BRITISH LEYLAND MOTOR CORPORATION

HC Deb 02 March 1977 vol 927 cc379-440

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

Leave having been given on Tuesday 1st March under Standing Order No. 9 to discuss: The worsening situation at British Leyland as a result of the continuing refusal of the toolroom committee to recommend a return to work on the advice of their union.

4.7 p.m.

Mr. Hal Miller (Bromsgrove and Redditch)

I make it plain at the start of this debate that my purpose in requesting it is wholly constructive. I very much welcome the return to the House of the Secretary of State for Employment, and I hope that he is strong enough to take part in a constructive and helpful debate on this very difficult question.

Let no one in the House underestimate the difficulty. It is no part of my purpose to rake over old ashes of controversy or to be wise with the benefit of hindsight. I think, however, that it would be for the convenience of the House if the Government could give an early indication in the debate that the Secretary of State will still be making a statement on the position vis-à-vis the National Enterprise Board and its recommendation on British Leyland, so that the minds of later speakers can be clear as to whether we are to concentrate today solely on the worsening situation as a result of the continuing refusal of the tool makers rather than on the whole question of the strategy of British Leyland, for which time does not allow.

My starting point, therefore, is the worsening situation. I ask the House to understand the very real sense of bitterness, isolation and loss of confidence amongst the tool makers, a body of skilled people who have undertaken a long apprenticeship and have a vital rôle to play, not only in this company but throughout our industry. One of my main worries is that unless their problems are resolved we shall be faced with a grave shortage of people offering themselves for apprenticeship, thus depriving the country and the company of much-needed skills.

I can testify to the feeling of bitterness from my constituents, some of whom have had to give up their cars and send their wives out scrubbing for the first time or seeking other forms of employment, so that when the men return from the night shift they have to stay up during the school holidays to look after the children until their wives come home. There is a feeling of bitterness which I ask hon. Members on both sides of the House to understand. My purpose in introducing this debate is to try to see whether this afternoon we can offer the tool makers some way out of the impasse in which they find themselves as a result of the various policies which I shall go into.

First, the tool makers find themselves trapped by the provisions of the pay policy, in the same way as the company finds itself trapped by the provisions of the pay policy. The company is unable to offer a common starting date for the various rates of pay in different plants and is unable even to offer a common rate of pay for the same job in different plants. The company's position is fixed, through no fault of its own.

The tool makers have been driven by their frustration and bitterness to make an impossible demand for a separate negotiating unit, which must clearly run counter to the whole thrust of company policy, which is to reduce the number of negotiating units, as recommended in the Ryder Report. It is also unreasonable of the tool makers to expect their union to agree to the formation of a separate negotiating unit for tool makers. We have real difficulties here. Unless the Government can tip their hand and show these people that there is some hope of reward for skill and some incentive for acquiring skill and for work, the bitterness and frustration will continue and the company will remain in its straitjacket.

Secondly, the situation is grave because it raises serious doubts about the effectiveness of our present system of industrial democracy. The tool makers are in a real difficulty because they fear that they will be outvoted on the Leyland shop stewards' combine and that they will be unable to obtain satisfactory negotiation of the differentials which they are seeking. This is a real difficulty and leads us to explore the whole meaning of industrial participation, because, despite the progress that the company has made in establishing machinery for further worker participation, the tool makers are still left with a feeling that they are unable to have any influence on the situation.

The situation is also serious because of the manner in which a genuine grievance—I hope I have carried the House with me in understanding that it is genuine—is being used by people who have totally different purposes. Here I quote what was said by Mr. Bert Benson, district secretary of the Birmingham West District of the Amalgamated Union of Engineering Workers.

Mr. Tom Litterick (Birmingham, Selly Oak)

Are they red tool makers?

Mr. Miller

The tool makers are largely Conservative, as the hon. Gentleman should know.

Mr. Russell Kerr (Feltham and Heston)

That is where the trouble lies.

Mr. Miller

Mr. Benson said: The tool makers are being used as a battering ram against the social contract, with a direct liaison between a group within the tool makers and a Communist-backed organisation. 'Defence of Free Trade Unions', which held a meeting in London last Saturday. There is also a serious question for industrial democracy in the fact, reported by Mr. Benson, that three former shop stewards from the Rover car plant, which is not supporting the strike, who had been rejected on a vote by the union membership nevertheless still attended the unofficial tool room committee's meeting on Saturday, when it was decided to continue the strike. As I have shown, there is real concern about the whole process of industrial democracy in relation to the tool makers.

I turn now to the question of industrial strategy, which has been very much called into question by this strike. I referred yesterday to the fact that in this country we have excess capacity for the manufacture of motor cars yet somehow we are unable to manufacture the output to meet domestic demand. The Prime Minister himself said that floods of cars were waiting to come into the country which would never come in if we were able to utilise the industrial capacity that we have available.

It is not an easy question of simply adding further investment, as our whole experience in British Leyland has shown. It has raised the whole question of the Leyland industrial strategy, on which the Minister—I hope he will confirm this—will be making a statement later. It has been shown at Leyland that the injection of finance is not enough in itself to restore confidence, to motivate the company and all involved in it, or to solve the problems of management and production.

There may be some who feel that the more successful parts of the company—there are still some very successful parts, such as the Truck and Bus Division and the Special Products Division—should be separated off so that their development and success is not held back by the troubles affecting the other parts of the company.

I realise that many hon. Members wish to take part in the debate, so I shall draw my remarks to their conclusion. My whole purpose has been to try to find a way out for the tool makers involved in this most unfortunate dispute, who are not accustomed to striking. For most of them it is the first time they have taken any industrial action whatever, but it raises the question of how people are to be motivated to produce the potential output that can be obtained from our factories. How is their confidence to be restored to enable that to come about?

It was most disappointing to hear the Minister of State suggest that this was simply a matter for the union and the company and that the Government had no part to play. I hope I have shown that the company and the men are caught in this bind by Government policies. That is why I am requesting the Government to tip their hands about the next phase of the pay policy and to offer some possibility of a way out. The Government should understand how great is the lack of confidence among the men. There is lack of confidence in the management, lack of confidence in the ability of their union to deal with the problem and lack of confidence in the Government, who have shown no consistent policy towards the industry, and who have given the impression—I hope falsely—that simply by ladling out taxpayers' money all these problems will be solved. That is far from true.

