HC Deb 19 December 1947 vol 445 cc2118-28

4.1 p.m.

Mr. Edelman (Coventry, West)

I am grateful for the opportunity of raising the question of the allocation of steel to the motor industry. This is a subject which is of great importance in my own constituency, but it is of equal importance to the country as a whole. It is important to Coventry because it affects the whole prospect of employment during 1948; it is important to the country because the motor industry is likely to be decisive in the export trade. My hon. Friend the Member for East Coventry (Mr. Cross-man), who is unable to be present this afternoon, wishes to be associated with the main theme of what I have to say.

I would not have thought it necessary to raise this subject this afternoon in view of an enlightening reply which my right hon. Friend the Minister of Supply gave last week on the future of steel allocations to the industry, but I feel it necessary to do so in view of the fortnight of confusing statements which preceded it. On 4th December one of the principal motor manufacturers, who is also a member of the National Advisory Council for the motor industry, made an announcement which received wide publicity, that the motor industry would have its steel allocation cut for the first six months of 1948. Because of the consternation which that statement created amongst managements and workers in the industry I feel it necessary to put three questions to my right hon. Friend in order to obtain clarification.

This is my first query. How much steel will the industry have during 1948? Will it be sufficient to reach the target for the industry and will it be enough to maintain full employment throughout the industry generally and in particular in my constituency? I would then like to ask, arising out of the statement, which was distributed after that industrialist had made his announcement, that the number of cars to be produced would be something like 260,000 only, whether during 1946 and 1947 a substantial amount of steel reached the motor industry but not by means of the machinery of allocation which my right hon. Friend and his predecessor have established? My third question is, will those firms who are specifically concerned with export and are enterprising and active in promoting the export trade, receive any degree of preferential treatment in their quotas?

The period of confusion and doubt to which I have referred began on 4th December when a leading industrialist in the motor industry held a Press conference, after which it went out to the whole country—his statement received very wide publicity—that there would be radical cuts in the allocation of steel. More than that, there were headlines which suggested that my right hon Friend was killing the industry's export trade. The figure of 260,000 cars to be produced as a rate of production, though not given by the industrialist himself, received extremely wide circulation. The consequence of that was the widespread belief, which still has not been entirely contradicted, that the motor industry in 1948 would enter a period of depression. My right hon. Friend promptly issued a denial of these statements and indicated that the level of production would be in excess of 310,000 cars per annum, the rate at which the industry is running today.

Here were two entirely contradictory statements, and the contradiction is all the more marked because the industrialist who put out the original statement, being a member of the National Advisory Council with which, my right hon. Friend had stated on 1st December, he was already in consultation, holds such a prominent position in the industry. Consternation and dismay were aroused by his words throughout the country. But even after my right hon. Friend has issued his denial, I regret to say that a highly respectable trade journal in the motor industry, wrote on 12th December: Last week's difference of opinion would seem to be the first warning that the Ministry of Supply, with characteristic slipperiness, is going to try to put the blame on the shoulders of private enterprise. I do not appear to have seen any apology on this matter either from the industrialist, or from those journals which gave this wholly erroneous statement such extremely wide publicity, and I would ask my right hon. Friend this afternoon to state the circumstances in which this extraordinary contradiction between the views of his Department and those of this member of the National Advisory Council arose, because we had always been led to believe that there was the closest consultation and communication of views between my right hon. Friend's Department and this Council; and that ought to be cleared up.

The second matter which arises out of that is how, if this motor manufacturer thought that the rate of production was to be only 260,000 per annum, the industry with only a small increase of steel over 1946–47 is due to reach a figure of 340,000 by mid-1948. The implication would appear to be that although the formal allocation of steel to the motor industry was for only a little more than 260,000, in point of fact substantial quantities of steel were reaching the industry through unauthorised channels. The expression "unauthorised channels" is a euphemism. When a housewife buys a pound of butter through unauthorised channels, it is normally described as the black market.

