Rolls-Royce plc

Part of Prayers – in the House of Commons at 1:30 pm on 10th April 1987.

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Photo of Mr Dave Nellist Mr Dave Nellist , Coventry South East 1:30 pm, 10th April 1987

It will be viewed with amazement, not only in Coventry but throughout the country and possibly even internationally, that a world-famous firm such as Rolls-Royce can be transferred from the public to the private sector, involving a transfer of about £1,300 million of public assets, with a mere 30 minutes of parliamentary debate.

This "piratisation" exercise—in reality, that is what it is — owes nothing to the Government's stated aims of increasing competition — Rolls-Royce has no British competitors—or of widening share ownership, especially given the terms and conditions for the flotation which were announced this week. Not that any widening will take place because, today, Rolls-Royce is owned by 55 million people, but in four weeks' time it will be owned by only a few thousand who will hold bits of paper and claim that they own that national asset.

Yesterday the Secretary of State for Defence asserted that I had no knowledge of, or constituency interest in, the defence of the 2,000 workers and their families at Westland, who face the dole as a result of his anouncement yesterday. I refute that because my job in this place is to try to defend, to the best of my ability, all workers facing the horror and iniquity of unemployment, through which I had to live for four years. Such a claim will not be made today because I represent directly many thousands of Rolls-Royce workers and their families who work in Coventry, and many who work for the 61 local firms in Coventry, Nuneaton and Exhall who rely on major orders from Rolls-Royce and who are suppliers for the two plants at Parkside and Anstey.

Certainly, at Parkside, the plant within my constituency of Coventry, South-East, there is overwhelming opposition to the privatisation.

The Minister of State for Defence Procurement has even got the names and addresses of more than 80 per cent. of the shop floor manual workers who signed a petition opposing his allegation that most workers at Rolls-Royce relish its privatisation. Last Friday, 40,000 workers throughout the Rolls-Royce group took industrial action against this enforced sale, demonstrating with their feet their total opposition to the privatisation. That opposition runs wide and deep among the work force at Rolls-Royce.

Early in 1971 I was an apprentice attending the Rolls-Royce technical college at Filton in Bristol. Like many others, I was called in to be told of the collapse of the company. I witnessed the way in which, in 24 hours of parliamentary time, the then Tory Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) took Rolls-Royce into Government hands. That time scale, showing how quickly this place can operate to widen public ownership, is perhaps one lesson that I am prepared to absorb from that ex-Prime Minister.

When Rolls-Royce was last in private hands it collapsed because it could not stand the strain of escalating research and development costs. It went bankrupt because of shortages of funds. Huge amounts of public money have been pumped into the firm during the past 16 years. The work force has been forced to make enormous sacrifices, especially in terms of the 20,000 jobs that have been lost during the past four or five years. Now that the company is again making a profit and taxpayers are just beginning to get some of their money back, the Tory Government intend to plunge Rolls-Royce back into the doubt and uncertainty of private ownership. Such profits as there are will not now go to taxpayers who made it all possible but to the new speculators who hold the shares. There is doubt and uncertainty. The future for Rolls-Royce cannot be challenged.

This week we have seen the difficulties with the new engine development and the Airbus project—potentially a major blow to the company's prospects. Moreover, there is in existence an "ice cream and banking" document that projects possible future plant closures. Although Ministers in the House have brushed it aside as only a draft and written by a junior member of management, the company describes it as having been superseded. If one of those projected plant closures—East Kilbride and Parkside in Coventry have been mentioned — was Coventry, Parkside, 3,000 jobs could be lost because 2,500 work there directly and 600 work in the component suppliers.

A closure would mean the loss of £30 million worth of wages every year in the local economy. Even discounting the £10 million that finds its way to the Treasury each year, £20 million worth of purchasing power would be lost to Coventry. Therefore, a further 400 jobs could be at risk in shops and other businesses which rely on the trade of those who spend their wages from Rolls-Royce.

The skill base of the city could deteriorate and the costs to the Treasury in dole and supplementary benefit could be huge. Even putting that aside, a company memorandum to its senior executives says that they should not worry about another 1971 crash as The institutions (clearing banks, insurance companies, merchant banks etc.) provide sophisticated recovery and rescue facilities which were not available in 1971. It is ominous that the company should even consider the implications of another collapse.

Such threats hang like the sword of Damocles over the workers in Coventry and other Rolls-Royce plants and their families. They have watched past piratisation exercises and seen new shareholders take the short-term view and maximise profits as quickly as possible. They have seen job cuts at British Telecom and Associated British ports. When we talk about Coventry and privatisation in this Chamber we are often told to consider the expansion of Jaguar and, yes, in recent months employment has increased there. However, I remind the House that next door to the Rolls-Royce Parkside site is the Coventry Climax site, which was privatised in 1981. Under private ownership 80 per cent. of the original 3,000 jobs vanished and the company collapsed in the latter part of 1986. I remind the House of the haemorrhage of jobs following privatisation of Self-Changing Gears and Alvis, both of which are ex-publicly owned companies.

Workers in Rolls-Royce and elsewhere have seen pay held back and even reduced in newly privatised companies. They have seen changes in and possibly raids on pension schemes, and worsening employment conditions. Those decisions have been taken largely by shareholders whose numbers rapidly dwindle following privatisaton as compression and concentration take place of the numbers who owned the original shares.

Despite Government assurances, and even private assurances given to me by members of the board of Rolls-Royce in recent weeks, those fears are real for Rolls-Royce workers. The RB211 engine primarily caused the collapse of Rolls-Royce in 1971. Today there are problems with the V2 500 and the Superfan engine developments. Pratt and Whitney has recently taken over engineering control and direction of the V2 500 project. Superfan, with its $3 billion research and development costs, seems ominously near to travelling the same path as the RB211 in the late 1960s and early years of the 1970s.

