HC Deb 25 April 1977 vol 930 cc700-2
8. Mr. Kenneth Clarke

asked the Secretary of State for Industry whether he proposes to make any changes in the planned future level of financial support from public funds of the motor vehicle industry.

7. Mr. Dykes

asked the Secretary of State for Industry what further discussions he plans to hold with the management of British Leyland on the provision of Government finance.

19. Mr. Hooley

asked the Secretary of State for Industry if he will make a statement on the future investment plans of British Leyland.

Mr. Varley

A review of British Leyland's plans will be submitted by the National Enterprise Board next month. I do not propose to make any statement about future levels of financial support from public funds until the Government have had an opportunity to study the NEB's recommendations. In the case of Chrysler, the extent of Government assistance was clearly defined in the agreement signed last year and no changes to these levels are planned.

Mr. Clarke

In the case of the review of the British Leyland car plan, will the Secretary of State give an undertaking that he will not rush into any decision that would involve long-term commitment of massive public funds? Would he not agree that the long-term future of British Leyland now depends on waiting to see what levels of production and productivity can be sustained there and whether there are any prospects of any lasting improvement in industrial relations within the enterprise?

Mr. Varley

The Government have made it plain on many occasions, going back over two years or more, that we see the continued support of British Leyland as being based on an improvement of performance and industrial relations. There was such an improvement last year, as the hon. Gentleman acknowledged. Indeed, I think that the whole House acknowledged that fact when I laid before it the proposal for the further tranche of public funds amounting to £100 million. I shall not rush to hasty conclusions. There has been a recovery over the past few weeks in British Leyland's performance. I want to see, as I am sure do my hon. Friends and even hon. Members on the other side of the House, a substantial and expanding British motor car industry.

Mr. Hooley

Does not my right hon. Friend agree that investment in a company of the importance of British Leyland cannot be turned on and off like a tap in the light of a passing phase of industrial relations? Is it not vital, if this great firm is to be successful in the future, to have a firm long-term commitment to a high level of investment?

Mr. Varley

I have always recognised that British Leyland will have to have investment from public funds, and that was envisaged in the Ryder Report. In the cars plan, as I told the House when we debated British Leyland a few weeks ago, it was envisaged that for every £1 of public money British Leyland would generate at least £1.50 from profits. There was a lapse in that process and the target was not achieved, because of a whole series of factors not necessarily associated with the toolmakers' dispute. There has been a recovery since then, as my hon. Friend knows, and as soon as we have the National Enerprise Board's report I shall seek to make a statement to the House.

Mr. David Price

Is the right hon. Gentleman aware that he will not get British Leyland right as long as the management is as over-centralised as it is, as long as the factories are so large and as long as the diseconomies of scale at the human level far outweigh any of the economies of scale on the technical side?

Mr. Varley

I was in the House when the hon. Gentleman raised that very point previously. I can tell him that no doubt this is one of the factors that will be taken fully into consideration by the National Enterprise Board and the Government.

Mr. Ioan Evans

Does my right hon. Friend agree that the fact that the British Government have rescued British Leyland and Chrysler has saved many hundreds of thousands of jobs not only in those two firms but in many components industries throughout the country? Will he have regard, however, to the future investment plans of British Leyland in order to ensure that the many components industries which supply parts to British Leyland are allowed to continue in the years ahead?

Mr. Varley

It is true that, had the votes of the Opposition been successful in the House on numerous occasions, the British motor car industry would now be in a state of disintegration. That is a fact that I think the whole House acknowledges. I want to see a substantial British motor industry and the level of import penetration reduced as quickly as is practicable. British Leyland and all the other motor car companies will have a rôle to play in that process. The component supliers not only rely to a great extent on home manufacturing but are also substantial and successful export earners.