HC Deb 10 January 1977 vol 923 cc1045-51
Mr. Hal Miller

(by Private Notice) asked the Secretary of State for Industry whether he has received a request from Meriden Motor Cycle Co-operative for additional funds over and above the £4.9 million originally made available by the Government, and whether he will make a statement.

The Secretary of State for Industry (Mr. Eric G. Varley)

On 15th December last the Meriden Co-operative asked me to provide a further £1 million to enable it to purchase from Norton Villiers Triumph Ltd. the latter's marketing organisation and other marketing assets and to provide working capital for that organisation. Whilst the application in the form in which it was presented has been turned down by the Government, we are exploring other possibilities.

Mr. Miller

Will the Secretary of State come clean and make plain to the House what the Government's policy is? Is it the policy that he announced originally, that there was to be no more money to be made available—as, incidentally, his predecessor announced before him—or is he trying to make a success of the Meriden Co-operative and clear the obstacles of the marketing arrangement out of the way?

Mr. Varley

As I have said already in reply to the hon. Gentleman's original Question, we are exploring the possibilities of seeing whether there is any help which can be given to the Meriden Co-operative. There is no doubt that it has substantial achievements to its credit. But its long-term future success depends on the market and its long-term viability.

A meeting took place this morning and, at my request, my right hon. Friends the Chancellor of the Duchy of Lancaster and the Minister of State, the right hon. Member for Swansea, West (Mr. Williams), are to undertake an in-depth study of the possibilities of keeping the co-operative in being. I hope that that examination will be undertaken as a matter of urgency. When conclusions have been reached, they will be reported to the House.

Mr. Robinson

Is my right hon. Friend aware that all Government supporters welcome very much the constructive spirit in which Mr. Jack Jones and I were received this morning by the Government and the readiness of the Government to look again at the situation in the light of the new information being made available and the variants of the proposals which can be put to the Government? We are confident that we can make the co-operative stand up and that it deserves the Government support for which we have asked. The alternative is more men on the dole, more unemployment benefit and a greater cost to the Government. We shall argue it to my right hon. and hon. Friend on both grounds.

Mr. Varley

I know that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) has been closely associated with the co-operative since its inception and has advised it over that period. As he will know, the application from the co-operative did not come in until 15th December. It wanted an answer very quickly. The application was put before us in the nature of interim assistance. What the Government really want to know is how the future is to go, how the co-operative sees the future and especially whether the motor cycle that it makes will find its way into the markets of the world.

Mr. Pardoe

Does the right hon. Gentleman accept that, when his Department made its original commitment to the Meriden Co-operative, it must have been obvious that further public investment would be required if it were to be a success? That being the case, what conditions were laid down for that further public investment to become available, and which of those conditions has not been met by the co-operative?

Finally, will the right hon. Gentleman accept that within his Department there have always been powerful voices which wanted this experiment in new forms of ownership to fail, both for itself and because it was the personal brain child of his predecessor? Will the Secretary of State make it clear today that he is not part of the "Get Benn" brigade?

Mr. Varley

When the Meriden Co-operative was set up, my predecessor made it clear on behalf of the Government that the assistance then was on a once-for-all basis. It was not given on the basis of an understanding that further assistance would be required. It is true that some of the original expectations of the co-operative have not come to fruition. We want to know how the co-operative itself—it is responsible—sees the future. If we can help in any way, we are prepared to do so. But we must bear in mind the criteria that we laid down some months ago for assistance not only to co-operatives but to all companies.

Mr. Rooker

Will my right hon. Friend assure the House that the investigation which is to be undertaken by the Chancellor of the Duchy of Lancaster will include allegations that Mr. Dennis Poore and his cohort stole and removed from the old factories detailed design projects which had been paid for by the old companies and that these were sold and bought at a knock-down price from the receiver, which had the effect of taking away future prospects for new projects and products from the co-operative?

Mr. Varley

I have not heard allegations of that kind, and it would not be appropriate for me to comment on what my hon. Friend said. The discussions and the examination which are to take place will be thorough-going, and no doubt Mr. Poore will be asked to take part in those discussions.

Mr. Lawrence

What did the right hon. Gentleman understand by the term "interim assistance"?

Mr. Varley

I thought that I had already made that clear. The co-opera- tives request was for assistance of an interim nature to enable it to draw up long-term plans. But we are concerned not only with the interim assistance but also with the long-term plans of the cooperative. We are interested in seeing an ongoing operation in that factory. That is what the examination which is to be conducted by my right hon. Friends the Chancellor of the Duchy of Lancaster and the Minister of State will be about.

