HC Deb 20 May 1969 vol 784 cc391-402

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

11.28 p.m.

Mr. Raphael Tuck (Watford)

I wish to raise the question of the proposed closure by the Hawker Siddeley company of the Shakespeare Street Factory of S. G. Brown Ltd., Watford. S. G. Brown Ltd. manufactures the finest giroscopic compasses in the world, a vital necessity both in war and peace.

In 1942 the company was acquired by the Admiralty for £55,750. In 1946 it was decided to carry it on under the Admiralty on a commercial basis. It was, as a First Lord of the Admiralty termed it, "an experiment in Socialism," and was accepted by all concerned—management and workers—with great enthusiasm. "This is our company", they said, "and we are going to make it prosper." This they did, by means of close co-operation with the management; they negotiated timing agreements and took cuts in wages. One wonders whether we would see the same kind of thing in other companies today. There were never any strikes. The result was profit after profit, reaching a record of over £200,000 in 1954. Nationalisation had brought success where private enterprise had previously failed. By 1959 the company was worth £1¼ million. Then, in that year, the Conservative Government proposed to denationalise the firm and hand it over again to private enterprise. A storm of opposition from the Labour benches, with my right hon. Friend the present Prime Minister much in evidence, greeted this proposal, the then Opposition fearing for the safety of these men's jobs. There was a full-dress debate in the House. The right hon. Member for Barnet (Mr. Maudling) said: It is nonsense for the party opposite to pretend that under private enterprise, jobs in this firm will be any less safe than under the Government. The hon. Member for Glasgow, Hillhead (Mr. Galbraith), then Civil Lord of the Admiralty, said: … we regard future employment in the firm as of the greatet importance and … we shall consider as possible purchasers only firms which can assure us of their ability to provide continuity of employment of the same highly skilled type."—[OFFICIAL REPORT, 25th June, 1959; Vol. 607, c. 1421 and 1462.] So the Conservatives sold the firm to De Havilland Holdings and the American Armor-Bosch Corporation, which was later taken over by Hawker Siddeley. The Labour Party felt so strongly about it that in July, 1959, The Times reported that the National Executive had pledged that S. G. Brown Ltd. would be renationalised when a Labour Government came to power. It reported Mr. Morgan Phillips, the General Secretary, as saying: It is our intention to ensure that the firm shall be retained by the nation. What happened after the sale? A new managing director and management team were introduced in 1962. The old heads left. This was followed by unnecessary diversification and the sub-contracting out of thousands of hours of work while 47 machines were standing idle in the company's premises, though the standards of workmanship outside could not be compared with the high standards of S. G. Brown Ltd. There was also a disproportionate increase in administrative staff as opposed to the highly skilled technical staff and a consequent increase in the overheads and a lack of efficiency.

The shop stewards constantly raised these matters, feeling that the firm would be priced out of getting new jobs. Time and again they asked for a meeting with Sir Arnold Hall, the managing director of Hawker Siddeley. They said that bad management, bad organisation and bad planning were responsible for the bad state of the company. But the reply was always the same—that the directors were satisfied with the situation and that work would be forthcoming, if need be, from the Hawker Siddeley Group.

So the staff in the progress department was increased from 10 to 27. Twenty-seven people responsible for progress! What progress was there? Not one new contract was placed with the company after denationalisation, and instead of profit after profit being made, there was loss after loss—over £66,000 in 1963 and over £328,000 in 1966, and so on. Yet the managing director wrote to the convenor in 1966 that forward orders were higher than they had been for many years, that there were schemes which would reward the extra effort and that there was a brighter future for the employees. On a number of occasions he stated that there would be no redundancies whatever. It is my contention that if this was not a calculated deception, it at least showed complete inability on the part of the management to forecast or exercise any control over the future of the company.

Now, just three weeks ago, the employees were told that there is insufficient work to make the factory economic and to bring the company back into a profitable position and that production at the factory will close and be transferred to the parent company, Hawker Siddeley Dynamics, in Lostock, Lancashire, where there is capacity to absorb the work load. Now where is the continuity of employment that was promised by the Government in 1959?

