HC Deb 08 June 1964 vol 696 cc36-41

Mr. Callaghan(by Private Notice) asked the Chancellor of the Exchequer whether he will make a statement about the extent to which the acquisition of shares in the Rootes Group by Chryslers will transfer control of policy of the Rootes Group out of the United Kingdom.

The Chancellor of the Exchequer (Mr. Reginald Maudling)

I understand that this deal will not involve transfer out of the United Kingdom of control of policy of the Group.

Mr. Callaghan

Is the Chancellor aware that, while everyone welcomes overseas investment in this country, we want to be quite clear that that investment is to be exercised in the interests of the British motor car industry and not the American motor car industry? [Interruption.] I repeat, not the American motor car industry. Hon. Members opposite should be just as concerned as we are about that.

As the shares of Rootes seem to be held in a small family trust, part of which at least is based in Nassau, what precautions is the Chancellor taking to ensure (hat there can be no dispersal of this family trust which would transfer the control of this company into hands outside the United Kingdom? Will he ask the President of the Board of Trade, who seems to have rushed into a quick statement on this matter, whether he will appoint an inspector to investigate the beneficial shareholdings of this company so as to make certain that the 30 per cent. acquisition by Chryslers does not give them effective control?

As the President of the Board of Trade has stated that he wishes all questions of take-overs and mergers to be referred to him for advice and guidance before they take place, even in advance of any legislation, what is the Government's policy on the question of the control of the motor car industry by overseas capital? Is the right hon. Gentleman aware that as a result of this latest purchase of shares, more than 50 per cent. of the cars which will be manufactured in this country will be to some extent, either wholly or partly, within American control?

As the motor car industry has been one of the most sensitive spots in the stop-go economy of the last 12 years, what is the policy of the Government to ensure that the future of the motor car industry in this country is dictated by our national interest and not by the interests of those overseas?

Mr. Maudling

The hon. Gentleman and his colleagues may welcome foreign investment, but they have a very strange way of showing it. The question of control does not arise. As I said, there will not be a transfer of control out of the United Kingdom as a result of this deal.

Mr. G. Brown

At any time?

Mr. Maudling

Yes, because the Chrysler Corporation would not be able to increase its holding without Treasury sanction.

I understand that the Rootes family, with its associates, will continue to hold 50 per cent. of the voting shares.

In general, this arrangement will bring new capital to this country, and access to American "know-how" and research, and also greatly increase export facilities —and a very good thing for the motor car industry, too.

Sir Ian Orr-Ewing

Would not my right hon. Friend agree that it is a little illogical for the Opposition to mistrust this type of American investment in Britain whereas they are prepared to trust the United States with the entire nuclear defence of this country?

Mr. Maudling

I would not agree that it is a little illogical. I think that it is typically silly.

Mr. Grimond

As there has been some suggestion that British industry is falling under German control, can the Chancellor tell us whether there is any truth in this and, if so, on what scale this movement is taking place? Secondly, is it not a fact that nothing could be more disastrous for this country than the growth of economic nationalism, that the scale of modern business in these days means that it will cross national frontiers, and that this growth of economic nationalism is one of the most serious dangers threatening the West?

Mr. Maudling

I agree very much with the point of the right hon. Gentleman's second question. On the first, I see no sign of British industry falling under the domination of any other country. Our overseas investments are on a greater scale than foreign investments here.

Mr. F. M. Bennett

Will my right hon. Friend confirm that the total of British investment overseas is roughly three times that of the equivalent foreign investment here? In these circumstances, is he not rather pleased that foreign opinion is not nearly so chauvinistic or parochial as that of right hon. Gentlemen opposite?

Mr. Maudling

I would rather see Chrysler investing money here rather than with our Continental competitors.

Mr. Edelman

Is it not the case that the trustees of the Rootes family—the General Trust of Nassau—are precluded by law from giving guarantees for the future, so that the majority shareholding in Rootes may at some time in the future come under the control of Chrysler's? Quite apart from the financial manipulations with which we are concerned today, is it not the case that in Chrysler's we have a firm with an unstable record at a time of recession, and that, if it were administering this important section of the British motor industry, if it had to choose between sacking men in Detroit or men in Coventry or Linwood, it would certainly act to the disadvantage of this country?