Unless the Government can this afternoon give some reason for confidence, I warn them that the loss of confidence will spread from the toolroom throughout the company, throughout industry and throughout the country.

4.20 p.m.

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

I shall take up some of the detailed observations of the hon. Member for Bromsgrove and Red-ditch (Mr. Miller). First, I should like to respond to his wish that I should set out the current position at British Leyland.

Today a total of 3,500 British Leyland workers are on strike, of whom approximately 3,000 are tool makers. Some 28,000 workers are laid off, of whom about 21,000 are unable to work because of the effect of the tool makers' dispute. There are a dozen smaller disputes, of which all but one are unconstitutional. The agreed procedures have not been followed.

The tool makers' dispute is led by an unofficial group of shop stewards who are demanding separate negotiating rights for tool makers. The executive of their union—the Amalgamated Union of Engineering Workers—has expressed sympathy with the aim of the tool makers to improve their wage position, but it has not supported a call for separate negotiating rights and has told the men to return to work.

Since last summer, disputes have taken an increasing toll of British Leyland's car production. In 1976 British Leyland lost about one-fifth of its planned production schedules. While disputes were not the sole cause, they were by far the largest factor.

This year, after a brief improvement during January, the position got steadily worse during February. Last week production was down to only one-third of the planned level. The prospects today are that this figure will diminish still further.

I should emphasise that we are concerned not simply with the effect of the present tool makers' dispute, serious though that is. The matter goes much wider than that. There has been since last summer a failure to maintain the improvements that were achieved during the first eight months of public ownership—improvements which I described to the House last August—which justified the approval of the first tranche, against which the Opposition did not vote.

The poor record since then has meant that British Leyland's market position in the United Kingdom and abroad has fallen far short of what could be achieved with a proper supply of vehicles. This failure to make the most of our opportunities is not a once-and-for-all loss. It is fast eroding the foundation on which British Leyland's future as a volume car manufacturer must rest.

The whole future of the strategy for British Leyland is being devastatingly undermined. The effect on profits is crucial to the whole operation. Calculations show that, as a result of the stop-pages so far this year, including the tool room dispute, the British Leyland cash position at the end of April will be £70 million worse off.

If there were to be an early full return to continuous working, by the end of the year a substantial part of that loss might—I emphasise "might"—be recovered. But if the strike continues, the harm to British Leyland's cash position will escalate rapidly. At the same time, the confidence of customers at home and abroad, and of the public, will be rapidly eroded.

My hon. Friend the Minister of State reminded the House on Monday that the failure to generate sufficient cash within the company will be crippling to its long-term plans, quite apart from any decision by the Government to withhold funds.

I confirm that the company's present plans call for £1,500 million to be generated internally in profit over the next seven years, as well as the £1,000 million needed from external sources. That ratio of 1½to I makes all too clear a point which the Government have repeatedly made: that public funds alone cannot in any sense secure the future of British Leyland or, for that matter, of any British company.

Mr. Michael Grylls (Surrey, North-West)

As the Secretary of State has just told us that the whole basis on which the Ryder Report was approved by the House in 1975 is not being met, because the company is not providing the 1½to 1 ratio from its own resources, will the right hon. Gentleman instruct the National Enterprise Board to renegotiate the Ryder Report, because clearly all assumptions are now no longer valid and are totally out of date?

Mr. Varley

I have not finished by any means. I shall say something more about the attitude of the British Leyland board and of the NEB. I shall tell the House as much as I can about the discussions that I have had with the NEB and Lord Ryder, its chairman.

The future of British Leyland rests largely in the hands of the company's management and employees. It is some of them—not all, certainly not the majority—who are jeopardising its future by the action now being taken. The great majority of disputes which interrupt British Leyland's production take place without exhausting the agreed procedures for settling disagreements.

When I visited Longbridge recently in the company of my colleagues on the motor industry tripartite group—Jack Jones and Hugh Scanlon—we emphasised as strongly as we could that if only agreed procedures could be observed, that in itself would bring about a massive improvement in the continuity of production. Again and again comparisons made between the performance of our industry and industries on the Continent show that the fact that we do not get continuity of production is one of our greatest weaknesses.

Mr. Litteriek

Does the Secretary of State recognise that the phenomenon that he has described has been familiar to us for the last 25 years? Does that not indicate that there is something intrinsically wrong with the procedures, not with the people concerned?

Mr. Varley

The procedures governing disputes, which have recently been revised with the full support of the AUEW and the trade unions involved, should be observed. That point was put across extremely strongly by those who have the responsibility for leading the major trade unions in the industry.

I am not suggesting that the situation is perfect—of course it is not. We must see whether we can bring about an improvement. But I am bound to tell my hon. Friend that there is no justification for the level of disputes which has taken place. In 1976 there were 700 disputes of one kind or another at British Leyland. That was not solely the result of the pay policy or the serious issues to which my hon. Friend referred.

Mr. Hamish Watt (Banff)

Does the Secretary of State agree that he can no longer continue to blame the workers or the management for these problems? Until such time as he gives the motor vehicle industry and the whole of British Leyland a complete shake up and shake out, he will not get anywhere.

Mr. Varley

I am sure that that intervention was just in case the hon. Gentleman failed to catch your eye, Mr. Speaker. I think that he has probably made a speech and does not require any comment from me.

I was referring to the procedures, which have recently been revised at British Leyland. The procedures were revised only after the most lengthy and detailed discussions with those who were directly elected to represent the work force. The work force and its representatives were fully involved. In my opinion and that of the Government, there should be no circumstances in which it is justified to take strike action before the agreed procedures have been fully explored. To do so puts at risk the livelihood of everyone who works in British Leyland. I cannot emphasise too strongly that the livelihood of everyone who works there is being put in jeopardy by this constant interruption.

The hon. Member for Bromsgrove and Redditch mentioned the bargaining structure at British Leyland. British Leyland has said time and again over the past few years that it fully accepts the recommendation in the Ryder Report that reform of the bargaining structure there is long overdue. It is widely known that movements in this direction have not been possible so far because they need to be preceded by movements towards a common negotiating date. This in turn is not permitted under the present pay policy, but the 12-month rule is an essential part of the present policy negotiated with the TUC.

