BRITISH LEYLAND

HC Deb 06 December 1974 vol 882 cc2115-23

The Secretary of State for Industry (Mr. Anthony Wedgwood Benn)

With permission, Mr. Speaker, I should like to make a statement about British Leyland.

Discussions have been taking place with the company regarding both its short-term requirements for working capital and its long-term investment programme. Because of the company's position in the economy as a leading exporter and of its importance to employment both directly and through the many firms that are dependent on it, the Government are informing the company's bankers that the approval of Parliament will be sought for a guarantee of the working capital required over and above existing facilities. I am satisfied that this will enable the company's requirements to continue to be met without interruption.

In response to the company's request for support for its investment programme, the Government also intend to introduce longer-term arrangements, including a measure of public ownership. In order to help the Government in framing a scheme for this purpose, they propose to appoint a high-level team, led by Sir Don Ryder, including members drawn from the Industrial Development Advisory Board, to advise on the company's situation and prospects, and the team will consult the company and the trade unions in the course of its work.

A further statement about the arrangements for the inquiry team will be made shortly, and I shall also put before the House the proposed guarantee to the banks for their approval.

Mr. Heseltine

Will the Secretary of State tell us the amount of the guarantee for which he will be asking Parliament's approval and putting before the House? In his statement he said that he was satisfied that the amount of the guarantee would be sufficient for the company's requirements. In those circumstances, he must know about the present financial position of the company. May we be assured that that when the guarantee is put before the House, the right hon. Gentleman will make available the latest information about the background to the company's position in the context of the assurance that he has given today?

What research has the right hon. Gentleman carried out into the effects on company liquidity of the inflationary pressures which are affecting British industry? To what extent are the wages pressures which are developing in the Midlands now threatening other companies on the scale which has overwhelmed British Leyland?

Will the right hon. Gentleman ask the FFI to consider what part it can play in the long-term requirements of British Leyland to which he referred?

The right hon. Gentleman will recall that British Leyland owes its existence to an earlier act of Government intervention through the IRC. Why does he now believe that public ownership will solve problems that do not appear to have anything to do with the ownership of the company, but concern its internal difficulties?

Will the right hon. Gentleman ask the independent advisers to recommend whether public ownership is desirable, or will he instruct them that that is the given solution? Will he also ask them whether proposals could be implemented for altering the structure and ownership of British Leyland as it is composed, as an alternative? Will he further ask them to report on the appalling strike record which has gone some way to aggravate the company's difficulties?

Mr. Benn

I shall take the hon. Gentleman's questions one by one. On the amount, I think that it would be sensible for the House to await the study to be undertaken by the inquiry team. I am not in a position to give an authoritative answer to that question today, because clearly it would be for the team, when appointed, to advise the Government on the amount that will be necessary.

The hon. Gentleman asked what factors had led to the situation. I think that he will recognise that, world-wide, the motor industry is now experiencing substantial difficulties. Indeed, British Leyland was extremely adversely affected by the three-day working week earlier this year.

The FFI may have a role to play, but I must ask the hon. Gentleman to await the report of the team and my report to Parliament.

On the extent and role of public ownership, the House will recognise that if public money is to be put into private industry, it is right that that should be reflected in the degree of public participation.

Mr. Richard Wainwright

On the statement that a high-level inquiry team will be appointed to examine British Leyland's long-term position for investment, may we have an assurance that the team will be specifically required to look into the whole of the motor component situation, bearing in mind that British Leyland factories for the most part simply assemble components made by others? Will the team also be asked to have regard to the maintenance of a healthy and competitive components sector for our automobile industry?

Mr. Benn

I recognise that the hon. Gentleman's question pinpoints the extent to which, in terms of employment, British Leyland is linked with its suppliers, but I must not give the House the impression that the team I have announced, and which will be appointed, will be engaged in a wide-ranging inquiry into the automobile industry, including the component factories. That is a wider and separate question that lies within the responsibility of my Department, but my statement does not of itself bear on that matter.

Mr. Luard

Will my right hon. Friend accept that his undertaking to provide Government support for the company will be widely welcomed by all those who work for British Leyland, among whom there is much anxiety about the future of the company? Will my right hon. Friend give an undertaking that in the discussions about the future investment programme of the company there will be the maximum possible consultation with those who work for the company, and that one of the main concerns will be to maintain stable levels of employment in the factories of British Leyland throughout the country?

