Motor Industry

Part of the debate – in the House of Commons at 5:17 pm on 12th December 1983.

Alert me about debates like this

Photo of Mr George Park Mr George Park , Coventry North East 5:17 pm, 12th December 1983

I welcome the opportunity to debate the car industry. I thank the hon. Member for Birmingham, Northfield (Mr. King) for providing that opportunity.

In the House and outside it there is still a lack of awareness of the importance of the motor industry to Britain. That is shown by the sparsity of attendance in the Chamber. More recognition should be given to the fact that no manufacturing industry contributes more to the wealth of the nation than the motor industry. Directly or indirectly it employs over 1 million people. In congratulating the industry on its improved performance, we should not lose sight of the fact that the major strain created by that improvement has been taken by the work force, or, rather, those who were formerly part of the work force, because over 300,000 have lost their jobs in the past couple of years.

The motion seeks to call attention to the British motor industry, but the continuation of an independent United Kingdom motor industry rests almost wholly with British Leyland cars and Leyland vehicles, since none of the other British manufacturers can take decisions in isolation from the interests and strategies of their parent companies overseas. That limits the scope of United Kingdom managers to manage those companies decisively and to direct their business operations in the United Kingdom. On crunch decisions, they are always subject to meetings that take place hundreds or thousands of miles away.

As a core manufacturing industry, many other sectors depend on the motor industry for their livelihood. For that reason, I agree with the hon. Member for Northfield that an agreement with Nissan to produce vehicles in Britain must contain at the outset a strict condition calling for a high local content in the vehicles. If not, it will be a Trojan horse. If our component manufacturers are not even to be given the chance to tender for the bits and pieces that go into a vehicle — it does not matter whether they are efficient—we may gain some jobs from Nissan, but we would lose at least that number, and perhaps more, in component manufacture and in our assembly companies.

As it is, the three major multinational companies that operate in Britain no longer have the capacity in Britain to design and produce vehicles. They are confined to assembly operations, the manpower for which is reduced with the continuing introduction of robotics. Just as important, we lose the design capability and the manufacturing skill.

I have the gravest doubts about the validity of the motion's aim to give continued encouragement to the industry. The Government have been reluctant to develop an overall strategy for the industry and are still trying to disentangle themselves from all responsibilities for the motor industry. The cash support for British Leyland was small in relation to the needs of the company, when competitors were investing at record levels to introduce new models, which are the lifeblood of the industry. The investment was not sufficient, and we should compare it with the money invested by other European Governments in their companies, which enabled them to continue research and development.

To talk of privatising parts of BL as they become profitable takes no account of the cyclical nature of the sales of individual models. They do not all sell at the same rate at the same time and, therefore, if the Government select parts of BL to sell, they will lose a great part of the corporate strength that holds BL together. The Government should take account of that when they talk glibly about selling parts of BL.

The hon. Member for Northfield referred to a range of cars but, obviously, if some parts of the corporation are sold off—I shall not name any parts, because it might encourage people to identify the companies—there will be not a range of cars but some individual companies. I notice that there is even some talk that, when the companies are sold, the purchaser should be given the proceeds of the sale. That really is the "bun and the ha'penny", is it not, because one cannot escape the fact that the motor industry was in a mess under private ownership and was rescued only by the input of Government money.

If the Government wished, they could give considerable help to the industry. They could increase the market to more than 2 million units by removing the special car tax. Apart from motor cycles, cars are the only consumer durable that are expected to shoulder that imposition, which was introduced as a temporary measure in 1981. Of course, we all know what "temporary" means. It means that successive Ministers have decided that they cannot do without it, probably nudged on by the Chancellor of the Exchequer. However, on the evidence of the increase in sales as a result of the relaxation of hire purchase controls, if the special car tax were removed there would be an uplift in sales. Let us see whether we have confidence in the car industry to maintain and improve its share of that extra part of the market. I am confident that it could do so, and I hope that the car tax is abolished.

The Government effectively imposed a purchase tax of 26·5 per cent. on a British-built car, yet Britain imports videos and hi-fi equipment at only 15 per cent. tax. We also have the continuing Spanish onion; successive Ministers who have been asked about it have said "We cannot do anything about that because it would be against the treaty of Rome or against the general agreement on tariffs and trade." Britain is about the only country that plays this game. During previous debates on the matter I said that Britain was still playing cricket while the other countries were playing karate. We are still doing it. All that I ask—it would not be an outright rejection of an agreement—is for the Government to say "If you want to put X per cent. tax on British vehicles that enter your country, that is your decision, but we shall have to put a similar tax on your vehicles." That cannot be discrimination. It is even-Steven and is fair to both sides. I urge the Minister who will reply to the debate—the plea comes from both sides of the House, and is not just a radical proposal from the Labour party to man the barricades—to take this point on board.

It is bad enough to have differential ratios, but something much worse is creeping in. The European Commission has introduced a draft bulk exemption regulation, which would force the European, not just the British, motor industries to harmonise prices. Yet all the member states will still have their own price controls, car taxes, and economic and fiscal policies. There will also still be exchange rate fluctuations. The regulation is a monstrosity that should not even be considered.

We must draw the Treasury's attention to the fact that 60 per cent. of car production goes in fleet sales. If the Treasury insists on continually increasing taxation on company cars, and regarding them as perks, it will no longer be viable to have a company car. It is like imposing a tax on a carpenter simply because he uses his tools to do some DIY at the weekend. A car is a tool of the trade and should be regarded as such. The Treasury should not continue to try to increase taxation.

When it comes to individual choice, as the hon. Member for Warwick and Leamington (Sir D. Smith) pointed out, that may not necessarily be exercised in favour of a British vehicle. Unfortunately, it is still not recognised, even inside the House, that for every seven cars that are imported we lose a job. I wish that people would bear that in mind when exercising their choice.

We must also recognise that vehicles need roads. The hon. Member for Northfield said that only a third of the £10 billion in tax was returned to the benefit of the road user in the form of road construction and maintenance. We in the west midlands have been trying to get a cross-country route through the black country for more than 30 years. That would take in a part of the west midlands that has been badly decimated, where once there were steelworks, and so on.

I urge the Government to have regard to all the derelict land that could be redeveloped to attract industry back into that area. If the Minister needs any convincing, he should try to journey across the black country to get to the M6. He will then see how necessary such a cross-country road is. Therefore, some of the money from car taxation could be used to give the west midlands a lift.

Various hon. Members will no doubt urge similar action on the Government. The industry has shown that it is capable of pulling itself up by its bootstraps. We now ask the Government to remove some of the restrictions that have been placed on the car industry over a number of years. As a result, the industry would blossom, provide more jobs and revenue and—particularly as its tentacles are spread throughout the country — benefit the whole economy.