Increasingly, more and more people are becoming concerned about imports and about the belief that something must be foreign before it is good.

We need a major "Buy British" campaign. It is a case of "Let us buy British and make work for ourselves". The campaign should be seen throughout all walks of life. It should be seen in industry—both in the board room and on the shop floor—in the home, in schools and in public life. The British trumpet needs a good, long solid blast, because for too long we have been silent and have allowed the knockers and the whiners to undermine our belief in ourselves. It is time that we put the record straight.

I conclude by putting a thought to my hon. Friend the Minister of State, that if he needs a slogan for such a campaign I will give him one free, gratis and for nothing—"Buy British and save a job."

Several Hon. Members:


Mr. Deputy Speaker (Mr. Bryant Godman Irvine):

Order. More than 15 hon. Members have intimated to me that they would like to take part in the debate and there is less than two hours left.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport (Monmouthshire/Gwent) 7:10 pm, 1st July 1981

In the 15 years that I have spent in the House this is the first car industry debate in which I have participated. Perhaps I should qualify that by saying that I am chairman of the parliamentary group of the Transport and General Workers Union, which organises more than two-thirds of the workers in the industry. What is more, I spent the 10 years before coming to the House in the car industry in Coventry, as an officer of that union.

In those days Coventry was a thriving, thrusting engineering city and one of the centres of our car industry. Today, the industry is relatively in tatters. I say "relatively", but, of course, I wish all good fortune to the Metro and the other new projects which British Leyland has under way.

What has happened to the car industry is a tragedy for the whole country. I know that industrial relations have not been all that we might have hoped. The blame lies on both sides. However, successive Governments have never really appreciated what an important sector of the economy the motor industry is. From time to time they have manipulated the industry in a cynical manner to regulate the economy and to create a boom or a slump—whichever suited their short-term needs. At one stage, the industry was starved of investment. The seed corn was squandered. The road building programme was also a factor in the industry's decline, because it was not pursued with sufficient vigour and tended to hold back the introduction by our manufacturers of new models.

The deterioration of our car industry in the last decade is measured easily by citing one or two statistics. In 1970, 12 per cent. of the cars coming on to British roads were foreign-made. Today, the total is more than half. A further indication of what is happening is that the new medium-range model to be introduced by BL at Cowley is essentially a Japanese model. We are now hoping that Datsum will be building a major manufacturing plant here.

My own constituency is in the running for the project. The Japanese have been to Newport to examine the site. It is next to the Llanwern steelworks, and someone has remarked that the necessary steel could almost literally be thrown over the wall. So we must not be too pessimistic about the future. The House will recall what was said about Llanwern steelworks not so long ago. I am glad to say that the works is now producing steel to Japanese standards.

Some people have tended to put the blame for the troubles of the British car industry on the Japanese. However, that is not true. The vast bulk of the new cars coming on to our roads from abroad come from our so-called Common Market partners. With the all-party motors group of the House, not long ago I visited two of the Renault plants in Normandy. A fortnight ago I had the privilege to visit the major Volkswagen plant at Wolfsberg. In that huge complex, employing no fewer than 58,000 people producing only cars, we gathered from conversations with German executives that the company was terrified of Japanese competition. Formerly, German manufacturers had believed fully in free trade. Today the ball game has changed slightly.

The fact remains that Renault and Volkswagen alone export to Great Britain more than Japan's total exports. I make no mention of Fiats, Citroens, Audis, Mercedes and BMWs.

I also notice that the new Rover plant at Solihull is to be closed. It is alleged to be one of the most modern car plants in Europe. Only a few years ago it produced the new Rover, which was described as the car of the year. From personal experience, I can say that it is an excellent car.

Every Sunday in the colour magazines we see major advertisements for the Audi, the BMW and the Mercedes. I do not blame those companies. They have their teeth into the British market and they do not intend to let go. I blame successive British Governments for allowing this key industry to be eroded almost to the point of no return.

I grant that much public money has gone into British Leyland in recent years. But much of it has been like pouring money down the drain. Alongside this new investment, import controls were needed. This is essentially the policy of the Transport and General Workers Union, which is by far the biggest trade union in the motor industry.

Our car industry needs time to modernise and to become competitive once again. Our Bourbon leaders have been wedded to the dogma of free trade. There is nothing wrong with the concept of free trade but if it does not suit our national interest at any time we should reject it. If we go back to Sir Robert Peel and the Corn Laws, to Austen Chamberlain or to the build-up of the German economy—the Zollverein—under Bismarck, we see that that has happened in the past. More recently, Japan has built up its own industries behind tariff barriers. If free trade does not suit Britain at any time there is nothing wrong in rejecting it.

Unfortunately, however, as a result of the free trade dogma which has been pursued with such vigour for such a long time, ordinary people have had to pay the price, because so many of them today are in the dole queues. This mass unemployment brings on all the stress and social tension which we now experience. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) spoke about the speech in the last 24 hours by the right hon. Member for Sidcup (Mr. Heath), who pointed out that much of today's juvenile delinquency and crime could be attributed to present Government policies. That, too, is a relevant factor, and I am grateful to the right hon.

The ripples of the decline of the car industry as a whole have extended to many other industries. I represent Newport, which could be described as a steel constituency. When those Renaults and Volkswagons began to dominate our roads there was a reduced demand in this country for steel. The British Steel Corporation came under pressure. Its competitive position was undermined. Its unit costs rose. In turn, our manufacturers imported so-called cheap foreign steel. The British Steel Corporation had to be bailed out by the Government. Thousands of steel workers were put on the dole. The same applies to many of the component industries. The record in tyres is catastrophic. In Caernarvon, a major factory, Bernard Wardle, which produced leathercloth, was closed. Glass and paint have been similarly affected.

Then, more basically, there is coal. The British Steel Corporation, finding itself in the predicament that it did, said that it wanted to import cheap foreign coal. That resulted in a major argument about possible pit closures. Transport was similarly affected, particularly the railways, being a major bulk carrier. The whole picture is a sad one.

A statement was made the other day by the Automobile Association, which said that 47 out of every 100 people in this country drive to work. On that basis, 29 out of every 100 people use a foreign car. I remind those people that they are driving themselves and their mates to the oblivion of the dole queue.

Ten years ago, Lord Stokes, the then chairman of British Leyland, told us that a marvellous future lay ahead of the British car industry when we joined the Common Market. A year or two later British Leyland was just about bankrupt and had to be bailed out by the Labour Government. It appears to me that many of the difficulties, not only of the car industry but of other manufacturing industries, are the direct result of British membership of the Common Market. It has given the multinational companies the opportunity to rape the British economy.

We all know that the Labour Party conference called for Britain to come out of the Common Market. I sincerely hope and trust that the next Labour Government will honour that commitment. In our recovery, which I hope will not be too long delayed after that new Govenment are elected, I hope that we shall use the public sector to lead in engineering our economic revival and to boost demand in the classical Keynesian way. Instead of allowing that stimulation of the economy to generate a new flood of imports we need import controls, as the famous group of economists at Cambridge have advocated for so long. Thus we can ensure that our recovery is not abortive or short-lived.

That, then, would be a part of our strategy to get Britain moving again and to make our economy competitive. Nevertheless, such measures are not intended to restrict our engaging in international trade. Rather, they are to expand our overall trade. When the 3 million people are brought out of the dole queue we shall produce more and the demand will be greater.

I know that the car industry has been dealt some severe blows in recent years. However, it now needs every encouragement. It can play a major part in Britain's economic recovery, which I hope will not be too long delayed.

Photo of Mr Graham Bright Mr Graham Bright , Luton East 7:26 pm, 1st July 1981

In the short period that I have at my disposal I hope to deal with some of the problems that concern my constituency, which houses the major Vauxhall plant in this country.

Vauxhall is now very much part of General Motors, which is one of the multinational companies that we talk so much about. Many people are only too ready and willing to knock the multinationals, particularly General Motors. However, it is fair to say that that if General Motors did not have the controlling interest in Vauxhall, Vauxhall would not exist. Vauxhall has had a bad time. In the last seven years it had losses of £82 million. Yesterday, sadly, we heard that in the past year that figure has been overtaken by a massive loss of £83 million. I underline the fact that Vauxhall would not be where it is now without General Motors. Indeed, General Motors has given a firm commitment that it wants Vauxhall to stay as a viable operation, and has said that it has no intention of backing out of the United Kingdom.

The president of General Motors, who visited this country a few months ago, said that his company was very concerned that the return and productivity at Vauxhall were so disappointing. That was highlighted by the fact that General Motors made its first loss since 1921 last year.

General Motors has put £105 million into Vauxhall to cover losses, as well as a further £75 million worth of investment. That investment will be spread over a fairly wide area, to cover the introduction of the J car, which is to be built at Luton, the T car, which is known as the Astra and which is to be assembled at Ellesmere Port, and to put further investment into A.C. Delco, which is the components end of General Motors in this country.

The General Motors strategy is to bring three world cars on to the market—the T car, which is the Astra, which at present is built in Germany and which is to be assembled in the United Kingdom; the J car, which replaces the Cavalier; and the C car, which is the new General Motors mini car, which clearly will be in direct competition with the Metro. All those cars will have interchangeable parts—engines, gearboxes and, in some cases, body panels—and will be built on a world-wide basis.

The sad thing is that the J car, which is now being prepared at Luton, will be built with component parts that come from all over the world, but not, from what I have been able to find out, unfortunately, from the United Kingdom. That is sad. Vauxhall said that if British suppliers can compete on price and produce goods on time, there is no reason why this should not eventually become more of a home-produced car.

Look at what has happened with the Cavalier. When it first came to Britain it was 100 per cent. German. It was already assembled. When it was eventually assembled at Luton most of the parts came from abroad. Currently, the car is 60 per cent. assembled from British labour and components. Although we can criticise the fact that Britain is assembling motor cars that are ostensibly prepared and built abroad, at least we are employing a labour force of several thousand. By improving productivity and showing that we can deliver the goods we have the option and the opportunity to build cars with British components.

General Motors is the largest motor car manufacturer in the United States. However, it is very much behind Ford in both volume and profitability in its operations outside the United States. In 1978 it embarked on a massive world-wide investment plan of $38 billion to bring it in line with Ford. It wanted to compete and become the No. 1 manufacturer world-wide. The way in which it did that was a little unfair to Britain. The number of cars built by Vauxhall in 1974 was 249,000. The figure for 1980 was down to 150,000. It is not the same story in Europe. Opel output has risen by 50 per cent. There is no way in which the recession can be blamed for that contrast in fortunes. It is purely the result of decisions by a multinational in America.

Reality has at last broken through. The change of attitude within management and unions at Vauxhall must be seen to be believed. Unfortunately, the decisions were made by General Motors four or five years ago, when productivity and labour relations in Britain were nothing like as good as they are today. We are paying the price for the difficulties that we experienced a few years ago. We must be constructive. We must work hard and prove that we can build cars in Britain—and that we can build them to quality, on time, and without the destructive forces that we have seen in the past.

Let us consider the way in which the reshaping has affected Vauxhall. It is the same story that we hear from a number of areas. The design and engineering of new cars has gone to Opel in Germany. We have lost a tremendous number of skills. Unless there is the possibility of the design and engineering returning to Britain, those skills will disappear for ever. We have also surrendered the European dealerships. Vauxhall cars are no longer permitted to be sold in Europe, which means that we have lost export potential. The assembling, rather than the manufacture, of German and Belgian cars is the order of the day.

There has been an integration of Vauxhall and Opel dealership in Britain. That has downgraded Vauxhall by bringing it into line with Opel. The work force has been reduced from 33,000 to 23,000 during the past two years. Within General Motors, in real terms, Vauxhall has been downgraded. It has lost skills. Britain has lost the design capability and the manufacturing experience that it needs. To bring back those skills we need a share of car manufacture. We accept the world-wide concept of car building. There is a great deal in that argument if we are to beat the Japanese. However, it is essential that Britain keeps part of the manufacturing ability. We must have a share in manufacturing parts for the cars. I would be happier if Luton were building the engine, the gearbox or the transmission for the new J car.

We have been told that an engine plant at Luton would mean a £125 million investment. With Vauxhall's record of profitability, we can understand why General Motors is reluctant to make that investment. It is important that the management and work force should convince General Motors that it would be a wise move to make that investment. We must continue to underline the fact that Britain wants to keep its manufacturing ability. It is no use being a country that simply puts cars together. That is not manufacturing cars. Manufacturing cars means going right the way down the line. We must have our share in making engines and gearboxes. If we have to share that manufacture, fair enough.

General Motors aims to take about 15 per cent. of the British market. I hope that it succeeds. Presently, it has only 7·2 per cent. The number of cars that it is importing to meet that level is far too high. About 130,000 cars are manufactured in Britain and 45,000 imported. We must get away from that trend.

It is a striking fact that Vauxhall lost in the bid to build some parts of the new J car. We are told that General Motors can buy the engines cheaper from Australia and the gearboxes cheaper from Japan. Opel is in a similar position. It is amazing to think that engines and gearboxes from the other side of the world are coming into Britain and Europe cheaper than we can manufacture them ourselves.