Mr. Benn

I am pleased to hear my hon. Friend say that my statement will be welcomed, and I am sure that it will be. In view of the speculation I thought it right, though perhaps unusual, to make my statement on a Friday. There will be full discussion with those who work in the firm.

Mr. Eyre

Is the right hon. Gentleman aware that British Leyland's survival is of great importance to prosperity in the country generally, and in Birmingham in particular? Is he further aware that continued industrial disruption has lost a great deal of production in recent years? Thousands of cars were lost last year when the market was high and sales were easy. Production is essential to support a continuing programme of investment for the future. Will the right hon. Gentleman acknowledge that mere job-saving operations are not enough, and will he say what special efforts will be made with the unions to ensure that these catastrophic losses of production through industrial disruption do not take place?

Mr. Benn

The importance of this company to the national economy and to the Midlands in particular, though not exclusively, its rôle in exports, and so on, are the reason for my statement. I think that it would be most unhelpful at this stage to begin a premature examination of blame, because with a firm of this magnitude, employing this degree of skill, it would be better for the House to have reported to it the result of the study so that we can examine how to do better in the future than we have in the past. The company has suffered from a number of factors, including world-wide problems and the effect of the three-day working week.

Sir G. de Freitas

In considering the long-term future of the British motor industry will my right hon. Friend look at the history of the French publicly-owned motor industry because, whether or not we like it, American and Japanese competition may drive us into having a publicly-owned European motor industry?

Mr. Benn

I understand my right hon. Friend's point, but I think he is anticipating a lot of decisions and discussions that will have to take place before we can contemplate such a matter. The French publicly-owned motor industry has been successful, and the French Government have recently decided to make a substantial injection into Citroen's part of its links with Peugeot.

Mr. Cope

What is limiting the guarantee?

Mr. Benn

I replied to the hon. Member for Henley (Mr. Heseltine) by saying that the House should await the result of the inquiry before any further statement is made.

Mr. Lee

As, in the nature of things, there is a considerable degree of urgency about this matter, may I ask my right hon. Friend how long he thinks it will take the inquiry team to report to us, so that the uncertainties can be removed?

Mr. Benn

I cannot say in detail how long, but I think that my statement will provide the necessary reassurance.

Mr. Shersby

Will the right hon. Gentleman say why he has to await the report from his high-level inquiry team before making proposals to Parliament for public ownership, having said that the company can continue? Will he tell the House what proposals he has for consulting shareholders in the company, as well as the unions and management?

Mr. Benn

I think the answer is clear. Until the team reveals the extent of support that is needed, the amount of public participation needed will not become apparent. I shall be in contact with the company, with its representative functions and with the unions.

Mr. Atkinson

Will my right hon. Friend confirm that the problems of British Leyland are those of accountancy and not of engineering? Will he accept that this is possibly the first major planning agreement to be discussed between private industry and the British Government?

In terms of restructuring the whole motor industry, will my right hon. Friend assure the House that the Government are lifting their sights well above the £100 million that has been talked about for some time, and that to bring about a fundamental restructuring of the industry and provide a sufficiently wide base for the future prosperity of this country they will be talking about a guarantee of £250 million or £300 million?

Mr. Benn

I think it would be wrong to say that the only problems are those of accountancy. One of the advantages of planning agreements is that they provide early warning of developing situations, including problems on the investment side.

I do not think I can help my hon. Friend very much further on the matter of the total sums involved, except to say that I shall put the report on this matter to Parliament to win its assent to our proposals.

Mr. Hal Miller

Will the right hon. Gentleman accept that as his Department has been in discussions with British Leyland for some time, his remarks about a better early warning system are not necessarily at once understood? When he places before the House the guarantee in respect of the working capital—I must say at once that I very much welcome the removal of doubt from the future of this great enterprise—will he make plain how this working capital will be serviced? As I understand it—perhaps he will correct me if I am wrong—the difficulty about a loan to British Leyland was that, for some of the reasons that have been ventilated on both sides of the House, its profit margin was not adequate to service such a loan, and there was, therefore, a question of the need to take up equity participation. When the right hon. Gentleman deals with that, will he make plain the price at which the shares are to be purchased?