I do not want to suggest that anything of that kind has been going on in the industry, but I would suggest that arrangements have been made directly between the steel industry and certain motor manufacturers which have bypassed the allocation system and methods of my right hon. Friend's Department. If, in the coming year, we are not to have a breakdown of the allocation system, it is of vital importance that my right hon. Friend this afternoon should state quite categorically and definitely that he intends his system of allocation to be maintained in the industry, and that the recipients of steel should only obtain it when that steel is part of their quota.

Finally, I would like to speak of what happens to the steel once it has been allocated to the industry. We know the industry, which did magnificently last year and which we all believe will be able to play a high part in the export drive in the coming year, is doing its best to help the Government to restore the balance of payments. But, within the industry itself, different firms and organisations have different degrees of competence in obtaining export orders, and in fulfilling them. I wish to ask whether in making his allocation to the steel industry my right hon. Friend does in fact take into account the part which the individual firm is willing and able to play in helping the export drive.

As an illustration, I mention a section of the industry which should be encouraged, that part of the industry which deals with the manufacture of heavy lorries. We need heavy lorries at home; abroad they are in considerable demand; but the number of heavy lorries produced has been restricted because of the relatively small share which the manufacturers of these lorries have been obtaining from the steel quota. I hope that in announcing the principle, my right hon. Friend will give additional allocations to those industries which show themselves capable of playing an important role in the export trade, and will bear in mind the case of the heavy lorries as an example of a part of the industry which should be helped.

I urge that the maximum amount of steel should be made available to the industry consistent with the national interest. But, in order that this objective may be achieved, it is essential that my right hon. Friend should clarify the situation, so that everyone knows what they are to get, that he states the method of allocation, and, having stated it, sees that that method is rigidly and accurately enforced in the coming months.

4.13 p.m.

Mr. Christopher Shawcross (Widnes)

My hon. Friend the Member for West Coventry (Mr. Edelman) is to be congratulated on having raised this important matter, and I hope that when the Minister replies it will be seen that there is more smoke than fire—not in what my hon. Friend has said, but in the matters to which he referred—because so far as I am aware relations between the Minister and the industry are extremely close and good, too good to my way of thinking in relation to one particular matter, to which I shall refer later. I should like to add two or three points to what my hon. Friend has said, although he did raise one aspect of one of them.

A system should be established whereby those manufacturers who are exporting cars which bring in more hard currency per ton of steel would be given extra steel, if they need it, even at the expense of others whose exports earn less per ton. This is a matter of simple arithmetic, not too simple I hope, but if it is, perhaps the House will excuse me. It can be illustrated in this way. It is better to export a car weighing two tons which brings us 4,000 dollars than one weighing one ton, which brings in only 2,000 dollars. I am aware of the arrangements which I understand exist, or will shortly be put into force, for reducing the amount of steel given to manufacturers unable to sell abroad a due proportion of their output, but that in itself is not enough. In addition, we need a notional pool of extra steel to be given, when needed, to those manufacturers who can prove that their cars bring in a higher rate of hard currency per ton than the others. I hope the Minister will seriously consider that proposal.

Apart from the factor of higher conversion value, I suggest that it is of great importance that the Government should encourage the continued production of high quality cars in this country. These cars are not necessarily luxuries. If it were not for the extra Purchase Tax they often represent better value for money to the buyer, especially to the buyer who uses his car every day and who must have a highly reliable vehicle. They have a longer life, cost less in maintenance, etc. I would ask the Minister to consider, he having already done what has been published in relation to the production of a British motor racing car, if he would not also consider whether the development of some of these high quality cars, which the manufacturers may not be able to continue to produce, or may not be able to develop into the most modern form, without assistance, should not be assisted in some way by the Government, in order to maintain and increase that great reputation which we have earned in that field.

