INDUSTRY (AMERICAN INVESTMENT) (Hansard, 29 January 1968)

§ Mr. E. S. Bishop (Newark)
I am grateful for the opportunity of calling the attention of the House and of the Government to the effect of American investment in British industry. At the outset I want to make it clear that I am not opposed to foreign investment in principle; I am not against American investment in British industry. I believe there are advantages as well as disadvantages in it. Foreign investment, as we know, has often introduced new techniques into our industry and brings about new employment for our people. Indeed, in Scotland it is estimated that since the war something like 50,000 jobs have been found resulting from American investment there. With investment of United States capital totalling about £2,000 million and providing jobs for over 400,000 British workers none can say that such investment has only disadvantages. In my own constituency in Nottinghamshire, indeed, in every constituency in the country, hon. Members know that there are firms which are American controlled where our constituents are employed, and that our constituents use products and consumer goods which have been provided by these firms.
The proud descendants of the Pilgrim Fathers and their friends have been returning in a massive procession to our shores over the years, while some of my hon. Friends have been gazing across the Channel looking for links with Europe, and during this time some of our cousins in the New World have been coming in by the back door into this country. They are visitors we welcome, of course, but at times we wish they would not always wear their boots when occupying our industrial and commercial beds. However, 1052 there is no doubt at all that American investment in this country is quite substantial and, as I said, it brings advantages and disadvantages as well.
I want briefly to deal with the motor industry in general and one or two points in particular. In doing so, when I look at the disadvantages, I have a very distinguished precedent, of course, is so far as the present Prime Minister, when he was on the Opposition benches, moved the Adjournment of the House in 1961 on the occasion when Ford of America took over Ford of the United Kingdom. That expression of concern about the possible effects of the takeover on the future of our economy was quite real, and my right hon. Friend alleged that the then Government had acted irresponsibly, with too little concern for the national interest, and asked what would be the result if the American motor industry were plunged into a recession, and what effect there would be on British commercial prospects if the world market for cars became more competitive.
These questions are still relevant today, and I should like to know what the present Government think about the answers at a time when we have here three United States controlled firms which produce over half our cars. Having been engaged on aeronautical design for some years I have some interest in the engineering industry.
Like many unions, the Draughtmen's and Allied Technicians' Association, of which I am a member, has been concerned about the effects of the transfer, or possible transfer, of work fom the United Kingdom to the Ford of Europe Company and the future prospects of the Main Design Centre of Ford in Britain at Dagenham and Dunton. Having expressed my concern for many months, the Parliamentary Secretary to the Ministry of Technology told me on 25th August, 1967, that the two Ford manufacturing companies in Britain and Europe had reiterated the assurance that Ford of the United States had given to the Chancellor of the Exchequer in 1960 concerning employment policy and so on.
Despite this, the fears which have been, and are being, expressed, have not been allayed. Following further representations made to the Minister of Technology, my right hon. Friend told me on 18th January last in a letter that Ford Europe 1053 was created to carry out the functions previously carried out at Detroit, that it does not produce, design or sell anything, that its job is to counsel, advise, inform and help on an international basis, that the executive functions will, however, remain with the subsidiary companies in Britain and Germany, and that Ford Britain will continue to design its own cars, though it will naturally draw on Ford experience in Europe in co-operative design work.
The Minister claimed that it does not follow that Ford Britain will necessarily need fewer engineers, designers and research workers in the future than it needs at present. He claimed that the rumours of the possible transfer of work from Dagenham to Europe and the apprehensions which have been part of Ford's life in the past four or five years have no real foundation.
This situation is bound to result from firms whose control is outside this country and whose international connections and ramifications quite naturally lead to fears for the future of those employed by them. These fears arise from the fact that we have not safeguarded the principle of national control of important industries.
