Nissan Project

HC Deb 01 February 1984 vol 53 cc265-75 3.34 pm

The Secretary of State for Trade and Industry (Mr. Norman Tebbit)

With permission, Mr. Speaker, I should like to make a further statement on the Nissan project. I am pleased to inform the House that the Government and Nissan have reached an understanding on the basis for a Nissan car plant in the United Kingdom. The president of Nissan, Mr. Takashi Ishihara, and I have signed heads of agreement today. These are being published and copies will be available in the Library of the House later today.

Subject to a satisfactory outcome of negotiations with United Kingdom trade unions and local authorities, Nissan will proceed with the construction of a car plant on a green field site of substantial acreage—probably around 800 acres — within a development or special development area.

The first phase will be a pilot plant, to begin production in 1986 providing an assembly capacity of 24,000 cars a year based on imported kits. These will be treated as though they were built-up imports in the context of the discussions between the Society of Motor Manufacturers and Traders and the Japan Automobile Manufacturers Association, both of whom have given their agreement to this arrangement. During this phase Nissan intends to gain experience of general operating conditions in the United Kingdom, to develop effective relationships with local component manufacturers and establish the prospects for further development.

In the light of that Nissan will decide, not later than 1987, whether to proceed to phase 2 which will provide capacity for 100,000 units on a full manufacturing basis. If Nissan decides to proceed to phase 2, production would start by 1990 at 60 per cent. local content on an ex-works price basis. Full production would be reached in 1991, with 80 per cent. local content being achieved and maintained from the middle of 1991.

In addition to regional development grants, the Government will also be ready to provide selective assistance of up to £35 million, if Nissan proceeds to phase 2; that is equivalent to 10 per cent. of the total capital costs of both phases. In phase 1, the plant will employ directly between 400 and 500 people, and in phase 2 about 2,700 people, but particularly in phase 2 the potential total direct and indirect employment will be considerably greater.

This project represents an important opportunity to create fresh investment and jobs in the motor industry. It will introduce a major, efficient new domestic customer for the United Kingdom components sector; and it represents a constructive step forward in the dialogue between Europe and Japan on trade and investment. For those reasons I am sure that the House will join me in welcoming the Nissan project to the United Kingdom.

Mr. Peter Shore (Bethnal Green and Stepney)

The House will certainly want to judge this proposal for major inward investment as it would any other such proposal — that is, against some measurable criteria of the national interest. In particular, it will want to judge it against the criteria of whether it will lead to a net increase of jobs in the United Kingdom and a net improvement in our balance of trade in vehicle trading.

On the first of those criteria, the Secretary of State will concede that phase 1 certainly would not meet the criteria of any increase in jobs or in the balance of trade, helpful to the United Kingdom. I think that that is specifically conceded in the remarks contained in the statement, that the 24,000 imported kits will, I understand, be set against the Japanese agreement under which they do not take more than 11 percent, of the British market. I should be grateful if the Secretary of State would make that point, which I think is implicit.

The judgment must therefore turn upon phase 2 of the proposed inward investment project. There, a great deal turns, as I am sure the Secretary of State recognises, upon the precise meaning of certain key figures and phrases. When he speaks of local content of 60 per cent. being achieved in 1990 and 80 per cent. in 1991, to what precisely do those percentages refer? Do they refer to the value of the components manufactured in this country or to that much looser and larger total value represented by the rent of factories, advertising, marketing and non-manufacturing activities? Those questions must be answered.

How far will this agreement and the component content — which may not be the same percentage at all, and may be considerably lower—fit in with the certificates of origin that affect access to the European market? The Minister should bear in mind, because it is a strong bargaining point for the United Kingdom Government, that the countries of western Europe, particularly France and Italy, maintain separate and highly restrictive direct constraints on the import of Japanese cars. It is a great pity that other countries have been unable to do the same.

How much does the right hon. Gentleman reckon will be the total cost of phases 1 and 2 together—on the assumption that phase 2 takes place—and of that sum, how much is to be contributed by the British Treasury?

Mr. Dennis Skinner (Bolsover)

They have got their agent in the Gallery, look—the Nissan agent.

Mr. Tebbit

I hope that we shall be able to conduct these proceedings with decorum and that we shall not be interrupted by such contemptible, oafish remarks as that.

Although the right hon. Member for Bethnal Green and Stepney (Mr. Shore) was almost completely wrong in everything he said, none the less, and as ever, he was immensely courteous. I am sorry that his attitude was as negative as that of his right hon. Friend the Member for Salford, East (Mr. Orme), although I understand that the right hon. Member for Salford, East later changed his mind.

