HC Deb 06 December 1972 vol 847 cc1300-8
The Minister for Industrial Development (Mr. Christopher Chataway)

In January 1967, the then Government agreed that the Chrysler Corporation should acquire control of Rootes Motors Limited, now known as Chrysler UK Limited, and the American parent company today holds 88.4 per cent. of the equity capital and 93.8 per cent. of the voting shares. The corporation recently asked for a release from one of eight undertakings which it gave in 1967. This would enable it to acquire the remaining minority shareholdings in Chrysler UK Limited. The Government have said that they would agree to this subject to the necessary exchange control consents being obtained.

The Chrysler Corporation has confirmed that the remaining undertakings, where still applicable, will remain in force including the undertaking to maintain a majority of British directors on the board of Chrysler UK. It has also confirmed that it has every intention of continuing the operations of Chrysler UK Limited in manufacturing vehicles for the British market and for export and of utilising as fully as possible its extensive plants in the United Kingdom.

The principal advantage to Chrysler UK Limited of this proposed adjustment is that, since other Chrysler subsidiaries in Europe are 100 per cent. owned, the UK company will no longer suffer even a marginal disadvantage in attracting new investment. The company therefore, takes the view that transfer of the remaining 6.2 per cent. of voting shares and other stock to the Chrysler Corporation is beneficial to it.

Mr. Benn

I am grateful to the right hon. Gentleman for that statement, although some of the anxiety about the matter would have been relieved if the statement had been volunteered instead of having to be read in a Press release issued by Chrysler itself.

Is the right hon. Gentleman aware of the anxiety that arises in this case in that we are the only country in the world that has the three American motor giants present in our own society and there are many jobs at stake, particularly in development areas, notably at Linwood? He has referred to the conditions that were agreed in 1967 between the then Government and Chrysler and the position is not as clear as might appear from his statement.

For instance, could he tell the House whether the Chrysler Corporation, in negotiation with the Government, still confirms that there will be expansion of its operations in this country? That was one of the conditions in 1967. There is no reference to expansion in the current statement, only a reference to the maintenance and utilisation of plant and capa- city where possible. In view of the difficulties which Chrysler has experienced, and the examples recently of foreign investment by, for example, Ford in Spain, there is necessarily some anxiety on that score.

Can the right hon. Gentleman also say whether the trade unions, which are vitally concerned, were consulted by the Government about the change of conditions and whether the Government themselves consulted the firm to ask it for its own manpower and investment forecasts and whether the fact that the regional employment premium is to end—which, we read in the newspapers, is to cost the Ford Motor Company £1 a year—is likely to have any impact on Chrysler's determination or wish to expand its facilities in this country?

Mr. Chafaway

The right hon. Gentleman referred to my volunteering a statement. Like any other Minister, I am loath to take time from other debates on any matters which are of lesser importance, and I suppose that it must remain a question of opinion whether the transfer of 6 per cent, of the voting shares in the third or fourth largest motor company in this country warrants taking away time from other debates.

The 1967 undertaking to expand was, of course, related to development work that was then in progress, and the right hon. Gentleman will know that, once control has passed to another company, in reality there can be no undated undertaking to expand. Nonetheless, what the corporation is doing here is to give a modest indication of confidence in that it wants to put further money into the company. I think it extraordinary that the right hon. Gentleman should talk about concern. It was he who approved the acquisition of control of the company by an American corporation. He cannot now argue that the change from 94 per cent. to 100 per cent. control has any substantial effect.

The right hon. Gentleman also asked about the regional employment premium and about consultation with the trade unions and so on. On the latter point, as he knows, it would not be possible, where a share exchange of this kind is concerned, for such consultations to be undertaken; but there was of course full consultation with the company and I have pointed out that the United Kingdom directors of the company unanimously take the view that it is in the interests of Chrysler (UK) Ltd. that this modest adjustment should be made.

Mr. Benn

But is the right hon. Gentleman saying that the Government agreed to this without seeking from the company an assurance that there would be an expansion of its own facilities in the United Kingdom, as was done in 1967? When the offer for the shares is in this form, is there any reason why the trade unions should not have been brought into consultation before the decision was taken?

Mr. Chatawav

The transfer of the shares can, of course, take place only after there has been a special meeting of the company, and it will be within the powers of a majority of the minority shareholders to block it if they so wish. No doubt they will take into account the profitability of the business and in that also take into account any reaction there may be from trade unionists. But the indication we have from Chrysler UK Ltd., with which we have been in negotiation, is that this is very clearly an adjustment, and a very modest adjustment, which is in the interests of the company, because the difficulty which has arisen is that in order to raise fresh capital the company now has to have a rights issue because of the small number of minority shareholders in this country.

