This debate, which I am grateful to have been granted, is about Government assistance to the Ford plant at Halewood. I welcome the impressive support of colleagues from Merseyside and beyond. I note the presence of my hon. Friends the Members for Liverpool, West Derby (Mr. Wareing), for Ellesmere Port and Neston (Mr. Miller), for Liverpool, Walton (Mr. Kilfoyle), for Swansea, East (Mr. Anderson), for Leigh (Mr. Cunliffe), for Birkenhead (Mr. Field), for Knowsley, North (Mr. Howarth), for West Lancashire (Mr. Pickthall), for Liverpool, Broadgreen (Mrs. Kennedy), for St. Helens, North (Mr. Evans) and for Warrington, North (Mr. Hoyle), and that of the hon. Member for Liverpool, Mossley Hill (Mr. Alton). I understand that others may be coming later to support me. I must also mention my hon. Friend the Member for Wallasey (Ms Eagle), who is here but subjected to enforced silence. Such support is indicative of the severity of the crisis now facing the Ford plant at Halewood.
Everyone knows Ford, but not everyone knows Halewood. Halewood is at the extreme south of Knowsley, abutting Liverpool to the west and Widnes to the east. It is situated conveniently on the motorway network—the M62 goes to east Lancashire and across the Pennines to the east coast ports, the M56 links it to Greater Manchester, Manchester airport and north Wales, and the M6 leads to the far north and the south.
Halewood is home to Ford (UK), which is by far the biggest employer on Merseyside. On Thursday 23 January 1997, Ford made an announcement that cast a shadow over the future of this important factory. I intend to spend a few minutes tracing the history of the factory and describing the detail of the announcement, the background to it and its severe implications for Merseyside and beyond. I shall question Ford's decision, draw some conclusions as to why it should be resisted, and seek Government support to persuade Ford to change its mind.
The plant was founded in 1960. Ford was attracted to the 346-acre site by the excellent communications that I have just described. Between 1960 and 1963, Ford spent £30 million on building what was then the world's biggest car factory under one roof. The official opening was on 8 March 1963. The first car off the assembly line was a 997 cc Ford Anglia, which is still in the Liverpool transport museum as part of the industrial heritage of Merseyside.
In 1968, another important event took place—the unveiling of the Escort Mark I, 1.1 litre. Six generations of this car have since been built at Halewood. The plant has also produced the Cortina, the Capri, the Corsair and the Orion, which are variants of the Escort. In 1969, the millionth car came off the production line.
In 1981, the Escort received the European Car of the Year award, and was the world's best-selling car. It retained the latter record in 1982 and 1983. Between 1986 and 1996, the Escort topped United Kingdom car sales for all but three years, and 129,000 Escorts were sold in the UK in 1996. Total world sales since 1968 have been nearly 18 million. Of course, the Escort is now made in Saarlouis in Germany and Valencia in Spain—names that will crop up numerous times in my speech.
Such sales owe much to excellent design and marketing, but they also owe much to the work force. Continuous improvements in productivity have been achieved not only through capital investment by the company, but through changing work practices and successive tranches of job losses at Halewood, from a peak of employing 14,500 people to its present level of 4,500 in the vehicle assembly plant. The company admits that the production costs per unit are better than those of the nearest comparable plant, in Saarlouis. Continuous improvements in quality have led to the award of Ford's Q1 standard in 1995—the cordon bleu in-house quality mark.
In addition to those 4,500 workers in the vehicle assembly plant are the 1,000 in the transmission factory on the same site, which makes transmission units for the Escort, the Fiesta, the Scorpio and the new Ka—those for the Scorpio and the Ka are for export—making Ford Halewood a key component in the industrial infrastructure of Merseyside and the wider region. High-volume family car production makes it by far the largest manufacturing employer in Merseyside, with a footprint of employment covering the whole of the Merseyside area—north, south, east and west—as well as Greater Manchester, Lancashire, Cheshire and north Wales.
In addition to those directly employed by Ford, the number of jobs provided in the supply of goods and services to the factory is unquantifiable but massive. Then there are the jobs provided in the local economy by the spending power of all those employees, from the local shops, large and small, to Halewood Labour club.
My hon. Friend touches on the important issue of the wider spread of jobs in Merseyside. Is he aware that much of the glass installed in Escorts is produced at the Triplex factory in St. Helens, which has also struggled over the past few years? The potential loss of that valuable order could have a major impact on the employment prospects at Triplex in St, Helens.
Indeed. I thank my hon. Friend for that practical example. The effects that he describes could be repeated many times elsewhere.
On Thursday 23 January 1997, the announcement hit Mersey side like a bomb. In round figures, 1,300 jobs were to go on the Escort production line at Halewood, reducing the work force from 4,500 to 3,200. The new Escort would not be made in Halewood, but would be produced solely at the German and Spanish plants. Production of the old Escort would continue at a scaled-down rate until the end of the century. Thereafter, a new multi-activity vehicle, which I shall refer to as MAV, would be built on the platform of the Escort, supplying the European niche market of people carriers—cars such as the Renault Megane Scenic. At the moment, the MAV is little more than a computer-generated schema.
The announcement had been extensively trailed against the background of declining sales of the Escort in this country and worldwide, and losses suffered by Ford across its European operation. The company announced a loss of $291 million on its European operations in 1996. However, it should be noted that those losses cover the whole European operation, not just production of the Escort, and were certainly not down to Halewood alone. The figures for any losses that may have been incurred at Halewood are not, as far as I am aware, available.
Within a fortnight of announcing 1,300 job losses at Halewood, Ford announced a profit of $39 million for the final quarter of published figures. The company claims that that is reduced to losses of $88 million after a one-off payment is taken into account. I wonder whether that one-off payment is the cost of writing down Halewood.
The declining sales of the Escort must be a factor. Halewood is currently dedicated to Escort production. However, the sales performance of the Escort must be taken in context. First, the United Kingdom sales figure of 129,000 is a serious decline from the 1990 peak, but all car sales declined during the recession. Those 129,000 sales still made the Escort the second best seller in the UK market in 1996.