As the right hon. Gentleman knows, there have been discussions between the trade associations JAMA and SMMT. As he said, prudent marketing has led to a stabilisation of Japanese imports at under 11 per cent. I understand that under phase 1, the two trade associations will treat the 24,000 assembly operation as a feature of their continued prudent marketing. In other words, 24,000 fewer completed cars will be imported, and 24,000 will be produced here from kits. Clearly, all of the 400 to 500 jobs that will be created in phase 1 will be a gain to the British economy.

Mr. Shore

How?

Mr. Tebbit

Quite clearly, because those 400 or 500 people are not employed at present.

The 60 per cent. and 80 per cent. figures are calculated on the ex-works value basis, and that is identical to the present EC rules of origin. That problem is clearly solved. I have explained that the extent of the Government's financial assistance will depend, first, on whether the plants are in a special development area or a development area and, secondly, that a maximum of £35 million, or about 10 per cent. of the total cost of phases 1 and 2, will be paid in selective financial assistance.

Mr. Steve Norris (Oxford, East)

I welcome my right hon. Friend's statement, especially the inclusion of the 24,000 phase 1 units in the JAMA quota. However, may I draw attention to the considerable reservations—held particularly by hon. Members who represent constituencies with British motor interests—about the unfettered release of 100,000 manufactured units on to United Kingdom market under the second phase proposals? There is still considerable fear that substitutional jobs will disguise the real increase in jobs that this scheme will create.

Mr. Tebbit

I note what my hon. Friend said. He should be clear that there is no basis for his assumption that all the 100,000 output would be released on to the British market; they would be capable of being exported to the remainder of the Community or elsewhere. The Department's estimate, based on some central assumptions, is that about 6,000 net jobs could be created as a result of the project. The ultimate number is crucially dependent, naturally, on the success of British component manufacturers in getting their components, as opposed to those of other Community manufacturers, into the project. That comes down to the same question that we face at all times: are they competitive? If they are not sufficiently competitive to supply into a factory on their own doorstep, I doubt very much whether they will be sufficiently competitive to supply into the flood of imports currently coming to us from the European Community.

Mr. Paddy Ashdown (Yeovil)

Did the Minister see the piece in last week's Observer, which said that one of the advantages which could spring out of the deal would be a reduction of trading tensions between ourselves and Japan? Is the right hon. Gentleman prepared to list to the House any advantages that he can see might accrue to British exporters to Japan as a result of this deal?

Mr. Tebbit

I am sure that the more that it is seen that British manufacturers can meet the extremely tight requirements of Japanese companies, the more credible we will be in our exporting policies towards Japan. This is quite clear.

Sir Raymond Gower (Vale of Glamorgan)

Is my right hon. Friend aware that in recent years a number of Japanese companies have settled in Wales and that their experience on the whole has been happy, successful and mutually beneficial? Will he bear in mind the fact that if the Nissan company should decide on a site in Wales, it will receive a welcome from all the community, as it could make a valid contribution to replace the numerous jobs that have been lost in the Principality in the past decade?

Mr. Tebbit

My hon. Friend is correct. A large number of Japanese companies have found very good homes in Wales and found that they have been extremely successful and prosperous there. It is not, of course, for me to say where Nissan will eventually locate its plant, but I am sure that what my hon. Friend has said about the welcome will be noted.

Mr. Geoffrey Robinson (Coventry, North-West)

Will the Minister accept that this is a pathetic shadow of the project that he presented to the House over two years ago, when he talked in terms of 5,000 jobs, 200,000 cars, half for export, and reaching a level of 80 per cent. within two years? Is this not a project which, in its present form, the right hon. Gentleman should not accept? Would it not be better to see if he can get to phases 2 and 3 at once and say politely that we must be critical in the national interest because, in terms of jobs and exports, the project as presented to the House is unacceptable? Under phase 3, provided that we had a commitment on gearboxes and engines to be manufactured in this country, we could look to an increase in jobs and exports, but without that we should back our indigenous manufacturers,

Mr. Tebbit

I am afraid that the hon. Gentleman has got it completely wrong again. He always did, he always does, and I fear that he has reached the stage in life when we must say that he always will. First, as I explained, the 24,000 cars which will be assembled from kits in the first phase will be wholly a gain to this country in terms of the jobs that will be created. Secondly, while he may be contemptuous of 100,000 extra motor cars being produced in this country, frankly I am not. Approaching 1 million cars were imported into Britain last year. The 100,000 stage could substitute for many of those, and I hope that the success of the Nissan firm will be such as to encourage it to move on from phase 2 to phase 3 and beyond. I am amazed that the hon. Gentleman should seem complacent about the fact that half the Ford motor cars sold in this country are imported, yet be so churlish about this.