The issues in 1967 and 1970 had all to be taken up almost in their entirety by the Chrysler Corporation because there was no demand for the shares on the British market. In that circumstance, it is somewhat of a handicap to the company in raising new funds and expanding to have this particular share construction. The right hon. Gentleman should not delude himself that the largely cosmetic undertakings which he secured in 1967 can have any major influence on a company such as this.

Mr. John Wells

Is my right hon. Friend aware that his statement substantially is a paraphrase of the managing director's notice to employees, and that, in using that paragraph, he has totally omitted to deal with the very important Chrysler air conditioning manufacturing, which primarily takes place in my con- stituency? I would be grateful if my right hon. Friend could give any sort of parallel assurance on that, such as he has given virtually word for word from what the managing director said on the vehicles side.

Secondly, there is the question of the actual share price. Is my right hon. Friend aware that no dividend has been paid since 1965 and therefore the price that the company has offered is really extremely generous in the circumstances? With one thing and another, there is no cause for complaint, except possibly in this one division which I have mentioned.

Mr. Chataway

Obviously, it is not for me to comment on the price that is being offered. It will be for the minority shareholders to make up their own minds. The undertaking and statement of intention by the firm, to which I have referred, refer to Chrysler as a whole.

Mr. Buchan

The incredibly careless levity with which the right hon. Gentleman has treated this matter is disgraceful and unsatisfactory to both sides. Is not he aware that the operators of the company were already the subject of guarantees to successive Governments—including the Conservative Government in 1964— and that we would have expected the same kind of involvement and assurances on this occasion? Before the public holding of the Industrial Reorganisation Corporation was disposed of in January this year, what continuing guarantees and assurances were given? What assurance do we have on the question of expansion, particularly at Linwood? Did the right hon. Gentleman find out from the company whether the trade unions involved were consulted?

If there has been any anxiety in this situation, it is because of the failure of the Government to recognise how serious it is that a key strategic company, in addition to what is already a huge segment of British industry, is now also passing 100 per cent. into the control of a foreign corporation.

Mr. Chataway

I have already answered the question about consultation, and I have made it clear whom the Government consulted. On the question of the IRC dispersal, it will be recalled that the previous Government, in 1967, made it clear that it was a temporary holding by the IRC and that the intention was that the IRC should maintain that holding for, as they put it, only a few critical years. It was written into the agreement between the Government of 1967 and Chrysler that Chrysler should in due course acquire that holding. This makes it all the more puzzling that the Opposition should take the view that the whole of the 15 per cent. should be maintained, because on 16th January 1967 exchange control consent was given for the sale of the IRC holding, which is a substantial proportion of the 15 per cent., to the Chrysler Corporation.

On the question of expansion, the Chrysler Corporation has made it clear that its purpose is to make it easier for it to put new investment into the company. This move involves it investing a substantial amount more, and in the public commitments which it has made as well as the intentions which it has described to the Government it has made it absolutely clear that its intention is to expand as much as possible.

Mr. Farr

Notwithstanding what my right hon. Friend said, may I press him on the question of the expansion of production? Chrysler, in very recent discussions which I had with it, indicated to me that, unless it got its way over a planning application for a new vehicle testing track, it had in mind the transfer of quite a part of its production facilities in this country to other countries on the Continent of Europe.

Mr. Chataway

I assure my hon. Friend that I am anxious that we should do all in our power to enable Chrysler and other major firms to expand. The House should be in no doubt that decisions—and the situation has not changed in this respect—will, in the main, depend on the performance of the British subsidiary. But we shall do all in our power to enable and to encourage firms to expand in this country.

Mr. Edelman

Does not the right hon. Gentleman, by referring to this flagrant breach, with Government collusion, in the 1967 undertaking as "a cosmetic operation", show a total incapacity to understand the disquiet which will be felt throughout the country at a 100 per cent. American takeover of the residual presence of a British share- holding which was undertaken not only by the Labour Government but by the previous Conservative Government? In these circumstances, will not the Minister and the Government, even at this late stage, veto this transaction to ensure the presence of a British shareholding, whether private or public, and that the British directors will be able to defend British interests?