In the 1961 Adjournment debate to which I referred, the present Prime Minister said that employment at Dagenham should be governed by the kind of foreign trade policies of which the House of Commons approved. He added that a number of other countries, including Holland, Switzerland and the Scandivanians, safeguarded the principle of national control of important industries. He declared that we were against a major industry being owned by the Americans; and a similar sentiment was expressed by the then Opposition spokesman on trade matters, who until recently was the President of the Board of Trade.
Since then, we have had the Chrysler Corporation of the U.S.A. acquiring a substantial minority in Rootes Motors. The T.U.C., while not deprecating bona fide foreign investment in British firms, has deplored the infiltration of foreign capital for the purpose of acquiring control in key sectors of the British economy.
The 1967 annual conference of the Confederation of Shipbuilding and Engineering Unions adopted a resolution expressing concern at the increasing penetration 1054 of American capital into British engineering, and while recognising the advantages of access to certain fields of advanced American technology, was apprehensive at the surrender by British engineering of its responsibility to maintain its research and development, especially in the science-based, growth industries.
Apart from the fears to which I have referred, there is apprehension about the future of Short Bros, and Harland, and its future in the British aircraft industry, due to rumours that Her Majesty's Government are determined to reduce, if not eliminate, their shareholding—that is, 69½ per cent.—in the company on the ground that the Hiller Corporation and Rohr Corporation, both American firms, are bidding to secure the manufacturing facilities of the factory, the former to build helicopters and the latter to make cowlings for jet engines.
The 7,000 workers at Shorts are wondering if a Labour Government are prepared to hand over a semi-public enterprise firm to private enterprise, extending the already high investment of American capital in Britain—which, according to an Answer given by the President of the Board of Trade on 3rd November last, totals about 1,650 non-financial companies resident in this country, owned or controlled by American firms, with book-value assets totalling nearly £2,000 million. Whilst United States investment here is quite concentrated, United Kingdom investment in the United States is widely based, and 80 per cent, is in minority holdings in firms under United States control.
There is not enough time in an Adjournment debate to refer to the very wide field of industry and commerce where American tentacles run quite deep. In computers, agricultural machinery, tractors and petroleum the United States stake in our industry is said to be 40 per cent, or more. For razors and blades, the United States have bearded most of the British market. There have been increasing United States developments in the film and processing markets.
Millions of British women are supported by bras produced by American firms in the United Kingdom, squeezed into shape by foundation garments, and made even more beautiful by a wide range of cosmetics produced by American 1055 subsidiaries here. Breakfast foods, biscuits, processed foods, washing-up detergents, office machinery, engineering, oil, cars, electronics, tabulators, chemicals, drugs, natural gas, aluminium, banks and services, publishing, advertising and cinemas—these and many other commercial, manufacturing and industrial concerns are increasingly under American control here.
Many of us have been alarmed in recent days by reading of the intention of the Americans to cut their investments in Europe by, according to one report, 35 per cent., which could have a very serious effect on our industry, and on our film industry in particular. We have in the Industrial Reorganisation Corporation a Government body investing money in some industries and so introducing a safeguard.
Another aspect of concern is in the field of trade union relations, where many American controlled firms are reluctant to recognise our trade unions. I need hardly remind the Minister of Roberts-Arundel, of Stockport, which was the subject of an Adjournment debate not long ago, and there is the other situation which faced workers in the Kodak firm, where trade unions were not recognised. Although the Minister of Labour said that it is Government policy to inform U.S. firms of the traditions and practices of our industry, and although pay and conditions at many United States-controlled firms are beyond reproach, the principle that workers have a right to be organised is basic to our society. Although in the Adjournment debate on 6th December last the Joint Parliamentary Secretary to the Ministry of Labour claimed that no conclusions about American industrial relations should be drawn from the Roberts-Arundel case, he did call it a "sad and squalid episode".
But others have also expressed concern about the foreign investment in our firms. John Grigg, in The Guardian on 4th January last, said: At last British opinion is becoming alive to the threat"— meaning the take-over of key European industries: but without steady leadership or adequate information. I am therefore asking the Board of Trade to seek information through an inquiry into this aspect.