Mr. Beaumont-Dark (Birmingham, Selly Oak)

I think that many of us will breathe a sigh of relief that the Meccano outfits that are to come in will be treated against the imports of Japanese vehicles. As the Japanese are considered to be so efficient already, and as they will virtually be given a green field site when they come here, why do we need to buy competitors? How much will we give the Japanese of other people's money to compete with our own industry?

If the Japanese are so marvellous already, why should we think that there is any chance of us beating them at the game that they intend to play? Most of us think that when we come to 1990 they will find a way to wriggle out of the agreement, and that by 1991 there will be so much taxpayers' money in the project that we shall not be able to let it fail, and other home industries will fail instead.

Mr. Skinner

And Sir Michael will have pocketed his consultancy fees.

Mr Tebbit

If my hon. Friend will forgive me for saying so, he is wrong on these matters. There is no question of a site being given to anyone. A site will be sought of about 800 acres on which the factory will be built. That site will be purchased. My hon. Friend asks about the aid that will be given. I shall not repeat the figures because I am sure that my hon. Friend will be able to read them in Hansard tomorrow. The aid that will be given to Nissan will not be nearly as much as that which has been given to British Leyland—[HON. MEMBERS: "That is British."] — and we shall treat Nissan as a British operation in the same way as we treat the British operation of Ford or General Motors.

Mr. Roy Hughes (Newport, East)

May I express regret that the investment is a good deal smaller than originally envisaged? Nevertheless, if Newport is chosen as the site, we shall say clearly and unequivocally, "Croeso oeth deg pedwar". Bearing in mind all the advantages that Newport has to offer, the company will make a wise choice if it decides to locate its factory within it.

Mr. Tebbit

I must confess that since my childhood in Wales I have forgotten what Welsh I learnt, so I am not sure whether the hon. Gentleman was speaking Welsh or Japanese. I construe that he was offering a warm welcome to Nissan should south Wales be favoured with the investment. I am sure that he is speaking for all the people of Wales when he makes that remark.

Mr. Mark Robinson (Newport, West)

Despite some of the carping comments in response to my right hon. Friend's statement, I welcome it, just as I welcome the visit of the chairman of Nissan to London today. Can my right hon. Friend say when a decision will be made on the siting of the plant? If the decision is made to locate in south Wales, I echo the comments of the hon. Member for Newport, East (Mr. Hughes) and say that Nissan will be made most welcome within the region.

Mr. Tebbit

I note, Mr. Speaker, that the Welsh lobby today is one that would have made your predecessor extremely proud. I hope that the decision on the location of a site will be made shortly. The Nissan company is anxious now to proceed as quickly as it can.

Mr. Gordon A. T. Bagier (Sunderland, South)

Does the right hon. Gentleman agree that by and large Japanese investment in Britain has been good investment? Does he agree further that by and large the Japanese have proved to be first-class employers? As Sunderland is one of the areas that has been short-listed for the location of the site, will he take it on board that in the light of the prediction of this announcement today, the chairman of the northern TUC telexed Nissan and assured it of a warm welcome in the north-east should the project go there?

Mr. Tebbit

I am grateful to the hon. Gentleman for his remarks and the fact that so many hon. Members can clearly see the advantage for their own region of this investment going there. That shows firmly that there will be a national advantage wherever it goes. The chairman of the northern TUC was echoing sentiments about the Nissan project that I have heard expressed by other senior trade union leaders.

Mr. Richard Hickmet (Glanford and Scunthorpe)

Will the Secretary of State consider the great hopes that have been raised by Nissan's decision? Will he bear in mind also that the Scottish and Welsh lobbies have a nauseating amount of time in the House? [HON. MEMBERS: "Withdraw!"] Accordingly, will he bear in mind that in my constituency in south Humberside a great welcome would be given to the project? Will my right hon. Friend consider that Humberside has development area status, whereas south Wales has special development area status and that it is open to the Secretary of State to top up any difference with discretionary grants should Nissan come to Humberside? I invite the Secretary of State to bear that in mind in any negotiations he may have with Nissan.