Mr. Chataway

The Government of the time were not able to explain what additional influence a 15 per cent. shareholding would give and nobody today has produced any argument showing that a 6 per cent. shareholding can be of national importance or can increase the British influence over the company.

Mr. Tugendhat

Is my right hon. Friend aware that, although I support him in this decision, it must be seen in the context of very great concern about the activities of American-owned car manufacturers in this country? In 1971, exports by those companies from the United Kingdom fell by 7 per cent.; imports rose by over 200 per cent. I understand that the figures this year may well be of equally alarming proportions.

My right hon. Friend's statement follows a recent announcement by Chrysler that temporarily perhaps, it is no longer exporting Avengers to the United States. At the same time, I understand that consultations have been taking place between Chrysler and Mitsubishi over the import of Colts into the United States. As my right hon. Friend says, this is a relatively minor cosmetic matter, but the context in which it takes place is of deep concern to the whole British economy.

Mr. Chataway

I agree entirely with my hon. Friend—[HON. MEMBERS: "Oh."] Of course there are major issues which affect American multinational companies. The decision to allow the company to pass into American ownership was very important, and I do not deny that. However, nobody should be under any illusion that the undertakings which were then secured materially altered the position, because they did not. I have made it clear that the remainder of the undertakings which are still applicable have been confirmed and I have explained that, while no disadvantages have been mentioned today, there are advantages for the United Kingdom company.

I agree with my hon. Friend that the question of exports is very important, although, as he says, it is totally unaffected by the matter we are now discussing. It is worth saying for the record that between 1967 and 1971 Chrysler increased its exports from 27.5 per cent. to 50.9 per cent. But there was nothing about imports in the undertakings given in 1967. It is the balance of trade which is of primary importance to the country.

Mr. Leslie Huckfield

Cannot the right hon. Gentleman understand that it is the most important undertaking given by Chrysler which has been broken? Does he not think that the House should be consulted before all major investment decisions pass to Detroit? Cannot he understand that Ford and General Motors have already shown how it is possible to "Europeanise" production and to play off one country against another? Is he asking the House to regard a British stake in this company as an investment disadvantage? If there is to be a British stake, should it not be a Government stake?

Mr. Chataway

I do not take that view, nor did the previous Government, who made specific arrangements for the sale of the IRC holding which accounted for a large proportion of the share which it was agreed should be reserved for British ownership. Major investment decisions are taken by the majority shareholder, and when the majority shareholder already has 94 per cent. of the voting shares there is absolutely no doubt that that is where the decision will be taken. Therefore, all the issues which the hon. Gentleman raises were relevant in 1967; they are not relevant now.

Sir R. Thompson

Is my right hon. Friend aware that the Chrysler Corporation, with 94 per cent. control of its subsidiary in this country, has pretty well all the power which it needs to do what it likes with the company and that if for investment purposes it requires another 6 per cent., and if the consequence of that is to make it easier in this country to raise the funds which must be dedicated to the expansion and improvement of the company, we should agree to that enthusiastically and not make mountains out of pathetic little molehills?

Mr. Chataway

I agree entirely.

Mr. Sheldon

Is it not astonishing that the Minister, who has responsibility and is expected to understand these matters, fails to appreciate the crucial difference between a 100 per cent. ownership and a stake whereby the company can be made accountable for British interests? The whole purpose of the agreement was that there should be representation of British interests within the company, and the Minister has sold that away for no assurances whatever.

Mr. Chataway

If the hon. Gentleman takes that view, I am very surprised that he did not object very strongly in 1967 when the Labour Government, not only gave control to the American company, but agreed to sell subsequently the IRC shareholding.

The major influence which a Government has over a multinational company lies in the fact that such a company is dependent on the laws of the country and, in many ways, on the Government for the climate in which it operates. The continuing discussions between the Government and any major multinational company are of much the greatest importance. However, I hope that the reaction of right hon. and hon. Members opposite will not be taken abroad as indicating that the Opposition have changed their mind about inward investment, because, as the previous Prime Minister—

Mr. Dalyell

Do not be silly.

Mr. Chataway

When control was being transferred to the American company, the previous Prime Minister made it clear that we as a country welcomed American inward investment. I believe that that is still the position.

Several Hon. Members

rose—

Mr. Speaker

Order. This is beginning to seem like a debate.

Mr. Bucban

On a point of order. In view of the highly unsatisfactory nature—

Mr. Speaker

Order. It is not appropriate to make such a point of order on a statement.