HC Deb 02 August 1957 vol 574 cc1763-72

3.55 p.m.

Mr. Maurice Edelman (Coventry, North)

I welcome the opportunity to raise a matter which is not only of great importance to my constituents, but of great importance, I suggest, to the country as well. I refer to the increasing American control of the British motor industry.

I am not complaining at all of American investment in British industry. On the contrary, I consider the mutual involvement of the two countries to be highly desirable, and that British investment in America and American investment in Britain can be of great benefit to both countries. What I object to is the developing possibility that there may be American control of one of our most important exporting and strategic industries.

The other day, when I raised this matter of American control, the President of the Board of Trade, in a reply which I thought was both pompous and question-begging, said: If by North American the hon. Gentleman means the Canadian people who have stood loyally by Great Britain for 200 years, I see no reason why they should not invest in the British motor industry."—[OFFICIAL REPORT, 25th July, 1957; Vol. 399, c. 574.] I call that reply question-begging, because I did not raise in any Question to him the matter of American or Canadian investment in British industry. The question related specifically to control, and it is to control that I wish to address myself again today.

There is great anxiety among not only workers but employers, too, in the motor industry lest an excessive share of the industry's resources should fall into American hands. The present position can be briefly stated. There are five major groups of motor companies in this country, of which two, at least, are manifestly American dominated, namely, Vauxhall, which is controlled by General Motors, and Ford Motor Company which is controlled by Ford of the United States. There remain three other companies, of which the Standard Motor Company is now in process of being taken over by an ostensibly Canadian company.

The Economic Secretary was good enough to say, when I raised this matter with him the other day, that he would inquire into the shareholding of Massey-Harris-Ferguson in order to establish to what extent it is in Canadian hands or in the hands of United States investors. The right hon. Gentleman was courteous enough to send to me certain particulars which had been gathered for him by Massey-Harris-Ferguson itself. I am not quite sure whether the company sent him the information of its own volition, or if he inquired of the company in order to obtain the information. According to the figures supplied by the company, 90 per cent. of the shares are held by Canadian investors and only 4 per cent. by United States residents. The remaining 6 per cent. are allegedly held by residents of the United Kingdom.

I venture to challenge the figures. Unless we can be satisfied that, in the 90 per cent. of shares ostensibly held by Canadian shareholders, a high proportion is not held by nominees of United States investors, it will be impossible to be sure that the dominating control of the company is in Canada itself.

It being Four o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bryan.]

Mr. Edelman

I hope that the Economic Secretary will be able to give us some further information on this matter, because unless he does so I shall be obliged to stand by the original claim which was made by me and by my hon. Friend the Member for Uxbridge (Mr. Beswick)that even today, assuming that this Massey-Harris-Ferguson deal does go through, over half of the British motor industry is in danger of falling into American hands. I believe that that requires the most careful investigation.

The special reason why I deplored and still do deplore the prospective sale of Standard Motor Company to the Massey-Harris-Ferguson Company is precisely that the Standard works, which are in my constituency, which are in Coventry, are a great national asset. Not long ago I went over the new automation plant where tractors are produced. From my own observation I believe that that plant is second to none in not only Europe but America as well. I believe that as a type of the highly developed automatic plant, it is comparable with the most up to date automation plant at the nationalised Renault works in France, and for that reason I view with great anxiety the transfer of this great national asset beyond British control.

We all know that not long ago the Standard Motor Company made an investment running into many millions of pounds in this new automation plant, and now the Massey-Harris-Ferguson Company comes along and offers a price which is regarded by various competent authorities as not corresponding in any way with the real value of the plant.

The shareholders of Standard can look after themselves. I am sure that before this transaction is completed they themselves will want to make the most searching inquiries as to whether they are receiving the proper price for this plant, which, as I say, has been brought to a pitch of perfection which no other comparable plant has reached, certainly within the history of motor car and tractor production. But I am not primarily concerned with whether Standard shareholders are getting value for their money. The reason why I am raising this matter tonight is that I feel that it is highly undesirable that the destinies of the workers of Coventry should be decided in either Toronto or Detroit.

Not long ago one of the heads of General Motors, Mr. Charles Wilson, now American Secretary for Defence, said, "What is good for General Motors is good for the United States of America." That may well be true, but I do not believe that the corollary is true, that what is good for General Motors is necessarily good for the United Kingdom. Indeed, I can imagine circumstances in which the control of the British motor industry in America could be directly damaging to the interests of the industry as a whole, and more particularly to the workers in the industry in this country. It is possible, for example, to conceive that there might be a slump in the American motor industry, and clearly, in those circumstances, those who own or control the British departments of the American firms, if they had to choose between unemployment in Detroit and unemployment in Coventry, would certainly prefer unemployment in Coventry to unemployment in their own country.

I mentioned that Mr. Charles Wilson is today the United States Defence Secretary, because the British motor industry is, as I said at the outset, a vitally important strategic industry. It is an industry which during the war turns to the manufacture of armoured fighting vehicles and tanks. Consequently, it is impossible not to regard the industry, quite apart from its commercial interests, as anything less than an industry of the highest strategic importance.