A bargain has been made, and, as Hugh Scanlon told the Leyland workers at the meeting three weeks ago, when we met 600 shop stewards, A bargain made is a bargain kept. Discussions are now going on about the next phase of the pay policy. As the Prime Minister reminded British Leyland workers from this Box yesterday, it will be a more flexible policy in the next phase.

However, the demand being made now for separate negotiating rights for different groups of workers would not in any case help to rationalise the bargaining structure of British Leyland. In fact, it would have the opposite effect: it could be argued that it would only exacerbate the existing already unsatisfactory situation. No one should be in any doubt about that.

As I have tried to make clear to the House, Leyland was in danger of reaching crisis point even without the current devastating series of disputes. The Leyland board has been considering what action should be taken to deal with this crisis and give the company the hope that even yet it may survive and prosper, but already it is clear that present plans must be reviewed.

Consultations have taken place between Leyland and the NEB. The NEB in its turn has considered the position over a period of days. It reported to me the evening before last, 28th February, and the Government have urgently considered its conclusions. For reasons of commercial confidentiality that I hope the House will understand, it would not be right to make available the whole correspondence, but I can give the House the outline of the main points.

British Leyland has reported to the NEB that since the major review of progress last summer there has been insufficient evidence of a reduction of industrial disputes or of improved productivity in Leyland Cars and that the situation has deteriorated sharply in recent months. British Leyland has also stated that, unless there is a substantial improvement in performance, the generation of cash by Leyland Cars—an essential component of the Ryder Report strategy—would be insufficient to support the Cars Plan. British Leyland would then be unable to recommend to the NEB and the Government the injection of further funds for modernisation and expansion of Leyland Cars. The NEB has decided that in those circumstances it would be unable to make further funds available for the Cars Plan and I can tell the House that the Government accept that position.

Several Hon. Membersrose—

Mr. Dan Jones (Burnley)

I address this remark to the Minister as a former toolroom worker. I am not prepared to go too far back, but there is no doubt in my mind that this dispute is strictly and almost entirely related to differentials. In the toolroom, that is asking for trouble. Trouble is bound to happen. With great respect to my right hon. Friend, may I ask whether any decision has been taken, first by the company, second by the NEB, and third by the Government that differentials will be restored as soon as possible?

Mr. Varley

So far as this Government are concerned, phase 2 of the pay policy is absolutely sacrosanct. That is inviolable. There is no way in which we can break that and we refuse to take any action that will break it. But my hon. Friend should know that yesterday the Prime Minister said and others have said that, pay policy permitting, the next phase, phase 3, of the pay policy should be more flexible and that under it some of these things can be taken into consideration.

Mr. Geoffrey Robinson (Coventry, North-Westrose—

Mr. Varley

I should like to go on a little further. In the context of what I have just said, there are other things that I ought to say. Then I shall certainly give way to my hon. Friend, if he still wishes to intervene.

If no further funds are available, the inevitable consequence is a drastic revision of the Cars Plan. The NEB's aim remains that it wants to see British Leyland become a viable car manufacturer. This also remains the Government's wish. There is, however, no prospect of achieving this aim unless urgent action is taken with the following objectives.

First, a complete return to normal working and to planned and agreed levels of output and productivity should be achieved quickly. If, as a result of lost production through industrial disputes, cash continues to flow out of the company at the present rate, the drastic review of the Cars Plan will have to take place at the latest during March, and the consequent cut-back in major investment plans and substantial unemployment will become inevitable at that stage.

Second, after continuity of production has been established, it must be sustained and the planned and agreed levels of output and productivity must be achieved steadily and regularly. Failure to achieve this will bring about the same serious financial consequences and the same need for a drastic review of the Cars Plan.

Third, if the first two objectives can be achieved, the period between now and the time when the next tranche would need to be sought must be used for discussions among management, trade unions and the work force which will result in tangible measures offering the prospect of a radical improvement in industrial relations in Leyland Cars in the future. Without these solid assurances for the longer term, in addition to the achievement of the first two objectives, there will still he no basis for the provision of further funds, and a drastic review of the Cars Plan will again be inevitable.

The Government have carefully considered the NEB's conclusions and objectives and I feel it right to inform the House that we fully endorse them.

Mr. Norman Atkinson (Tottenham)

On that basis, what my right hon. Friend is now enunciating is an entirely new concept in the whole purpose of industrial relationships. Would he not agree that if any private manufacturer, such as General Electric or ICI, were to make the injection of new capital into its organisations conditional upon industrial relations and the number of disputes, that would be treated in this House as an absolute scandal? Therefore, is it not a disgrace for a leading trade unionist in this country, as my right hon. Friend is acknowledged to be, suddenly to enunciate a new method of this sort and to say that the future of a company depends upon its industrial relationships, when the management is the cause of many of the problems?

Mr. Varley

What I have been enunciating is the policy which has been decided by the NEB, which has put certain proposals to the Government and asked whether we will endorse them. As my hon. Friend knows, the NEB does not wholly consist of hard-nosed industrialists. Three trade unionists are among its members. While I do not say that they are necessarily the sole arbiters, the views which I have put to the House and endorsed on the Government's behalf are the views of the NEB collectively.

I cannot go further than that. The simple point that I want to emphasise is that no one is more sick than I am about this situation. I want Leyland Cars to be a volume producer of cars. I shall say exactly in a little while what I have done and what part I have played in this. The simple fact is that if the company is to be successful not only the £1,000 million of Government money is involved but the profits which British Leyland can make.

Apart from the Ryder strategy, there was not only the £1,000 million of public funds or funds from external sources but the £1,500 million which Leyland would have to generate itself. It is clear from what has happened so far that the 1977 Cars Plan cannot be realised unless a dramatic improvement takes place immediately.

Several Hon. Membersrose—

Mr. Varley

I give way to my hon. Friend the Member for Sheffield, Hills-borough (Mr. Flannery).

Mr. Martin Flannery (Sheffield, Hillsborough)

Will my right hon. Friend take note that on this specific point all the support is coming from the Opposition Benches? There are many Labour Members who, like himself, know a great deal about industrial relations—[HON. MEMBERS "What does the hon. Gentleman know?"] The barracking from the Opposition is welcome. On the Government side there is quietness and a willingness to listen. I hope that my right hon. Friend takes note that we think that the Government's stance is liable to intensify the problem and to make a solution more difficult.

