HC Deb 20 February 1968 vol 759 cc389-400

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

11.18 p.m.

Mr. Stan Newens (Epping)

The takeover of A.E.I, by G.E.C. is merely one of a spate of mergers taking place at the present time. This raises an important public issue, not only for those affected. There are also issues of wider national importance. There is general recognition today of the inadequacies and inefficiencies of many British enterprises and the need for modernisation and rationalisation certainly applied to A.E.I. Many private enterprises are failing the nation and if the Opposition devoted one-tenth of the time which they spend attacking public ownership to the waste and inefficiencies and failure to seize opportunities of private enterprise, the public's eyes would be truly opened.

I am therefore not opposed to rationalisation for modernisation or the improvement of techniques in the electronic industry, and therefore in A.E.I., but the benefits to the shareholders should not be the only criterion. I accept that there is a need to ensure the efficient use of capital, and this is measured in a capitalist society by profit margins, but there are two other vital responsibilities in rationalisation—first to the workers and second to the community.

The Government policy of supporting mergers and handing over rationalisation and modernisation to the "golden boys" of British industry, the most successful, go-ahead and ruthless captains of industry, does not ensure that responsibility to the workers and the community is covered. Mr. Arnold Weinstock, the chosen architect of the new A.E.I.-G.E.C. complex, undoubtedly has enormous energy, initiative and intelligence but his primary responsibility is to the shareholders and the merger's preliminary history has demonstrated this clearly.

This is just not good enough. Vast sums of public money are being spent to subsidise private industry at a rate, according to a recent T.U.C. document, of £2 million. According to The Times of 5th February, this year A.E.I, is expected to get £400,000 a year from Government payroll subsidies, including the regional employment premium for development areas of 30s. per worker per week and the selective employment premium of 7s. 6d. a week for each employee for providing 4,000 jobs in development areas.

In addition, the Government provide £5 a week for a man in training. I have not bothered to go into the investment grant entitlement and so on, but, short of giving the factories away, public generosity could hardly be greater. Public expenditure on this scale demands public responsibilities. I would prefer public ownership. I entirely support the creation of jobs in development areas, but it is idiotic to make people unemployed elsewhere to create these jobs, which could be created without that cost.

I make no apology for voicing my first concern about the effect on those made redundant. It is all very well for professional men to expect at the outset of their career to move around the country for promotion but, in the average case every redundancy may mean real hardship not only to the employee but to his wife and family if they are asked to move. We must remember that industry exists for man and not man for industry. It is much preferable to provide work near a man's home.

My second concern is the responsibility to the community. In my constituency, A.E.I. came to Harlow New Town to produce for profit. However, large numbers of houses were provided at public expense to enable the firm to recruit labour. It would be a vast waste if this were not taken into account, which means allowing for the effect on Harlow when any large closure is proposed.

We must also take into account projects which were under way in the research laboratory at Harlow. If they are not completed, effort and capital will be wasted. It may, of course, be more profitable for an individual enterprise to buy new methods on licence from abroad, but this is not in the national interest.

Again, I think that public responsibility is called for when one considers the grave danger that highly-skilled personnel, educated and trained with the British taxpayers' money, may be attracted to go abroad and add to the brain drain. However, the problem in my constituency at Harlow will, I admit, be comparatively small compared with that created at Woolwich, and of course there may be worse to come in other parts of the country for the employees of A.E.I.

Experience of this merger demonstrates the need for a national plan and public ownership of industry in which industrial democracy can be introduced and the workers and the community consulted about rationalisation. This would, of course, be the Socialist solution, and I make no apology for referring to it tonight.

In the absence of this solution, however, the Government have a responsibility to lay down a code of conduct for private industry when mergers occur. It should be axiomatic that workers and their representatives, local authorities and regional planning councils, should be consulted before closures and redundancies are settled.

Today the workers of Crompton Parkinson, of Chelmsford, were lobbying Members of this House. They first learnt of the intended closure of their factory from the Press. This is disgraceful, but it is almost the usual practice. Closures should be dovetailed into schemes for absorption of labour released, and there should be proper removal allowances, provisions for rehousing and travel allowances, etc., for workers who move.

Private industrialists—and in this case the new management of A.E.I.—should be made to face up to the full cost of rationalisation—the social cost—and recognise that they are fully responsible for the workers and the community before they chalk up gains.

There was not, in fact, proper consultation before the recent A.E.I. closures took place, although I confess—and I welcome it—that there appears to be some slight improvement in the firm's attitude towards the problems which have been created.