Secondly, the UK is the Escort's best market. Comparisons with sales in Germany and Spain make interesting reading. United Kingdom sales between 1990 and 1995—remember that our recession was deeper than that in the rest of Europe—went down by 27 per cent. In Germany, sales went down by 37 per cent., and in Spain they went down by 24 per cent. The company's figures for sales in Germany are different, but they fail to make the adjustment for West German sales only in 1990 and sales in the unified Germany thereafter.
Even more interesting comparisons can be made between national production and national sales of the Escort in the three countries. United Kingdom sales are 85 per cent. of domestic production, according to figures that I have been given. That means that we are a net exporter. The figure for Germany is 132 per cent., and that for Spain is even higher. Germany and Spain are net importers of Escorts.
Thirdly—this is a crucial point—the new model Escort is designed to arrest the recent decline in sales across its markets. It is timed to ride the upsurge in the market as we emerge from recession.
In spite of all this, production of the new model has been assigned to Saarlouis and Valencia, not to Halewood. The implications are serious. The loss of the new model Escort takes Halewood out of high-volume, two-shift family car production—the big stuff in the automotive industry. The concession that the old model Escort will be produced until 2000, concurrently with the new model coming off continental production lines, is meaningless. Old models do not sell when the new model is available. The only car that ever bucked that trend was the Fiesta. That was in the context of rising sales. The Escort would have to do so in the context of depressed sales.
The promise of the MAV as the basis of the future survival of the Halewood plant is to be treated with the utmost reservation. It is still at the earliest stage of development—little more than a gleam in the designer's eye. As of last Monday, when we met management, it had not been put to the board for approval of development costs. It appears that development may be dependent on a large grant from the UK Government. Even if it gets off the drawing board and into production, there are further reservations about the MAV, because it serves a niche market, with low-volume production and sales in comparison with those of family saloons such as the Escort.
Putting all that together, the prognosis for Halewood is difficult. It must struggle to buck the market trend, with the old Escort competing against the new, followed by dependency on the MAV in low-volume production. Make no mistake: we want the MAV and we want it to be a winner in its niche market, but we also want and need the high-volume production of the new Ford Escort. The two are not incompatible. If the MAV is based on the Escort platform, there is no reason why the two could not come off the production line.
On behalf of the hon. Members from the Wirral area, one of whom has had to take a trappist vow for the debate, may I draw to the attention of those following our proceedings the fact that there are more hon. Members present in the Chamber than there often are for debates subject to a three-line Whip? We could obviously take up the whole day debating the issue if that were possible. That is how seriously we take the problem.
We in Wirral have suffered from huge job losses—not just any jobs, but jobs paying decent wages. I want to stress the link between wage levels and families. Much emphasis in public debate is put on the desire for stable families. It is difficult to have stable families without decent family wages. For many of us, my hon. Friend's speech has another dimension. Jobs are important, but people usually require them so that they can nurture children, so it is also a blow for them.
I shall make some observations about the point my hon. Friend has raised later in my speech, when I turn to the direct financial costs of supporting an additional 1,300 unemployed people. I am sure that my hon. Friend and all hon. Members are aware of the indirect costs of unemployment and its associated deprivation.
The prognosis for Halewood is difficult. We want the MAV to be a winner in its niche market, but we also want the new Escort. The MAV represents only half the future that we would expect if Halewood were to produce the new Escort. Virgil's expression,
Timeo Danaos et dona ferentes
is apposite in respect of the MAV. It means, "I fear the Greeks when they bear gifts,"' and refers to the Trojan horse. Arguably, the Trojan horse was the first ever people carrier.
Why then was Halewood singled out for an uncertain future? What can be the reason for effectively exporting 1,300 jobs from my constituency to Spain and Germany in order to manufacture the new model Escort for import into the United Kingdom, the market where the Escort is the second best seller, where it sells in greater volume than any other market, and where, in a declining trend, its sales have held up better than elsewhere? The United Kingdom is the only country that exports more Escorts than it produces.
Can the reason be productivity levels at Halewood? I have referred to the heroic achievements of the Halewood work force in improving productivity to the point at which the Escort is cheaper to produce per unit than in Saarlouis. I am advised that production costs per unit are cheaper in Valencia. That depends on how one calculates the statistics, and one would expect that of such a relatively modern factory.
It should also be remembered that current assessments of productivity at Halewood are based on a long period of single-shift working during the depressed car market, when Halewood had to carry the costs of down-time payments and the other diseconomies of scale when a production line designed for double-shift working is reduced to a single shift. The factories at Valencia and Saarlouis did not suffer the same disadvantage when productivity assessments were made.
If Escort production capacity has to go—I shall qualify that "if—there is a strong case in terms of productivity for consolidating production at Halewood instead of cutting it there.
If the problem is not productivity, can it be quality? Again, there have been heroic achievements by the work force at Halewood, leading to the award of Q1 status in 1995. That was also against a background of single-shift working and interrupted production runs which can affect quality, as the management told us last week. Despite that disadvantage, the work force achieved Q1.
Thus, in terms of commitment, productivity, quality and sales, the work force at Halewood are not agents of their own misfortune as has been suggested in some misguided sections of the press; they are innocent victims.
Can the reason be over-capacity across the three plants at Halewood, Saarlouis and Valencia? Some journalists have suggested that Ford has half a plant too many producing the Escort, that the company needed to amputate one plant, and that Halewood was the weakest. My evidence on productivity, quality and market performance of Halewood Escorts gives the lie to that. In any case, the argument about over-capacity is open to question. If the new Escort is as successful as Ford intends it to be, the capacity of the plants at Saarlouis and Valencia will probably be inadequate to meet the expected demand.
My hon. Friend mentioned over-capacity. Did he hear the reported comments of Mr. Jac Nasser on Radio 4 today, when he said that Ford Halewood has to compete not only with southern Europe, but with eastern Europe? Is there not an argument to be made about the fact that Ford is increasing its capacity in areas that do not have the same employment and working conditions that are expected in western Europe?
My hon. Friend has raised an interesting point that I hope the Government will bear in mind in discussions with Mr. Nasser, when considering their commitment to production in Britain.
I return to over-capacity, and the inadequacy of the Saarlouis and Valencia plants to meet expected sales of the new model by possibly 100,000. If Halewood were to lose the new Escort, the 1,300 jobs would be exported to provide expanded production—possibly a third shift in the factories in Spain and Germany—to produce cars for import into the United Kingdom.