The second point which I would like the Minister to consider is whether he could not do more than he has done, and in that I am not sure whether he has yet done quite so much as his predecessor did, towards persuading the industry, not necessarily by means of the control of steel, to achieve a higher degree of rationalisation and standardisation. I know that this has been fully dealt with in the recently published report of the Motor Industry Advisory Council, which in many respects is already out of date. That report also deals with the equally important question of getting the industry to produce the right kind of car for export.

I suggest that standardisation has not yet gone nearly far enough. I would urge my right hon. Friend to see if he cannot, along the lines already accepted by it as shown in that report, persuade the industry to go farther and faster, because when we look at the existing facts today—not what is said in the report but the facts as they appear in the catalogues for export—they are that the five big concerns in this country capable of anything like mass production are producing no fewer than 29 different models.

The second illustration is also a recent one of new models produced by some of these big five. One of these models is being made in two forms—one with two doors and the other with four. There is no other difference. Surely that represents an extraordinary development of the principle which the industry has agreed upon in that report. Another new model recently produced by another of the big five, although it has up-to-date features such as steering column gear change, which seems of doubtful value in that there is not room to seat three people in front, still retains the old-fashioned form of fixed axle front springing.

I would like finally to express again the opinion which I wrote in a letter to "The Times" and which has never yet been contradicted, that the highest degree of rationalisation and standardisation which we must have, will never be achieved unless there is some kind of merger of at least three of the existing big five concerns. We shall never get, by any other means, anything like the proportion of rationalisation and standardisation that exists in the American industry, which, with 10 times the output of our own, has less than twice the number of separate models. Whilst congratulating the Minister on everything he has done—and knowing that he is thinking closely and carefully about this—and especially congratulating him on the help which for the first time has been given by any Government—this Socialist Government—in the production of a British racing car. I ask him to consider this as an urgent matter. I am convinced that unless that degree of rationalisation and the production of the right type of model are more quickly achieved, we shall one day wake up to find that we can no longer export cars in anything like the quantity now contemplated. If that time comes, it will be a disaster. I hope that it never will.

4.19 p.m.

The Minister of Supply (Mr. G. R. Strauss)

I am sure that all sections of the motor industry will be grateful to my hon. Friend the Member for West Coventry (Mr. Edelman) for raising this point and I am certainly grateful in that it gives me the opportunity to clarify some of the confusion which was created in the minds of many people by contradictory statements issued by Sir Reginald Rootes and my Department. Those statements must have caused a certain amount of anxiety in the minds of the operatives in the motor car industry, as much as in the minds of the employers. My hon. Friend asked me to explain how those two statements came to be made, and what was the cause of the confusion. I think I can tell him very shortly. Very good relations exist between my Department and the motor industry.

It is the custom of my Department to consider with a small informal subcommittee of the Motor Advisory Council the future allocations of steel to the motor industry before those allocations are finally made. One of those informal discussions took place early in December. They are, of course, entirely confidential, and we were rather surprised to find the next day that a statement had been made by Sir Reginald Rootes—who had been present at the informal discussions—giving certain facts and figures, and expressing opinions which were really quite misleading to the public, and which had little relationship to the facts as disclosed at the meeting. Perhaps I can put it this way, that there had been an obvious misunderstanding by Sir Reginald Rootes about the facts which have been disclosed by my Department. That combined with a possible exaggeration in the interpretation given to the statement by the reporters in the papers, gave a wholly false impression to the motor industry of what exactly were the proposals made by my Department. I regret very much that that statement was made, particularly in view of the confidential nature of the discussion, but I am not suggesting for a moment that Sir Reginald, in making it, was motivated by anything but the best intentions. He obviously thought he was giving information to the industry which it should have.

