Motor Industry

Part of the debate – in the House of Commons at 5:50 pm on 12th December 1983.

Alert me about debates like this

Photo of Alan Williams Alan Williams , Swansea West 5:50 pm, 12th December 1983

Yes, a convenient reference point with no debating significance.

Since 1968, the last full year of the Labour Government, United Kingdom production has declined massively. Production was 25 per cent. down on the 1968 level in 1980. It remained 25 per cent. down in 1981 and in 1982. In those three years, under the present Administration, the equivalent of nine months of the 1978 production was lost. That was not because of disputes or industrial arguments but substantially because of industrial wreckers in Whitehall.

In the period that we lost 75 per cent. of the 1978 output West Germany lost only 23 per cent., France only 33 per cent. and Italy only 34 per cent. Japan's increase is not comparable, so it would not be valid or fair for me to make the comparison, but its production increased by over 20 per cent. in each of the three years. That was an abnormal phenomenon.

The world recession was not the cause of over half the lost production in those three years. It did not have the same impact on our major competitors in Europe. Far more devastating for the United Kingdom industry were the policies pursued by the United States-owned car companies in the United Kingdom and by this Government. The Government's policy was to push up inflation, which caused high interest rates, and the high rate of sterling made products uncompetitive.

Even now, with inflation back to the same level as it is in Germany, our interest rates are twice as high. Much of the damage that has been, and is being, suffered is a result of Government action. The effect is seen in the crumbling performance of the British car industry. Traditionally, we have exported between 30 per cent. and 40 per cent. of our output. Yet, in 1980 exports were 35 per cent. below the 1978 level, mainly because of the high price of sterling. In 1981 exports were 38 per cent. below the 1978 level and in 1982, 52 per cent. below.

At a time when our export sales were disintegrating, imports were rising. As the hon. Member for Northfield said, imports will reach a record level this year as a result of the high value of sterling, which makes us uncompetitive, and as a result of the policy of Ford and Vauxhall to source production so massively abroad for sales within the United Kingdom. Most Vauxhall sales here today involve little more than assembly kits. Even the design teams are being taken from Britain, although Britain has been famed for years for the quality of its design.

Contrary to popular public opinion, nearly all the extra import penetration between 1975 and 1983 is not attributable to the Japanese. Japan's import penetration has been constant. Nearly all the extra import penetration from 1975 to 1983 has been the result of internal policy decisions of Ford and Vauxhall, leading to the tied imports that they have brought into this country. Even their so-called British cars have a higher import content than they did. In November, Vauxhall spoke of having reached 16 per cent. sales in the United Kingdom market, yet only 46 per cent. of the cars it sold were produced in the United Kingdom. Indeed, I received a letter from one of its factories this moring which claims that a small company of which General Motors is a shareholder is assembling Japanese Itzu vehicles, small vans, in Portugal, badging them as Bedford and selling them in the traditional Bedford markets.

It is small wonder that, while we have witnessed this enormous penetration of the British market by the European producer, we saw, by contrast, a British export penetration of the EC of less than 2 per cent. By 1982 we had a deficit on car production of £973 million and, as has been pointed out, this year we will have a deficit of more than £2 billion.