1056 A recent book called "Le Défi Améri-cain" by Jean Jacques Servan-Schreiber describes the economic struggle between Europe and America as The first great war fought without arms or armour. And John Grigg comments that unless the major modern industries of Europe not yet taken over can be kept under European control, Europe will lose its inventive brains and higher technical skills to the New World, and will become little more than a provincial production line for American industry, and a playground for tourists.
A weekend conference was recently held at Ditchley, near Oxford where leaders of industry and Government from several countries discussed the problems raised by the invasion of great international corporations, mainly American. At that conference, Americans, British, French and others from technology, banking, giant industries and commerce as well as representatives of the Treasury, the Ministry of Technology and the Foreign Office, discussed these matters. Overseas investment is being checked by the Americans themselves, but we should not check the flow of such capital. We need to look at the position as others I have mentioned have done to ensure that the results are to our mutual advantage economically, industrially and in labour relations.
I conclude by thanking the Minister for her courtesy in being present to answer the points I have made. I ask her to consider several questions which arise. Will the Minister reconsider her hon. Friend's reply to a Parliamentary Question I put some weeks ago when I asked whether the Government would cause an inquiry to be made into the effects of American investment in British industry? I suggest that such an inquiry should include among other aspects the extent and range of foreign, particularly American, investment, control, financial effects, labour relations and employment prospects of its workers.
Will the Government consider the desirability of maintaining a majority of British directors on the boards of companies resulting from such investments, and seek assurances that such firms will not initiate any action to impair either the home or overseas operations of the management of such companies in their relations with the Government, labour, 1057 British shareholders and the public as is the case in the agreement between the Minister of Technology and the Chrysler Corporation of a year ago? In other words, can we have action to ensure that our interests are safeguarded in firms under American and foreign control here as my right hon. Friend the Prime Minister insisted when he spoke from the benches opposite in 1961? When we welcome foreign investment in our development areas and elsewhere such an inquiry can be helpful to us and our visiting investors.

The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dun-woody)
I am grateful to my hon. Friend the Member for Newark (Mr. Bishop) for the thoughtful and provoking speech he has made on this subject. I am glad that he made the point clearly that he is not opposed to foreign investment here as a matter of principle. As he said, it creates new employment especially in the development areas where we are particularly concerned to bring in new firms. It helps also with the redeployment of workers from the older and declining industries.
This is not the only advantage which foreign investment brings us, for it brings foreign currency. By producing goods previously imported it also helps to reduce our import bill and to introduce new techniques of industrial management. American firms have an excellent record as exporters. In 1965, for example, American subsidiaries accounted for about 7 per cent, of the total net assets of all United Kingdom companies and for 13 or 14 per cent, of our total exports. If we could add to that export achievement the imports which have been saved as a result of the new production set up here—not to mention the immediate benefit to the reserves of the initial inflow of funds—I think we would find that American investment has made a very substantial contribution to our balance of payments.
This as my hon. Friend pointed out, this is not a simple matter of black and white. We realise that there are dangers as well as advantages in foreign investment. That is why, for example, we look at cases involving the take over of major firms on their merits. In doing this, we already take care of many of the points 1058 which are worrying my hon. Friend. For example, he asks us to consider the desirability of maintaining a majority of British directors on the boards of foreign-controlled companies, but, as he himself has said this evening, this is precisely one of the undertakings we obtained when Chrysler extended its interests in Rootes last year.
My hon. Friend has also asked whether, in cases of this sort, we should not seek assurances that the firms will not reduce their operations overseas. Again, to give the same example, although it is not the only one, we sought and obtained an undertaking from Chrysler that it would plan a progressive increase in the exports of Rootes products, without restriction, to all practicable markets.
Therefore, at what point do my hon. Friend and I disagree? My hon. Friend asks us to consider attaching conditions of this sort to all foreign investment. We do not think that it is necessary. By and large, as I have said, it is clear that this investment operates in our economic interest. It makes much more sense to continue, as we already do, to look at the cases which really matter and where we believe that issues of this sort may really be important.