The Minister should, in my view, intervene to ensure that proper consultation takes place, not only in the future, but also that there should be some compensation made for the lapses which have taken place to date. If not, we shall create a Luddite attitude among workers. It is unrealistic not to expect people to fight for jobs just because the captains of dustry have adjudged it in the public interest that these jobs should be removed. We in this House will fight hard enough for our jobs at the next General Election, irrespective of what the captains of industry say, and I do not think we can criticise people outside the House for doing the same.

The Minister should recognise now that unless he takes action these mergers will certainly produce enormous resistance from all those affected, not merely the lower-paid workers but also the highly-skilled men and even those in executive grades who all stand to lose from the effect of mergers and rationalisation.

11.28 p.m.

Mr. Christopher Mayhew (Woolwich, East)

The House should be grateful to my hon. Friend for raising this question, and particularly for the extremely effective manner in which he put the case for a national code of conduct to cover mergers like this in future. I think the points he made will get wide support in the House.

I should like to ask two questions of the Minister:firstly, whether the Government are prepared to work out and put forward a code of conduct; and, secondly, whether he will look at the practice in regard to industrial development certificates in this area.

We all know the policy of the Government on this point, but there are cases when it is quite wrong, in a situation such as exists in Greenwich where many industrialists wish to set up there and employ people, that they should be prevented from doing so by the Government. I should like an assurance from the Minister that if there is unemployment in that area—and we hope there will not be—it will not be caused in any way by the Government's refusal to allow employers who wish to go there and establish works to do so.

11.30 p.m.

Mr. William Hamling (Woolwich, West)

I am grateful for the opportunity to intervene briefly to add one or two questions to those asked by my hon. Friend the Member for Woolwich, East (Mr. Mayhew). I am glad that my hon. Friend the Member for Epping (Mr. Newens) has seen fit to raise this subject tonight.

The two questions to which I wish to refer concern the problems of older workers in Woolwich. I understand that some thousands of workers are affected who are no longer young workers. They are, therefore, people whom we do not expect to be able easily to travel about looking for other jobs. I should like an assurance from my hon. Friend the Joint Parliamentary Secretary to the Ministry of Technology that opportunities will be taken to ensure that the older workers particularly are looked after.

The other question to which I should like my hon. Friend to refer is the possibility of alternative employment. The announcement was such a shock and was so overwhelming for many people that they are very frightened that alternative jobs will not be easily found in South-East London, particularly when one bears in mind the nature of the urban development in that part of South-East London, which is old, Victorian and reminiscent of some of the older industrial parts of the country.

These are matters on which we have had urgent representations from our constituents, and I should like to think that the Government have these problems very much in mind.

11.32 p.m.

Mr. James Dickens (Lewisham, West)

We are grateful to my hon. Friend the Member for Epping (Mr. Newens) for giving us the opportunity of making a short contribution to this vexed question which has grown up because of the recent G.E.C. decision to close factories at Woolwich. Sydenham and Harlow and the research laboratory at Blackheath.

I want simply to make two brief points. First, I very much hope that the Government will take seriously the proposition set out by some 76 hon. Members requiring a code of conduct for the private sector of industry for all those firms which are in receipt of Government money. In short, what we are saying is that with the cash goes social responsibility.

My second point is that we have to regard the G.E.C. closure at Woolwich especially as a textbook example of how not to do it. Even after an interval of a fortnight, we still do not know certain basic elementary details about the closure.

We do not know in detail, for example, where all the workers live, the age distribution of the workers at Woolwich or Sydenham or, for that matter, their skills.

With a code of conduct, there must go from the Government a request to the private sector to prepare forward manpower plans for factory closures setting out precisely and in detail what alternative employment opportunities there will be within the enterprise. That is the only way to deal with the widespread rumours which are inevitable in a situation like this.

I was very disturbed, as, I think, many of us were gravely disturbed, at the implication behind a remark made a week ago last Monday by my right hon. Friend the Minister of State, Board of Trade, when he said that the regional economic planning councils had no say in commercial policy decisions of this nature. If that is so, it makes complete nonsense of regional government. I want the Government to give instructions to the regional economic planning councils that they have a right to prior consultation in all developments of this nature. I endorse all that my colleagues on this side of the House have said.

11.34 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Jeremy Bray)

We are grateful to my hon. Friend the Member for Epping (Mr. Newens) for giving us a chance tonight to go over this important question. As my hon. Friend has said, the changes at Harlow announced by G.E.C. stem from the general review of the structure of the organisation following the G.E.C.-A.E.I. merger. The change is aimed at a concentration of related activities in one location. This is expected to result in greater efficiency and increased competitiveness.

G.E.C. has told us that it is reviewing all A.E.I. activities at Harlow, as in other areas. The company has already decided to concentrate all its process control work at Leicester. This involves transferring to Leicester Harlow's process control work as well as the computer activities at Manchester and the system development unit at Knutsford. Harlow will become essentially the centre for scientific apparatus activities, involving mainly electron microscopes and mass spectrometers. It is expected that the field will grow sufficiently to occupy most of the hourly-paid people at Harlow who were engaged in process control work.

