Motor Industry

Part of the debate – in the House of Commons at 6:40 pm on 12th December 1983.

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Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames 6:40 pm, 12th December 1983

I join my hon. Friends in congratulating my hon. Friend the Member for Birmingham, Northfield (Mr. King) on raising this subject today. It is the first time for a very long time that we have had a debate on the motor industry, and it is extremely welcome. I also congratulate him on the way that he addressed the House and on the content of his speech.

My hon. Friend's constituency has been represented by many people who have championed the motor industry —including the late Jocelyn Cadbury, whose death was a great loss to the House. He was a formidable champion of the industry, and my hon. Friend is a worthy successor.

This has been a serious debate, although I am not sure that I take seriously all the comments made by the right hon. Member for Swansea, West (Mr. Williams). Fortunately, he will not be present for the remainder of the debate so I do not have to follow his argument, although I had no intention of doing that anyway. The seriousness with which the Opposition view the debate has been demonstrated not only by the right hon. Gentleman's speech but by the absence of his supporters from the Back Benches. I also note that no representatives of the SDP or the Liberal party have been present during the debate.

As it is nearly the end of the year, we can look back on what has been a significant year — in several respects, an encouraging one for the motor industry. There have been new models, such as the Maestro, which has been an outstanding success. Car sales have reached a record level. There has been no shortage of demand, with an all-time high of more than 1·72 million sales during the first 11 months. Of course, the right hon. Gentleman tried to explain that away with his usual pessimism by saying that if the sun shines today, it will inevitably rain tomorrow. But we do not accept that. Despite the spectacular increase in the market this year, as my hon. Friend the Member for Bromsgrove (Mr. Miller) said, we have managed slightly to cut back the penetration of car imports. As he reminded us, additional labour has been taken on at Cowley and at Luton with a double shift. They may be small additions to the labour force, but it is encouraging. It shows what happens when companies become more competitive and increase productivity.

The car industry symbolises Britain's manufacturing industry. It used to dominate the world. Although we can hardly believe it today, during the 1950s we were not only the largest exporter in the world but, after the United States, the second largest manufacturer. The 1960s and 1970s saw many problems, such as the failure to develop new models, and poor industrial relations, but today, contrary to what the right hon. Gentleman said, the industry again symbolises British industry in its determination to overcome its past problems and reputation and to begin the fight back. That has been shown in some of the encouraging results. As my hon. Friend the Member for Warwick and Leamington (Sir D. Smith) said, there has been a dramatic improvement.

Of course, we all recognise that the industry is still not secure. Our productivity has improved faster than that of our competitors, and must continue to do so. I sometimes receive representations from industrialists who say, ''We have had a bad time. Our productivity has been improving markedly, so what will the Government now do for us?" That is a nonsensical approach. I hasten to say that that attitude is not taken by the motor industry. Industry will survive only if productivity follows a moving target. We must continue to improve.

My hon. Friend the Member for Bromsgrove and the hon. Member for Coventry, North-East (Mr. Park) raised the serious subject of the Commission's proposed regulation on block exemption. The Government support the general principle of block exemption, which is obviously right.

The motor industry has vast investments—there are the dealerships and the dealer networks which serve the interests of the consumer — and it is right that they should be protected. But two concerns in particular worry the industry. One is the possible requirement that a dealer may demand the supply of a vehicle with foreign specifications at his own local price and the second is that franchised dealers may not be bound by wholesale restraints if the recommended tax-exclusive prices in any other member country are 12 per cent. or more higher. We are well aware of the industry's concern on this matter. I have met the SMMT on several occasions and discussed it. It relates to the whole question of car prices and differentials.

It has always been our view—we have made this clear to the industry—that in the long run the car price differential cannot be maintained, but it may be exaggerated in the short term; it may be exaggerated by currency movements or by price controls in one country, and it would be wrong if price controls in one country had to be exported to another country. In so far as the differential reflects lack of productivity, no one can say that our industry has not been making stupendous efforts in the recent past to improve its productivity and efficiency. We have always made it clear that in our view the differential would have to go gradually and could not be maintained in the long run. But if we had precipitate action or artificial moves that removed that differential, that could be a disaster for the industry.

The adoption of regulations of this type, by which the Commission exempts whole categories of agreements under competition rules, is subject to a consultation procedure. One step is the publication of a draft in the Official Journal, and that is the stage we have now reached. Now, manufacturers and others have the chance to comment on it. There will be further consultations, including consultations with committees of experts from different Governments. It will take time and I can at least give the assurance that it will not suddenly be adopted in its present form. We are under no illusion as to its importance for the industry, and we shall watch it carefully.

A number of my hon. Friends spoke about Nissan. The story to which reference was made from The Guardian about the possibility of Nissan purchasing Austin-Rover is totally untrue. Contrary to what has appeared in some newspapers, no decision has yet been made by the company. It has always been the view of the Government that Nissan would be welcome here, provided that the project would have a high local content. Certainly it would not be acceptable if it were in the terms, described earlier, of a "Meccano outfit". That would be a quite unacceptable proposition.

I assure my hon. Friend the Member for Bromsgrove that the assurances that he has received from my right hon. Friend still apply. The House will understand that I cannot go into the details of the negotiations, but obviously we should welcome Nissan to this country only if we felt that it was a project that in net terms would add to the United Kingdom both in terms of output and employment. It is true, as has been pointed out, that there is excess capacity in the industry in Europe, but in this country we have a market 60 per cent. of which is supplied by imports, and if we could get more competitive production here, that could be greatly to our advantage.