My hon. Friend asks if we can have legislation to ensure that our interests in these matters are safeguarded. We already have this legislation, both in the Exchange Control Act and in the monopolies legislation. The latter, which applies to any form of amalgamation, whether it arises from inward investment or is a transaction between British companies, will apply only in the larger type of case, but the former is general in its coverage.
My hon. Friend has referred to a few particular cases. He particularly mentioned the Roberts-Arundel case. The House does not need to be reminded of the deplorable industrial relations situation which arose in that firm. My hon. Friend the Joint Parliamentary Secretary to the Ministry of Labour gave a full statement of the Government's view of the matter in an adjournment debate on 6th December last. However, I think that we must remember that Roberts-Arundel was very far from typical of American-controlled firms in this country. Difficulties do arise sometimes—perhaps most often over the recognition of trade unions 1059 —but the same sorts of difficulties sometimes arise in British firms as well. I do not think that it would be wise to take any special measures to try to deal with the industrial relations problems of American-controlled firms in isolation. Rather, we should hope that these problems, like our other industrial relations difficulties, will be eased by whatever action the Government decide to take after the Royal Commission on Trade Unions and Employers' Associations has reported.
My hon. Friend expressed uneasiness about the future of Ford of Britain. I should perhaps remind the House of what Ford is doing for Britain. Its exports from the United Kingdom approach £200 million a year, and it has just announced a campaign to increase exports to £225 million in 1968,including a major effort to increase sales in the U.S. itself. Ford has in recent years undertaken a massive programme of capital spending in the United Kingdom, not only on new productive capacity, but on design and research facilities. The establishment of Ford of Europe means that the company is thinking in terms of Europe as a single market, and seeks to organise its activities in Europe as efficiently as possible. We should welcome this outlook and development.
As my hon. Friend has mentioned, the Government have received assurances that the establishment of Ford of Europe does not mean any alteration of the undertakings given by Ford in 1961, when Ford of Britain became a wholly-owned subsidiary of Ford, United States, about its future expansion plans, the ploughing back of its profits, and its employment policies. I do not think that this is the time to doubt the usefulness of this company to our economy and I hope that the assurances given by the company will set at rest the fears that my hon. Friend has expressed.
Finally, my hon. Friend asks the Government to have an inquiry made into the effects of American investment. It will be clear from what I have said that in those really major cases where there might be detriment to the national interest—and these are very few—we consider very carefully the effect that the investment will have. This is the essence of the policy, to which I have referred, of considering major cases on 1060 their merits. But I agree that general studies of the effects of investment made in this country by foreign companies are also valuable. Private studies have been made from time to time, but I think that we still lack enough hard information. Because of this, the Board of Trade has set in train a thoroughgoing research study into the economic effects of foreign direct investment in this country. This will take some time to conduct but will provide a valuable addition to our existing knowledge of this complex subject.
To sum up, we have the powers; we examine the really major cases with care, and we are trying to add to our information in general. We already have very much in mind such considerations as my hon. Friend has referred to. I hope he will rest assured that we are really very much in agreement.

§ Mr. Bishop
Before my hon. Friend resumes her seat, may I thank her for the consideration she has given to my comments and may I remind her of the great urgency of any steps taken in this matter?

Mrs. Dunwoody
I am sure that we are very anxious that this survey should be carried out in detail, but we will obviously bear my hon. Friend's views very much in mind.

§ Mr. Albert Booth (Barrow-in-Furness)
May I ask my hon. Friend for an assurance that while the survey is being conducted, some account will be taken of the fact that the dividends made from American investment in this country become an invisible export to us and an invisible import to America? If we are to consider the facts put before us tonight as to the advantages of American investment, we should have this particular disadvantage investigated, as we are a country who rely very much on our ability to manufacture.

Mrs. Dunwoody
As I said, we are looking at all aspects of this matter. Although we are aware of the immediate advantages, we are also aware of some of the facts which could be long-term disadvantages. These will also be taken into account.