If over-capacity can be ruled out, why did Ford single out Halewood and not share the pain across all three plants? There are several possibilities. An article in The Observer on 19 January compared the difficulty and cost of making people redundant in Britain, Spain and Germany. It showed that it is easier to make people redundant in the United Kingdom because there are fewer legal hurdles and binding agreements to overcome. It is also cheaper to make people redundant in Britain, because redundancy terms are more generous in Spain and Germany, where all employees are entitled to redundancy payments, not just those who qualify under the two-year rule.
The company argues, with some justification, that the severances will be voluntary and the terms generous, but leaving aside the economic abstractions, every redundancy is a personal tragedy for a family—1,300 tragedies in this case. The pill has to be sugared, because the age profile of the Halewood work force is such that, after all the successive job losses, it is a difficult life decision for a worker to take the money knowing that he is most unlikely to have a comparable job ever again. Finally, once the redundancies have been made, the jobs will no longer be available to the local and national economy.
A further argument is that greater financial inducements have been provided by the Governments of Spain and Germany to the company to keep production there. I have no hard evidence for saying that, but I would not be at all surprised if there were evidence to support it. I simply ask the Minister to bear that in mind in his discussions with Ford.
I shall not make political points about the cost and the ease of making people redundant in Britain. Others may wish to do that. I confine my remarks to the effects of the announcement about Halewood on my constituency in Knowsley and the surrounding region.
In conclusion, the announcement that the new Escort will not be produced at Halewood is catastrophic to the economy in my constituency, and those of many of my hon. Friends who are here today. I see that my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) is now in his place.
My hon. Friend drew attention to the effect on the local and regional economy. The people of Ellesmere Port where the Vauxhall Astra is made are deeply worried by the announcement. There is no glee in Ellesmere Port. My constituents recognise that it is a serious blow to the regional economy following the job losses at Gallaghers, H. H. Robertson Ltd. and Prestige. Manufacturing jobs are being lost throughout the north-west, and, whatever the product, they are creating serious crises for many thousands of families in the region.
Absolutely. There could not be a better demonstration of the objectivity of the case that I am presenting than the fact that car workers in a factory just across the Mersey are supporting their opposition in the market. I note that my hon. Friends the Members for St. Helens, South (Mr. Bermingham) and for Bootle (Mr. Benton) have joined the debate.
We are talking not only about 1,300 jobs but about the knock-on effects of job losses in a myriad of suppliers—great and small—of components and services to the Halewood factory. There is a further knock-on effect of such wages and salaries across the retail economy of my area, and a social cost in an area where unemployment is far higher than the national average.
There are hard financial costs as well. There is the cost to the Treasury of sustaining with benefits those who lose their jobs and the indirect and wider cost of the consequences of unemployment, and the attendant social deprivation. Such arguments are, of course, of general application when unemployment occurs, but I ask the Minister to take particular note of this incidence.
Merseyside is an unemployment black spot. It has suffered more than its fair share of job losses in the two recessions of the 1980s and 1990s. It is the only industrial region of mainland Britain that has objective 1 status. This is not a scouse whinge; our heads are not down on Merseyside. Indeed, we are energetically regenerating Merseyside. A blow such as the Ford decision, however, is a severe setback.
Moreover, Ford is the sort of flagship multinational inward investor whose investments do two things in an area such as ours. It not only gives a big boost to the local economy with its own jobs and the piggy-back jobs that it brings with it: it punches a hole through which lesser investors follow, on the principle that, if Merseyside is good enough for Ford, it is good enough for them. There is a confidence factor, and if Ford disinvests, that is damaged. We scousers have plenty of pride and confidence in ourselves, but we need others to have confidence in us, too—notably Ford.
The argument that I present to the Minister is for selective regional assistance and affirmative action for Merseyside. Some might call that special pleading, but it is an argument for the balance of trade in the automotive industry.
It is predicted that the four best sellers in the UK family car market will be the Fiesta, the Escort, the Mondeo and the new Ka. If Escort production is taken from Halewood, all those but the Fiesta will be produced abroad and imported into this country. A conservative estimate is that that will involve 360,000 units, or £2.8 billion, on the debit side of the balance of payments. The social costs, the regeneration of Merseyside and the balance of trade are hard financial reasons for keeping the Ford Escort and the 1,300 jobs at Halewood.
I know that the Minister is seriously interested in the issues that I have put before him: the impact of the announcement on Merseyside and the danger of the domino effect on the Halewood plant, the Merseyside economy, and other Ford plants about which I could have said much—I could have mentioned Iveco in Langley or Bridgend.
I know that there is on-going dialogue between Ford and the DTI at the highest ministerial level and through officials, and I urge the Minister to pursue those discussions with vigour and commitment. I suspect that they will touch on support for investment in the MAV. I encourage him in such discussion. We want the MAV, and if any work force can make it succeed, Halewood can. Compared with production of the Escort, however, the MAV offers Halewood only half a future. I urge the Minister to explore any and every avenue with the company that could lead to the award of the production of the new model Escort at Halewood.
I end by quoting the motto of Liverpool: Deus nobis haec otia fecit—God gave us all these leisure pursuits. It refers to the parks and gardens of Victorian Liverpool. We in Knowsley, South, we in Liverpool and on Merseyside have had enough of enforced leisure. We want jobs—specifically the 1,300 at Halewood.
I congratulate my hon. Friend the Member for Knowsley, South (Mr. O'Hara) on securing the debate. I am conscious of time, and shall not detain the House.
I am slightly disappointed that none of our Conservative colleagues who represent Merseyside has been able to be present, but I welcome the presence of the Under-Secretary of State for Education and Employment, the hon. Member for Hornchurch (Mr. Squire), who has responsibility for Merseyside.
My hon. Friend the Member for Knowsley, South described the effect of the decision on confidence on Merseyside. I do not believe that that can be overstated. The decision comes at a quite critical time for us on Merseyside. We have been living with objective 1 status for three or four years. It is a double-edged sword. It provides very much needed European aid, which is essential in the region if we are to regenerate the local economy and improve economic activity, but its downside is that it is a recognition of just how bad things have become.