Mrs. Wise

Will my right hon. Friend accept that most Government supporters believe that the Meriden Co-operative has proved that it deserves this additional assistance by the tenacious fight that it has put up already? Will this study also consider the cost of not providing assistance, both financially and in terms of the principle involved?

Mr. Varley

All factors will be taken into account. I have already paid tribute to the substantial achievements of the co-operative, the total flexibility amongst the work force, and the rest of it. The future of the co-operative depends on whether it can manufacture and sell motor cycles. There are substantial stocks of motor cycles, and that is the crucial issue which is not underestimated by my hon. Friend.

Mr. Biffen

Is the Secretary of State aware that it was with pleasure that I heard him say that the future of the co-operative depended on its success in the market? Is he aware, further, that that pleasure was tinged with apprehension on my learning that the Chancellor of the Duchy of Lancaster was to be involved in these further studies, as we all recollect the last time that the Department of Industry was subject to the footloose activities of the Chancellor of the Duchy in respect of Chrysler?

May I put two specific matters to the right hon. Gentleman? What were the factors which led the Department to reject the request for financial aid that was made on 15th December? Secondly, can he give us an undertaking that the in-depth study which will now be conducted will include taking the advice and judgment of the Industrial Development Advisory Board and making its recommendations known to the House?

Mr. Varley

The Industrial Development Advisory Board has been consulted about the assistance to the co-operative. The Board was not consulted about the interim assistance for which the co-operative applied, and it was turned down on the basis of Government authority. But I can tell the hon. Gentleman that over past months, when the co-operative asked us whether we would defer payment of interest on the Government loan, that was put to the IDAB and it approved the offer that we made to the co-operative at that time.

As for the hon. Gentleman's other questions, I must make it plain that my right hon. Friend the Chancellor of the Duchy of Lancaster is looking at the co-operative and conducting this study at my request.

Mr. Whitehead

Will my right hon. Friend accept that the long-term plans of the co-operative—and we all applaud what it has done thus far—could never have been satisfied by this one-off assistance in view of the industrial and organisational innovation that was needed? Will he accept also that the co-operative is considering a wide range of diversified production and that all Government supporters and those who sent us here would not forgive this Government if the Meriden Co-operative were killed?

Mr. Varley

No one on the Treasury Bench wants to kill the Meriden Co-operative. I make that absolutely plain to my hon. Friend.

In view of his question, I ought perhaps to tell the House what the assistance amounts to so far. As the House knows, the Government provided £4.2 million at 10 per cent. interest, with interest relief for the first year, to be repaid over 10 years from June 1980, and a grant of £750,000. The Government have also provided NVT, through the ECGD, with export credit facilities of up to £6 million to enable that company to finance purchases of Meriden motor cycles. In addition, over the last few weeks we have offered to defer payment of interest. We have also told the co-operative that, if it will help, we will subordinate that £4.2 million loan to all other creditors. That substantial assistance has been given already.

Mr. Kenneth Clarke

Would the Secretary of State clarify the reference he made just now to the Industrial Development Advisory Board, and in particular would he make it clear that, following the in-depth study, the views of the Board will be sought on any further assistance which may be recommended by the Chancellor of the Duchy of Lancaster and the Minister of State? Also, would he ensure that the views of the Board are given to the House so that the decision can be properly evaluated?

Mr. Varley

I shall have to judge that at the time. If it were proposed that further assistance should be made to the Meriden Co-operative, it is the view of the Government that this proposal should go to the IDAB. As the House will recall, the original proposal for assistance went to the Board, and the Board advised that assistance should not be given. However, at the end of the day it is for the Government to decide whether assistance should be given. It is a matter for Ministers, who are answerable to the House, to say whether such assistance should be approved.

Mr. Skinner

Would my right hon. Friend accept that if the police forces throughout the country bought Meriden bikes instead of German BMWs, and if many other authorities who have bought German bikes had bought from Meriden instead, the situation would be much better?

What criterion has my right hon. Friend laid down with regard to the surplus of motor bikes? This criterion does not apply to the manner in which other grants are made by his Department, because there was a case where £5 million was given to Lonrho to manufacture bedding and blankets for Brentford Nylons although there was a surplus of bedding and blankets at the time. My right hon. Friend's Department did not appear to take that into account.

Mr. Varley

We took all the factors into account. My hon. Friend may remember that when assistance was given to Lonrho to purchase Brentford Nylons, this had the support not only of the IDAB but of all the trade unions involved, including the Transport and General Workers' Union.

On my hon. Friend's first question about the procurement policy of police authorities, I must tell him that this is a matter for them. However, I think that as far as is practicable all public corporations and local authorities should go in for a policy of "Buy British".

Several Hon. Members

rose—

Mr. Speaker

Order. I am afraid that we cannot pursue the matter further now.