The merger received the endorsement of the I.R.C. and the expected rationalisation and improved efficiency is generally accepted as serving the national interest. Indeed, when my rt. hon. Friend the President of the Board of Trade considered the proposal for this merger, although no details had been worked out it was clear that there would be some closures of factories and some expansions. Decisions on the utilisation of capacity are, of course, for the firm to take in the light of its commercial judgment, but G.E.C. gave assurances that as far as possible these closures, contractions and expansions would accord with the Government's regional policies. The announced reorganisation of the telecommunications group is in line with these assurances and will result in an increasing concentration of telecommunications work in the development areas.

Regarding the research and development centre in telecommunications at Harlow, I understand that the decision to run this down is based on the company's wish to rationalise its research effort with the large G.E.C. research centre at Wembley and research and development activities elsewhere. It is understandable how the company came to the view that the relatively small separate unit at Harlow employing about 120 people could not be justified as a separate exercise. From the country's point of view, we cannot afford to use scarce resources inefficiently in research and development, any more than in any other field. The reorganisation of research and development by G.E.C.—A.E.I. is, of course, a matter for the company, but, naturally, the Government are interested in seeing that our national resources are well used. It is the view of G.E.C. that the reorganised research and development effort will be as strong as, or stronger than, the separate efforts of G.E.C. and A.E.I.

To sum up the position at Harlow, out of the nearly 1,000 workers at Harlow it appears that perhaps 130 in the research unit and perhaps another 150 in other departments might become redundant, making a total of less than 300 in a labour force of about 1,000, and not taking any account of increases in other activities. I understand that the precise numbers cannot yet be finalised. This is against a background where the level of unemployment in the Harlow Exchange area in February was 1.8 per cent., compared with an average of 4.2 per cent. in Scotland, 4.3 per cent. in the North and 4.7 per cent. in Wales. In addition, the Board of Trade estimates that there are already 640 jobs in the pipeline for the Harlow area from schemes which have already received I.D.C. approval.

As for Government support, the Harlow factory is contributing to the production of a 1 million volt electron microscope which is the subject of an £80,000 research and development contract with A.E.I. This contract is linked to the pump priming manufacture of three units costing approximately £600,000 for N.P.L., the Atomic Energy Authority and the Science Research Council.

It is not known whether any premises will be vacated by G.E.C.-A.E.I. at Harlow, but it certainly would not be difficult to find alternative uses for any premises which became vacant. However, it is unlikely, to say the least, that the development of the new town will be affected by this redundancy at all, and I only wish that every industrial situation with which we have to deal had as few problems as that of A.E.I. at Harlow.

Mr. Norman Atkinson (Tottenham)

Do I take it from my hon. Friend's earlier remarks that the electron microscope manufacture is to be removed from Trafford Park and will be given to Harlow at some subsequent date?

Dr. Bray

I am afraid that I cannot give any information on that, but perhaps my hon. Friend will write to me—or to the company, when, I am sure, it will endeavour to reply.

The Woolwich closure is a far more serious affair, resulting in the redundancy of 5,500 workers over a period of about a year. It was largely in pursuit of rationalisation in the telecommunications industry that I.R.C. gave its support to the G.E.C. bid for A.E.I. According to Press report, A.E.I. telecommunications lost over £3 million in 1966–67. The task was stated by Mr. Arnold Weinstock when he said: In order to remain in the telecommunications game we must get 50 per cent. more output with 5,000 fewer workers in the A.E.I. telecommunications factories. The decision regarding Woolwich was for the company. It was fully aware of the current and future demands of the Post Office and the importance of meeting Post Office delivery and other requirements. The company will have taken these factors into account in the reorganisation of its telecommunication activities and in planning for adequate capacity to meet future Post Office needs.

But we must look beyond the needs of the Post Office. The industry will need to be increasingly competitive in the future both to gain exports and for home needs; and an adequate scheme of rationalisation is needed to achieve the most efficient production. This is of the highest importance for the industry.

The Woolwich factory is an old factory. There are new factories, under employed, in Scotland and the North-East. The Government have taken major measures, with the support of the Labour Party and the trade unions, to secure the growth of employment in development areas rather than in London and the South-East. I gladly acknowledge the understanding of this by the workers at Woolwich, as well as by their representatives in this House. We have recognised all along that this cannot be achieved without a measure of upset and inconvenience, and I would be the last person to minimise the effect of redundancy for the workers at Woolwich or anywhere else.