We on Merseyside are making many improvements. A new city centre is emerging from the ashes of the 1970s and 1980s, when manufacturing fled the region, and hopes for the future of the region have been growing. There has been some success in the campaign to attract new jobs in my constituency, which borders with the constituency of the hon. Member for Mossley Hill. The Wavertree technology park is one of many examples of success in attracting new businesses and generating new jobs on Merseyside.
Just as we were hoping to come to the end of objective 1 status, Ford's decision has been a huge blow to the confidence of Merseyside people and their work in partnership with local authorities—and in many respects with the Government—in lifting the region and pulling ourselves up by our bootstraps, demonstrating the skills, ingenuity and resilience of the people, who have had to face and grapple with such economic difficulties.
Ford's decision has had a major impact on the image that people have of Merseyside. I criticise the company for the way in which it handled the decision and remained silent about the reasons why it had arrived at it. That left commentators, the press and others around Britain and in Europe to draw their own conclusions based on images—often the wrong images—of Merseyside. The way in which the decision was taken did not allow for any clear analysis. Everything was privately indicated in meetings with Members of Parliament, the unions and the Government.
It is clear that Ford has been facing serious problems. There is no question but that the Escort has been losing its position in the car market. It has made its case to Members, the Government and the unions, and explained how it has been losing money hand over fist with that product. Hon. Members understand the difficult competitive world facing car manufacturers; we appreciate that, when people buy their cars, they base their decision on different judgments than those they made in the past; we understand the problems facing volume car producers such as Ford when they are deciding what new products to bring on stream.
The hon. Lady referred to Conservative Members from her region. I represent an area further south that makes motor cars. Rover and Land Rover are virtually within spitting distance of my constituency, although not in it. She does her own region proud in her defence of it.
I do not feel that the decision is so much a reflection on Merseyside itself, as the hon. Lady seemed to be saying. It is, as she is now beginning to say, more of a reflection on Ford, which has had problems in attracting buyers of certain designs of car over the past five years or so. That has been a problem for Ford Europe, and I am sure that the hon. Lady will go on to say that that problem is not reflected in some of its competitors, such as Rover and Land Rover. The decision is therefore to some degree a reflection on the company, rather than on the area or the work force of Merseyside.
That is my point precisely. As my hon. Friend the Member for Knowsley, South has explained, the workers at Ford Halewood have demonstrated their capacity to grapple with the problems that the company faces and to work in partnership with it. There has been an unprecedented period of freedom from all kinds of industrial problems at the plant. The workers have demonstrated their commitment to the company, and shown that they are prepared to work with it to rise above the challenges that it is telling us about.
I believe that Ford's decision was based on reasons other than those about which it is prepared to come clean. As a country, we must face up to the fact that Ford has three plants in three European countries, that it has taken that decision, and that, in doing so, one factor that it has taken into account is the difference between the employment requirements in the three countries. There is a strong belief on Merseyside that we have suffered because it has been easier and cheaper for Ford to make 1,300 people redundant at Halewood than it would have been at either of the other two plants.
My hon. Friend has talked about those 1,300 jobs, and I want to talk about the consequences for the 1,300 workers. Every week at my surgeries, I see the consequences for the health of men who stop working at 50 with no prospect of further work. There are also important consequences for the job opportunities of young people on Merseyside, who hoped to find employment and develop their skills at the plant.
We are aware of the problems that Ford has faced, and of the changing car market. Why does the Department of Trade and Industry appear to have been taken so much by surprise by Ford's decision? Given the major impact that it will have on our trade deficit, why was the Department caught on the back foot? It seems to me that the German and Spanish Governments had been working more closely with the company in trying to prevent the decision from going against workers and businesses in their countries. I greatly regret that.
A view is developing on Merseyside that objective I funding should be used to support Ford's decision to bring new manufacturing to Merseyside, but I believe that that would be a mistake, and that other funding should be used instead. We should use DTI funding rather than European money, because clearly most of that has already been earmarked for other projects, and we are coming to the end of it.
I am conscious of the number of people who want to speak, so on that point I shall finish.
I too shall be brief, because I realise that so many people want to make contributions.
In 1982 there was a similar problem, which had largely been caused by bad management-labour relations. I shall not say who was to blame, because that would be futile. I was the chair of economic development at Merseyside county council at the time, and we had four hours of discussions with Bill Hayden, who was then the chief of Ford Europe.
As a result, agreements were made within the company between the work force and the management, and the workers agreed to co-operate in the changes in productivity and works practice. This time, however, Ford has not consulted anybody. I presume that it did not even consult the Government before making its statement.
Since 1982, the labour force has carried out all its promises to improve productivity—so much so that, on 17 January, Ford News, the house magazine of the Ford company, said that Halewood workers had reached their productivity objectives under the company's total productivity maintenance scheme in record time.
What was the reward for that? It was the notices sent out to the effect that 1,300 workers are to be made redundant. What message is the Ford Motor Company sending to other workers in this country who may also be asked by management to agree productivity deals and changes in works practice? My hon. Friends suggest that the company chose Halewood for the cut—
I shall give way in a minute.
I think that Ford chose Halewood because it believes that, unlike other Governments in Europe, the British Government are a soft touch. That comes across in all their actions in connection with Europe. They are not at the heart of Europe. Ford and other companies—a recent example is Toyota—have shown that they want to be at the heart of Europe.
Does my hon. Friend agree that the work force at Ford are not asking for special treatment? However, there is something that the workers do expect—this is something that the Minister will have to address when he sums up.
They expect not to be put at a disadvantage compared with those in Spain or Germany simply because it is cheaper for the company to get rid of them than to get rid of workers in other parts of Europe. If that is what lies behind the decision, all the Government's claims to be friendly towards industry and employment go out of the window. If work protection in this country is so weak that it makes us vulnerable, it is time that the Government thought again about their approach to the social chapter and other such issues.
No, I shall continue, because I want other hon. Members to be able to make their speeches.
There are works councils in Germany. In Saarlouis, one can see the management and the workers constantly discussing the problems of the company. Firms can also be taken before labour courts in Germany; in Spain, public inquiries have to be held, and there are local and regional labour authority controls.