What about new plant in Europe and Britain? General Motors says that it is not building new engine parts in Britain because the Austrians have offered a free site, free road and rail links and 33 per cent. construction costs. We cannot blame General Motors for choosing to go to Austria. I understand that similar offers have been made by Spain and Portugal. If Britain wants a share in the car manufacturing industry the Government and the nation must make some contribution towards catching that share. Even in our regional plans there is nothing that could offer the carrots to persuade companies to build plants in Britain.

We are seeing the erosion of manufacture in Britain. The leading role in car manufacture for General Motors is going to Europe. It is sad that we are losing skills, design and manufacture. Also sad is the loss of skills in putting together robots and all the modern technology associated with cars. There is a loss of exports because we are not building the cars that could be manufactured in Britain and sold abroad.

A number of my colleagues have mentioned the loss of components. Luton is not the only place to suffer from that. British Steel is suffering in other parts of the country, as is Pilkington glass. The many small businesses that contribute nuts and bolts and bits and pieces for the cars have lost business because of sourcing from other parts of Europe.

Where do we go from here? We must accept that Vauxhall is part of a multinational company, as are Ford and Talbot. Ford has proved to be a success and there is every possibility that Vauxhall will prove to be successful. It is essential that the Government should encourage our arms of the large multinationals which succeed and back them in trying to persuade the multinationals to support them and provide further investment.

I hope that the bad relationships between managements and work forces are now a part of history. It is important to say so in this debate. There is now a sense of reality and we must ensure that we receive the full backing of the multinationals. We must take the path that lies ahead rather than harping on what happened in the past.

The Government should never again use the motor industry as a regulator for the economy. For too long we have tampered with hire purchase arrangements and taxation. I cannot understand why the motor car is singled out for a special tax. It is no longer a luxury. It is an essential, especially for those who live in country areas. It seems that we must have a motor car nowadays. It has become part of modern living. It is wrong that the motor car and the motor cycle should be penalised by additional taxation. Surely VAT is quite enough. It would be a great incentive to the industry if the additional taxation were removed fairly rapidly.

There is a great deal of talk about taxing company cars. Some Labour Members jump with delight at the thought of taxing those who have cars that are run on the companies that employ them. However, the majority of British companies that buy cars buy British cars. It is important to consider the implications of taxing company cars.

It is vital to reject schemes such as import controls or the compulsory manufacture of vehicles in Britain alone. I know that such schemes are favoured by the unions and the Labour Party. To take such a course would merely perpetuate our high costs and our overmanned production lines. Our object must be to become at least as efficient as the Japanese. Our car workers produce far fewer cars on average, in terms of man/hours per year, than Japanese workers. On that basis about six cars are produced in the United Kingdom as against 42 in Japan. That is a disgrace to an industrial nation such as Britain.

We cannot afford to make things worse by closing our market to competition. That would make us even more inefficient. As Britain is so dependent on exporting, our industry would lose far more from foreign retaliation than it could gain from the protection that import controls, for example, would offer.

The commitment of the General Motors Corporation to investment in Britain is welcome. The management and workers of Vauxhall need a secure future. It is not in their interests or in Britain's to have the range of tasks that they perform reduced to mere assembly. We must ask General Motors to reconsider its global strategy as it bears on the United Kingdom.

We must encourage much better productivity at Vauxhall. The company must be able to make sufficiently high profits to enable it to gain a better return from its capital investment and to pay better wages to its work force. It must be able to generate investment in the company for the future. The Government must keep under constant review the incentives that our competitors offer and the impact of their taxation policies. If we want Vauxhall to be more successful, the management, the unions and the Government must create the necessary conditions so that the company can get on with the job of building motor cars.

Photo of Mr Terry Davis Mr Terry Davis , Birmingham Stechford 7:44 pm, 1st July 1981

I have some sympathy with the argument of the hon. Member for Luton, East (Mr. Bright), who contended that the special tax on motor cars should be removed. However, there is little point in removing the tax if the extra sales go to importers. I disagree with his views on import controls. I believe that such controls are necessary. I much prefer the views of the hon. Member for Rugby (Mr. Pawsey). However, I would go further and advocate that import controls should be introduced for other countries as well as Japan.

The hon. Member for Liverpool, Edge Hill (Mr. Alton) was wrong to suggest that it has been claimed that import controls would be a cure for the problems of the motor industry. Import controls will not provide a cure. We need import controls to provide time for us to deal with the industry's problems. We also need import controls to protect the industry against unfair competition and to protect the country against the decisions of multinational companies, which make decisions that are based on their interests and not on the interests of Britain.

As we listened to what the Secretary of State said this afternoon it became clear that he blamed the loss of jobs in the motor industry on a lack of competitiveness in design and price. He blamed strikes, overmanning and bad working practices. He blamed low productivity. He blamed a failure to introduce new models. He blamed regional policy and the decision to locate factories on Merseyside and in Scotland. He blamed the actions of previous Governments. He blamed everyone and everything except himself and the Government for the loss of jobs in the industry during the past two years.

Somebody must answer the right hon. Gentleman, and I shall do so wall specifics and not generalities. Let us take two examples. First, let us consider the privately owned firm of Metro Cammell Weyman, which makes buses. I select this firm because the right hon. Gentleman referred to the decline in bus sales. Two years ago Metro Cammell Weyman was recruiting people to work in its bus factory in Birmingham. In the past few weeks it has declared redundancies of several hundred people.

The management has provided a number of reasons for the redundancies. No one has suggested that the reason lies with design problems. No one has suggested that the redundancies should be blamed on a lack of price competitiveness. No one has said that the redundancies are the result of strikes, overmanning and bad working practices.

The management has explained that the redundancies are due to factors that are the responsibility of the Government. It blames the general recession for a reduction in the number of people who travel by bus. It claims that the blame lies with the policies—Conservative policies—of cash limits and high interest rates, which have caused a reduction in orders for new buses. It says that the number of passengers carried by bus has declined because of the reduction in service mileages. None of those factors has anything to do with the reasons listed by the Secretary of State. Several hundred men and women will lose their jobs because of Government policies.

A second example is the publicly owned company of British Leyland, which has recently announced proposals to close the Rover factory at Solihull. If the closure goes ahead it will mean the loss of 2,100 jobs in Birmingham, Solihull and the surrounding area. The hon. Member for Liverpool, Garston (Mr. Thornton) described the empty Speke factory as a monument to all that is bad in the motor industry. The Rover factory at Solihull can be described as a monument to much that has been good in the industry. A new model was introduced at the factory five years ago and the design won on international award.

We cannot blame the proposed closure on a lack of design competitiveness. The Solihull plant is a new factory, so we cannot blame the proposed closure on a lack of investment. The management has not blamed low productivity. On the contrary, the work force has earned one of the highest productivity bonuses in BL cars. Finally, the management says that industrial relations are not to blame for the proposed closure.

The factory is threatened because it is making 700 cars per week when it has a capacity to make 3,000 cars per week. The management says that there are three factors that explain that low output. First, it blames price competitiveness, but it says that that is the result of the high value of the pound, which has affected imports into this country and exports from this country to the Continent, which was one of the key markets intended for the new Rover car. Secondly, it blames the recession and says that as a direct result there will be a reduction in the car market of 10 per cent. in 1982. Thirdly, it says that there is a further reduction in the market for the Rover car as a result of a shift to smaller cars, which is blamed by the management of British Leyland on the Budget and the increase in petrol tax.

Therefore, the management of British Leyland is not putting forward any of the reasons listed by the Secretary of State. I hope that we will be told whether the Government accept responsibility for their policies, which are causing the closure of the Rover factory at Solihull. If they do not accept the responsibility, it must be the responsibility of the British Leyland management. The management decided to build a factory that was capable of producing 3,000 cars a week. It was not the decision of Sir Michael Edwardes and his management team, but when they were appointed they endorsed that decision. Now they say that they cannot sell the cars. The result is that 2,100 people are likely to lose their jobs. If the management of British Leyland cannot sell as many cars as can be made, and if it is not the Government's fault, Sir Michael Edwardes should accept the responsibility for failing to sell and he should resign so that the Government can appoint someone who can sell the cars that can be made at that factory.

The Government cannot have it both ways. Either the management of British Leyland is responsible for the proposed closure of the Rover factory or the Government are responsible. I believe that both are responsible. British Leyland needs a new chairman, and Britain needs a new Government.

Photo of Mr Hilary Miller Mr Hilary Miller , Bromsgrove and Redditch 7:53 pm, 1st July 1981

I shall not follow my old adversary, now the hon. Member for Birmingham, Stechford (Mr. Davis), into his byways. I shall instead content myself with saying that the Metro Cammell Weyman bus project was set up because British Leyland was unable to deliver—he must have been aware of that—even with special inducement from the West Midlands county council. The Rover plant suffered serious over-capacity from the beginning, and the hon. Gentleman will also be aware of the paint problem. Now that the market conditions have changed it is not possible to sell cars of that size in the quantities originally envisaged. It is no good the hon. Gentleman trying to pin the blame for all those developments on my right hon. Friend the Secretary of State.

I am glad that the Labour Party has chosen the subject of the motor industry and has given us the opportunity for a full dress debate rather than our usual attempts in the middle of night on the Consolidated Fund Bill. However, the Labour Party has made a bad fist of it because, for example, it has left out one of the most important reasons for such a decline in the motor industry. That reason is inflation.

Inflation has destroyed the jobs and has undermined the industry. That is why I have so constantly supported the Government in their selection of the defeat of inflation as the first priority. We have been subjected to a raft of Labour arguments, with easy panaceas, such as import controls and multinational company restrictions, ignoring the contribution which the multinationals have made to our motor industry and ignoring the fact that many of those operations are able to continue only on the basis of imported cars. The cost structure in this country is too high for them to operate profitably otherwise, largely as a result of the inflation to which I have referred.

I have a host of figures from the Ford Motor Company to prove the point and to show that whereas it was relatively advantageous to make an Escort in Britain as recently as 1976, by this year that no longer applied. Our cost structure is much too high, so that it is possible to acquire a British model more cheaply on the Continent because it has to compete with the market structure there. So please do not let us be led into those easy byways and imagine that they will solve the motor industry's problems, which are real, although they reflect a number of the other problems to which hon. Members have referred.

I wish to develop my ideas on the need for a sector industrial policy rather than a regional policy, the effect of that on the West Midlands and the responsibility of the Government for creating the competitive climate in which alone our industry can flourish. I am having to shorten my remarks in view of the number of other hon. Members who wish to speak. I have already voiced my criticism of the Government in relation to British Steel—that there was no coherent Government sector plan for the steel industry. It was left to Mr. Macgregor, on behalf of British Steel, to devise the plan for the whole industry regardless of the effect on private firms.

I am afraid that the same criticism can be levelled with regard to the motor industry and the treatment of British Leyland. The Government's financial support of BL appears to have been based on the BL corporate plan rather than on any view taken by the Government of the sector as a whole and regardless of the effect on other firms in that sector. It is important to ram home the need for such a Government view when we consider the application of Nissan to manufacture here. There is bound to be a considerable effect. We must have some ideas of where that impact will fall and whether any counter-measures need to be taken. It appears to me that the Nissan project would establish the manufacture of a company fleet car which would compete seriously with Ford, Vauxhall and the new BL model, the LM 10.

The Government must have some idea of the model which will be made, the quantities in which it will be produced and the export plans for it. Otherwise there is bound to be a serious prejudicial effect on existing British manufacturers, some of whom are supported largely with Government funds, and on BL or the Ford engine plant at Bridgend, which would be vitiated thereby.

There is also the question of the effect on the component industry. If the Japanese plant is allowed to use a high percentage of cheaper Japanese components because of the different cost structure in that country, the only way in which our assemblers would be able to compete would be by resorting to imports of components, with disastrous effects on the component industry and on the West Midlands.

I fear that the siting of the plant will be influenced by regional policy and by the grants available to the firm if it goes to a certain area. We are faced with the prospect of transferring employment from the West Midlands—and a lower level of employment being created because of the more modern methods of production—to another part of the country, putting more people out of work in the West Midlands, which is already suffering severely. There are a number of other considerations about the Nissan project—the need for design, and so on. I know that other hon. Members hope to discuss those considerations.

The West Midlands is crucially dependent on the motor industry for its employment and prosperity. At the moment it has the highest rising rate of unemployment in the country. Hon. Members do not understand that unemployment in Birmingham is already higher than in Glasgow or Liverpool. People do not take on board what has happened to the West Midlands. The rebuff experienced by the delegation this week at the hands of the Department of Industry, when it tried to bring home to the Department the problems of the West Midlands, was regrettable. The problem has to be worked on further, because the answer was not satisfactory.

I have departmental papers to support my belief that the West Midlands now qualifies, with its unemployment and long-term structural decline, for regional assistance. Either the regions should be given that assistance or the policy should be changed. I have advocated that the policy should be changed to one of supporting particular sectors, rather than being founded on a geographical basis, which is not in the interests of the country or of the industry. Indeed, my right hon. Friend referred to that aspect in his opening remarks.