This means that because of the failure of management to allow the workers to contribute helpful criticism, which was the basis of the previous success, 600 workers find their jobs in peril through no fault of their own. The super-clean air room of the latest type which has just been installed at Shakespeare Street at a cost of about £50,000 will disappear into thin air, while the specially qualified force with unique experience in all this highly skilled work will disperse and these highly technical devices will not be able to be produced with anything like the existing efficiency.

It must be remembered that S. G. Brown Limited still makes the world's finest giroscopic compasses adaptable to a variety of installation conditions, and continues to make and service appliances for Her Majesty's Government in other companies, and, further, that its workmanship standards are so high that S. G. Brown Ltd.'s rivals are known to subcontract work to S. G. Brodn Ltd. to ensure that the appliances will meet the stringent specification requirements of the various Ministries.

Closure of the S. G. Brown Ltd. Shakespeare Street, Watford, factory could be justified if the complete unit were moved to better premises in the Watford district. But the premises are of less importance than effective management. Transfer of the work under the same management means transfer of all the problems that bedevil the present situation. Transfer of the work to a distant factory, however modern, that has no long continuous experience of giroscopic manufacture means, with no disrespect to the workers up there, a certain setback to the current production and the programme envisaged for next year.

Precision giroscopic manufacture is a branch of the trade where an unbroken background of experience is essential to maintain present standards and essential to satisfactory development in the future. The managing director of S. G. Brown Ltd. has admitted that over three years was needed to develop the Arma compass at a factory which has long specialised in giro manufacture. What chance has another factory without this specialist background of even taking over where the Watford factory leaves off?

As devices that guide ships, planes, tanks and missiles and scan the ocean depths to detect and record the presence and size of shoals of fish and other submarine phenomena become more accurate in their performance so do the demands upon skill and patience become more exacting and the continuation of experience more necessary. It is a mistake for any one to think that acquiring new skills of such high degree can be achieved immediately a need exists. Suddenly, as the need arises, one cannot acquire such skills.

Her Majesty's Government have certain requirements for Arma compasses in 1969 and 1970, and the transfer of work that is proposed places the completion of these orders in jeopardy.

The disbanding of the Shakespeare Street, Watford, work force which will follow the transfer of work to Lostock will be seen to have long-term consequences not only of interest to the workers of S. G. Brown Ltd, but to Her Majesty's Ministries which rely on the precise reliability of the instruments of S. G. Brown Ltd. Once scattered, this unique assembly of skills will never be re-mustered, and then to what wholly British owned company can we turn in time of national need?

I fear the disastrous consequences of closure if S. G. Brown Ltd. and Hawker Siddeley persist that there is no alternative. In order to avert them, it is my contention that S. G. Brown Ltd., should be renationalised as soon as possible. This is a moral obligation on the part of the Government in view of what the Labour Party said in 1959; that it would renationalise the company, and in view of the failure of the company to provide continuity of employment, which was promised by the Conservative Government in 1969, I repeat—

Mr. Speaker

Order. I am not unsympathetic; but can the company be renationalised without legislation? If not, we cannot propose legislation on the Adjournment.

Mr. Tuck

I ask the Government to consider renationalisation and putting a stop to the transfer of the company's work immediately. The following objectives should then be pursued. First, changes should be introduced in management to bring in engineers. Second, we should engage the services of business consultants and insist upon the implementation of their findings. Third, the work now being done at the Chiswick and West Watford factories should be restored to Shakespeare Street and the premises at Chiswick and West Watford let for the remainder of the leases.

Fourth, stop sending out work to sub-contractors while workers and machines at Brown's are idle. This has been the practise and is to be deplored wherever it happens. Fifth, stop using costly contract labour in the drawing offices and clerical departments except for holiday relief. Sixth, introduce a joint production council with the widest possible terms of reference. If we do not renationalise, I ask my right hon. Friends to consider using the Industrial Reorganisation Corporation to help keep this company afloat, or if not that, then to use some such method as was used at Fairfields.