I am not asking the Government to pick up the bill, because they will have to do that anyway. However, they have an option about the way in which they pick it up. One way would be to help the Ford workers by investing and giving encouragement to ensure that production of the Escort continues at Halewood. Otherwise, they can pick up the bill in another way—by paying out an estimated £50 million in redundancy payments, unemployment pay and other social benefits.
If the Government choose the second option, they will blow a huge hole in this country's foreign and gold currency reserves. The price, on top of the social costs, could be £2.8 billion. I ask the Government to weigh those options, and to ensure that they take into account the fact that a failure to support Ford will mean that about 10 per cent. of the economic activity on Merseyside will be affected. Not only the Ford company and its workers, but workers elsewhere on Merseyside, will suffer.
The hon. Member for Knowsley, South (Mr. O'Hara) has rendered the House a service in so ably painting the depressing picture of what will happen as a result of the job losses at Halewood. It is for the rest of us to put some brush strokes on that canvas, to try to support the points that he has made.
During the 25 years that I have been representing the people of Liverpool—first as a councillor, followed by 18 years in this House—there has been a depressing litany of job losses. I have stood alongside the hon. Member for Liverpool, West Derby (Mr. Wareing) and others on many occasions when we have been to see Ministers and employers to plead for jobs.
All of us know that, for the past quarter of a century—almost since it was founded—a sword of Damocles has been hanging precariously and threateningly over the Halewood plant. In turn, that has sapped morale and led to a loss of confidence. Despite the corrosive effect of such prolonged uncertainty, the employees have delivered substantial improvements in output and quality. Their reward has been the loss of 1,300 jobs. It is no wonder that, not unreasonably, they want to know what they had to do to secure their long-term futures.
My late father, having left the Eighth Army at the end of the war, went to work on the Ford shop floor for the whole of his life. For that personal reason, and because I know that many Liverpool families depend on Ford, I am completely aware of how devastating the effect of this announcement will be—as the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) and others have said—on those families who depend on employment at Ford for their homes, their futures and their livelihoods.
Ford is a giant employer in an area which has always had a weak manufacturing base. The knock-on effect into the local Merseyside economy on suppliers and retailers is incalculable. What a mockery this makes of myriad job creation initiatives and the conferring of objective 1 status if jobs such as these continue to haemorrhage and flow away. I had assumed that objective 1 meant inward European investment. Instead, this haemorrhage in employment represents disinvestment and the export of jobs to much more affluent parts of Europe. There is no logic—and no sustainable or coherent strategy—to this, let alone any sign of social responsibility towards the people involved.
Even the most ardent European would be hard put to explain why—despite being specially designated as objective 1—Merseyside should end up exporting jobs rattier than cars. It also makes a mockery of the Government's claims that the lack of employment protection through the non-application of the social chapter has made the United Kingdom a mecca or a honeypot for inward investment.
We have the worst of all worlds. We have a lack of minimum standards for employees, and when employers are choosing whether to make German or British workers redundant, they inevitably go for the cheaper British option. That doubly fails British working men.
I have literally five minutes. I hope that the hon. Gentleman will forgive me, but I know that other hon. Members want to get in.
It is no good the Chancellor of the Exchequer merely shrugging his shoulders and saying, "You win some, you lose some." Losing one's job is not like the roll of a dice—it is not like losing a bet. Unemployment means having nothing to do, and that very rapidly ends up meaning nothing to do with the rest of us. Unemployment leads to alienation, depression, isolation and suicide. These are the consequences that one sees in communities riddled and racked with high unemployment.
In the 18 years that I have been in the House, I have seen all too many job losses without commensurate job gains, and that has had a devastating effect on family and community life. It saps the lifeblood of the community. We have been promised—as the hon. Member for Knowsley, South has said, by "Greeks bearing gifts"—the prospect of a new model at Ford. That is all well and good, and the work record of the people at Halewood more than warrants the bringing of that new model to Ford. But what about the 1,300 jobs on which the hon. Member concentrated our minds this morning? What about the continued production of the Ford Escort on Merseyside?
There is no reason why those two things should not go hand in hand, or why the burden of job losses should not be shared across all the plants mentioned by the hon. Member for Knowsley, South. The Government must do whatever needs to be done to secure that opportunity. The workers undoubtedly feel anger, and one can understand their sense of frustration. What the Government and the House must do is to give them the opportunity they are looking for to use their talents, their energies and their dynamism to build cars—something that they are good at.
Merseyside's biggest problem has been its industrial image. Sometimes that has been unfair, but it has undoubtedly turned away some investment. The last thing we need now is a long-term crippling industrial dispute, and we must do all we can to prevent it. Leadership is needed from this House, the Government and all parts of the Merseyside community to ensure that a constructive solution comes out of this. We must harness and channel the energies and dynamism of the community, not negative and destructive purposes.
I declare an interest, in that many of my friends and those with whom I work in St. Helens are shop stewards and employees at Halewood. One can actually see the Halewood plant from St. Helens, South, as it is only just down the road, in the constituency of my hon. Friend the Member for Knowsley, South (Mr. O'Hara). People who live in St. Helens and Knowsley know what unemployment means, and it is not just the loss of a job.
In the 14 years that I have represented St. Helens, South, I have watched the Government wipe out the mining industry. My hon. Friend the Member for St. Helens, North (Mr. Evans) knows about this, as his constituency has suffered in the same way. We have watched the glass industry shrink, and we have watched friends lose their jobs at 40, with no jobs to follow. They are on the scrap heap at 40—can one imagine it?
Now we are watching it all happen again at Halewood. It is more than a tragedy—it is almost the final act of desecration. It need not happen. In the north-west, the workers provide skill, hard work and a commitment to jobs. Many thousands of men will be sitting at home this morning watching television because they have nowhere to go and nothing to do. Those men are skilled in glass work, engineering and mining, and they have talents and training. All they want is an opportunity to use their skills. "Get on your bike," said Lord Tebbit many years ago, but if one rides out of Merseyside, one either goes into Greater Manchester or into the sea. But one will not find a job, because beyond us lies more unemployment.