Mr. Varley

My hon. Friend is entitled to that view. We are sorry that we have had to make this statement. The NEB, which was set up by this Government to monitor the performance of British Leyland, has made a recommendation to the Government on certain action. What have we to do as a Government? Do we say to the NEB that it has no right to make those recommendations? Do we deny it the right to make them? If we did that, it would be serious for the NEB and for those who are charged with responsibility for it. No one should act on any assumption other than that the Government, the NEB and the British Leyland board mean what they say and accept fully the implications and consequences which will follow unless the situation is quickly put right and stays right.

As my right hon. Friend the Prime Minister made clear yesterday, the position will be reviewed thoroughly before further funds are committed. The implications for employment in many areas of the country, particularly the West Midlands, could be profound. I want all workers at Leyland, including those on unofficial strike today, to be quite clear that their own future employment and the future of their company is now in their hands. They can kill it or they can save it. They will have no one else to blame or to thank.

Sir Keith Joseph (Leeds, North-East)

Could the right hon. Gentleman help the House by telling us what happened to the existing authorised tranche of £100 million of which, I understand, £25 million has already been drawn? Is the other £75 million, destined for investment, available only for investment, or is it for working money?

Mr. Varley

The £100 million approved last August by this House will still go to British Leyland. As the right hon. Gentleman said, £25 million was drawn by British Leyland last week, and a further £25 million will be required very shortly—

Sir K. Joseph

For investment?

Mr. Varley

—for commitments that have been entered into by British Leyland for investment. If the situation deteriorates further, I shall take an early opportunity of informing the House. The situation is changing rapidly from day to day because of British Leyland's cash position and the fact that car production targets are not being met.

A year and three quarters ago I had responsibility for asking the House to approve the proposals for placing British Leyland in public ownership at a cost of £246 million. Seven months ago I asked the House to approve the Department of Industry's share of the first £100 million tranche of loan finance for British Leyland. Since then I have approved the plan for the new Mini, on which rests the future of Leyland as a volume car producer. I have always had high hopes that Leyland could win through and succeed, for its work force and the country. That hope now depends on the actions of the work force from today onwards. Even now that hope can still be fulfilled, But time is running out fast. I hope that the serious statement which I have made will be taken fully into account by all those in British Leyland and that action will be taken quickly to put the situation right.

Several Hon. Membersrose—

Mr. Speaker

Before I call the next hon. Member, may I tell the House that a large number of hon. Members have indicated to me that they hope to catch my eye? Brevity, therefore, would be a great help.

4.46 p.m.

Mr. Charles Morrison (Devizes)

The Secretary of State has described a bleak and grave situation, but he has spoken with considerable firmness, which has not always been self-evident. It is encouraging that he has spoken in that way in order to bring home the seriousness of the situation to all those concerned with Leyland.

Last night I had a long telephone conversation with the AUEW convener of the Leyland factory outside Swindon in my constituency. He was a very worried man, not about his factory but about the whole future of Leyland. He, too, emphasised many of the points which have been made today by my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) and by the Secretary of State about loss of confidence. The convener asked how any company could continue to lose £12 million a day through lost production and yet remain in business. As the Prime Minister said yesterday, 200,000 cars, which were included in the Leyland plan for last year, have been lost.

There is a total lack of realism on the part of some tool makers, but not all, which put the whole future of Leyland at risk. Adjacent to Swindon in my consituency there are 1,011 tool makers, maintenance men and machine maintenance men, who make up the biggest Leyland toolroom and, I am told, supply 45 per cent. of presswork needs. They are not on strike and they do not support the unofficial strike.

The AUEW members were consulted about the tool makers' strike but believed it was untimely and would create a loss of money and hardship for their families. They are resting their hopes on phase 3 of the pay policy. Yet the Swindon tool makers are among the lowest paid. Their differentials have been steadily eroded. Phase 1 and phase 2 of the pay policy precluded them from achieving their objective of comparability with Cowley, which was agreed with management before the introduction of the incomes policy. Therefore, undoubtedly there is bitterness and they have more reason to strike than many.

Why are they not doing so? The explanation I have been given is "sheer common sense" and an appreciation of the serious consequences of a strike for the future of the company, coupled with their loyalty to their union. That that common sense and realism are not prevalent elsewhere is self-evident.

It is worth recalling the comments made by the Expenditure Committee's Trade and Industry Sub-Committee in its conclusions to the report on the motor vehicle industry, published in August 1975. It said: There is an urgent need …for the greatest degree of co-operation between, and effort on the part of, management and workforce …The possibility of concerns becoming permanent pensioners' is something which neither Government nor Parliament should contemplate. Parliament and Government cannot contemplate permanent pensioners, simply because the country cannot afford them. Therefore, the alternatives for Leyland are to die or to rejuvenate itself by a much greater effort by the management and work forces. The Secretary of State strongly repeated this today.

Why have there not been that effort and co-operation in the past? I think that there are two reasons. The first is the Government's inability so far to communicate to the total work force that the money is limited. That is barely surprising. To publicise all the Ryder proposals and to make a commitment to them was to imply that money from the National Enterprise Board or the Government was to be available regardless of productivity, regardless of unofficial action by labour and regardless of any cause of disturbance to the flow of production. Not to insist on firm productivity agreements was highly irresponsible in the use of the taxpayer's money.

The right hon. Gentleman and the House may remember the words of the hon. Member for Sheffield, Attercliffe (Mr. Duffy), who said on the publication of the Expenditure Committee's report: We were left with the feeling that Ryder and his team thought of money rather as confetti. If that was true of the Sub-Committee's Chairman and its members, of whom I was one, it was bound to be true of the Leyland work force. If money was thought to be so plentiful, why should anyone worry?

The second reason why there was no adequate co-operation or effort stems from the pay policy's inflexibility. It does not allow for the consideration of differentials, productivity, special cases, and so on. But it should, and it would have done if there had been any consistency in economic or incomes policies.

Mr. Hal Miller

Does my hon. Friend agree that the Secretary of State's response this afternoon has been most disappointing in that he has given no clear commitment to recognition of differentials at the end of phase 2 in August, but will, as I understood him, take a decision on the company's future in March?

Mr. Morrison

My hon. Friend has anticipated what I was going to say. I agree that that is a considerable shortcoming in what the right hon. Gentleman said this afternoon.