The region has the highest dependence on employment in manufacturing of any part of the country—nearly 43 per cent., of which two-thirds is in the engineering and metal industries. Apart from the general high level of unemployment there is the high level of unemployment among youth—35 per cent. —and among blacks. People seem to think that racial problems are confined to London, but very serious problems are building up in the West Midlands.

In manufacturing, the region also has much the highest number of people on short-time working—one in four. That is one-third of the total in the country. Further serious and heavy redundancies are inevitable in the region. Only today we have witnessed the closure of the Rubery Owen plant in the Darlaston district.

Some members of the Government have said that manufacturing jobs will be replaced by service jobs. In the West Midlands, in 1980 alone, there was a loss of 27,000 service jobs. That goes to show that in the region service employment follows manufacturing employment rather than creating alternative opportunities. There is a structural decline similar to that in areas dependent on coal, steel, textiles or shipbuilding, which at the moment qualify for aid. So we have to develop a package to deal with the position in the West Midlands.

It has become fashionable to regard the motor industry as an albatross industry, to be discarded and allowed to go into decline in the hope that it will be replaced. The industry employs 450,000 people directly, accounts for 5 per cent. of the gross domestic product, and provides £4·25 billion of exports. If that is an albatross, let us have more albatrosses.

The motor vehicle industry can provide the engine for change that we need. It is interesting that my right hon. Friend's Department is developing a sector policy in high information technology. There is a Minister for the subject and programmes for spreading it round schools, and assistance is concentrated on it. If the higher information machines are to be applied successfully to our machine tools and our production processes, the motor vehicle industry offers a unique opportunity to produce the progress that needs to be made.

The Metro building plant at Longbridge contains over half the robot machines in the country. So there is a real opportunity to bring forward the rest of the electronic and other developments to which I have referred and at the same time to render our industry more competitive.

My right hon. Friend was right to refer to the need for profitable competitiveness. But he did not say that the Government -lave a responsibility in creating a competitive environment, quite apart from the efforts required from management and men.

I am well aware of the arguments that once upon a time a half-crown was referred to as "half a dollar", and that in those days we used to compete successfully all round the world. But with the declining European exchange rates it is so profitable to export to Britain that there is no basis on which we are enabled to compete satisfactorily at present. It is necessary only to mention that a Mercedes can be bought in Germany for between £6,500 and £7,000 and that the same car sells here for £11,000. That demonstrates the huge profit in making the cars in Germany and selling them here. I referred earlier to the way in which the Ford Motor Company has had to survive on just that basis, because we have not yet dealt with our problems.

The Government have a part to play in dealing with inflation. The loss of competitiveness on the exchange rate with Germany over the last five years has been 40 per cent., and with Japan 33 per cent.

My views on energy prices have already been made known, as have my views on support for the public sector at the expense of the private sector.

Industrial rates are proving a real burden. The Opposition—perhaps understandably—made no reference to the ills besetting manufacturing industry in the West Midlands, where the county council is proposing to levy a supplementary rate, to be followed by the Birmingham city council adding a further supplementary rate this autumn.

The Labour Party has offered no serious answer to the problems of the West Midlands or of the vehicle industry, any more than it has offered an answer to the problems of the country. But in the Conservative Party we must adopt a more positive attitude, realising that the motor vehicle industry provides us with the possibility of an engine for change. We cannot afford to adopt a "hands off' policy. We have to be involved and we have to have a basis for being involved.

I find great difficulty in understanding my right hon. Friend's attitude when he supports the steel industry without a coherent plan for it, and when he supports British Leyland without a coherent plan for the vehicle industry. I cannot understand how that policy is to be explained to the people. More leadership is required, and a more positive attitude has to be taken.

I confess my disappointment that the reaction to the BL support is "It is much cheaper than putting them on the dole". I am also disappointed that on the day when the Metro was being launched it was thought necessary to say "We have no idea whether it is a good car or not".

Being in politics involves giving a lead to the people. My feelings have been well summarised in a recent article in The Sunday Times, on 21 June, in which Hugo Young referred to the factor of popular consent, and For the difficulties being caused to people by the collapse of jobs, the closing of factories and the withering of services.

I believe that people still want our Government to succeed and that they accept the need to change. They know that the practices that have operated hitherto cannot continue for ever. But they are now beginning to entertain serious doubts about the leadership being provided. They cannot understand why, as Hugo Young says, the government continues to dole out vast sums of money to public sector industries, but without either political sensitivity or strategic coherence. Such handouts could be seen and used in a positive light. Instead, Sir Keith and his prime minister speak of them with apologetic self-loathing". I believe that we must have a partnership between Government and industry. The Government have a responsibility for creating a more competitive environment. They must pay attention to unemployment in the West Midlands and develop coherent policies for dealing with those aspects. I urge my right hon. Friend. most sincerely, either to do that or please make way for somebody who will.

Photo of Mr Edward Fletcher Mr Edward Fletcher , Darlington 8:11 pm, 1st July 1981

The House has seldom heard a more complacent speech than that delivered by the Secretary of State. The right hon. Gentleman reiterated the old slogans that the motor car industry must become more competitive, that we must have a competitive edge and that workers must accept their responsibilities and work more economically and presumably for lower wages in order to compete in world markets. The right hon. Gentleman failed to touch upon the real problems in the car industry. He should be familiar with them. I am sure that, as Secretary of State, he has often had meetings with officials with the Society of Motor Manufacturers and Traders and Sir Michael Edwardes, who will have spelt out to him the real problems of the industry.

Hon. Members are familiar with those views. Sir Michael Edwardes has addressed hon. Members at the House. We have received correspondence from the Society of Motor Manufacturers and Traders setting out what the industry considers it needs from the Government. The industry asks that some action be taken about the high cost of the pound. This frustrates the exporting of models abroad and allows competitors to introduce models into this country at very much cheaper rates. The industry also protests about high interest charges which have a particular impact on the components industry. The motor car industry has contributed to the £1,400 million profit made by the big four banks because of high interest charges.

Another requirement—it is the one on which I want to concentrate—is selective import controls. The Secretary of State dealt with this important problem only at the tag-end of his speech. The right hon. Gentleman did not answer the questions put to him by my right hon. Friend the Member for Salford, West (Mr. Orme), who opened the debate. I should like to spell out the case for selective import controls. From a small surplus in 1970, the United Kingdom trade deficit with Japan rose to £1·1 billion in 1980. This year the deficit could be as high as £1·4 billion. I do not always agree with using these billions. I would prefer to express it as £1,400 million, representing the trade deficit with Japan.

Last year, British exports to Japan covered only 34 per cent. of imports. I am dealing with the totality of trade with Japan. The most publicised aspect is the import penetration in the vehicle sector. In April this year Japanese car imports amounted to 11½ per cent. of our home market. In the commercial sector, Japanese imports amounted to 29 per cent. for the period from January to April this year, compared to 17 per cent. in the corresponding period of last year. These statistics are supplied by the Society of Motor Manufacturers and Traders.

Numerous delegations representing the motor manufacturers have visited Japan to try to reach a mutual agreement to restrict imports of Japanese cars to this country. However, the assurances that were gained were ignored by the Japanese. The totals are well in excess of the promises that were made during the visits to Japan.

The EEC has also endeavoured to intervene. On 19 May of this year the European Council issued a statement expressing serious concern at the present state of trade between Japan and the Community … the Community should emphasise once more to the Japanese authorities its preoccupations over the level and excessive concentration of Japanese exports in sensitive areas … The Japanese government should take positive steps to increase imports by Japan of Community products. The Japanese ignore completely any representations received either from representatives of the trade in this country or from the EEC. Sir Roy Denman, the Commissions's director of external relations, after a meeting with Mr. Kikuchi, of the Japanese Foreign Ministry, stated that the talks amounted to "pretty near zero". No progress can be made in negotiations with the Japanese.

What do the Japanese take in return? Our exports of cars to Japan for the month of April this year were valued at £300,000. On the basis that an average car costs £5,000, this means that we exported to Japan in April 60 cars. In the same period, the Japanese introduced over 14,000 cars into this country. On a cash basis, we exported cars to Japan in 1979 to a total value of £16 million. Imports of Japanese cars to Britain reached £308 million.

What attitude do other countries take towards the penetration of Japanese exports? France has decided to put a 3 per cent. limit on the number of Japanese cars entering the country. As a consequence, the number of cars that entered France was 47,000 against 180,000 imported into this country. The Italian Government have imposed a ceiling of 2,200 cars per year. In 1979 only 1,600 Japanese cars entered Italy. The number of cars imported into West Germany between January and August 1980 increased by 64 per cent. and the German Government are now considering a year's restriction on the import of Japanese cars. In Sweden there has been a 23 per cent. increase in the number of Japanese cars entering the country and the Swedish Government are in negotiation and are threatening the Japanese with restrictions on their imports.

I and the workers in the motor industry want to know what our Government will do to protect our workers against the penetration of Japanese cars in particular. I mention Japanese cars but we also have a problem with cars from the EEC, which possibly can be resolved only when we get out of the Common Market, as I hope we shall in the near future. The Government must face the question of the stand that we can take against the Japanese. If the other EEC countries can do it there is no reason why we should not protect our market by taking the same sort of action as they have taken.

Many Labour Members have long advocated selective import controls as part of an alternative economic policy. More than five years ago the Tribune Group issued a statement advocating selective import controls. It was largely ignored by the Labour Government at the time and, predictably, it was ignored by the Tories when they came to power. Such a policy has now become respectable at last. The CBI is in favour of it and the Society of Motor Manufacturers and Traders wants selective import controls. Even a Conservative Member has advocated a five-year moratorium on imports of Japanese cars, so some Government Members are prepared to accept a U-turn away from the obstinate policy of the Secretary of State. In the interests of the industry and of full employment we urge the Government to think again about restricting imports from Japan.

The enemies of the motor industry are not the workers in the industry. I remind the House, because of the many references that have been made about the strikes and industrial disputes in the industry, that the workers of British Leyland have for two years accepted wage increases below the average rate of increases in industry generally. The enemies of the car industry are not the workers or the management, who can see clearly the obstacles to expansion. The real enemy of the industry is the Secretary of State. The sooner he resigns the better it will be for our economy generally and for the motor industry in particular.

Photo of Mr David Bevan Mr David Bevan , Birmingham, Yardley 8:23 pm, 1st July 1981

My constituency of Birmingham, Yardley, is surrounded by and embraces many British Leyland car plants, and a few yards up the road there is the Rover plant that is to be closed.

This has been a fascinating debate, and I appreciate many of the points that have been made. The hon. Member for Newport (Mr. Hughes) said that he had experience of the DS 1. the Rover car that I drive. To judge from his absence, it looks as though he likes it so much that he has gone to have another drive in it. It is a good car, and I should like to see certain matters concerning it redressed. That is not to say that I agree with the wording of the amendment, although I agree and have some sympathy with Members on both sides of the House who are frightened and worried about the British car and component business.

I do not think that Government policy is entirely wrong, but surely part of it must be wrong, or the collective implications of what happens by virtue of its not having been remedied must be wrong. The decisions of successive Governments from the early 1960s onwards, and the Labour Government led thereafter by the right hon. Member for Huyton (Sir H. Wilson), must have been wrong. The policies that were aggregated, inherited and perpetuated must be wrong in certain respects.

It is no answer to say that there must be tariff barriers. That will affect nothing. It will be counter-productive. Indeed, there will eventually be a world rebuttal of those who put up tariff barriers against us. Temporary expedients and temporary restrictions are the politics of desperation, but they become progressively more attractive as the situation worsens.

I remind the House that the Italians, who have been so much quoted, had a bilateral treaty with Japan prior to entering the Common Market, and when they signed the Treaty of Rome they insisted that that agreement should be honoured and included. We were not around to make a similar stipulation. We know the Frenchman's normal de Gaullean sang froid and bloody-mindedness. He, of course, is making the administration of the entry of Japanese cars as difficult as possible.

Over the past decade Britain's capacity has been reduced to almost 50 per cent. In a similar period, Japanese capacity has risen roughly ninefold. Moreover, as has been said, we were importing precisely that amount from two European manufacturers. I point out to the hon. Member for Darlington (Mr. Fletcher) that the voluntary agreement that we have with Japan at about 11 per cent. is almost on target. It is about ½ per cent. off, and we hope that it will shortly be completely on target.

In the present situation we might well be as difficult as the Japanese in the administration of what they import and be as perpetually partisan as the French. I suggest that we should, if that is the medium that we have to use to achieve a more reasonable balance.

I am not so much concerned, however, with international or even national policy, except, as I have said, to the extent that since the early 1960s it has resulted in injury to my part of the world—the heartland of Britain, the iron heart of England, the motor manufacturing centre of this country. It is particularly harming my constituency of Yardley, where I suspect that the majority of the 2,000 people at the Rover plant currently live, and possibly many of the 2,000 others who will be thrown out of work as a result of its closure.