Mr. Maudling

The answer to the hon. Gentleman's first question is that the Bahamas are within the United Kingdom exchange control. The second question is highly hypothetical, particularly because the firm is not administering, and will not administer. the Rootes Company.

Mr. Webster

Does not the Opposition's chauvinistic and nationalistic attitude of resistance and resentment to every American investment in our development districts show what would happen if the country made the mistake of accepting the invitation, "Let's go with Labour"?

Mr. Speaker

These questions, arising out of a statement are getting out of order. There is no Ministerial responsibility for pronouncements of that kind.

Mr. H. Wilson

Do not the right hon. Gentleman and his right hon. Friend distinguish between those forms of foreign investment in this country which are and have always been welcomed, which introduce "know-how" which we do not possess, or which lead to the creation of new industries or new factories and employment for our people on the one hand, and, on the other, those which involve a partial or complete take-over of existing British firms which are already very well run? Does not the right hon. Gentleman draw that distinction?

Does he not recall that not only during his period at the Board of Trade, but also during mine, we brought in many American firms to create new industries and to bring into this country "know-how" which we did not have? This being so, how does the right hon. Gentleman square this proposal, on which we have not yet been given very full information, with the general argument about "know-how" investment?

When the right hon. Gentleman said that the argument for this deal was that it brought much needed capital into this country—I think that the amount involved is £12 million or so—does he not feel, after all we have heard about the City of London, that we could have found the capital in this country—or are we too busy lending money to Japan and other countries, as at present?

Mr. Maudling

The first question put by the right hon. Gentleman was deliberately—perhaps not deliberately—but it was clouded by the word "partial". Anyone who takes one share in the company would have what I suppose might be called "partial control". The point is that we have to distinguish—and I agree with the right hon. Gentleman—in every case—as we do—between the national interest involved in a foreign investment in this country. I look at this problem from the point of view of the encouragement of foreign investment, not only because of the inflow of capital to which the right hon. Gentleman referred, but also because of the inflow of "know-how" and research and the inflow of experience of a kind which we do not have, and the widening of opportunities for export which come from an investment of this kind.

Sir A. V. Harvey

When considering this matter will my right hon. Friend take into account that only a few weeks ago Mr. Clore's group invested £5 million in the United States and got control of Consolidated Laundries, the largest company of its kind?—[HON MEMBERS: "Laundries?"] Yes; that was a foreign investment. If there are to be overseas investments of that kind from this country should not we welcome them here with the safeguards which he has outlined?

Mr. Maudling

We must remember that, as a country, we have made vast investments throughout the world—and are continuing to do so—which are of great benefit to ourselves and to the countries in whom we invest. It would be absolute folly to start opposing the international flow of capital.

Mr. Callaghan

Does not the Chancellor realise that we are facing a period of intense competition in the motor car industry from abroad? May I ask what steps have been taken by the Government to safeguard the position of the British motor car industry, in which an increasingly large amount of American capital is being invested, which, as was said by my hon. Friend the Member for Coventry, North (Mr. Edelman), may operate to the detriment of our own people in this country and in favour of thte American motor car industry?

We all accept what the Chancellor says about the need for overseas investment. What steps is he taking to protect the national interest of a vulnerable industry which is not like Consolidated Laundries in America?

Mr. Maudling

If the hon. Member is concerned, for example, with Continental competition, would he prefer to see the resources of Chrysler's put behind a German, or French or Italian firm—

Mr. Callaghan

Answer the question.

Mr. Maudling

—because I certainly would not?

In answer to the remaining part of the hon. Gentleman's question, I would say that I agree with the General Secretary of the Scottish T.U.C., who said, "I suggest that we should look at this deal happily and without foreboding"

Mr. Crossman

Will the right hon. Gentleman try to answer a question which, I think, is seriously worrying my constituents who work at Rootes? Is he satisfied that the kind of deal which has started—we do not think that this is the end; this seems to us the first stage—will not end in putting our firm in the same position as Simca? Is he satisfied with the Simca position?

Secondly, is he satisfied that we shall be able to retain our exports franchise in the way that many firms have not been able to do after similar bids?

Mr. Maudling

I agree that it is an important question. I think that the experience of Ford and Vauxhall in the export market show how well American companies export from this country.

Regarding future changes, the Chrysler Company would not try to extend its holding in Rootes without Treasury permission.

Several Hon. Members


Mr. Speaker

Order. There is too much to do; we must keep moving.