Mr. Benn

On the question of the early warning system, there have been links between the Department of Industry and this company over a long period but, even so, a planning agreement on a more systematic basis—which I have every reason to believe would have been and still will be acceptable to British Leyland—would have been more advantageous. When I come forward with my affirmative resolution the House will be entitled to know as much as it needs to know and wishes to know about these arrangements, but it would be wrong to read across from the special problems of British Leyland, which have been widely discussed for a long time, a general conclusion about British industry as a whole.

Mr. Leslie Huckfield

Will my right hon. Friend accept that people in Coventry are particularly grateful for what he said this morning because British Leyland provides literally thousands of jobs in Jaguar, Triumph and Morris engines and hundreds more in factories on trading estates around the area?

Will my right hon. Friend ensure that as this is the only motor-making company that does not have its investment decisions taken in Detroit or Dearborn, the provision of any kind of financial assistance or public money is accompanied by adequate public control and accountability?

Will my right hon. Friend accept that my constituents will be particularly grateful for what he said about worker participation in future investment decisions, and that they will be grateful also that it is he who has made the statement, because at least they know that he will not make some of the stupid accusations that we have heard from Conservative Members?

Mr. Benn

I understand my hon. Friend's anxiety on behalf of his constituents, which I am sure would be echoed by many hon. Members from various parts of the country where there are Leyland plants or component suppliers. From 1966 onwards, when Chrysler acquired Rootes, British Ley-land was in a special sense the British motor industry itself. The discussions that we would have with the company would be on a basis which I certainly share, that there is strong interest in the success of British Leyland. Clearly, if that involves public finance—as I have made clear it will—there must be proper accountability.

Mr. Hordern

The Secretary of State referred to a measure of public ownership, but will he make clear what the position is on the principle of the matter? Does it mean control or not?

Mr. Benn

The House must await the statement that I shall make about the amount of public participation involved, but I hope that the Opposition will recall that in another quite different case, that of Rolls-Royce, the Government of the day handled the matter in such a way as to create maximum world-wide panic, and then came in on 100 per cent. public ownership, which, in the circumstances, did damage to the company. I believe that our handling of this matter has been more responsible in that respect.

Mr. Rost

How many more British companies will have to be bailed out before the Secretary of State admits that it is his Government's policy that is leading to the collapse of economic activity in this country?

Mr. Benn

When the hon. Gentleman sees the various factors that contributed to the difficulties of British Leyland he will, since he mentions Alfred Herbert, realise that it was the lame duck policy between 1970 and 1972 which produced the near collapse of manufacturing investment in this country.

Mr. Ridley

Is the right hon. Gentleman telling the House that he has given an open guarantee of an unlimited amount to this company without any parliamentary control on its size? What has he done to stop taxpayers' money going direct to industrial disruption, strikes, wage claims and excessive demands through his open guarantee?

Mr. Benn

The hon. Gentleman was a Minister in the Conservative Government which passed the Industry Act, which I am now using for this purpose. [Interruption.] At any rate the hon. Gentleman was a member of the Department concerned before the Industry Act was introduced, but as a loyal Member he voted for the Industry Act which went through Parliament—

Mr. Ridley

No, I abstained.

Mr. Benn

I apologise if I have accidentally misrepresented the hon. Gentleman's view. But the Industry Act was passed by the Conservative Government, and it provided for that Government and this Government a valuable instrument to uphold public interest, and we shall use it wisely in this case.

Mr. Dykes

The right hon. Gentleman says that he has to come to the House again to make another statement and I imagine that the House will accept it as reasonable in view of the complexities involved, but can he not be a little fairer to the House right now about his phrase "a measure of public ownership"? Such jargon phrases do not help. Let him say more to the House about what he means, bearing in mind, aside from the guarantee arrangements, short term and longer term, that any amount of money that the State is paying through his Department now to be put into British Leyland will be so large in relation to the value of British Leyland—as a result of the catastrophic fall in its equity because of his Government's policies—that it effectively means outright and complete nationalisation. Why does he not say so now?

Mr. Benn

The hon. Gentleman had better await the report that I shall make to the House. I make no apology for saying that if the Government are required to put substantial sums of money into British Leyland in view of its importance to our national economy, it is right that the taxpayer, in making that contribution, should get with it a proper measure of public control and accountability. I do not see why the taxpayer should be put at any special disadvantage vis-à-vis any other investor, given that investors who put money in automatically expect that they will get a proper measure of control.

Several Hon. Members rose——

Mr. Speaker

We must move on now.