My part of the country has from time immemorial been a manufacturing centre—from swords to buttons, through the whole range of metal goods to carriages and then motor cars and bicycles. With the grant of assisted status to other parts of the country and the restriction of IDCs in the past, my area has been particularly disadvantaged. Yet no other area has been particularly advantaged. The strategic decision to remove car manufacturing from the West Midlands, which was taken in the 1960s and has been carried through, has not assisted other regions. It has not benefited Cowley. Nor has it benefited Speke or Linwood. Many of those plants have closed. But it has certainly disbenefited Birmingham and the West Midlands.

The dictum adopted by successive Governments of "strengthening the weak" has come back like a boomerang to "weaken the strong", and the strong are now themselves very weak. Of four car manufacturing companies in this country, three are now foreign.

We are in danger of becoming mere assemblers of offshore Meccano sets—foreign motor jigsaw puzzles—with an unknown quantum in respect of British components. The car components industry is already decimated, particularly in Birmingham, where at the beginning of this year I undertook an examination of small and medium-sized components firms. Many of those companies do not know where their next orders will come from. In many cases, they do not know where next week's wage bill will come from. On top of that, we have heard the news today that Rubery Owen, whose largest customer was BL, is closing down, with the loss of another 1,000 jobs.

The West Midlands must retain its skills, work force, designs and genius. They must not be diminished by dissipation to those industries abroad which in the main were subsidised by American aid immediately after the war. American money was pumped in in vast quantities, which provided those industries with new plants and factories and gave them a basis for building motor cars that Britain did not possess. Except in a few cases we carried on with our old outworn plant. In those circumstances it is no wonder that those companies could achieve a higher degree of productivity. Of course they found it easier to produce. As a result, labour relations were better than ours.

Bus production has been transferred, for example, from Coventry to Cumberland, with resultant inefficiency and job losses in the West Midlands. My neighbour, the hon. Member for Birmingham, Stechford (Mr. Davis) referred to the Metro Cammell bus. In my previous capacity as chairman of the transport committee in the West Midlands I had the honour of ordering several million pounds worth of those buses to get them into use, and very good buses they are. As a result of Birmingham and the West Midlands ordering mainly Metro Cammell buses, a few redundancies will be avoided.

Production of the TR7 has been all around the place. It went to Cowley, to Solihull, and then to Speke, and it is now to die. We have seen the demise of the MG for no apparent reason, at a time when customers are buying a copy that is selling like wildfire in the United States.

Rover, possibly helped by the falling value of the pound, has picked up 82 per cent. more American orders during the past year. Those astounding facts are before us.

In addition, Birmingham possesses an indigenous industrial genius. Many hon. Members have spoken about research and development. Great things are happening in the West Midlands. There is experimentation by Lucas with electric cars, which will perhaps take five years to develop. If there is a breakthrough with a smaller battery, my word, what ramifications there will be.

There have also been new concepts for motor cars, such as revolutionary engines like the Wainwright Butterfly. There has been the development of a gearbox by a totally new method. The box will be placed where the differential is now located. There has been the development of a sub-floor mounting for the engine, which will allow for left-or right-hand drive. Revolutionary new ideas in ignition, such as plasma arc burning, have already been developed and are available.

If it is moral to preserve and back the nationalised sector so that it is given a chance, it is equally moral that a tithe of the amounts that go into that sector should go into the private sector. If my hon. Friend the Minister would like to know, I should be happy to suggest the companies that could benefit. If he wished to hold industry's hands there might be a splendid partnership.

I speak for Yardley. Birmingham used to be a city of 1,000 trades. It was car-oriented. Hon. Members ask that our skilled workers should not be made redundant and should not be sold to the highest overseas bidder. We must look carefully to find where our Achilles heel is and to see whether, by exposing it, a shaft will be fired into it that will do irreparable harm—even worse than that experienced today—to the industry.

I am banging a drum for Birmingham, which has been mortally wounded by a geographical disprivilege that has been sustained by successive Governments. The famous Austin 7 was made by a Birmingham entrepreneur in a garage in one of the town's back streets. Such activities could still be fostered. I drive the car that was called "The Car of the Year" the Rover 3.5, and it is excellent. It does not need to be replaced by an alternative model at this stage. It does not need to be moved to Cowley, when there is an engine and body shop a couple of miles away in Castle Bromwich.

I bang the gong for Birmingham and I yell for Yardley. My people can and should work. The grand strategy to remove the car manufacturing capability from the West Midlands is wrong. Our growing rate of unemployment is at least three times that of any other area in the United Kingdom. At present, unemployment in Birmingham amounts to 13·4 per cent. Opposition Members pointed out that unemployment might rise to 30 per cent. God help us all if that happens.

About 10 years ago British manufacturers made 40 per cent. of the cars sold in Britain. They now make half that amount. No one believes in interfering with industry. Let managers manage. However, when the Government invest £1 billion they are in the position of a bank manager, standing behind a company chairman. The bank manager is entitled to tell the chairman, that, having put up the money, he does not expect to see one of his finest plants immediately closed and some of his most skilled people put out of work.

I commend a series of articles on the Rover DS 1 that appeared in the Birmingham Evening Mail. Indeed, I recommend that my hon. Friend the Minister looks at them. I refer in particular to the magnificent editorial in this morning's Birmingham Post. We must follow a trade policy of some sort, but it must be based on repricocity. There must be some element of an eye for an eye and a tooth for a tooth. The value of the barter between the two willing parties must have some indentity. We are worried, because the imbalance is growing. If it continues to grow I shall, regretfully, have to rechristen my constituency "Hardly—hardly any work". Birmingham is fast becoming "Blightedham" and the West Midlands will have to be renamed "the Mid Wastelands".

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

I remind the House that the Front Bench speakers are due to begin at ten minutes past Nine o'clock.

Photo of Ms Jo Richardson Ms Jo Richardson , Barking 8:40 pm, 1st July 1981

I am not sure whether the hon. Member for Birmingham, Yardley (Mr. Bevan) ended by calling for import controls, but at least he referred to them. I am glad that he did, because I intend to concentrate on the need for import controls on a selective basis.

No other country allows such free access to vehicles as Britain. Nobody would disagree with that. The recent report on imports and exports by the Select Committee on Industry and Trade issued some weeks ago shows that we are the worst "sucker" market for other people's vehicles in the world. There is no dispute about that.

The penetration of Japanese cars into France and Italy is a small fraction of the penetration of Japanese cars into Britain. The penetration of British cars into the Japanese market is even smaller. Many people, including some members of the Labour Party, say that if we impose import controls we shall export unemployment and open up the danger of retaliation. However, other countries have already retaliated against import controls that we have not imposed.

Many countries, including our EEC partners, impose technical standards on heavy commercial vehicles which are supposed to be for safety or environment purposes. For example, the Japanese place a width restriction on their imports of heavy vehicles. Such standards are obstacles to importing vehicles from Britain.

By contrast, we do not seem to require any such controls on vehicles entering Britain. I wish that we did impose controls for safety and environmental purposes. My constituency is on the route to the coast. Many residential roads are cluttered with lorries coming in and going out of the country, either to deliver or to collect goods. My constituents would be pleased if proper environmental standards were imposed on the importation and use of foreign lorries in Britain.

Only a week or two ago, I am sad to say, a 3-year-old child was killed by a lorry in my constituency. There is a big movement, and the beginnings of an understanding, among ordinary people who wish proper safety and environmental standards to be imposed.

A sensible Government would take an overall view of the British motor industry, as do the Governments of France and Italy. At it is, apart from Ford, every British vehicle manufacturer takes its turn to be threatened with extinction. Many of my constituents work at Ford's factory in Dagenham. The factory is smack in the middle of my constituency. Even that company is under a permanent potential threat because its destiny is decided not in Dagenham but in Detroit. The workers have no real security for their futures.

My right hon. Friend the Member for Salford, West (Mr. Orme) referred to the need to deal with multinational companies by planning agreements. That is relevant. It would certainly give assurance and security to the people at the Ford plant in my constituency. That company has a good export record. It claims to import little. However, it imports the Euro built-up car. It produces the finished built-up car, such as the Fiesta or the Cortina, which is made in several other countries. The ultimate country of destination is determined by the manufacturing company's overall strategy. Euro built-up imports are, in a sense, imports of no fixed abode. No one quite knows where they come from. For example, if one buys a Fiesta from Dagenham one does not know whether it has come from Dagenham or Valencia. When I ordered a car from Dagenham I thought it had come from Valencia but I was very pleased to find a small plate inside saying -Made in Britain".

The decline is of great concern to the shop stewards and the workers in the motor industry. I beg the House not to brush off the feelings of the workers as being unconcerned about the future of their industry. They are not only concerned for the future of the motor vehicle industry—they are more sophisticated than that. They understand that if the motor vehicle industry goes down so will others, such as the machine tool industry and the steel industry. They are concerned, and the effect of the collapse of the vehicle industry is well understood by them. We must not make the mistake of believing that they do not understand that it is the Government's monetary policy that has made the imported vehicle cheaper while simultaneously forcing up the price of vehicles exported from the United Kingdom.

Belgium restricts imports. The French limit vehicle imports to 3 per cent. of their domestic market. The Italians allow imports on a one-to-one basis. As I have said, the Japanese impose a safeguard through width limits on road vehicles. The Spanish Government virtually forbid the import of any vehicles.

The Government must see that we must control import penetration. If they do not they are blinding themselves to the stark truth that our motor vehicle industry will collapse altogether. Every hon. Member has underlined our need for a healthy, rapidly developing vehicle industry. The control of import penetration, alongside other policies which other hon. Members have mentioned, will give us what has been referred to as a breathing space to get our motor vehicle industry on to a more thriving basis.

This has been a useful airing of views about the motor industry. I hope that my hon. Friends will support the Opposition motion.

Photo of Mr John Stokes Mr John Stokes , Halesowen and Stourbridge 8:49 pm, 1st July 1981

This has been an interesting and sombre debate. In spite of what some Opposition Members and my colleagues have said. I believe, with Shakespeare, that our faults lie in ourselves and not in our stars. The problems of the British car industry are part of the problems of British industry, added to which BL is a nationalised industry.

The answer to those serious problems lies not in anything that we say here but in the car industry itself and the men and women who work in the research, design and development departments, on the assembly line, in the engineering workshops, in the sales offices and in the distribution centres. The success of the industry depends upon the quality of people employed.

I shall concentrate my speech on BL, which is the heart of my constituency. Before the war, to work at Austin or Morris was considered a privilege. Under the original leaders the firms grew and developed as highly respected British manufacturers. People at Longbridge still say "I work at the Austin".

When the pioneers died, new men came along, and after that we had the huge amalgamations. Looking back, one sees that it was a disastrous mistake to put the bus and truck divisions of Leyland with the volume car business of Austin and Morris and the prestige cars of Daimler, Jaguar and Rover. I still hope that one day these divisions will be split and private enterprise will have a chance either to take them over or at least to have a share in them.

Returning to the people employed in BL, after the war there was a great demand for labour in the industry. Wage rates were pushed up too high, and discipline became poor. Too much money for too little work does not make for happiness or contentment. Productivity became appalling, and labour relations as bad, especially in the car divisions.

I salute Sir Michael Edwardes for what he is doing and what he is trying to do. I hope that he will take a leaf out of General Montgomery's book. Monty won his battles because he gave the highest priority to training, morale, and leadership. He spent much time choosing commanders down to quite low levels. He was ruthless in rooting out failures. It is that single-mindedness that is now required if BL is to return to profit.

At a time when the surface fleet of the Royal Navy is being cut severely, when the universities' budgets may be reduced by up to one-quarter and when such vital services as the BBC's overseas broadcasts are being reduced for the sake of economy—and economies must be made—we have to ask ourselves whether we can go on pouring millions of pounds into the motor industry year by year, let alone into steel and all the other nationalised industries.

The splendid Metro is still not yet making a profit. Two more volume cars are to come, on which a great deal depends. The competition from Europe is fierce, and from Japan it is devastating. I hate import controls, and I cannot believe that English people are inferior to Frenchmen, Germans and Italians in making cars or, for that matter, anything else. We have as much brain power here as there is in any other country. All that we need do is translate that brain power into making products that the British public as well as foreigners will want to buy.

As we heard in the impressive speech by my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), the competition from Japan, not only for us but for all the countries of the EEC, is so formidable, not to say terrifying, that it is clear that special temporary measures will have to be continued until we can build up our own productivity.

In the last analysis, however, I do not believe that the problems of BL are primarily technical. They do not lie in design, though in the past design has sometimes been poor. They do not lie in buying or in machine tools. The Metro and the new Acclaim have the most modern production tooling. The problems lie in the human element.

BL's workers are just like any others. Most of them are the salt of the earth. The English will not be bullied, and they cannot be dragooned, but they can be led. Leadership is required not only at the top but in the middle ranks, right down to junior manager, foreman and chargehand. Despite the smirks that we see occasionally on the faces of Opposition Members, I believe that our motor car industry and industry generally can learn a great deal about leadership from officers and NCOs at present serving in the Armed Forces.