What do we have on Merseyside? We have communications, and a road structure that is second to none. Funnily enough, we have the money. My hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) knows the saga of Vauxhall and about getting the company's money out of the Government. The DTI nearly blew the whole scheme because of its incompetence.
The Government do not give a toss about Merseyside—let us be truthful. Where has the objective 1 money gone? There are buckets of it—an ocean of it—left. Where has the RECHAR money gone? It has not been used. It is all there. I have spoken to local European Members of Parliament on the matter. All we want is a change in the rules so we can rely not on a Government who will not give us anything, but on third-party funding. Those discussions have now begun.
This is not just a tragedy: it is a disaster. We could re-tool and reinvest—the money is there. All we need is willpower on the part of the Government of the day—please God, the present Government will not remain "the Government of the day" for long. We need them to show willpower and to get in there, to do something about an area whose skills are undoubted.
I leave the Government with one interesting thought. They tell us that we live in a world of increasing prosperity, and that the British public are better off. I suggest to them that they read The Independent this morning, which shows that—contrary to all their comments—the average weekly wage has fallen from £228 to £225 a week. But on Merseyside and in the north-west, our prosperity has fallen by 12.7 per cent. Now this has come upon us, and it is yet more disaster. We have the money, but we do not have prosperity—we are not given a chance or a fair deal. It is time that the Government began to realise that millions people in the north-west of England deserve a chance.
I make two points. First, the Government appear to have been caught on the starting blocks by this decision, yet they have key responsibilities, not only because of the effect on the balance of payments and regional employment levels, but because their decisions on employment policies have made the United Kingdom a soft touch as opposed to Spain and Germany, when multinationals make difficult decisions about which plants to close.
This morning, I spoke to Andy Richards, the district secretary for the Transport and General Workers Union for Ford workers in south Wales. He told me of the sense of betrayal in the plants at Bridgend and in the constituency of my hon. Friend the Member for Neath (Mr. Hain), who is on the Opposition Front Bench and who would have liked to speak in the debate—his constituency adjoins mine. As he knows, the workers in south Wales have done everything that the Ford company has asked. Delegations have been brought from the United States and elsewhere to marvel at the efficiency of the plant. The workers feel let down.
Secondly, the decision does not affect only Halewood. We feel sorrow and anger on behalf of those at Halewood, but the decision will have consequences for the plants in south Wales. At Bridgend, the new Escort engine—the 14, 15 investment—is in question. If Halewood production is transferred to Saarlouis, engine production for the Escort at Bridgend will almost certainly transfer to the German engine plant at Cologne, and 700 jobs could be lost at Bridgend. There is no other product at Bridgend, the overheads would remain constant, and there is a real danger to the plant as a whole.
The Swansea plant produces drums and discs for the Escort and engine parts for Bridgend, and it has lost the air conditioner investment through the Ford decision. We are now seeking to produce the worldwide fuel pump for the Escort, and the scenario that is relevant for Bridgend also applies to Swansea. When production of the Transit axle finishes in 1998–99, or possibly a year later, there will be no programme at that plant, which could have disastrous consequences for south Wales.
The Bridgend plant employs 1,500 men, and the Swansea plant 1,200. Both plants are effectively tied to the Escort. Those jobs are high-wage, high-quality, London-wage jobs, and it will be disastrous for south Wales and for Halewood if the decision goes ahead and the Government do not fight it, even at this late stage.
The air-conditioning production plant that was promised to Swansea and Neath was lost to Portugal in the same announcement, because the Welsh Development Agency could offer only £6 million, whereas the Portuguese Government offered £49 million. That gives some indication of the auction that is taking place among European Union Governments and of the fact that multinationals can blackmail national Governments. I hope that that lesson will not be lost on the Government.
We need some agreement at European Union level—just as there is with export credits—to ensure that national Governments are not picked off in that way. My hon. Friend the Member for Neath and I share the concern about the dire consequences for south Wales if the decision goes ahead.
Much of what I wanted to say has already been said, so I will confine my remarks on behalf of the people of Bootle and the Ford workers to supporting the comments of my hon. Friend the Member for Knowsley, South (Mr. O'Hara). I am glad to have the opportunity to do so. We are talking about the loss of 1,300 jobs in Merseyside—a loss that we can ill afford. My constituency will share that loss.
I had occasion to meet some of the Ford principals with other hon. Members at a meeting in the House. A number of hon. Members have mentioned the implications of the social contract, which figured highly at the meeting. I asked the Ford management a question about it, and it seems strange that there has been no reference to this in their written response to us. In my opinion, there is no question but that the non-existence of the social contract has worked to the detriment of the Ford workers at Halewood. I am convinced of that.
Another matter that has not been mentioned is the Ford company's moral obligation. I urge Ford to consider that obligation. The record of the work force has been mentioned, but Ford also has a strong moral obligation to the Merseyside community at large. As has been said, the decision will have a devastating effect across that community.
Ford has an obligation because the records will show that the work force, the local authorities and the community have supported the company on Merseyside and have made it a highly successful operator, despite the current profit and loss indications. It is time for Ford to say that it will reconsider the matter and come back with something better to support the people to whom it owes a debt of honour.
I take this opportunity—it is probably the last one I shall have—to ask Ford to reconsider. There must be a way around this. Life is not all about profit. I would advise Ford to read a little booklet called "The Common Good"—the recent statement by all the Churches on what profit and loss is all about. That is the key. Profit is fine and Ford is entitled to expect it, but we are entitled to expect from Ford fair and just treatment for its workers, particularly those who have worked so hard and long, and have co-operated with all the adaptations in working practices that the company has suggested. The company owes a debt to those people.
I agree with my hon. Friend the Member for Knowsley, South that the severance terms are generous—they are certainly far better than what the Mersey Docks and Harbour Company is offering the dockers, but that is another argument—but severance is not everything. The company has another duty—to secure the common good, and the good of the Merseyside community.
I have only a few minutes to make my case, and the issue that I want to raise is as important as the Ford decision. Merseyside Members of Parliament will know that the economy of the area has been based for the past century and beyond on the port. Think of the factories along the dock road in the last century—Tate and Lyle, Silcocks, the British American Tobacco company—and the host of ship repair yards on both sides of the Mersey. All that has gone.