Efforts are being made to find a suitable occupant for the factory site. The Ministry of Labour has made arrangements to interview and register the workers affected and to give advice about alternative employment and training. My hon. Friend the Member for Woolwich, West (Mr. Hamling) was concerned particularly about the older workers, and my hon. Friend the Member for Lewisham, West (Mr. Dickens) about the proper registration of the workers and an analysis of their potential. I am advised that the sooner a timetable for the rundown can be agreed to, the sooner the Ministry of Labour will be able to get to work. If the present degree of co-operation continues, there is no reason why this work should not start very soon. I am sure that it is in the interests of the workers in Woolwich that the Ministry of Labour should be allowed to get to work as quickly as possible.

It is fairly easy to place skilled, semi-skilled and technical workers in other jobs. It is more difficult to place unskilled workers, especially the elderly. Nevertheless, if the redundancies are spread over a period of a year or so, the problem will be less severe than it otherwise might have been. The position is complicated, as my hon. Friend the Member for Woolwich, West said, by the nature of the urban surroundings of Woolwich. It is further complicated by the proposed development at Thamesmead. My right hon. Friend the Minister of State at the Board of Trade has already said that the Board of Trade would consider any application for industrial development certificates at Woolwich and Thamesmead from suitable London firms with strong ties in the area.

It would be foolish to minimise the problem of development in London and the South-East. There is great pressure for development, as my hon. Friend the Member for Woolwich, East (Mr. Mayhew) reminded us. The Board of Trade will be keeping a very close eye on the situation. There is no reason to believe that a situation in any way comparable with that in the development areas could conceivably arise in South-East London.

Mr. Mayhew

I am grateful for my hon. Friend's assurance that the Board of Trade is keeping an eye on this. Are we to understand that the Board of Trade has not set its face against a relaxation of its industrial development certificate system in this instance?

Dr. Bray

I would abide by the statement by the Minister of State at the Board of Trade that applications for industrial development certificates in Woolwich and Thamesmead from suitable London firms with strong ties in the area would be considered.

Mr. Mayhew

And no more than that?

Dr. Bray

It is really quite a lot. It has been reported that the possible closure of Woolwich was discussed by A.E.I. with the Greater London Council before there was any question of the take-over by G.E.C.; so it cannot be said that the take-over created difficulties of employment in Woolwich though it certainly would have brought them forward.

Many of my hon. Friends have signed an Early Day Motion regarding a code of conduct for mergers. The Motion affirms full support for the Government's regional policies as an instrument of full employment and economic growth, and notes the very considerable Government support for private industry in pursuing these policies. The Motion goes on to urge the preparation of a code of conduct applicable to all private firms in receipt of public funds, following discussions with the C.B.I. and the T.U.C. It covers a very wide field, stretching far beyond factory closures and manpower redeployment and includes transferability of pensions, equal pay, staff status for manual workers and company training policies. I assure my hon. Friends that that Motion is being earnestly considered by the Ministers responsible.

I fully appreciate the concern about this matter which is felt in the House and the country, but it is too sweeping and it does not help to talk of a lack of social responsibility in recent company mergers. I should make it absolutely clear, if it is not already, that the consequences of rationalisation and moving employment from areas where labour is generally scarce to areas where new employment is generally needed were fully appreciated and actively sought by the Government. There is a danger that, by speaking with two voices, the Government and Parliament—and my hon. Friends should not under-estimate their influence in this matter—we shall hold up and distort the pattern of social and industrial change the direction of which is generally agreed.

It is right to make sure that no one can forget the social aspects of his actions in making major industrial decisions. However, we often find it easier to create bogies to explain the difficulties with which we are faced. But it is unfair and it defeats the objective which we are all seeking to label industrialists as socially irresponsible when what they are undertaking is the socially esssential task of modernising our economy.

Let us consider the genuine human difficulties and let us find better methods of working—and I agree that we have not found them all yet—and let us deal urgently with the immediate pressing problems with the vigour and confidence which are needed, but let us not hold up the socially and economically essential task of modernising industry. There are consultations on a wide scale among the many people involved. I am anxious that my hon. Friends should be fully involved and I am sure that I can rely on their co-operation to ensure that the best solutions are found.

Mr. Newens

Will my hon. Friend say clearly whether it is the Government's policy to press on industrialists the need for prior consultation, not only with the workers and their representatives, but with the regional planning councils and others, prior consultation and not merely the announcement of a closure when the decision has been made?

Dr. Bray

The importance of consultation is constantly stressed, but my hon. Friends have gone further than that in proposing a specific code of conduct. This further proposal is being considered by right hon. Friends and I ask my hon. Friends to await the outcome of that consideration.

Question put and agreed to.

Adjourned accordingly at twelve minutes to Twelve o'clock.