Mr. Tebbit

My hon. Friend was for a moment encouraging what one might call the division lobby with his remarks about some other lobbies. Hon. Members are all good lobbyists for their constituents, and there is nothing wrong with that. I note what my hon. Friend has said. I believe that I made it clear that the RDGs would be fixed according to whether a region was a special development of a development area and that I would consider special financial aid. I cannot add to that.

It is useful to reflect that Nissan appears to be in the van of a number of people in taking that view of investment in Britain. I was especially interested to read the view of some hard-headed Swiss bankers, the Union Bank of Switzerland, that recently observed: Great Britain, one of the world's leading industrial nations, has thus become attractive again as an investment country and will receive increased attention especially from investors residing abroad.

Mr. Kevin McNamara (Kingston upon Hull, North)

It must be clear to all men of objective thinking that, all things being equal, south Humberside is the best site for this project. That being the case, will the Secretary of State inform the House more precisely about the Government's position on grants? Humberside county council has always been of the opinion that if the erea were chosen, our position as a development area would not be used against us and the Ministry would be prepared to top up any grants. Has the right hon. Gentleman revealed to Nissan what rate of grant will be available in the different areas following his review of development area status throughout the country?

Mr. Tebbit

The hon. Gentleman will be aware that when I introduced the White Paper I made it plain that there would be transitional arrangements. Under those arrangements, the existing rates of grant will be applicable to this plant and others whose timing is similar. RDGs will be paid at the appropriate rate, according to where the factory is sited. I have said that I could provide selective financial assistance up to about 10 per cent. of the total capital costs of the project to a maximum of £35 million.

Mr. Roger King (Birmingham, Northfield)

Not wishing to be left out of the auction for where the cars should be built, I point out that history has told us that the only sensible place to build them is in the west midlands. What, if any, sign has Nissan given about the model mix that it is about to start assembling? What classification of car will Nissan make? Will it be a range or one particular vehicle?

Are the terms that have been set down open for renegotiation pending the Nissan project developing more quickly than anticipated? Is it possible that the 1991 date will come forward to the late 1980s so that the British components industry can become involved more quickly with the manufacture of the car?

Mr. Tebbit

I note what my hon. Friend said about the great strengths and abilities of the midlands. He will understand that in the initial stages with a small production it is most unlikely that there would be more than one model, and that would be in the medium price range. I expect the principal model to be in the medium price range in the second phase, although it will be a commercial matter for Nissan to decide whether it can produce more than one model within a production of 100,000 vehicles. It is for the company to see whether it is appropriate to accelerate the pace of the development, but I hope that it will go on to phase 2 and phase 3.

Several Hon. Members

rose—

Mr. Speaker

Order. I have a duty to protect the business of the House. There is another important statement after this, as well as a ten-minute Bill, and I have had notice of some points of order. I propose to allow questions on this important matter to continue for a further 10 minutes, when I shall call the Front Bench to wind up, but I ask hon. Members to be brief in their in their questions.

Mr. Sydney Bidwell (Ealing, Southall)

Is the right hon. Gentleman aware that part of the reason for the success of Japanese penetration in the market here has been the advance of cheap money, sometimes with long-term, no-interest loans to purchase Japanese cars? Does he agree that it would be ridiculous if the money advanced by the British taxpayer to establish the Nissan plant were used for such purposes?

Mr. Tebbit

I take it that the hon. Gentleman opposes the existence of Ford, Vauxhall and Talbot plants in this country.

Mr. Robin Maxwell-Hyslop (Tiverton)

So that we may be reassured about the benefit from the 80 per cent. and 60 per cent. local components provision, will my right hon. Friend tell the House whether the agreement provides for an explicit policy on transfer pricing between Nissan, Japan and its subsidiary in the United Kingdom?

Mr. Tebbit

There are arrangements in the agreement concerning those matters.

Mr. Ernie Ross (Dundee, West)

Is the Minister aware that the statement about the first phase means that this country will provide the low-tech components because the company will not want to ship wheels, fuel tanks and the like from Japan? Will he admit that the statement has more to do with the fact that within the next two days it will be announced that the Japanese trading surplus with the Common Market is $13 billion and that the real purpose of the project is to give Japan a back door into the Common Market?

Mr. Tebbit

If the hon. Gentleman believes that the project will be a back door to the Common Market for Nissan, he must believe that the products will be exported to the remainder of the Community. In that case, it is certainly a very good deal for the workers of Britain to have the factory here rather than elsewhere in the Community exporting to Britain.