The workers of S. G. Brown Ltd. would welcome changes such as I have outlined and would co-operate as they have previously co-operated to restore S. G. Brown Ltd.'s earlier profitability. They understand that changes in managerial techniques will bring in their train changes on the factory floor that might not always be welcome. They feel that the closure of the factory has to be avoided in their own interests as well as the interests of the nation, and that some changes will have to be endured. They rightly feel that changes are better made as the result of consultation than as the result of high-handed dictation. Even now Sir Arnold Hall refuses to see the men.

I beg my right hon. Friends not to let the technical know-how that has been achieved be lost. If it is lost it will be lost to the benefit of our American competitors. Let us get rid of the dead wood, and give the workers of S. G. Brown Ltd. the chance once again to show their mettle and expertise. Private enterprise has failed where public ownership has succeeded. I urge my right hon. Friends to give public ownership a chance to succeed again.

11.43 p.m.

Mr. Ian Mikardo (Poplar)

My hon. Friend the Member for Watford (Mr. Raphael Tuck) has put the House very much in his debt by taking the opportunity of raising this extremely important matter, and I know that the House will be anxious to hear the Minister's reply to the most powerful case which my hon. Friend has marshalled with such force, cogency and comprehensiveness. As one who took part in the debate in 1959, shoulder to shoulder with my right hon. Friend the present Prime Minister and my right hon. Friend the Member for Newton (Mr. Frederick Lee), I feel that I have some obligation to contribute a few words to the discussion.

I can say in advance that one thing the Minister will tell us in reply is that the undertaking given by the Government as one of the conditions to the sale of S. G. Brown Ltd. from public ownership to private ownership could not have been and was not—and this is right—a contractual obligation. It was a sort of Letter of Intent, if I may coin a phrase. It could not be a contractual obligation that the purchasers, or any subsequent purchasers who brought from the original purchasers, would contract to maintain the factory in operation and to maintain, as a contractual obligation, the whole of the labour force. But there are contracts and contracts. There are statutory obligations, and there are moral obligations. There are contracts in law, and there are contracts in decency. There are men at the factory at Watford who could have sought and obtained other employment, perhaps more advantageous employment from their point of view. They would not and did not because of the undertakings that were given. They were let down very badly.

Finally, I make a political point, and I do it without apology. To my mind, nothing damages the credit, the credibility, the prestige, the good name and the honour of a Government so much as departing, when they are in office, from the principles which they advocated in opposition. That is true whether the departures are great or small.

Here is a case—from some points of view microcosmic, but macrocosmic in the minds of those thrown out of work—in which, unless the Government take action to reverse the intention of the present owners of the company, they will in the most blatant way refuse in Government the obligation which they assumed in opposition.

My hon. Friend the Minister of State is a man of honour. I cannot believe that he would willingly be a party to this sort of thing. I hope that he will find it possible to say that the Government will not stand aside supinely and see carried out in practice acts which 10 years ago they said were wrong and which, for the reasons that they gave then, are still blatantly wrong.

11.47 p.m.

The Minister of State, Ministry of Technology (Mr. J. P. W. Mallalieu)

Both because of his constituency interest and because of the history of this business, I can understand the zeal and energy of my hon. Friend the Member for Watford (Mr. Raphael Tuck) on behalf of S. G. Brown Ltd. and those who work there. It is a zeal and energy to which I pay special tribute, because I happen to know that my hon. Friend is in considerable physical pain tonight.

The history of this firm is very much as he stated it. Like him, and like my hon. Friend the Member for Poplar (Mr. Mikardo), I deplored the original decision to sell a profitable public enterprise back to private enterprise. Like them both, I can understand the feelings of S. G. Brown Ltd.'s workers who 10 years later face the loss of their jobs.