The year 1971 was a tragedy and if the lessons of 1971 are not learned in the next three or four years of private ownership for all those who directly suffer job losses a repeat of history would be a farce.

Above the many other industries within the British economy, the aerospace industry needs long-term planning, not just because of the scale of research and development costs but because of the immensely long lead times—up to 20 years for the development of a project. It is axiomatic within the Labour movement that one cannot plan what one does not control and one does not control what one does not own.

It is my personal belief — I am one of a minority within the Labour party—supported by my union, TASS and the Confederation of Shipbuilding and Engineering Unions since 1982, that that industry requires co-ordinated planning and structured decision-making and full public ownership. This is necessary to defend Rolls-Royce against privatisation as a manufacturer of engines within the aerospace industry. Further public ownership should be extended to aerospace, to avionics and back into British Airways.

If the sale is completed, workers in the Rolls-Royce plant face a future of insecurity and uncertainty. Rolls-Royce will be a prime target for asset-stripping. There are increasing plans within the United States for protectionist measures against Japan and Europe. There are pressures within the US economy—the effects of a newly elected Democratic Congress, the decline in the value of the dollar and the pressure on the two major competitors of Rolls-Royce, Pratt and Whitney and General Electric — to bring work in-house to save the jobs of American workers or even consciously to squeeze out their only mutual major competitor, Rolls-Royce, by action leading to a possible takeover or by elimination of that competitor.

As we move towards a new world recession in the next couple of years, it is inevitable that those pressures in the American economy will be exacerbated. The Minister is smiling, but he should consider one fact. In 1985, the 140 members of the International Air Transport Association made between them a total profit of only $100 million. That would not buy even one Boeing 747. Think what a new world recession, even in the Minister's economic terms, and the cyclical nature of the aerospace industry, would mean to the future order books of firms such as Rolls-Royce. Both of Rolls-Royce's competitors are twice its size, and both are parts of larger multinationals, with the facilities of cross-subsidisation to assist the campaign to attempt to squeeze out Rolls-Royce. General Electric's attitude to the Airbus project in the next three or four weeks will be an important pointer to that direction.

It will not be beyond the wit and wisdom of the Boeskys and Bests of this world to intervene in the sale that takes place in a month's time. I make it clear, not only to the work force and my constituents, that my position on the sale is equally strong whether the purchasers of Rolls-Royce shares are domestic or foreign. Speculation, because essentially that is what trading in shares is in that City casino down the road, is rarely a respecter of national boundaries. It goes in the direction of profit alone and will find ways round the Secretary of State's rules. Job security and the well-being of working people, their families and communities, both directly with the 40,000 Rolls-Royce workers and indirectly with the 160,000 workers in the major components suppliers, are of no concern to the accountants in New York, London or Tokyo.

Some 137 Labour Members of Parliament — significantly, not a single member of the so-called alliance — have signed early-day motion 85. On dozens of occasions, in lobbies organised by workers in the past 12 or 18 months, in business questions, in questions to the Department of Trade and Industry, demands have come from many Labour Members for a debate on this issue. This 30 minutes today is the only result of those demands, and that is because I had the luck to win a place in the ballot for this one minute to midnight affair.

Why have the Government been so afraid in recent months to use their own time to put the case for the privatisation of Rolls-Royce? Could it be because of the escalating problems with engine development, which they want to keep under wraps for the next four or five weeks so that potential purchasers of shares are not frightened off? Could it be that the Government are embarrassed at having to cancel £645 million of company debt to provide a sweetener for institutions and speculators to buy shares?

Once again, the Government are underpricing and selling cheaply a national public asset. They have already lost £1·5 billion through underpricing the sale of British Telecom, Jaguar and British Aerospace.

Coventry city council has borrowed money over the past 60 years to build houses, schools, and community centres and now owes over £200 million to the banks and financial institutions. All local authorities owe a total of about £30,000 million. If it is OK for this Tory Government to cancel £645 million of Rolls-Royce debt as a sweetener for privatisation, that will be a precedent when I call on the next Labour Government to cancel the debts of local authorities such as Coventry. Cancelling Coventry's debt, in the same way as the Government have cancelled the debts of Rolls-Royce and other privatised concerns., would release £25 million a year of debt interest charges which could halve all domestic rents and rates in the city and leave £10 million a year for the building of new houses and the repairs of existing houses. Coventry's housing crisis could be half-axed in the lifetime of a Parliament.

The whole sale stinks—from the debt cancellation to the refusal of the Rolls-Royce management, including the arch-proponent of privatisation, Sir Francis Tombs—who is not unconnected with the banks that will be profiting from the mechanics of the sale—to allow trade unions to discuss privatisation in work time, although videos and so on were used by the management to promote the sale.

The sale is a kickback by the Tories to those who support them financially at elections. It owes nothing to a genuine desire to promote the future of the industry and merely seeks to return it to the uncertainties of the anarchy of capitalism and private ownership.

I have no doubt that the debate will not stop the sale going ahead, but it gives me an opportunity to pledge to the workers and families in my constituency and to the workers in the whole of Rolls-Royce that under a future Labour Government, I and other Labour Members will argue not only for the return of Rolls-Royce to public ownership, but for the co-ordinated planning of the aeroindustry, with wider public ownership of firms such as Westland and Lucas.

When workers own their industries and, through their traditional union organisation, have a majority say in the planning, development and control of those industries and when there is genuine control and management of publicly owned industries by the labour movement instead of by Sir Michael Edwardes, Sir Kenneth Keith, Sir Robert Reid and the others who have run those industries in the past, the jobs of aerospace workers will look a great deal safer than they do today—four weeks before the butchery of Rolls-Royce.