As regards the first phase—

Mr. Ross

What about the Leyland car industry?

Mr. Tebbit

The hon. Gentleman must try to keep his mouth closed for a moment so that he can listen.

As regards the first phase—

Mr. Ross

What about the Leyland car industry?

Mr. Tebbit

He is at it again.

As regards the first phase, the cars assembled here will be in substitution for cars which would have arrived in any case, but fully assembled. The hon. Gentleman is being extraordinarily stupid, even by his own standards.

Mr. Hal Miller (Bromsgrove)

Although there should be a broad and warm welcome for inward investment from Japan to offset the trade imbalance and for anything that will help our motor industry to be more competitive and to create additional jobs in this country, is my right hon. Friend aware that there will be disappointment that the project has been so long delayed and so much reduced? Is it to be financed in accordance with his new regional policy or is the west midlands yet again to suffer discrimination on the basis of old and discredited policies?

Mr. Tebbit

I am grateful in general terms for what my hon. Friend has said, as he recognises that the project offers a considerable opportunity, not least for British component manufacturers. As I have already explained, this project — like all others of identical timing — is covered by the transitional arrangements that I announced in December. In respect of regional grants, therefore, it will be treated on the present basis and not on any future basis which has not yet been decided.

Mr. Stuart Bell (Middlesbrough)

Is the Secretary of State aware that we have now been waiting for about two years for a decision on the creation of some 5,000 jobs in this country but that that figure has now been reduced to 500? Although Cleveland is at the top of the unemployment league, I doubt whether anyone there would expect me to go down on my bended knee asking for this investment to come to Cleveland on that basis alone. There will be great disappointment at the mouse that has been presented to us today. Many of us find it demeaning that after five years of Tory government and with 2 million more men and women unemployed Members of Parliament have to scratch around making a case for 500 jobs for their constituents. Many of us are greatly saddened by today's experience.

Mr. Tebbit

I can assure the hon. Gentleman that whether he goes down on his bended knee will make no difference to a commercial decision about where a project will be placed, whether it be from Japan, Birmingham or Frankfurt. What counts is the quality of the work force and the environment. The environment for business in this country is improving every day. I am sure that the hon. Gentleman's constituents will not thank him for his sneering references.

Mr. Michael Marshall (Arundel)

Does my right hon. Friend agree that if some Opposition Members find it difficult to accept the import substitution argument plenty of people in the European Community accept it? Does he agree that there is sufficient interest within the Community and that if we had not come up with a decent package the project would have gone elsewhere?

Mr. Tebbit

My hon. Friend is quite right. Moreover, if the investment had gone elsewhere in the Community, I am sure that there would have been cries of outrage and "Why didn't you get it for Britain?" from Labour Members. Of course we should all be happier if the project had been earner and larger, but that is a commercial judgment on the part of the company. Opposition Members should rehearse in their minds what they would have said if the project had gone to Belgium, France or Germany.

Mr. Eddie Loyden (Liverpool, Garston)

Does the right hon. Gentleman agree that the manufacturing base of the British car industry has been eroded over many years and that although we should welcome an extension of that base we are concerned that the present project may undermine the position of the British industry? Does he agree that such extension is essential but that it should be in the control of British companies?

Mr. Tebbit

The hon. Gentleman says that it is essential to extend the manufacturing base of the car industry in this country. That is what the project is about. If he does not like the project he had better get down to Dagenham and tell the people there how lucky they are that the Ford company is taking some of its investment away from there.

Mr. Stephen Dorrell (Loughborough)

Does my right hon. Friend agree that this is a further example of an investment project coming to Britain because Britain is a member of the European Community and offers an attractive production base for supplying a larger European market? With that in mind, will my right hon. Friend confirm that the 24,000 cars made from knockdown kits and the 100,000 manufactured fully in this country will be treated as having free circulation within the Community and able to compete for Europe-wide markets?

Mr. Tebbit

I think that the 24,000 are unlikely to qualify in that way, but the remainder on the 60 per cent. and 80 per cent. basis certainly can. My hon. Friend is right. The fact that we are in the Community was one of the important factors which caused Nissan to look towards the United Kingdom as well as other member countries. But, of course, the other important fact is contained in the view I quoted earlier by those hard-headed Swiss bankers who commented that, from the fact that the Conservatives have another four years in office, it can be expected that they will adhere to the policy to restore the health of the nation's economy and that will have a related positive impact. That is the reason why the Japanese are coming here.