We are now considerably concerned with differentials, as my hon. Friend implied. Early in 1974 we were concerned about what were then termed relativities. Logic may have very little to do with politics, but it seems to me that if there had been a logical progression and development of incomes policies from, say, the Roy Jenkins freeze of 1966, by now we should have an incomes policy which took account of many if not all of the points now in dispute, and the country would be far better off. Instead, each Opposition in turn have believed that they could do without an incomes policy, until 18 months after taking office they discover that they cannot. Therefore, some of the pressing Leyland problems stem from the lack of continuity and consistency provided by the British political system.

Mr. Norman Tebbit (Chingford)

Does my hon. Friend agree that after two or three years of having an incomes policy each Government have concluded that it will not damned well work?

Mr. Morrison

I do not accept that. Each Government have concluded that if they are to continue with the incomes policy they will become somewhat unpopular before the next General Election. If each Government tried harder, they might bring about progress with an incomes policy, even though they might not improve their chances of winning an election. The consequences of the present chopping and changing are adverse for the whole country.

The Secretary of State says that if any pay concession were made to the tool makers now it would be seen as a concession to extremism. I was glad to see the right hon. Gentleman standing so firmly by phase 2. If there were a concession, it would totally undermine the position of moderate shop stewards such as those at Swindon, and would immediately cause trouble amongst other skilled unions. Therefore, what the Government must do now is to reiterate, as the Secretary of State has, that there will be no more funds without a firm productivity agreement, and that if there are no funds Leyland will indeed gradually bleed to death.

There must be a terminal date before which agreement must be reached and after which, without an agreement, Leyland will be broken up. That was done in the case of Chrysler. If the unions there had not accepted and signed the details of the statement of intent of, I think, 16th December 1975, Chrysler would have gone into liquidation on 31st December. I believe that a similar approach in Leyland will mobilise the moderate majority of people working for that company. It will stop them believing, in a good old-fashioned English way, that somehow the company will muddle through.

This sort of shock treatment is the only hope for the future. If it is coupled with the repetition of a commitment to flexibility in phase 3 and tax cuts in the Budget, I think that there is some hope of a solution.

The possibility that Leyland might go under, putting at risk 170,000 jobs directly and several hundred thousand more indirectly, is a very grave one for British industry. It is by no means certain that our political and social fabric could stand the strain of such a disaster. But every day that passes in the present crisis makes what is a possibility more of a probability.

The Government must from now on act without the ambivalence which they have sometimes shown and with a firmness that has been far too intermittent so far.

4.58 p.m.

Mr. Geoffrey Robinson (Coventry, North-West)

I shall be brief and to the point, because I know that many other hon. Members wish to speak. I agree with the statement of my right hon. Friend the Secretary of State that the scope of the debate must be the worsening situation at Leyland. It is not about any particular dispute, the present dispute being only one of a deplorable succession that have led to what must now be a critical cash crisis at British Leyland.

However, what saddened us on the Labour Benches, and where my right hon. Friend was getting the matter fundamentally wrong, was my right hon. Friend's attitude that it was all the men's fault. We have heard it every time. My right hon. Friend still maintains a one-sidedly critical and minatory posture, that if only the unions would go back to work and be good boys, if only they would do this or do that, there would be no problems at British Leyland.

On a previous occasion—I think it was the first time I had the pleasure of intervening during Question Time and before my maiden speech—I pointed out that in 1975, for example, many tens of millions of pounds must have been lost by mistaken management decisions. There are more fundamental problems with the basic organisation of British Leyland than my right hon. Friend has cared to touch upon.

I have kept pretty quiet about the company since I left it. I say what I have to say today with some regret and with knowledge that the reasons I gave for my resignation have been proved sadly but fundamentally well founded. With due consideration I shall outline about seven things that I believe need saying and which if implemented would give us some chance of reversing this worsening situation, this perpetual downward trend in a company that is so vital a contributor to our economy.

Whatever Conservative Members say, there can be no question of closing down the company. There is no point in saying that one sector should be hived off or another closed down. That is a self-mutilating negative approach. The company is too big and too fundamental for such an approach. The whole point of the debate should be "Why is it going wrong? What do we do to get it right?" I shall make a few comments about the way in which I believe matters are going wrong.

First, we must realise where we went wrong. We went wrong in some ways in 1968. We failed to learn the lessons when we went wrong again with the Ryder Report—I note that Lord Ryder is gracing our debate—when we put the whole lot together and kept it together. We have put together something that is too big and too complex for any management to cope with properly.

Secondly, we must recognise that it is pure fiction to pretend that British Leyland is in any meaningful sense a private sector company with its own quote on the Stock Exchange. It is not. We all know that it is 95 per cent. State-owned. We all know that its destiny in so many respects is controlled by the State. That must be accepted as a reality. Therefore, it follows that it is no good living with fiction. Let us buy out the remaining 5 per cent. Let us treat it for what it is—namely, a State-owned enterprise.

I would go further and disband the board of British Leyland. The board has no function to play because the company is not a coherent entity. It has many different parts, and each part has to be dealt with separately. We should have a proper and coherent national strategy for each part. It bears repeating that there are many vital sections in British Leyland quite apart from the Car Division—admittedly by far the biggest—that are none the less very crucial entities. There are, for example, the Material Handling Division and the Construction Equipment Division. They are part of huge international industries where we have been falling behind our main competitors and for which we should have a boldly conceived national strategy.

I would then close the British Leyland headquarters. That would save a great deal of taxpayers' money and we are rightly worried about money. Let us close the headquarters and then make the four divisions report directly to the National Enterprise Board. After all, the NEB is the shareholder. That is where the real responsibility for the success of British Leyland lies. It does not lie with some board that is there because it is a fiction of our imagination that British Leyland is a private sector company. I do not think that responsibility would be shirked by Lord Ryder. We should then redeploy the headquarters' staff. There are some very able people in head office who could be redeployed to the divisions on the one hand and to the NEB on the other to strengthen the NEB's monitoring and control capacity.

Mr. Grylls

Does the hon. Gentleman agree that rather than disband the Leyland board it would make more sense to disband the NEB so as to avoid having a bureaucratic layer in between?

Mr. Robinson

I had great pleasure seeing and hearing the hon. Gentleman on television the other night when he said that he would not disband the NEB. I am happy to agree with him. I should not take that course either.

If we redeployed in the way that I suggest, the process would serve the useful function of having a direct effect in improving the situation in Leyland Cars. The situation at present is one of widespread dismay among management and the work force. There has been too much centralisation, a lack of direction and a lack of a sense of accountability and direct control in particular plants. I have very much in mind the factories that comprise the company. We must restore more decision-making down the line.