I hope and believe that the overall strategic interests of the United States and Britain are identical and will never be separated, but within that scope there is room for wide differences of opinion. For example, during the war a decision had to be made about the allocation of aircraft production. It finally resulted in fighting aircraft being made in this country and transport aircraft being made in the United States, with the ultimate result that, when the war was over, the United States transport aircraft industry was several years ahead of its British counterpart. I say, therefore, that if the motor industry is to serve the national purpose of providing equipment for our fighting services, as and when necessary, it seems quite obvious that it is highly undesirable that control of that industry should pass from London to New York, or wherever the control may be vested abroad.

I have dwelt on the commercial and strategic aspects. I want to deal with one further point, which I think is one that will cause the greatest concern in this country. I am talking about the position of the trade unions vis-à-vis their prospective North American employers. In the past, relations between the trade unions, employers and management, certainly in Coventry, despite a few strikes here and there, have been pretty good. Since the war I do not think that there has been one official strike in the motor industry. Indeed, the labour record in Coventry itself compares most favourably with the labour record of Dagenham where one had a large number of British workers who were controlled by a management responsible to American employers.

I do not say that necessarily derogatorily to the Americans or the managements they selected, but the fact is, as everyone knows, that the United States attitude towards trade unions is different from ours. I do not say for a moment that it is necessarily better or worse. I only say that it is different. If they try to apply the technique of labour relations to Coventry—and I mention Coventry specifically because it is within my knowledge and experience—I cannot help feeling that there is likely to be the gravest resentment. Here again is an added reason why this great industry, this national asset, should not be permitted to go out of British hands. I will not dwell on or extend the argument as to the means by which the nation can exercise control of the motor industry. I have already stated in the House that I believe that the motor industry should be nationalised.

Mr. Speaker

I think that will involve legislation.

Mr. Edelman

I am afraid it is precisely for that reason that I said that I did not want to extend the argument.

Nevertheless, dealing with the situation as it is, I would ask the Economic Secretary to the Treasury to consider very carefully the controls which lie within his power.

Only an hour or so ago we had a debate which made reference to the British Petroleum Oil Company. The Economic Secretary will recall that in 1911 it was the right hon. Gentleman the Member for Woodford (Sir W. Churchill)who acquired shares on behalf of the British Government in order that we could be guaranteed control of essential oil resources. In reply to a Question which I put to the Economic Secretary the other day, the right hon. Gentleman reminded the House that this same technique was used to obtain control of the Cunard Company, and to make sure that no foreign Power could acquire what was designed to be a great national asset.

I need not say now that for my own part I do not hold very much with the project of establishing a shareholders' or a stockbrokers' State. I do not believe that it is the best means to obtain control of, or even to direct, the fortunes of any industry, particularly one which is of national importance. I say today, however, that even within the limits of the Exchange Control Act, a provident Chancellor and Government have the power to protect the British motor industry and to keep it safe for Britain.

I hope, therefore, that the Economic Secretary, on behalf of the Government, will assure us that he will take that action and so prevent the creeping American control which today threatens to put the British motor industry in hands beyond the reach of Parliamentary control. I hope he will take the necessary steps, using such powers as he possesses, to safeguard the motor industry and its workers from influences, from directions and from controls which have no right to be exercised against it.

4.12 p.m.

The Economic Secretary to the Treasury (Mr. Nigel Birch)

The hon. Gentleman the Member for Coventry, North (Mr. Edelman)knows a great deal about this subject and has put his case with great clarity. I think he will agree with me that this Adjournment debate has been sparked off, as it were, by the Massey-Harris offer for Standard's. Without infringing the rules of order I think I may refer to a previous speech made by the hon. Gentleman on this subject, when he advocated nationalising a part of the industry. He said this: One has naturally in mind as a national candidate for such a distinction the Standard Motor Works in Coventry."—[OFFICIAL REPORT, 22nd February, 1957; Vol. 565, c. 782.] Perhaps the hon. Gentleman feels that he is being robbed of a victim if this deal goes through. I fear that that is really his basic approach to this difficult problem.

Now I will say something about the policy of inward investment; that is to say, the policy of investment in this country by foreign companies of all kinds. The object in allowing foreign investments is, first, to increase our reserves and, secondly, to do anything we can to facilitate the increased liberalisation of trade in general. All these cases come under the Exchange Control Act, and certainly any case of buying control of a company does so. When considering any case there are certain criteria we apply. There are three main ones, and at least one has to be satisfied, although in many cases, of course, they are all satisfied.

The first criterion is: will such an investment increase our exports? The second one is: will such an investment reduce our imports? The third one is: does the transaction bring to this country any worthwhile technical experience or "know-how", or patents, or anything of that kind which we have not got in this country at the moment? If we are convinced that any deal satisfies, at any rate, one of those criteria, and preferably all of them, then we allow it.