When Ford and other parts of the car industry first came to Merseyside, it was hailed as a new dawn for the area: we were moving from a port-oriented to a broader industrial economy. In the 1970s, there was a similar situation to today's, when two plants in my constituency left Merseyside, along with other industry.
The Government must consider the alternatives. The fact that Liverpool happens to be on the wrong side of the country and is therefore affected by the European Economic Community means that the Government have a responsibility to consider areas such as Merseyside, and the north-west as a whole, and to ensure that industry goes where it is needed. They have failed absolutely in that responsibility.
The work force at Ford have been as good as any set of workers in the Ford companies here and abroad, and there is no reason whatever for the decision. The uncertainty will be devastating for Merseyside's future. Ford's decision is a blow to the area, a blow to Merseyside and a blow to the north-west. We hope that the Government will turn their attention to the problems facing areas such as Merseyside.
The economy of the port has changed dramatically. At one time, 20,000 people were employed on the docks, but today there are fewer than 500. There are no companies left along the dock road. The whole economy has to change, and the Government's influence should be seen on a daily basis. They should not leave the place to rot. Government intervention is of prime importance. The Ford workers have done all that was required of them, and it is a scandal that they should be left in this situation.
I congratulate my hon. Friend the Member for Knowsley, South (Mr. O'Hara) on securing this debate. He has done us all a service. All who spoke in the debate did so passionately and constructively about the immediate and long-term effects for Merseyside and other places in the United Kingdom of Ford's plan for Halewood. They were right to record the dismay and anger of those directly affected by the announcement of the 1,300 job losses, and the added uncertainty about the remaining jobs. They were also right to spell out the impact of such job losses on the already fragile manufacturing base of Merseyside.
If the decision remains and the worst scenario comes to pass, it will eat into the very heart of the community, and undermine attempts to regenerate Merseyside's regional economy. The redundancies have not been brought about by a lazy, unco-operative and unproductive work force; on the contrary, as my hon. Friend the Member for Knowsley, South and others so graphically showed, the workers responded positively to every new idea and work practice introduced by the company.
Indeed, there is evidence that the unions and the work force have been ahead of the local management in accepting and promoting new manufacturing techniques. The productivity increases and the high quality of product at Halewood bear witness to that. Cars are being produced to the highest standard set by the company.
It is significant that not one Conservative Member spoke in this debate other than by way of intervention I suspect that that is because they were, and are, embarrassed about the policies that they advocated through the 1980s and into the 1990s. Those policies were predicated on the belief that manufacturing industry was of secondary importance to this country. They clung to the view that Britain had a great future based on the service sector alone.
Over the past 17 years, Conservative Members have argued that we need a low-wage, no-skill economy, with minimal protection for those in work and reduced support for the millions who have been thrown out of work with no hope for the future.
No. The hon. Gentleman was not here for the whole debate, and as a local Member of Parliament he should have been.
In case Conservative Members have forgotten, I want to remind the House of what has happened to manufacturing jobs. When the Government took office in 1979, there were 6.6 million jobs in the manufacturing sector in Britain; by December 1995, that had fallen to fewer than 4 million. Each year, 172,000 people were thrown on the scrap heap in pursuit of a failed and destructive policy.
What happened in the United Kingdom generally was visited on Merseyside with a vengeance. In 1983, more than 650,000 people were employed in manufacturing on Merseyside; nearly 200,000 of those jobs were lost by 1996. Today, there are 10 people chasing every job on Merseyside. There is little hope of finding alternative employment for those thrown out of work, no matter how skilled or talented they may be. Long-term unemployment is, sadly, a fact of life on Merseyside. It scars the community and damages its social fabric.
We need a united approach to Ford's closure announcement for Halewood and its proposals for the long-term future of its other operations in the UK. We all recognise that Ford is important to the UK, but set against that is the fact that the UK has been important to Ford, which has done well out of us in terms of grant aid over the years, and has been provided with a strong home market for its products and a base for its export activities.
We all want the relationship to continue, so we must look for ways in which to preserve Ford's presence in the UK at a higher and more definite level than the company currently projects. That is why the Labour party should be kept fully informed of the Government's discussions with Ford. After all, the Labour party may be in government in a few weeks' time.
It is no good the Minister dismissing that by claiming that discussions with the company are confidential. We all know that, but the problem can be got round on Privy Council terms. If it was good enough for the Deputy Prime Minister to beat a path to the door of the Leader of the Opposition about the Greenwich millennium project, surely the current negotiations with Ford should be given at least the same priority.
The negotiations will cross over a general election period; the Government may fall, and the responsibility would then pass to an incoming Labour Government. Thousands of jobs are at stake and the car manufacturing base on Merseyside is at long-term risk. It is therefore important for the Government to get it right, which they could do by showing willingness to be inclusive and to put the country's interests before their political survival.
There can be no question about the fact that Ford has been planning its global strategy for some time. The moves it is making are born not of panic and short-termism but of what it considers its strategic need to respond to new markets and new competitors. There is strong evidence that the German and Spanish Governments have been closely involved with Ford in looking for ways of meeting that need. The same cannot he said for the UK Government.
It would clearly be wrong to overstate the power of Governments to influence corporate decisions or investment strategies, but they can have an effect if they try hard enough and early enough. The Spanish and the Germans have been doing that. We need to know when the Department of Trade and Industry first became involved with Ford, and what efforts it made to retain the new Escort model for the production facility at Halewood. The Minister should tell us today.
This debate will be studied not only on Merseyside but elsewhere; it will be examined by others who work in the automotive and manufacturing industries. They will want answers about why the Prime Minister claimed to be surprised by Ford's announcement, when anyone with half an inkling about the company's global strategy could have told him that such a decision was a possibility; they will want to know who did not tell him about Ford's likely strategy for its European car operations and the possible effect on the UK; they will want to know when, if ever, DTI Ministers first engaged with the company to consider ways in which to keep production of the new Escort model in the UK; they will want to know what is on offer to the company, how many jobs it will bring, and over what term; and they will want to know why the Prime Minister is prepared to put his trust in a Chancellor of the Exchequer who, when told of the 1,300 job losses at Halewood, shrugged his shoulders and said, "You can't win them all." They will want answers from the Minister today on why the country should put up any longer with a Prime Minister who does not know what is going on and a Chancellor of the Exchequer who does not care. Their actions and indifference have hurt Merseyside. The tragedy is that fewer people are likely to be working as a direct result of their mismanagement of the country and the economy.