The disbandment of the British Leyland board would remove one layer of review and one layer of complication. At present the divisions have to agree their plans. Anyone who has run a division knows what it is like to try to reconcile the important and justifiably competing elements within a division. Anyone who has been in that position will know of the pressures involved. Once agreement has been established within the divisions, it is then necessary to go to the board of British Leyland, then to the NEB and finally to the Government. That is far too complicated a review process. What I have suggested would get rid of one of those stages, and that is the first thing that should he done. That in itself would eliminate a stratum of Byzantine encrustation, which in itself would bring a sense of direction to a company which fundamentally is lacking precisely that. It would mean that we come therefore to the most important thing of all—namely, a clear sense of responsibility at the point at which that responsibility should reside for strategic manning in the company. That is something on which perhaps the Government and the NEB should have agreed when the Ryder Report was published.

I argue again today that the Government's strategy of saying "If you are all good boys and we have a good run of three months, we shall make commitments" is not effective. Of course, we had a three-month good run last summer. A further six-month good run would take us through this summer if the tool makers and others can be beaten back. However, there would be a smouldering resentment among the men, which would not help in the long term. There would be a hardening of attitude on the part of the management, which, again, would not help in the long term. But I agree that despite those attitudes there might be a good run of three to six months and presumably the Government would be pre- pared to make a commitment on the Mini. The next thing would be to enter into commitments on skin line release for the body dies and tooling. That with other contracts would easily amount to anything from £30 million to £100 million. But if there is another spate of disputes after that, what do we do? Do we stop what has been committed? That is not an effective sanction. In fact, it is nonsense. Having said that I should get rid of the board, we would have the four bodies reporting separately to the NEB. They would be separate, discrete and independent entities.

I have so far refrained from comment on the manufacturing and selling arrangements of the Car Division, but surely one of the early jobs of the NEB would be to have another hard look at that organisation. There is one thing that we should have insisted upon at the very beginning and I believe that with good will, leadership—I emphasise "leadership"—competence and integrity on the part of the managemnt it is something that could still be obtained. However, the thing that must be obtained—I believe that it can be—is a common grading structure across the car company. There should be common rates within that structure and a common renewal date for pay negotiations for the various grades.

If management convinced the men that it meant what it said, such a structure could be obtained. We all know that the feeling on the shop floor—this will be recognised by all those in the House who have car workers in their constituencies—is that management is insincere and incompetent. If those impressions—there may be grounds for them—could be dispelled and if management and the NEB consulted on the basis of phase three, which is to allow for greater flexibility, I believe that there could be an agreement leading to greater productivity along with a common grading structure with common rates and a common renewal date. That in itself would provide the basis of an improvement in industrial relations.

That, however, will not be enough. We definitely need a change in attitude, a change in competence and a change in leadership among management if the men are to respond, as I happen to know from experience they are able to do. I say this directly and unequivocally to my right hon. Friend the Secretary of State for Industry. Any other road will be long, arduous and extremely costly to all of us who are taxpayers.

5.8 p.m.

Mr. John Stokes (Halesowen and Stourbridge)

I am glad to be able to speak after the hon. Member for Coventry, North-West (Mr. Robinson), because in the past I have made many of the points that he put forward today, and it is important that the House should realise and ponder upon what he said. I am particularly keen that there should not be wholesale condemnation of the workforce in the Leyland factories. The workers are not all bad men. I see many of them in their homes and in the clubs and pubs in my constituency. They seem to me like a cross-section of any other community. I am sure that there are as many good men in British Leyland as there are in other large organisations.

We must ask ourselves what has gone wrong. I hope that that is what the debate is all about. I hope that it will he constructive and that it will give the Minister sonic helpful suggestions. I shall not go too much into the history. We know that the car industry has never had a very good name in Britain. The units have grown too large and the work is probably organised in too repetitive a way. The wage structure has always been haphazard. Nevertheless, I agree with the hon. Member for Coventry, North-West that the fundamental trouble for British Leyland has been a lack of leadership in the boardroom, in the office and on the factory floor.

When Marshal Pétain successfully quelled the mutinies in the French army in 1917 it is true that he shot a few ringleaders. But after that he asked to see the officers of the units concerned. From then on he concentrated on ensuring that the officers led their men properly and cared for them. I do not understand why Labour Members should laugh at that. That is the essence of the trouble in British Leyland.

The standard of the chargehand on the shop floor, the foreman, the manager and the general manager, as well as the director, like much elsewhere in British industry, is unfortunately below the standard that such a large organisation requires. It is certainly, for instance, below the standard of NCO, warrant officer and officer in the Armed Forces. There is no imagination in these large soulless plants. As my hon. Friend the Member for Bromsgrove, Redditch (Mr. Miller) said, confidence is totally lacking in both management and work force.

The state of morale and ésprit de corps is abysmally low. After all, why are not the workers enormously proud to work for the greatest British car manufacturer? Why are there not lots of flags flying on Leyland sites, with wall charts everywhere showing production and sales figures and the strength of competition from abroad? Above all, why do not the sales executives, particularly those who successfully go abroad and bring back big orders, go on to the shop floor and tell the men what they have done, getting them involved and interested in the business of putting British Leyland at the top of the car league in Europe?

We have the ability, the brains, the inventiveness and the design skill. What seems to be lacking is the organisation and leadership of the men. Can anyone doubt that if British Leyland were broken up into its component parts, as it should have been and if, for instance, some of those parts were taken over by a firm such as GEC, in a very short time British Leyland would be making a profit? Can anyone doubt that if the whole of the top management of British Leyland were removed and management of the standard, for example, of Marks and Spencer were substituted, there would be an immediate and startling improvement in the company's fortunes?

British Leyland's troubles are symptomatic of the troubles of the nation. We have lost our pride and for too long many British workers have been poorly led, apart from listening to voices on the Labour Benches which say that somehow or the other the State or the bosses will always bail them out. Extra effort and inventiveness have been penalised by crippling taxation. Successive pay policies, impracticable and often impossible to implement, have eroded differentials, and now we seem to have reached the end of the road.