I turn now to the proposed Massey-Harris deal. As the hon. Gentleman rightly said, the deal is not through. Whether the shareholders of Standard's accept the offer made to them is entirely up to them. It is not up to the Government to decide whether or not they have been offered the right price, and I will say nothing about that at all.

On the question of satisfying the criteria, I should have said that the proposed deal satisfies all of them. It will facilitate the tooling up for the production of the heavy tractor in Coventry, and I understand that it is the intention of Massey-Harris, if the deal goes through, to concentrate its tractor production in Coventry. The company will bring with it the advantages of its sales organisation, particularly its sales organisation in North America. We believe that as a result of these things not only will money come into this country to build up our industrial potential but we shall increase our exports substantially, and particularly those to the North American Continent. Therefore, the deal appears to satisfy the criteria.

On the question of control, the hon. Member is on a fair point in saying that when one has what are, in effect, bearer shares it is not exactly easy to be absolutely certain who the ultimate owners are. The company has volunteered the information that approximately 90 per cent. are Canadian owned. What I do not think anyone has any doubt about at all is that the company is under Canadian control.

The hon. Gentleman also referred—and it is an important point—to the question of the degree of participation by American companies in motor production in this country. It is very substantial. Taking the first six months of this year, the American-controlled companies produced about two-fifths of the motor cars and about one-third of the commercial vehicles. Those are the best figures that I have been able to obtain.

Mr. Arthur Moyle (Oldbury and Halesowen)

Have American companies such as Vauxhall's and Ford's, and possibly Standard's, any advantage in respect of capital investment over our domestic concerns?

Mr. Birch

I am not absolutely clear what the hon. Gentleman means.

Mr. Moyle

I have in mind, for example, the recent capital investment programme affecting Ford's and Vauxhall's, and I wonder whether, by virtue of their being American companies, they have some freedom with regard to capital investment which would not be enjoyed by domestic companies.

Mr. Birch

We must be clear about the distinction here. They get no additional freedom in the sense that the Capital Issues Committee would sanction borrowing by an American-controlled company which it would not sanction in the case of a British company. There is no question of that at all; all companies are treated equally in that respect. Where it is possible that some American-controlled companies may have an advantage is that they have more money of their own to invest. One of the points about the Massey-Harris-Standard deal is that the Massey-Harris Company proposes, if the deal goes through, to put in a lot of capital, which will, I should have thought, be of very great assistance to the company and to Coventry.

I was talking about the share of the British motor industry which the American companies have. The American-controlled companies have an extraordinarily good record in exports. The allegation has often been made—and the hon. Member for Coventry, North made it to a certain extent today—that they are looking towards Detroit all the time. In practice, it has not worked out that way. For example, one of the best of our exporting firms to the United States of America is Ford's itself, which has an extraordinary record there. It has been found that American-controlled companies all over the world have, on the whole, followed the policies of the countries where they reside. They have brought into this country a great deal of wealth and it is the dollars and the foreign currency earned by these companies which is doing so much to build up our balance of payments.

In the days when we had a very large surplus on our balance of payments, it was we who controlled the companies. We built up American industry and we built up Canadian industries. We owned their railways, and controlled many of their companies. To this day we control companies in America and very important companies in Canada. It was to the advantage of the Americans and Canadians and also to our advantage. I believe that today we should not be too frightened of inward investment. It is to our mutual advantage of Canada, America and ourselves that this investment should take place.

Mr. Edelman

Does not the right hon. Gentleman agree that if there were a recession in Detroit, rather than import Vauxhall motor cars from Luton, General Motors would cut down the export of Vauxhall motor cars from Luton in favour of cars produced by General Motors in Detroit? That is obvious, because, otherwise, there would clearly be labour trouble on a scale which has never been experienced in the motor car industry in America.

Mr. Birch

There have been certain minor recessions in the American motor industries over the last few years and nothing of the sort has occurred, and I see no reason why it should. It is to our mutual advantage that this sort of thing should take place.

I do not think that there is much in the strategic case. There is no analogy between the motor car industry in this country now and what happened about civil aviation during the war. During the war, we deliberately said that we would stop our research and development of civil aviation. That was a position to which we were forced owing to the strain of the war. I very much hope that we shall not be too narrowly nationalistic about all this.

The hon. Member said that he does not believe in the half and half policy of the leader of the Opposition. He believes in outright nationalisation, and, since that is so, I understand his objecting to the proposed Massey-Harris-Standard deal. However, he did say—and I was glad to hear him say it—that he thought that the more our affairs and American affairs became mixed, the better, and I believe that he is profoundly right.

As this is the last speech before the Summer Recess, and as when called upon to speak at the end of the Session just before the Summer Recess one is in a perspiration of good will, I might be allowed to wish the hon. Member and you, Mr. Speaker, a happy holiday.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Four o'clock, till Tuesday, 29th October, pursuant to the Resolution of the House yesterday.