Mr. Terry Davis (Birmingham, Hodge Hill)

The Secretary of State has referred to the net effect on jobs, but what are the gross figures for job creation and job loss? How many existing jobs will be lost at existing motor manufacturers and component manufacturers such as GKN, Lucas, Smith Industries and hundreds of smaller firms that supply the British motor industry? As for the option to move to phase 2, will this be an option for the British Government, or will the decision be taken by Nissan alone? Have the Government simply given a postdated cheque to Nissan for £35 million?

Mr. Tebbit

I am afraid that the hon. Gentleman again was not listening. The question of the £35 million arises only in the event that we go on to phase 2, so there is no question of a post-dated cheque. The decision quite clearly will be taken by the company concerned, in the same way that it is taken by Ford. [Interruption.] Of course the Government cannot decide when a commercial operation increases its scale. When the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) tried playing that game, his Government stumbled into one of the biggest financial crises that had ever been seen and got kicked out of office and kept out of office at the subsequent general election.

Several Hon. Members

rose—

Mr. Speaker

Order. In the interests of balance, I shall take one more question.

Mr. Michael Gryils (Surrey, North-West)

Would my right hon. Friend note that, while I welcome this decision on balance, unlike other hon. Members, I am not seeking to have the company in north-west Surrey. Does he agree, as has been said earlier, that this is a vote of confidence in a low inflation rate economy, and that it is therefore a plus to the country that it is coming here? Could he give us an assurance that it will not result in the British Government having to give more money to British Leyland as a result of the Nissan development?

Mr. Tebbit

No, the arrangements for funding British Leyland are not related to this, and British Leyland is expected to look after its own financing before too long. The fact that my hon. Friend is not asking for the company to go to north-west Surrey, must be a relief to all of us, not least his constituents.

Finally, I did not fully answer the hon. Member for Birmingham, Hodge Hill (Mr. Davis) on the subject of the number of jobs, but, of course, it is impossible to estimate that, beyond the fact that we know—[Interruption.] If the hon. Gentleman would let me reply, it is not possible to estimate that, beyond the fact that we know that there will be 400 or 500 jobs directly in the first phase and about 2,700 in the second phase. The number of jobs additional to that will depend crucially on the success of British manufacturers in supplying components against the competition with others within the Community.

Mr. Peter Shore (Bethnal Green and Stepney)

The Secretary of State has shown an unusual degree of ill-temper, even by his own standards, in addressing the House. We understand that he would have welcomed the Japanese equivalent of a Roman triumph this afternoon, but what he has found is that the House was in a serious and probing mood on both sides because it genuinely wishes to establish where the national interest lies. Because of that, I want to come back to two factual questions that I think are of great importance.

The first relates to the amount of manufacturing that will take place in the United Kingdom when phase 2 is reached—I put phase 1 on one side for the time being— and that is not until 1990. Can we have a further explanation of what is meant by percentages based on EEC ex-works prices? Is that based upon the cost of the various components that go into the assembly of the car? Are engines, gearboxes and other major components to be manufactured here in Britain? That is what we want to know. We want to know also whether British machine tools are to be used, and not Japanese machine tools in the general assembly and laying out of the new plant. If they are to be Japanese tools, is regional development grant to be paid to install them? Finally, on the major costs of the project, will the right hon. Gentleman confirm that what we are talking about here is a sum of not less than £100 million of British money in a total project in phase 2 which on current costs is of the order of £350 million?

Mr. Tebbit

The right hon. Gentleman puts his points clearly and fairly and, as always, courteously.

If I have been sharp with some hon. Members, it is because of the offensive and distasteful behaviour of one or two hon. Members in particular. I wish I could direct my remarks to the hon. Member for Bolsover (Mr. Skinner) with the skill with which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) did one day in putting him in his place.

Turning to the right hon. Gentleman's questions, the ratios are related to the ex-works price of the vehicle. With regard to what the right hon. Gentleman said about the engine in phase 2, for example, the engine components may well be assembled, and certainly sub-assembled, in Great Britain. Production of 100,000 is very unlikely to be a sufficiently large base for engine manufacture. As to the question on machine tools in the building of the lines, the first thing is that they will, of course, be the best. I very much hope that British manufacturers will be able to compete in that way. It would not be sensible to require the company not to use the best machine tools, from wherever they come, and it would clearly be very foolish to say, for example, to Ford, to Talbot, to GKN or, indeed, to British Leyland that it could not import machine tools that were competitive with the best in the world.