The tool makers' strike, not the only strike in British Leyland but an important one, is in some senses taking on the State in the same way that the miners took on the State in February 1974. I believe that neither confrontation should have been allowed to happen. I am convinced that some concessions will have to be made to the tool makers, although I admit that Leyland's troubles are far more deep-seated than that. The time has come for heroic measures. The Government certainly are taking a strong line on the availability of finance to the company, and anyhow in the end the British taxpayers' patience will become exhausted. But there is little time left.

As a start the Minister should search for the finest leader in British industry to be put in immediate charge of the company's affairs. That having been done, I believe that he should choose a hoard of directors to run the company. Sooner or later the Government's pay policy will have to be ditched, but if British Leyland is properly led and properly run, it should soon make enough profits to pay its workers the best rates in the country.

Someone is required to inspire the whole organisation in the same way that Montgomery inspired the Eighth Army in 1942. I remember him saying that the men should be put in the picture and that they should be made to feel that they count. Those simple virtues, which are now in all the textbooks, are not as yet observed in British Leyland.

Constantly when I meet the men from these factories they tell me that they have no confidence in their workshop, in the site or in the company as a whole. That is a matter not of systems jargon or technique, but of flesh and blood. We need the men to get this great company right before it goes under.

If money is withheld, as it must be unless the men go back—and I urge them to go back—this company will not only go down but will take with it hundreds of other companies in the West Midlands and elsewhere which depend on orders from Leyland. It will put hundreds of thousands of men out of work and will also probably bring down the present Government. That is the situation which faces us.

I hope that all those who take part in the debate, some of whom may not have Leyland workers in their constituencies, will realise how deeply serious the matter now is and will accept that we in this House should now join together to help to put the situation right.

5.18 p.m.

Mr. Julius Silverman (Birmingham, Erdington)

I have in my constituency the British Leyland Castle Bromwich plant, which employs many thousands of workers. I suppose that the position there is similar to that in the other British Leyland plants. I agree with the hon. Member for Halesowen and Stourbridge (Mr. Stokes) on just one point, which is that the morale of the car workers generally is bad. I am talking not only about the tool makers, about whom I shall make some reference, but about the whole of the work force. That may be for several reasons. One is that the men's position in the wages table has fallen, and they always remind me of that. They obviously resent the fact that their standard of living, like that of many other people in the country, has fallen.

Another reason for the bad morale is the lack of communication between the the management and the people on the shop floor. In many respects I find it inadequate. This may also be due, as my hon. Friend the Member for Coventry, North-West (Mr. Robinson) said, to the organisation of British Leyland. With giant concerns there is always a gap between those at the top and the workers on the shop floor. Whatever the cause that feeling exists. Therefore, somehow or other, a change of attitude has to be realised in British Leyland.

As previous speakers have already said, the toolroom workers are not a militant body. They have had comparatively few strikes. Their major complaint is that no one has taken any notice of them. They have asked for talks with the management but the management has refused to talk with them. Perhaps this is a matter of procedure. I do not know. But I thought that procedures were intended to avoid industrial disputes.

Not knowing where they were, the tool makers decided to go on strike. I regret that just as every other hon. Member regrets it, but it was a deliberate decision taken after many months because they could not get an answer. Of course, there are many problems associated with the tool makers. It is not merely a problem of differentials or of declining purchasing power. The fact is that in British Leyland there are vast dispartites between tool makers in different plants amounting to more than £20 a week. That is obviously bound to create intense discontent in the present situation and that is precisely what it is doing at the moment.

It is essential for the Government to disclose their hand with regard to pay policy at a much earlier date. Yesterday the Prime Minister referred to a more flexible policy. That ought to be spelled out as far as it can be at the present time. I hope that the pay policy will not merely be flexible but will deal with many of the anomalies which at present exist in industry. Unless phase 3 takes an entirely different approach to phase 1 and 2, there is a serious danger that it will not be acceptable to workers.

I hope that it will be possible to settle the toolroom workers' strike. I am glad that the Prime Minister has made a statement and I am also glad that the AUEW has decided to meet the men to see what can be done to settle the strike.

I make one reference to the NEB suggestions. It would be a serious psychological error to use the present moment to announce the abandonment of investment in British Leyland. It would be psychologically bad, because, as I have already said, morale is vital at present. If we say to the workers "If you are not good boys, we are not going to invest" I do not think it will have the effect that the NEB and perhaps even the Minister anticipate. That is a psychological factor which we have to face. I believe that it would have precisely the opposite effect. Morale would sink much further and some of the people who could not care less will ask "Why should we retain good industrial relations?".

Not all strikes are due to the workers. After all, they can arise from a source of conflict on both sides. I hope that my right hon. Friend will take account of that. We must remember that improved investment is not merely undertaken for the purposes of increasing the capacity of the industry but also to increase its competitiveness. Bearing in mind the attitude of the workers, it is vital that we increase their morale. They should feel that they are in a living, dynamic and developing industry, and for many years they have not felt that.

I hope that my right hon. Friend will think again about his words. I also hope that British Leyland will show a better industrial record and that we can emerge into a period of industrial peace, but I do not think the possibility of peace will be enhanced by what amounts to a threat to the workers of preventing any further investment and modernisation in their industry.

5.25 p.m.

Mr. Richard Wainwright (Colne Valley)

The hon. Member for Birmingham, Erdington (Mr. Silverman), with his intimate knowledge of one of British Leyland's largest and most important factories, stressed the importance of the Government now coming forward with a very much clearer statement of their aims with regard to the sort of pay policy that they seek. I entirely endorse the hon. Gentleman's view that a highly industrial country like ours cannot afford to live from hand to mouth on its incomes policy. An incomes policy must be maintained, but not on a cliff-hanger basis, with the country in suspense until the last days of July about what the rules will be from August onwards. In that regard, the House is entitled to a clear exposition of what the Prime Minister meant when he vaguely referred yesterday to flexibility in phase three of the pay policy.

Is the Prime Minister thinking solely of flexibility with regard to differentials? That is certainly necessary, but very difficult to achieve. Or is he thinking of flexibility—which I and my colleagues believe to be an even more important aspect—with regard to the settling dates for pay bargains?

In connection with this dispute it has to be recognised that the present form of pay policy—with the rule that 12 months must elapse between settlements—frustrates important advances in the scientific assessment of pay and the conclusion of realistic policies within an incomes policy framework. It frustrates the movement towards a situation where we can have one acknowledged date in the year for major pay settlements. Within British Leyland, it frustrates the admirable desire to work towards one single settling day for pay bargains throughout that vast empire.