When BL recruits again, the company needs the best people available. In the past, the motor industry hardly ever employed a graduate. I am the last person to say that leadership is found only among graduates. We get leadership from every type of person, including those splendid people who leave school at the age of 16 and go on to part-time education. However, some graduates are needed in the motor industry.

Somehow, Sir Michael has to make British Leyland into a corps d'elite of British industry. It should be a privilege to work there, and every man or woman who does should feel proud of the fact. That is the attitude that has to develop in BL.

Photo of Mr James Pawsey Mr James Pawsey , Rugby

It exists in Japan.

Photo of Mr John Stokes Mr John Stokes , Halesowen and Stourbridge

My hon. Friend the Member for Rugby (Mr. Pawsey) is right to say that it exists in Japan. One of the justifications for pouring so much money into BL is to protect the jobs of the component manufacturers, of which I have so many in my constituency. In the end, to secure a long-term viable future, the component manufacturers want a sound and viable car industry that can stand on its own feet.

The crisis in the car industry is part of the crisis of British industry and part of the crisis of our nation. We are reaching the point of no return. If we do not survive this slump in better shape in manufacturing industry, there is little hope for us as a manufacturing nation. Have we, as a nation, with our great history and all the troubles that we have overcome, really lost the will to win? Can we have been the leaders in the Industrial Revolution 200 years ago only to be the laggards now? The motor industry should be the spearhead of British industry, leading not only in exports but in the home market.

An enormous responsibility rests on management, at all levels, to take care of its employees, to tell them what is happening and, above all, to praise them when they do well. English people will always respond in a crisis when the facts are put squarely to them. We are in a crisis now. The taxpayers' patience will soon become exhausted if still more enormous sums are demanded by BL.

The trade union leaders must consider the true long-term interests of the men, which I believe are the same as the interests of the nation. Stoppages at work, however short, must be a thing of the past. A supreme effort is now required in BL to lift productivity to much more competitive levels, including work on the new Metro and its brand new plant. The new designs must be of the finest. Salesmanship must be intelligent and vigorous. If all pull together in that great enterprise, BL could still surprise the world. We must devoutly pray that that change of heart will soon come about.

Photo of Mr David Stoddart Mr David Stoddart , Swindon 8:58 pm, 1st July 1981

The hon. Member for Halesowen and Stourbridge (Mr. Stokes) opened his remarks with a quotation from Shakespeare's Julius Caesar: The fault, dear Brutus, is not in the stars, But in ourselves". That was something that Cassius said to Brutus before he stabbed Caesar in the back. That is precisely what the Tory Party has been doing to BL since 1975.

I sympathise with the hon. Member for Bromsgrove and Redditch (Mr. Miller), because he comes from the West Midlands, and it was that area to which the Tory propagada of greed and self-interest was directed during the last election. Indeed, he accused the Government Front Bench of putting an albatross around BL's's neck.

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

I never accused the Government of doing anything of the sort. I said that the car industry had a great role to play and that if some people considered it to be an albatross, I just wished that we had more albatrosses to provide the same amount of experts, employment and GDP.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

The hon. Gentleman was looking at his Front Bench when he uttered those words. Perhaps I misinterpreted them. In 1975, during the rescue operation for British Leyland launched by Labour, Conservative Members criticised BL and advocated that no assistance should be given to save the British car industry and the jobs of their constituents.

Although Swindon is renowned for its railway works and railway engines, it has a British Leyland factory. It has enjoyed extremely good labour relations for a long period, even though Swindon workers have been paid rather less than those in other British Leyland factories. Despite that fact, and despite the closure of the Triumph and Rover factories, the Swindon factory is to lose even more jobs. To date it has lost more than 1,000 jobs since the Government took office.

The problems of the British car industry go back a long way. It is no good blaming British Leyland and saying that the reason for all the problems is that it is a nationalised industry. Hon. Members on both sides of the House know that that simply is not true. The fault goes back a long way. When the rationalisation in the industry took place investment should have been made in new plant, equipment and models. That investment was not made. At a time when there was a great need for additional investment, when overseas car factories were spending a great deal of money refurbishing plant and equipment, the privately-owned British car industry was still distributing profits that should have been ploughed back into the industry.

When that rationalisation took place the leadership to which the hon. Member for Halesowen and Stourbridge referred did not come from the top. The merging of the industry was not followed by the measures that were necessary and the rationalisation that should have taken place. Management continued in the same way as it had before. It was weak-kneed. It did not lead the workers as it should have. It did not lead them to adopt the new methods and machinery that were necessary to meet the competition that was emerging in Europe, Japan, America and other countries. The tragedy of the British car industry—British Leyland, as we now know —was the failure of leadership and the failure of the system in which Conservative Members believe—the system of laissez-faire.

We have heard a great deal today about Japanese competition. At the same time we have heard about the establishment of Japanese factories in Britain. How hypocritical can we be? We criticise the Japanese for exporting cars to Britain—at a lower level than to many other countries—while at the same time local authorities throughout Britain, including the Midlands are trying to attract the Nissan factory, which will be in direct competition with our car industry. Not only is that hypocritical; it is against the best interests of the British car industry and its workers.

It has already been said that we are prone to attack the Japanese for their import penetration of our car market. However, we forget that import penetration from the EEC is three times as great. I remember during the 1975 referendum campaign a letter being written by the then Sir Donald Stokes, who has been transmogrified and now sits in another place down the passage as Lord Stokes, and sent to all my car worker constituents. It claimed that if we entered the Common Market everything would be hunky-dory. My car workers were told that Britain would be exporting many more cars and that there would be a great future for British Leyland and the car industry generally. They were told that they would be exporting cars all over the place.

None of that has come about. Since we became a member of the Common Market our exports have fallen by more than a half and EEC imports to Britain have more than doubled.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

One of the reasons is that other member States received preferential treatment by the removal of tariffs when vie entered the market. Any fool could have seen that by studying the figures. However, many did not consider the facts. They relied on emotion.

The greatest import penetration is from the Common Market. It is vital that Britain has a managed trade policy. Conservative Members who represent car constituencies should understand that. There is a limit to which a country can absorb imports. If we do not understand that we can absorb imports only to the extent that our gross domestic product increases and enables us to pay for them, we shall be heading for ruin and bankruptcy. It is the entitlement of every country to ensure that there is managed trade and that indigenous industries are not wrecked by unfair and unrestricted competition from abroad, from wherever it may be.

We have much to do in the car industry and elsewhere. We need new models. We need additional investment in the industry. Above all, we need to praise our industry and to give those working in it every encouragement. We should not knock our products at every tiff and turn. We should be praising British cars. We should be praising British management. We should be praising British workers. Given the opportunities and given the leadership, our workers have proved time and time again that they can bring forward goods and services that are at least equal to, and in most instances better than, anything produced anywhere else in the world.

Photo of Mr Jocelyn Cadbury Mr Jocelyn Cadbury , Birmingham, Northfield 9:08 pm, 1st July 1981

I am happy to agree with the last statement made by the hon. Member for Swindon (Mr. Stoddart) if not with the remarks that preceded it. We should praise our car industry.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

And buy its products.

Photo of Mr Jocelyn Cadbury Mr Jocelyn Cadbury , Birmingham, Northfield

A few weeks ago the car workers in my constituency produced the one hundred thousandth Mini Metro. As my right hon. Friend the Secretary of Stare said, the car is a success story. It was produced on time. It is being produced at the planned production levels and it is high quality. Its ultimate success will depend on how well it sells in Europe.

The significance of this success story goes beyond Longbridge. It demonstrates that with strong management and the co-operation of the work force Britain can still produce a car that is competitive in design and quality with the best automotive products of Europe.

I agree with some of the things that my hon. Friend the Member for Bromsgrove and Redditch (Mr. Millet.) said. The Government have supported the British car industry. Precious little credit has been given by the Opposition for the £800 million or £900 million in loans that was given to British Leyland by the Government. However, I want to see a more coherent strategy for the car industry pursued by the Government. I shall refer in particular to the need for more help for research and development. I welcome the aid that has been given to British Leyland to bring out new models, but the fact is that other Governments are giving more aid in research and development to their car industries.

If one goes down to the British Leyland technology centre at Gaydon, one will find interesting and exciting work being done in the development of fuel economy and in the use of alternative fuels, such as mixing alcohol with petrol, liquid petroleum gas, and so on. However, the centre is receiving only about £500,000 a year from the Government in aid. If one compares that with what is going on in France, Germany and the United States, one will find a different picture. For example, in France the French Government from March 1980 allocated £90 million over 10 years to Renault, Peugeot and Matra, to improve the fuel economy of cars, with a target of 94 miles per gallon. There is the same story in Germany, where, in 1977, £35 million of Government aid was given over four years to Volkswagen, Daimler-Benz and Porsche to develop a safety car, with the result that the VW 2000 has just been produced.

The Government should give more money for research and development to Britain's car makers because, while it may be possible for us to catch up in productivity in the next few years, we cannot afford to slip behind in technological lead. We have to keep our technological lead, because otherwise there will be no car industry.

I shall return to what my right hon. Friend said at the beginning of the debate. In the end, the British car industry will survive only if it is successful in raising its productivity in line with our foreign competitors. It will succeed only if it is capable of producing cars at the right price, of the right quality, of the right design and on time.

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford 9:12 pm, 1st July 1981

This has been a worthwhile and interesting debate. If I may say so after a Session's leave from industry Supply debates, it is fascinating to come back to listen to the Secretary of State and observe that the old magician is still at it. I observed that he was very much still at it from the moment that he moved the amendment to the motion. The motion deals with the vital question: should we have a motor vehicle industry at all in this country, and, if so, should the Government be prepared to intervene to safeguard it? That is what we are talking about.

The right hon. Gentleman's amendment and his speech were as neutral as they could possibly be. He leaned neither one way nor the other, but just castigated everyone.

It is interesting that the right hon. Gentleman knows that he has the reputation for it, and therefore he has to be tough and unyielding. Of course, he is nothing of the sort. His hon. Friends are an important part of his life. As Halifax, the seventeenth century pamphleteer, said: Nothing is more frail than a man too far engaged in wet popularity. Therefore, the right hon. Gentleman has to be dry. The result is that he is always consistent in everything that he says, and totally inconsistent in everything that he does. That is why, during the past eight or nine months since I stopped Shadowing the right hon. Gentleman, I have not known how many thousands of millions of pounds of public money he has been putting into the nationalised industries, wringing his hands the whole time, doing it far too late and not enough, but doing it all the same. But at least there is consistency in everything that the right hon. Gentleman says, and I believe that he wants to see a motor car industry in this country, for all the neutrality in his speech.

That cannot be said of the magnificent campaigners on the Social Democratic Party Bench. [HON. MEMBERS: "Where are they?"] My hon. Friends ask where they are, and that is a shrewd question. Unfortunately for the Social Democrats, not many of my hon. Friends have marginal seats in the West Midlands to defend, unlike some Conservative Members. [Interruption.] Those Conservative seats are marginal now, believe me.

I was referring to the Social Democratic Party, and I should like to quote its view on the British motor car industry. Mrs. Shirley Williams, in "Politics is for People", said, on page 196: The weakness of the manufacturing sector … is a consequence of Britain's declining competitivity in making cars, even for the home market, and in particular of the appalling record of one huge corporation, British Leyland. That is very different from what was being said a few moments ago. The serious imbalance in trade in cars is responsible for most of the deterioration in Britain's manufacturing trade balance". Are motor cars manufactured in Warrington? I do not think so. Warrington manufactures steel, plastics, paper and board, and wire. There is even a brewery there. They are all good products, but they have all been suffering as a result of a decline in industry, and none of the industries is related to motor cars.

The motor vehicle industry has to be related to the industrial position as a whole. That is because, apart from anything else, it is vital to our economy. My hon. Friend the Member for Barking (Miss Richardson) said that the motor car industry was the basis of the machine tool industry—she might have added the engineering industry—of our country. Motor vehicles are vital to road haulage and distribution.

The motor vehicle industry, directly and indirectly, accounts for 8 per cent. of the gross domestic product, and not for 5 per cent., as the hon. Member for Bromsgrove and Redditch (Mr. Miller) said. He was quoting the Society of Motor Manufacturers and Traders' figure. It is 8 per cent. if one adds in the indirect figure. That is a formidable percentage. Eight thousand suppliers supply parts to the typical United Kingdom car firm. It is interesting to note that 375 firms supply 3,500 components to British Leyland for the Mini Metro alone. That is an enormous variety, and it is of enormous importance.

As my hon. Friend the Member for Swindon (Mr. Stoddart) said, when we consider the decline in the motor car industry we have to go back a long way. How did it arise? Ten years ago the British motor car industry was an export leader. The three great sellers abroad, up to 10 years ago, were motor cars, textiles and whisky. The motor vehicle industry had been an engine of growth—to use the phrase of the hon. Member for Bromsgrove and Redditch—in the 1950s. But between 1964 and 1972, partly as a result of the under-investment of the 1950s, import penetration began to rise.