The company says that, despite its efforts, it has not obtained a sufficient volume of work to make its Shakespeare Street factory economical and bring the company into a profitable position. It adds that the reduced military spending in the United Kingdom does not suggest that there will be any improvement. As a result, the intention is that production now at Shakespeare Street will be transferred to the production factory of the parent company, Hawker Siddeley Dynamics, at Lostock, Bolton, where there is capacity to absorb the work load. Clearly one factory working fully loaded is likely to be more efficient than two factories working under-loaded, especially when the chosen factory is modern, as Lostock is, with a wide range of facilities and individual skills.

I was delighted to hear my hon. Friend cast no discredit on the skills at Lostock. The labour force there is extremely highly skilled. They manufacture Firestreak and Red Top and the control equipment for, and in the final test of, Sea Dart and Martel. I can assure my hon. Friend, from administrative experience, though I am no technician, that to do that requires a high degree of skill. Indeed, the skills at Lostock are equal to, and cover a wider range than, even the skills at Watford.

Of course, equipment made at Watford requires the application of accumulated know-how, particularly in assembly and testing processes. That, I agree, could in the initial stages cause difficulty; so it will surely be in the interests of the company to do everything that it can to attract from Watford to Lostock the key men whose skills it will require. That is the company's proposal.

Both my hon. Friends have urged certain action. My hon. Friend the Member for Poplar began by agreeing, as I am afraid we all must, that these conditions of sale were no better than guidelines. In many respects, I think that they were pretty meaningless. But they are not legally binding. Therefore, it is not a question of taking legal action.

It has been suggested that we might try to have an inquiry. But the Government have no powers to set up an ad hoc inquiry. We can set one up administratively, but we could not compel witnesses to come. I do not think that, even if they did come, we should find out more about the proposal than we know already. It would not increase our powers to act in any way if we did.

The main proposal is one of public ownership. I am in some difficulty here, because I fully understand that we cannot discuss legislation on the Adjournment. But what would be the purpose of taking action? There is no question here of taking action to preserve a special service to the community as there was when S. G. Brown Ltd. was taken over initially. Today, in contrast with what was happening in the early days of the war, there are many suppliers in this country: Sperry, not wholly British owned; Ferranti; Elliotts; Kelvin Hughes; and, of course, the facilities at Lostock for the S. G. Brown Ltd. work. So there is no urgent necessity to take action on the score that we shall otherwise be denuded of an essential service.

So far as efficiency is concerned, I cannot see the need to take action. The Shakespeare Street factory is an elderly one, to say the least of it. The Lostock factory is highly up-to-date, and it really is part of the Government's policy to try to encourage firms to increase their efficiency by loading their efficient factories to the maximum so as to reduce overheads. Therefore, on the score of efficiency I see no need to take action.

But there is another and equally important side, and that is the social side. If the action proposed by Hawker Siddeley were going to lead to a large-scale hardship, for example, then I could see that there would be a possible case for taking action. I do not for a moment suggest that having to change a job is a happy thing for anyone, but in these circumstances the action that the firm is taking cannot be described as having grave social consequences.

Watford has a very high level of employment. The unemployment rate there is 1.2 per cent. The unemployment rate in Bolton, where it is proposed the work should be sent, is 2 per cent., fairly substantially higher. The demand for labour of this skill in the Watford area is really very considerable; so on social grounds I do not see a case for action.

What action my right hon. Friend at the Department of Employment and Productivity certainly will take is to make sure that at the moment the notices are given, and even before, all the workers in this factory who are likely to lose their jobs in Shakespeare Street will be interviewed, and very special efforts will be made, as indeed they usually are, to ensure that the employers who in the end are asking for men of this kind are put in touch with those who are out of a job.

Mr. Speaker

Order. It will help if the Minister addresses the Chair.

Mr. Mallalieu

I am sorry, Mr. Speaker.

On practical grounds of efficiency, on social grounds, and indeed on every other ground, I feel that it would not be right for the Government to intervene in this proposal.

My hon. Friend the Member for Poplar spoke reasonably enough about moral obligations. I do not think that by that he means that an election pledge given in 1959—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes to Twelve o'clock.