The moment I saw that statement in the papers I issued instructions that a correction should be given to the Press, stating the true facts. This statement was issued on the same day. That is how the conflict arose. I stated the true situation in a reply to my hon. Friend the Member for West Coventry (Mr. Edelman) in a reply to a Question which he put to me on 15th December, and I would like to repeat the essential part of that answer. I stated that in their view, that is, the view of the National Advisory Council for the motor manufacturing industry, the allocation of steel which is being made to the motor manufacturing industry for the first six months of 1948 and which represents an increase on the allocation for this quarter, should enable the industry to approach the mid-1948 target for cars. On commercial vehicles there might be a short fall on the target, the amount of which cannot yet be assessed. That statement of the National Advisory Council for the motor industry was endorsed by Sir Reginald Rootes, who is himself a member of the council. So much for the statement which that gentleman issued, and the explanation which I made immediately to the Press, and in answer to my hon. Friend. I hope there will be no doubt in the mind of anybody that, first of all, there will be an increase in the allocation of steel to the motor car industry during the first two quarters of next year above the allocation during the present quarter. That is just contrary to what Sir Reginald Rootes said. In point of fact, we have no doubt that, on that allocation, the export figures for cars should either be achieved, or very nearly achieved.

The hon. Member for West Coventry asked a number of questions and I would like to answer them but I will naturally, have to be brief, particularly as I wish to deal with one or two points raised by the hon. Member for Widnes (Mr. Shawcross). He asked how much the steel industry would get in 1948. I cannot give him the exact figures of the total of the allocation, either for the six months or for the year. For the second part of the year of course we cannot say what the allocation will be. But, so far as I can foresee the future of the industry during the coming year I do not think that anyone working in the industry needs to fear that he will suffer unemployment. Naturally, I cannot guarantee that in every individual firm, particularly every small firm, redundancy may not arise, but broadly speaking there should not be unemployment in the motorcar industry.

Secondly, the hon. Member asked whether steel has reached the motor industry through unauthorised means. It is possible that in the past some steel has reached some sections of the industry above the allocation to which particular firms were entitled, due partly to certain difficulties with the allocation machinery, which have arisen since the war, and which have been explained many times in the House. However, I have no evidence to suggest that at the moment any firm is getting anything more than its allocation, and it will be our purpose to see that during the coming year that only the proper allocations are received. Then I was asked whether allocations will take into account the success of a particular firm in exporting its cars. My hon. Friend the Member for Widnes further added to the point and referred particularly to exports to hard currency countries. He asked whether the conversion factor would be taken into account. My answer is that the number of cars exported by particular firms, and the success with which certain firms can export to hard currency countries, are factors taken into account in making allocations. They will be applied even more strictly in the latter part of the year.

The hon. Member for Widnes also raised the general question of the standardisation of cars. That rather broadened our discussion, as I had understood from my hon. Friend the Member for West Coventry that the Debate was to be on the narrow question of the conflict of the statements. But as the point was raised, I would like to say that there has been a large measure of standardisation in the industry and concentration on certain models. I am speaking from memory, but I think that there has been a con- centration representing about two-thirds of the models which existed before the war. We are as a result now producing about one-third of the prewar models. I am very doubtful whether any further concentration would be in the national interest at the moment. In the long run, it is highly desirable, but if we try to reduce further the number of models now it could only be done at the expense of the production, of cars. At present we want to produce as many cars as possible, particularly for export purposes, and I would not therefore advocate any intensification of the move towards standardisation at this stage.

The hon. Member for Widnes also made a small point about the number of doors on a car. At first sight that seems to be an unnecessary refinement, but I would like to stress that it is a special export requirement for some markets and that is why it is undertaken. We realise to the full the important part which the motorcar industry plays in our export drive. Motorcars are a ready export. There are still very big markets for cars, and the industry is doing as much as any part of British industry to help us to achieve success. We in the Ministry of Supply will continue to give the industry every help and encouragement that we can to see that it plays a maximum part in helping us through the present economic difficulties.

Question put, and agreed to.

Adjourned accordingly at Twenty-Nine Minutes past Four o'Clock, till Tuesday, 20th January, pursuant to the Resolution of the House yesterday.