I think that it was my hon. Friend the Member for Newport (Mr. Hughes) who said that as late as 10 years ago seven cars in eight on British roads were British. Today, fewer than half of them are, hence the plant closures and the job losses. The Secretary of State said that we still have a balance in our favour on components—I think that he said a surplus—but if he takes the balance of foreign trade in motor products and vehicles, plus accessories, he will find that we entered a £300 million deficit last year for the first time. Many factors explain why that has happened. They apply in many respects to all industries. They are important, above all, in the motor car industry.

I agree with the Secretary of State that we entered 1970 with an ageing model range. I believe that insufficient attention had been paid to new product development in the preceding decade of the 1960s. Productivity was not as good as it should have been. In many cases, but not invariably, this was due to bad industrial relations. It was also due, and still is due, to an inability to continue the supply lines and the conveyor belt in the way adopted by the Japanese, who have a genius or a meticulousness for this activity that we do not possess to the same extent.

It is true that there have been strikes. There have been silly strikes. However, it takes two to make a quarrel. Although we may have had a record on strikes— [Interruption.] Before the Minister of State laughs on the other side of his face he might listen. It is important, and he will have to reply to the debate in a minute.

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford

In a minute, I said. Although there were strikes, the fact is that we had the best record on absenteeism in the whole of the developed world. The hon. Gentleman has to answer that. It seems to me that if one has a bad record on strikes but a very good record on absenteeism the fault must lie to a great degree with management—a great deal more than with the unions. Otherwise, there would be a bad record in both strikes and absenteeism.

I do not disagree with the right hon. Gentleman's argument about overmanning in some car plants. That is true. I can think of two motor car companies in which that was true. II: was not, however, universally true. Throughout the car industry the real difficulty was under-capitalisation. That has almost the same effect as overmanning. Output volumes have been too small in our car industry fully to exploit economies of scale. Is not an inability fully to exploit economies of scale the same as overmanning? I suggest that it is.

Another factor that caused decline was the United Kingdom's entry into the EEC. Apart from anything else, the removal al import tariffs on vehicles exposed an already damaged and fragile United Kingdom industry to EEC competition, leading to import penetration from Germany, Belgium and Italy especially. Reference has been made to Lord Stokes—then Sir Donald Stokes—who was already presiding over a sickening company and a sickening industry. When he thought that British cars would go into every capital in Europe if we joined the EEC he was woefully mistaken. The reverse has happened. Every foreign car is now in the capital of Britain.

Hon. Members have made a great deal of Japanese imports. The truth is that these have stabilised at about 11 per cent. While there is ground for some complaint, the real complaint is the vast protection area of the EEC into which Japanese cars have come. 1 shall not take lectures from pro-European fanatics about protection in this country, when we belong to the most protective economic community in the world. I agree that their exports should be controlled, but the Japanese have, by and large, played the game. That is more than can be said of the EEC.

Let us look at the question of import controls, because we need to consider it and decide what we are to do. To hear some of the talk about import controls one would think that they had never been imposed in the history of this country, and that if we were to impose them the most terrible organs of retaliation would be set up.

My hon. Friend the Member for Barking said that that was nonsense In a fascinating phrase she said that the retaliation had already started, even before the imposition of import controls. She mentioned Spain, and she was obviously thinking of the Fiesta. I am sure that one or two hon. Members occasionally have a glass of whisky. If they have a glass of whisky in Spain, it will be whisky made in Spain under licence. It will not be imported, because Spain does not permit imports. It would be difficult to assess the retaliation if we controlled the level of imports of Fiesta cars from, say, Spain.

I deal next with the novelty of import controls. They can come in many shapes and forms. There can be import control by way of quotas, and one that says that a certain percentage of component parts must be made in the destination country. But is there not a third—an import control by tariff?

That is as much an import control as the others. I take it that the right hon. Gentleman would agree with me.

If that is so, what is so novel about import controls? I have said that in the 1950s British motor cars were an export leader. They were the wealth of Britain. Up to 1966 we had an import duty on foreign cars of 33 per cent. During the 1960s we began to reduce that tariff. By 1968 it had fallen to 22 per cent., and by 1972 to 11 per cent. By 1977, only four years ago, under the transitional provisions we introduced a zero duty for cars from the EEC. In other words, up to July 1977 there was a duty even on EEC cars coming into this country.

What on earth is so novel or extraordinary about impart controls? They are imposed to protect an industry that needs to be protected. That brings us to the present time, but, as my hon. Friend the Member for Coventry. North-West (Mr. Robinson) pointed out, and as my hon. Friend the Member for Birmingham, Stechford (Mr. Davis) said in a vigorous speech, the Government cannot give themselves an alibi, even if it is true that the decline has been going on for some time. I accept that. We must be reasonable. But the deliberate policies of the Government have made the position catastrophically worse. What was already an industry in grave difficulty has become one whose survival we have been discussing and arguing about amongst ourselves. In a thoughtful and interesting speech, the hon. Member for Aldridge-Brownhills (Mr. Shepherd) debated that question with himself and with the House.

The facts that have made it a difficult question for us to decide relate to the action of the Government in the past two years. The high exchange rate, the high interest rate and the lack of investment have all played their part in the decline of British industry in general, and the motor industry in particular. What should we do now? The right hon. Gentleman is in the habit of asking what we should do. He says that the Opposition merely attack his policy, but if we put forward our own policy, he says that we have too much policy.

We cannot please everyone, but I hope that I shall take the right hon. Gentleman some of the way with me on this. We should maintain restrictions on Japanese imports, but we should also understand, as my hon. Friend the Member for Swindon pointed out, that three times as many motor vehicles are imported from the EEC in any one year as come from Japan. The danger is not from Japan. It is far more from the EEC.

Secondly, we should reject calls, even if they come from The Daily Telegraph, as they did last autumn, to dump BL and forget it. We should reject calls to hive off and privatise the profitable operations. If the Secretary of State goes on saying that he wishes to encourage the privatisation of everything, I shall forgive him so long as he does not actually do it. If he wants a British car industry he will not do it.

Thirdly, we must recognise that results are beginning to emerge at BL. Here I thought that the two sides came together a little at one point, although I thought that the Secretary of State was a shade ungracious in referring to the Metro figures, as Metro production is ahead of BL's own forecasts. He might at least have given credit for that. I take it that that was simply a mistake on his part. We must also maintain support for new product development, because the future of any motor car industry in the world lies in new product development.

Finally, if we are to do things in style we must tell the EEC Commission "Hands off'—I had better not use a stronger phrase—because we must not allow the EEC to interfere at this time with the revival and regeneration of our motor car industry, and it is in grave danger of doing so.

I saw an answer from the Under-Secretary of State about a week ago on this very point. We should not allow the European Commission to prevent our investing as much as we need to in BL. If the Commission objects, we should point out that we have splendid precedents just across the Channel, even in the days of President Giscard D'Estaing, for a Government saying frankly that they do not agree and intend to do what is best for themselves.

Those are the steps that we should take immediately. The right hon. Gentleman may rightly ask, however, what a Labour Government would do. I take the point and I shall answer it as best as I can.

First, a Labour Government would deal with the motor vehicle industry as a growth sector. Here I found myself strangely in agreement, for the first time in about nine years, with the hon. Member for Bromsgrove and Redditch. He was really saying that he wanted the motor car industry treated as a sector, but he does not really give a damn about any other part. Nevertheless, he is right to say that it should be treated as a sector. We should make it a growth sector in our industry, as it has an interlinking effect on so many other industries—on steel, on coal and on every other major industry—and its effect on the components industry is enormous.

Secondly, if we are to revive the motor vehicle industry as an engine of growth we must boost home demand. We must steer it into domestic production by controlling imports of motor vehicles, including imports from the EEC. We should be prepared to do that, and we should give a warning that we intend to do it now.

Finally, as my right hon. Friend pointed out in what I thought was the kernel of his argument, we need to channel public funds into investment in a whole new range of product development. Many hon. Members rightly spoke of using public funds in research. I agree, but we should not be afraid of larger investment either. While we are thinking in terms of research and development, however, as of course is right, we should also never be afraid to learn from others. I have often advocated from this Dispatch Box—and, indeed, from the other when I was Minister of Agriculture, Fisheries and Food—that we should not be afraid to learn from the French. We should also learn from the Japanese.

In the Department of Industry there should be a division of information technology of a slightly different form from the one on which the Minister of State is rightly so keen. That division should do what the Japanese did, and go to every patent office in the developed world. At the end of the war the Japanese did not have the money or the time to develop their own research, so they looked at what everyone else had done and developed variants of it.

That is one way in which we can reduce the time lag, otherwise we are faced with the gloomy prophesy of the hon. Member for Aldridge-Brownhills that we will never catch up with the Japanese.

This has been an interesting and important debate. I hope that my right hon. and hon. Friends will join me in the Lobby tonight.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford 9:35 pm, 1st July 1981

One message that must certainly go out from this House is a caution to Japan. Had the Japanese been listening to the debate they would have heard many expressions of good will and understanding of the success that has come to Japan through hard work, efficiency, technical advance and all the things that we should have in Britain.

However, we must also warn them that when our trade is affected, not across the board over a large number of products but in respect of a narrow range of products, it can be dangerous not only to our industries but to the industries of other countries that are affected.

I want no part of import controls, but we expect Japan to maintain an understanding of the perils for world trade that could be caused if their activities are as disruptive as they could possibly become. That is common ground throughout the House. It is, therefore, all the more effective if that message is known.

It is pleasant to welcome the right hon. Member for Deptford (Mr. Silkin) back from his exile, wherever it has been. I believe that he has been fighting an election somewhere. The right hon. Gentleman spoke about marginal seats at the beginning of his speech, and I think that he must be after one. He is right to come here to conduct his campaign in the House of Commons. It is much cheaper to advertise here than in Tribune or Labour Weekly, and no one will question his election expenses.

I enjoyed the right hon. Gentleman's passing swipe at the Social Democrats and his old colleague, Mrs. Shirley Williams, with whom he shared so many election platforms, who sat in Cabinet with him and the right hon. Member for Bristol, South-East (Mr. Benn), and who deserted him only when she found that she had backed a loser. I was also taken with his remark that it takes two to make a quarrel. It certainly does. I notice that some of the right hon. Gentleman's colleagues have said that recently.

The right hon. Gentleman made a passing reference to productivity, as though it were a little problem that the motor industry had experienced in the past. In his view, it was not the big problem. Good gracious me, no; it was just a throw-away line. But it is not the Government who are now inventing these stories about the problem of productivity.

The right hon. Gentleman should look again at the CPRS report on the British motor industry, published in 1975, to see what it then said about the problems facing the industry. There was more than a passing reference to productivity there. Chapter III, paragraph 37, on page 79, stated: Productivity (i.e. output per man) in British car assembly plants is considerably lower than in continental plants. It takes almost twice as many man-hours to assemble similar cars using the same or comparable plant and equipment in Britain as it does on the continent". But all we had today was the right hon. Gentleman's passing reference to a little triviality.

Page 91, paragraph 51 (iii) continues: Poor labour productivity and production losses in the British car industry also increase the cost of capital for each car produced. That is the problem about investment. We had to invest more than any of our rivals to get the same amount of production. There was a shortage not of investment but of productivity.

Page 120, chapter IV, paragraph 34 (III) states: Productivity will not improve unless there is a willingness to accept new manning levels and work practices. Page 121, chapter IV, paragraph 36 continues: Indeed, many of the problems besetting Chrysler and Vauxhall in Britain can be traced to their decisions to expand capacity at Linwood and Ellesmere Port in the mid-1960s on the basis of a false expectation that the United Kingdom car market would continue to expand at the then current rates of growth. That covers many of the points raised in the debate.

Those are the problems. I am sorry that the right hon. Member for Deptford did not address himself to them. The British Motor Corporation, under the then Sir Donald Stokes—said the right hon. Gentleman—was too weak to cope with entry into the Common Market. The company was unable to cope with the French or Italians. It was not only Leyland that could not cope with the Italians or the French. Ford, Chrysler, Rootes and General Motors, Vauxhall were all in the same position. Therefore it was not just a question of what was happening in one firm.

The right hon. Gentleman said that for some reason—and productivity was a trifling one—we could not cope with competition. What is the right hon. Gentleman's recipe? He wants us to put back the barriers so that we need not try to cope. That is his only remedy. He wants us to build a wall round Britain and to pretend that the world is not there. In that way, we do not need to become as good as the others. The right hon. Gentleman wants import controls and nothing else. I accept that he wishes the industry to become a growth industry. However, that is to be done inside tariff walls. Who will accept our exports if we will not let imports into our markets?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The right hon. Gentleman did not give way to me, but I shall be more courteaus.

Photo of Hon. John Silkin Hon. John Silkin , Lewisham, Deptford

The hon. Gentleman asked me a question. He looked straight at me and I assumed that he wanted me to answer. The answer is that Spain, for example, will not import our whisky, gin or anything else. Nevertheless it sends Fiestas to Britain.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I notice that the right hon. Gentleman is particularly upset about Spain. Certainly, Spain's tariff wall is outrageous. However, on Spain's accession to the Community it will come down. The right hon. Gentleman made a bigger fuss about Spain's 5 per cent. import penetration than about Japan's 10 per cent. import penetration. It would seem that the Japanese are playing the game and that it is only the nasty Europeans and their competition that the right hon. Gentleman does not like. That is a new twist.