I place on record my appreciation of the presence of my hon. Friend the Member for Hornchurch (Mr. Squire), the sponsor Minister for Merseyside. I also appreciated the restrained and constructive way in which the hon. Member for Knowsley, South (Mr. O'Hara) opened the debate. Clearly, he is concerned about the matter, as I am. He wants to ensure that there is a satisfactory outcome, as do other hon. Members, including my hon. Friend the Member for Crosby (Sir M. Thornton).
On the comments of the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy), I have received an explanation and an apology from my right hon. Friend the Member for Wirral, West (Mr. Hunt), who cannot be with us today because he has a long-standing prior engagement. My right hon. Friend took part with the hon. Lady in the delegation that visited me at the DTI, and he is clearly concerned. I have no doubt that, had death not intervened, Barry Porter, the former Member for Wirral, South would also have attended the debate.
I regret Ford's decision and the impact that it will have on Merseyside. However, the House should recognise that Ford has made it clear that its decision was commercial, and that it will allow it to put in place measures to improve the plant's competitiveness, and, I hope, to secure its long-term future.
With the hon. Member for Knowsley, South and other hon. Members, including the hon. Members for Liverpool, West Derby (Mr. Wareing) and for East Kilbride (Mr. Ingram), I pay tribute to Halewood's good progress in improving productivity and quality. However, the House should appreciate that the continental plants with which Halewood is competing have not been standing still. The battle for productivity, like the battle for inflation, is never over. One must always re-examine work practices to stay ahead of the competition.
We should take encouragement from the fact that Ford has not, despite some comments to the contrary, been talking about closure. It has made it clear that it considers that the plant could become the home, and sole European source, for a new sort of vehicle at the turn of the century.
Irrespective of any grant application that might be received by the Government—we have not yet received an application—we are working with the company in assisting the plant to achieve levels of performance that would help it to compete both in the marketplace and for new investment. As the hon. Member for Knowsley, South—and, I hope, other hon. Members—know, impressive efforts are being made by the local agencies, co-ordinated by the Government office for Merseyside, to support the plant. The work on a proposed supplier park is a good example.
The information that we have from Ford is that those figures are incorrect. Ford says that Halewood is more expensive than Valencia and only marginally cheaper than Germany. If transport costs are considered, as has been said, Halewood is not cheaper. According to Ford, measured by man hours per car, Halewood is 10 to 20 per cent. more expensive than Ford's continental plants. We must address that, not brush it aside.
The Government are firmly committed to supporting and developing the competitiveness of the automotive sector in the United Kingdom, at Ford and elsewhere. We are working with companies at local, regional and national level. Only last year, I officially opened the Society of Motor Manufacturers and Traders industry forum, which is designed to help companies based in Britain compete with other companies based in Europe and the rest of the world.
We are already listening to Ford's concerns. The House probably already knows, but I place it on record, that my right hon. Friend the President of the Board of Trade and I recently met Jacques Nasser, the president of Ford Europe. My officials are discussing the possibility of financial assistance to support future investment at Halewood. Those discussions are continuing, but they are at an early stage, and I can make no promise about their outcome. We have an open mind, and are listening to what Ford says. I hope that the House will welcome that.
One of the most fundamental contributions that a Government can make is the provision of a sound macro-economic climate, with low inflation, low taxation, sound public finances and a flexible work force. When I met a delegation of hon. Members last week, I made it clear that the matter involved two issues. The first was the 1,300 job losses announced and the second was the long-term future of Halewood. I expressed the hope that the 1,300 job losses could be addressed in some way by Ford. That is the basis upon which we have been proceeding in our discussions.
I regret to tell the House that, at present, all discussions with the company suggest that it is unlikely to revisit the 1,300 job losses. To date, no proposals for reducing the number of job losses has been put to me or my officials by Ford.
Will the Minister bear in mind the fact that the multi-activity vehicle is based on the platform of the Escort? It is likely that there will be under-capacity for Escort production for the market beyond the millennium. Will he investigate with the company the possibility of investment not only to bring the MAV to Merseyside but to retain the Ford Escort? There is a case for having both.
I do not rule that out. Yesterday, I met Tony Woodley, whom many hon. Members will know. I was impressed by his constructive position. I understand that he is having further discussions with Ford tomorrow. We intend to have further discussions with Ford next week. We will bear the hon. Gentleman's point in mind. However, he must appreciate that it is ultimately a matter on which Ford must make a commercial decision.
My hon. Friend knows that there have been all-party discussions on this. With the hon. Member for Knowsley, South (Mr. O'Hara), we have been able to meet Ford and the unions. Will my hon. Friend ensure that the information we get is thoroughly checked, because there is a huge dispute between what Ford says about productivity and cost and what Mr. Woodley and his colleagues presented in our discussions. That is fundamental to any discussions that the Government might have.
My hon. Friend makes a good point. Some hon. Members have said that they have evidence that disputes Ford's figures. If that evidence is available, I would like to see it. I shall consider it. To date, such evidence has not been supplied to me.
Many hon. Members mentioned our employment laws. In making a product, what matters is the productivity of the plant. One does not close down, or reduce output at, the most productive plant. That is the position that Liverpool has to address. Ford has also suffered a setback in the markets, as some hon. Members rightly acknowledged. That has added to the problems that have had to be grappled with.
I cannot deal with all the points raised in the debate, owing to lack of time, but I shall answer the hon. Member for St. Helens, South (Mr. Bermingham) who commented on objective 1 status. Only last month, the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Hornchurch, who is with us today, met the council leaders of Merseyside, and they all agreed that matters were progressing much faster. There seemed to be no dispute about that, so the hon. Gentleman's comments were out of date.
Many fine cars and memorable names have rolled off the production line at Halewood since the first 997 cc Anglia. I have owned two cars built at Halewood: a Ford Anglia and a Ford Capri—they were among the best cars that I have owned. I hope that, for many years to come, others will be able to say the same of new models that have yet to be made at Halewood.