The right hon. Gentleman said that the car industry should become a growth industry. He said that we should boost home demand by controlling imports. He would like to cut us off from the rest of the world. He thinks that if we hide it will be all right. How did we become uncompetitive? We lurked away from the competition.

The right hon. Gentleman wanted all sorts of things to receive public funds. I almost forgot that he had another recipe. He thought that we should go grubbing round the world looking at other people's patents. That was his lot. Mind you, Mr. Speaker, it was a lot more than the right hon. Member for Salford, West (Mr. Orme) had to offer. He did not even ask why our industry had become uncompetitive. He said that he wanted public expenditure to expand output. But what did he and his Government do when they had the chance to use public expenditure to expand output? I shall remind him. In 1974 the production of motor cars in Britain amounted to 1,534,000 units. They really whacked it on. They really steamed it in. They put in public purchasing. They did it all and they got demand up to 1,223,000 units. In the period 1974–78 production fell by 20 per cent. What were the then Government doing? Were they not boosting demand enough? Were they not making enough public investment available? Or would Labour put in twice as much next time and achieve a fall of 40 per cent?

The figures that I shall now quote are not directly comparable. I warn hon. Members now, because I want to play fair. Let us consider what was happening to employment in the United Kingdom car industry at the same time. In 1974, about 497,000 people were employed in the industry. In 1978 there were 477,000—a fall of 4 per cent.

Now we know what caused unemployment in the last two years. There was a fall of 20 per cent. in output in the Labour Government's time and a fall of 4 per cent. in manning. The industry was uncompetitive before 'we started. The motor industry was grossly overmanned as we came into office. That shows us much of the problem.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It is no good the hon. Gentleman rabbiting on like that just because he cannot stand the statistics.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

No, I shall not. I am not going to let the hon. Member for Renfrewshire, West (Mr. Buchan) into the debate.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. It is clear that the Minister is not giving way.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

In no circumstances will I give way to the hon. Gentleman.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. We have had an orderly debate. I hope that it will continue so.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It is not my custom to refuse interventions, but the hon. Member for Renfrewshire, West has not been here all day and I refuse to give way to him.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

I am obliged to the Minister. He has quoted statistics for the car industry during the period of the last Labour Government. Exactly what was he doing during that period? Was he not voting against aid for British Leyland?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I must confess that I voted against the Second Reading of the British Leyland Bill with Liberal Members, and for similar reasons. I took the opportunity to read the record of that debate today. Everything that was said from the then Opposition Benches has proved to be true. There is no need to take back a word.

Which hon. Member accused me of stabbing Leyland in the back?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Stabbed in the back? I stabbed it in the back with a cheque book. If I have made an incision into its fair body it is to slide in the tube to carry the financial blood transfusion. If I have made any error it is that I have been too kind and generous to Leyland. However, in many ways that has been repaid in recent times. There has been a considerable turn round in the last couple of years. That applies not only to British Leyland. It applies to Talbot—but not to Linwood, unhappily.

Mr. Geoff Whalen, the personnel director of Talbot, says: I don't think people yet realise the extent to which the often-stereotyped image of the militant and probably lazy British car-worker is a thing of the past. There have been major changes in the last two years and they are represented by some of the things that have happened in Leyland—to which I shall refer again—and in other businesses. It is worth while to pick up one or two other threads in the debate. A common thread has gone through a number of speeches, but because of the lack of time some hon. Gentlemen and my hon. Friends will forgive me if I do not mention every person who spoke.

One of the threads was "Wouldn't it all be nice if it were not for the terribly high level of sterling? Why don't the Government do something about it?" I ask the hon. Member for Coventry, North-West (Mr. Robinson), what were we doing when the pound was $2·80 or $2·40? Why have we lost the competitiveness that allowed many firms to export in those days? Was life that much better when the pound was at $1·60? I see that sterling today is at $1·90 and deutschemark parity is below DM4·60. Shall we now have everyone rushing forward saying that all will be well, or shall we have a new series of whines from the Opposition? Let them remember that we have a trade surplus on sterling. That implies an upward pressure on our currency.

I do not think that we can bring our currency to a level which we think suits us. We cannot. I doubt whether Mr. Mitterrand wanted to devalue the franc when he was elected President of France, but that happened. I imagine that President Reagan wanted to strengthen the dollar, but that put down sterling and I doubt whether we can reverse that progress against it.

The high level of sterling has been one of the factors over the past two years that has forced British industry to become more competitive than it ever has been. It has not forced Leyland out of business. It has forced it into a position where, for the first time, it is becoming competitive.

Another thread in the debate came from those who questioned regional policy and the effects of pushing industry where it did not want to go. There is no lack of sympathy in the House for the problems of the regions, but there is a question mark over how effective the aid has been, first, in helping the regions and, secondly, in its effect on the rest of the country. My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) interestingly questioned whether the policy should be sectoral rather than geographical.

Protection was another theme. I remind the right hon. Gentleman—he must know it—that we export 29 per cent. of our gross domestic product as against Japan's 12 per cent. Of all the countries with an interest in maintaining the GATT agreement we must have the strongest. We must remember that there are other countries with which we have heavy imbalances of trade, but the imbalance is in our favour. We do not want to set those countries off on the path of putting up tariff barriers against us.

The hon. Member for Coventry, North-West also spoke about the problems of the multinationals. He said there was no way of getting rid of them. Why does he think that they are a problem? Why should he discuss whether there is a way of getting rid of them? Surely we should welcome them. He betrayed his inner thoughts by his casual use of words.

My hon. Friend the Member for Liverpool, Garston (Mr. Thornton) gave a clear and realistic view of the tragedy of the history of some of the motor industry on Merseyside. He was correct to regret Leyland's failure at Speke and he was correct to be more hopeful for Halewood. I should tell him and others who use the expression "mindless militants" that those militants are not mindless. Those who did the damage are clear-minded. They know what they want. They are the Trots with "Militant Tendency", the extreme Left, denounced as disruptive by the right hon. Members for Huyton (Sir H. Wilson), Cardiff, South-East (Mr Callaghan), Ebbw Vale (Mr. Foot) but never by the right hon. Member for Bristol, South-East. They are his allies.

My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) was right in a lot of what he said. I am not nearly so pessimistic as my hon. Friend, and I do not believe that Japan can continue to widen the gap that she has over us. Sooner or later, either other countries will be forced to take action or there will be social changes inside Japan that will reduce her competitiveness.

The hon. Member for Liverpool, Edge Hill (Mr. Alton) dealt mainly with hire-purchase restrictions. I do not believe that we can relax those at present. It would have an effect on monetary aggregates and, most of all, at the moment we are not getting very good statistics about the path of monetary aggregates. Perhaps it will be easier to have a better discussion about this when we have those statistics again. However, I am aware of the problem, and I met representatives of the industry about it only a few days ago.

I am not sure whether I agree with the hon. Gentleman's 3:1 or 4:1 ratio of unemployment if BL were to close. I believe it to be much less than that. We have done what the hon. Gentleman asked us to do. We have put money into Leyland. But, as the hon. Gentleman said, import controls are insular, and we have to trade.

We are continuing investment in plant in industry across a very wide spectrum. But that investment should come primarily from profits, as I am sure the hon. Member for Edge Hill acknowledges, and those profits can come only from successful and productive industry.

My hon. Friend the Member for Rugby (Mr. Pawsey) was right to call for action in a number of areas and to ask about Government attitudes towards the motor industry. I agree especially with his emphasis on not using the industry as a regulator.

The hon. Member for Newport (Mr. Hughes) was a TGWU transport committee chairman and he worked as a trade unionist in the industry. If he blames only successive Governments for the long decline and does not think that anything was really wrong in the attitudes of workers, he is not living in the same world as I am.

According to the hon. Member for Birmingham, Stechford (Mr. Davis), everyone in the industry was perfect except the Government. I understand that the hon. Gentleman used to work for British Leyland. That is probably why he thinks that everyone there was perfect. He apparently thought that the only problem was high sterling.

As we come to the end of the debate it is worth mentioning some of the factors that are now going right in the industry. My hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes) put it very well, in my view. We have seen great changes in the industry. In recent months we have seen the first reduction in import share in the car market. We have seen the first increase in output of cars per man year in British Leyland. We have seen the first increase in British Leyland's share of the car market. We have seen wiser pay bargaining. We have seen improvements in industrial relations in British Leyland. Last year, 98·6 per cent. of the working hours were strike-free. This year, so far, the figure is 99 per cent. Is this the programme of confrontation which we were told before the election the Government would indulge in? We have seen the launch of new models. The Metro is a success already. We see the Acclaim coming in October. Linwood could have taken part in this if it had got it right five years ago. We have the LC10 coming soon.

Things are happening in the industry on time, on cost and on quality. As I have said already, it is not just in BL. It is also happening in Talbot, which is why that company is getting the investment at Ryton. All these things could have been done five years ago, and should have been.

Today, we have had a well-intentioned but vacuous attack from the Opposition, and we have to emphasise again the last line of the Government's proposed amendment to the motion. It is the customer that matters. It is satisfying the customer with the right product on time, on price and on quality that matters. That is why we reject the Opposition's vacuous attack upon the Government.

Question put, That the original words stand part of the Question: ——

The House divided: Ayes 225, Noes 317.

Division No. 241][10.00 pm
Abse, LeoCowans, Harry
Adams, AllenCraigen, J. M.
Allaun, FrankCryer, Bob
Anderson, DonaldCunliffe, Lawrence
Archer, Rt Hon PeterCunningham, Dr J. (W'h'n)
Ashley, Rt Hon JackDalyell, Tam
Ashton, JoeDavidson, Arthur
Atkinson, N. (H'gey,)Davies, Rt Hon Denzil (L'lli)
Bagier, Gordon AT.Davies, Ifor (Gower)
Barnett, Guy (Greenwich)Davis, Clinton (Hackney C)
Barnett, Rt Hon Joel (H'wd)Davis, T. (B'ham, Stechf'd)
Bennett, Andrew (St'kp't N)Deakins, Eric
Bidwell, SydneyDean, Joseph (Leeds West)
Booth, Rt Hon AlbertDempsey, James
Boothroyd, Miss BettyDewar, Donald
Bottomley, Rt Hon A. (M'b'ro)Dixon, Donald
Bray, Dr JeremyDobson, Frank
Brown, Hugh D. (Provan)Dormand, Jack
Brown, R. C. (N'castle W)Douglas, Dick
Brown, Ron (E'burgh, Leith)Dubs, Alfred
Brown, Ronald W. (H'ckn'y S)Duffy, A. E. P.
Buchan, NormanDunn, James A.
Callaghan, Rt Hon J.Dunnett, Jack
Callaghan, Jim (Midd't'n & P)Dunwoody, Hon Mrs G.
Campbell, IanEadie, Alex
Campbell-Savours, DaleEastham, Ken
Canavan, DennisEllis, R. (NE D'bysh're)
Cant, R. B.English, Michael
Carmichael, NeilEnnals, Rt Hon David
Carter-Jones, LewisEvans, loan (Aberdare)
Clark, Dr David (S Shields)Ewing, Harry
Cocks, Rt Hon M. (B'stol S)Faulds, Andrew
Coleman, DonaldField, Frank
Concannon, Rt Hon J. D.Fitch, Alan
Conlan, BernardFlannery, Martin
Cook, Robin F.Fletcher, Raymond (Ilkeston)
Fletcher, Ted (Darlington)Ogden, Eric
Foot, Rt Hon MichaelO'Halloran, Michael
Ford, BenO'Neill, Martin
Forrester, JohnOrme, Rt Hon Stanley
Foulkes, GeorgePalmer, Arthur
Fraser, J. (Lamb'th, N'w'd)Park, George
Freeson, Rt Hon ReginaldParker, John
Garrett, John (Norwich S)Pendry, Tom
Garrett, W. E. (Wallsend)Powell, Raymond (Ogmore)
George, BrucePrescott, John
Gilbert, Rt Hon Dr JohnPrice, C. (Lewisham W)
Ginsburg, DavidRace, Reg
Golding, JohnRadice, Giles
Grant, George (Morpeth)Rees, Rt Hon M (Leeds S)
Grant, John (Islington C)Richardson, Jo
Hamilton, W. W. (C'tral Fife)Roberts, Albert (Normanton)
Harrison, Rt Hon WalterRoberts, Allan (Bootle)
Hattersley, Rt Hon RoyRoberts, Ernest (Hackney N)
Healey, Rt Hon DenisRoberts, Gwilym (Cannock)
Heffer, Eric S.Robertson, George
Hogg, N. (E Dunb't'nshire)Robinson, G. (Coventry NW)
Holland, S. (L'b'th, Vauxh'll)Robinson, P. (Belfast E)
Home Robertson, JohnRooker, J. W.
Homewood, WilliamRowlands, Ted
Hooley, FrankRyman, John
Huckfield, LesSever, John
Hudson Davies, Gwilym E.Sheerman, Barry
Hughes, Mark (Durham)Sheldon, Rt Hon R.
Hughes, Robert (Aberdeen N)Shore, Rt Hon Peter
Hughes, Roy (Newport)Short, Mrs Renée
Janner, Hon GrevilleSilkin, Rt Hon J. (Deptford)
Jay, Rt Hon DouglasSilkin, Rt Hon S. C. (Dulwich)
John, BrynmorSilverman, Julius
Johnson, James (Hull West)Skinner, Dennis
Johnson, Walter (Derby S)Smith, Rt Hon J. (N Lanark)
Jones, Rt Hon Alec (Rh'dda)Snape, Peter
Jones, Barry (East Flint)Soley, Clive
Jones, Dan (Burnley)Spearing, Nigel
Kaufman, Rt Hon GeraldSpriggs, Leslie
Kilroy-Silk, RobertStallard, A. W.
Lamond, JamesStewart, Rt Hon D. (W Isles)
Leadbitter, TedStoddart, David
Leighton, RonaldStott, Roger
Lewis, Ron (Carlisle)Strang, Gavin
Litherland, RobertSummerskill, Hon Dr Shirley
Lofthouse, GeoffreyTaylor, Mrs Ann (Bolton W)
Lyon, Alexander (York)Thomas, Dafydd (Merioneth)
Mabon, Rt Hon Dr J. DicksonThomas, Jeffrey (Abertillery)
McCartney, HughThomas, Dr R. (Carmarthen)
McDonald, Dr OonaghThorne, Stan (Preston South)
McKay, Allen (Penistone)Tilley, John
McKelvey, WilliamTinn, James
MacKenzie, Rt Hon GregorTorney, Tom
McMahon, AndrewVarley, Rt Hon Eric G.
McNamara, KevinWainwright, E.(Dearne V)
McTaggart, RobertWalker, Rt Hon H.(D'caster)
McWilliam, JohnWatkins, David
Magee, BryanWeetch, Ken
Marks, KennethWellbeloved, James
Marshall, D (G'gow S'ton)Welsh, Michael
Marshall, Dr Edmund (Goole)White, J. (G'gow Pollok)
Marshall, Jim (Leicester S)Whitehead, Phillip
Martin, M (G'gow S'burn)Whitlock, William
Mason, Rt Hon RoyWigley, Dafydd
Maxton, JohnWilley, Rt Hon Frederick
Maynard, Miss JoanWilliams, Rt Hon A. (S'sea W)
Meacher, MichaelWilson, Gordon (Dundee E)
Mellish, Rt Hon RobertWilson, Rt Hon Sir H. (H'ton)
Millan, Rt Hon BruceWilson, William (C'try SE)
Miller, Dr M. S. (E Kilbride)Winnick, David
Mitchell, Austin (Grimsby)Woodall, Alec
Mitchell, R. C. (Soton Itchen)Woolmer, Kenneth
Morris, Rt Hon A. (W'shawe)Wright, Sheila
Morris, Rt Hon C. (O'shaw)Young, David (Bolton E)
Morris, Rt Hon J. (Aberavon)
Morton, GeorgeTellers for the Ayes:
Moyle, Rt Hon RolandMr. Frank Haynes and
Newens, StanleyMr. Frank R. White.
Oakes, Rt Hon Gordon
Adley, RobertEyre, Reginald
Aitken, JonathanFairbairn, Nicholas
Alexander, RichardFairgrieve, Russell
Alison, MichaelFaith, Mrs Sheila
Alton, DavidFarr, John
Amery, Rt Hon JulianFell, Anthony
Ancram, MichaelFenner, Mrs Peggy
Arnold, TomFinsberg, Geoffrey
Aspinwall, JackFisher, Sir Nigel
Atkins, Rt Hon H. (S'thorne)Fletcher, A. (Ed'nb'gh N)
Atkins, Robert (Preston N)Fletcher-Cooke, Sir Charles
Baker, Kenneth (St.M'bone)Fookes, Miss Janet
Baker, Nicholas (N Dorset)Forman, Nigel
Banks, RobertFowler, Rt Hon Norman
Beaumont-Dark, AnthonyFox, Marcus
Beith, A. J.Fraser, Rt Hon Sir Hugh
Bendall, VivianFraser, Peter (South Angus)
Benyon, Thomas (A'don)Fry, Peter
Benyon, W. (Buckingham)Galbraith, Hon T. G. D.
Best, KeithGardiner, George (Reigate)
Bevan, David GilroyGardner, Edward (S Fylde)
Biffen, Rt Hon JohnGarel-Jones, Tristan
Biggs-Davison, JohnGilmour, Rt Hon Sir Ian
Blackburn, JohnGlyn, Dr Alan
Blaker, PeterGoodhart, Philip
Body, RichardGoodhew, Victor
Bonsor, Sir NicholasGoodlad, Alastair
Boscawen, Hon RobertGorst, John
Bottomley, Peter (W'wich W)Gow, Ian
Bowden, AndrewGower, Sir Raymond
Boyson, Dr RhodesGray, Hamish
Braine, Sir BernardGreenway, Harry
Bright, GrahamGriffiths, E. (B'y St. Edm'ds)
Brinton, TimGriffiths, Peter Portsm'th N)
Brittan, LeonGrist, Ian
Brooke, Hon PeterGrylls, Michael
Brotherton, MichaelGummer, John Selwyn
Brown, Michael (Brigg & Sc'n)Hamilton, Hon A.
Browne, John (Winchester)Hamilton, Michael (Salisbury)
Bruce-Gardyne, JohnHampson, Dr Keith
Bryan, Sir PaulHannam, John
Buchanan-Smith, AlickHaselhurst, Alan
Buck, AntonyHastings, Stephen
Budgen, NickHavers, Rt Hon Sir Michael
Bulmer, EsmondHawksley, Warren
Butcher, JohnHayhoe, Barney
Cadbury, JocelynHeath, Rt Hon Edward
Carlisle, John (Luton West)Heddle, John
Carlisle, Kenneth (Lincoln)Henderson, Barry
Chalker, Mrs. LyndaHeseltine, Rt Hon Michael
Channon, Rt. Hon. PaulHicks, Robert
Chapman, SydneyHiggins, Rt Hon Terence L.
Churchill, W. S.Hogg, Hon Douglas (Gr'th'm)
Clark, Hon A. (Plym'th, S'n)Holland, Philip (Carlton)
Clark, Sir W. (Croydon S)Hooson, Tom
Clarke, Kenneth (Rushcliffe)Hordern, Peter
Clegg, Sir WalterHowell, Rt Hon D. (G'ldf'd)
Colvin, MichaelHowell, Ralph (N Norfolk)
Cope, JohnHunt, David (Wirral)
Cormack, PatrickHunt, John (Ravensbourne)
Corrie, JohnHurd, Hon Douglas
Costain, Sir AlbertIrving, Charles (Cheltenham)
Cranborne, ViscountJenkin, Rt Hon Patrick
Critchley, JulianJohnson Smith, Geoffrey
Crouch, DavidJohnston, Russell (Inverness)
Dean, Paul (North Somerset)Jopling, Rt Hon Michael
Dickens, GeoffreyJoseph, Rt Hon Sir Keith
Dorrell, StephenKellett-Bowman, Mrs Elaine
Douglas-Hamilton, Lord J.Kershaw, Anthony
Dover, DenshoreKimball, Marcus
du Cann, Rt Hon EdwardKing, Rt Hon Tom
Dunlop, JohnKnight, Mrs Jill
Dunn, Robert (Dartford)Knox, David
Durant, TonyLamont, Norman
Dykes, HughLang, Ian
Eden, Rt Hon Sir JohnLangford-Holt, Sir John
Edwards, Rt Hon N. (P'broke)Latham, Michael
Eggar, TimLawrence, Ivan
Elliott, Sir WilliamLawson, Rt Hon Nigel
Lennox-Boyd, Hon MarkRhodes James, Robert
Lester, Jim (Beeston)Rhys Williams, Sir Brandon
Lewis, Kenneth (Rutland)Ridley, Hon Nicholas
Lloyd, Ian (Havant & W'loo)Ridsdale, Sir Julian
Lloyd, Peter (Fareham)Rifkind, Malcolm
Loveridge, JohnRippon, Rt Hon Geoffrey
Luce, RichardRoberts, M. (Cardiff NW)
Lyell, NicholasRoberts, Wyn (Conway)
McCrindle, RobertRossi, Hugh
Macfarlane, NeilRost, Peter
MacKay, John (Argyll)Royle, Sir Anthony
Macmillan, Rt Hon M.Sainsbury, Hon Timothy
McNair-Wilson, M. (N'bury)St. John-Stevas, Rt Hon N.
McNair-Wilson, P. (New F'st)Scott, Nicholas
McQuarrie, AlbertShaw, Giles (Pudsey)
Madel, DavidShaw, Michael (Scarborough)
Major, JohnShelton, William (Streatham)
Marland, PaulShepherd, Colin (Hereford)
Marlow, TonyShepherd, Richard
Marshall, Michael (Arundel)Shersby, Michael
Marten, Neil (Banbury)Silvester, Fred
Mates, MichaelSims, Roger
Mather, CarolSkeet, T. H. H.
Maude, Rt Hon Sir AngusSpeed, Keith
Mawby, RaySpeller, Tony
Mawhinney, Dr BrianSpence, John
Mayhew, PatrickSpicer, Jim (West Dorset)
Mellor, DavidSpicer, Michael (S Worcs)
Meyer, Sir AnthonySproat, Iain
Miller, Hal (B'grove)Squire, Robin
Mills, Iain (Meriden)Stanbrook, Ivor
Mills, Peter (West Devon)Stanley, John
Miscampbell, NormanSteel, Rt Hon David
Mitchell, David (Basingstoke)Steen, Anthony
Moate, RogerStevens, Martin
Monro, HectorStewart, Ian (Hitchin)
Montgomery, FergusStewart, A. (E Renfrewshire)
Moore, JohnStokes, John
Morgan, GeraintStradling Thomas, J.
Morris, M. (N'hampton S)Tapsell, Peter
Morrison, Hon C. (Devizes)Taylor, Teddy (S'end E)
Morrison, Hon P. (Chester)Tebbit, Norman
Mudd, DavidTemple-Morris, Peter
Murphy, ChristopherThatcher, Rt Hon Mrs M.
Myles, DavidThomas, Rt Hon Peter
Neale, GerrardThompson, Donald
Needham, RichardThorne, Neil (Ilford South)
Nelson, AnthonyThornton, Malcolm
Neubert, MichaelTownend, John (Bridlington)
Newton, TonyTownsend, Cyril D, (B'heath)
Normanton, TomTrippier, David
Nott, Rt Hon JohnTrotter, Neville
Onslow, Cranleyvan Straubenzee, Sir W.
Oppenheim, Rt Hon Mrs S.Vaughan, Dr Gerard
Osborn, JohnViggers, Peter
Page, John (Harrow, West)Waddington, David
Page, Rt Hon Sir G. (Crosby)Wainwright, R. (Colne V)
Page, Richard (SW Herts)Wakeham, John
Parris, MatthewWaldegrave, Hon William
Patten, Christopher (Bath)Walker, Rt Hon P. (W'cester)
Patten, John (Oxford)Walker, B. (Perth)
Pattie, GeoffreyWalker-Smith, Rt Hon Sir D.
Pawsey, JamesWall, Patrick
Penhaligon, DavidWaller, Gary
Percival, Sir IanWalters, Dennis
Peyton, Rt Hon JohnWard, John
Pink, R. BonnerWarren, Kenneth
Pollock, AlexanderWatson, John
Porter, BarryWells, John (Maidstone)
Prentice, Rt Hon RegWells, Bowen
Price, Sir David (Eastleigh)Wheeler, John
Prior, Rt Hon JamesWhitelaw, Rt Hon William
Proctor, K. HarveyWhitney, Raymond
Pym, Rt Hon FrancisWickenden, Keith
Raison, TimothyWiggin, Jerry
Rathbone, TimWilkinson, John
Rees, Peter (Dover and Deal)Williams, D. (Montgomery)
Rees-Davies, W. R.Winterton, Nicholas
Renton, TimWolfson, Mark
Young, Sir George (Acton)Mr. Spencer Le Marchant and
Mr. Anthony Berry.
Tellers for the Noes:

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,That this House supports the Government's economic and industrial policy; regrets the British motor vehicle industry's long decline in competitiveness which reflects the past performance of managements and workforces as well as the interventions of previous Governments; notes that Her Majesty's Government have provided substantial funds to the industry at the expense of taxpayers and other sectors of industry and commerce; welcomes the industry's recent improvements in productivity, the investments in the United Kingdom by multinationals, and the voluntary restraint agreement with the Japanese; and believes that jobs and prosperity in the industry can only be assured if managements and workforces satisfy sufficient customers with the quality, price and design of the products.