I hope that we shall hear a little more from the Government about whether flexibility with regard to dates and periods of settlement is intended, as well as flexibility in other ways.

More immediately, there is an opportunity for the Government and the Chancellor, who will open his budget towards the end of this month, to attend to one acute aspect of the problem of differentials. The existing discontent with narrowing differentials between the rewards of skilled workers compared with unskilled work in engineering is, of course, greatly aggravated by the present tax structure and the way that it falls on different earnings.

The last occasion on which there was a meticulous review of the problem was in June 1975, when it was shown that the differentials in gross pay between an average skilled engineering worker and a wholly unskilled adult engineering worker was about 31 per cent. But in terms of take-home pay—comparing the two on the basis of a man with a wife and two children under 11—the differential, after tax and social security contributions, was only 23 per cent.

I estimate that the tax and social security situation has worsened, and that the differential has narrowed still further. Therefore, although attending to the tax anomaly would not remove anything like the whole of the problem it would be a considerable alleviation to the present deeply felt injustices by those who have taken the trouble and pains to acquire very necessary and immediately required skills.

Although the Secretary of State's speech this afternoon was in many ways constructive and helpful, it did nothing to increase the rather meagre credibility, to those most immediately concerned in British Leyland, about Government warnings and indications that the tap of money might be cut off. The Government destroyed a great deal of their flexibility when, all too easily, they approved the British Leyland Mini programme and undertook to make available their share of the finance for that programme at a time when there were no serious indications of improved productivity in British Leyland. I hope that before the close of the debate the Government will do something to add to the rather modest credibility of the statements that they make about the future availability of money.

I turn briefly to the company. Nothing has been said today to indicate in what ways, other than pay, the company is trying to acknowledge the legitimate grievances of toolroom workers as compared with other workers in the concern. What about, for instance, attention to career development prospects for those in the toolroom? It has been said to me, and no doubt to other hon. Members, that the trouble concerning the really highly skilled and efficient toolroom worker is that he is far too valuable in his present job to promote, and that management is very reluctant to move him on to other responsibilities if he has a highly skilled job in the toolroom.

That is an incredibly shortsighted attitude for management to take. I am not making that allegation precisely, because I have not been able to carry out the necessary checks. However, we should like to hear from the Government, on behalf of the NEB, whether the non-financial grievances of toolroom workers are being attended to, as this could be done without in any way infringing the Pay Code.

Finally, on the issue of trying to bring to a close this fairly appalling history of continued disputes and certainly deeply felt grievances over several years on the part of highly skilled men, from this Liberal Bench I should like to endorse what was said, very effectively indeed, by the hon. Member for Coventry, North-West (Mr. Robinson), which is that British Leyland is, and has been ever since the ill-starred original merger, far too big and far too disparate a structure. There ought to be recognition at an early date, even though it comes late in the day, that British Leyland is a very loosely organised collection of factories, on widely dispersed sites, with a great variety of different and sometimes clashing customs, styles of operation and, indeed, traditions and rates of pay, and it is making a very wide variety of products of markedly different types and prices.

In view of what has happened, and the failure of the experiment with such a vast industrial empire, it ought to be reduced to a rational state, as the hon. Gentleman suggested, of four divisions, or possibly five or six. The country would then have—I am not suggesting any change of ownership at present—more manageable units, in which there would be room for variety without causing the sort of strife that we are witnessing now.

Many things that could have been done have been left undone in the past, mainly through lack of courage. However, there is still time to save the essentials of what is now called British Leyland if the Government will show both imagination and some determination.

5.35 p.m.

Mr. Joseph Dean (Leeds, West)

Successive speakers, on both sides of the Chamber, have put forward their view of this dispute as they see it as Members of Parliament. However, if we are to resolve this very damaging and dangerous dispute it is essential that someone should put himself in the position of the guy involved.

Up to the time of my election to this House, just three years ago, I was a shop steward working in the engineering industry. What is happening to tool makers today is symptomatic of the history of the trade union movement as a whole. It is not merely something that has suddenly arisen. It is the frustration of a continuing set of circumstances that has brought about this dispute.

Anyone who knows anything about the engineering industry knows that it has always been the men of the highest skills in that industry that have been amongst the lower paid. The machine tool industry was notorious. It produced some of the finest machine tools in the world, but the men were always on almost the lowest scale of skilled wages in the country. I could cite my own case of work in the heavy engineering section, doing huge jobs, some worth multiples of thousands of pounds, when I was at my machine for months. Because we had no bargaining power, we never took the lead in the money league.

This is not something that has suddenly arisen. It has come about through frustration. A situation very similar to the present dispute developed in regard to tool makers during the last war. My hon. Friend the Member for St. Pancras, North (Mr. Stallard) has provided me with a little passage from a book that is very important to anyone who wants to study engineering. It is entitled "150 years of Engineering" and was published in 1946. The author, Jeffrey, says, The Toolroom Operatives Agreement of June, 1940, gave men in this key section of the industry the average earnings of skilled workers in the same firm—or in some cases the same district—engaged on piecework production. An agreement of January, 1942, provided that skilled maintenance men, inspectors and others, on the basis of a 47-hour week, were to earn not less than 8s. above the inclusive district rate for fitters. That was the first time in history that a basic differential was established for that type of worker.

I can appreciate the frustration of the men about the situation in which they find themselves. I am extremely sympathetic to their cause and would love to see the dispute resolved in their favour. However, the tool makers do not stand alone in what has been happening in the engineering industry over the last 12 months. I issue a general warning to the Government. They must bring some flexibility into the negotiations on phase 3 of the social contract. Let us not deride the social contract. It was unavoidably necessary and it did a good job, but it has had its time. People in all sections of industry do not want the perpetuation or continuation of a Government, of any colour, determining in the main the size of their wage packet. Therefore, the tool makers are possibly in the forefront of some people who are beginning to shout about some form of free collective bargaining being returned to them on a factory basis.

Some hon. Members seemed surprised when my hon. Friend the Member for Birmingham, Erdington (Mr. Silverman) said that because of different geographical locations, certain tool makers working in the same massive companies earned as much as £20 a week more than other tool makers in the same company. That is not new. It is one of the big problems in engineering. One can work for a company in Manchester and be paid £10 a week less than someone working in Cardiff for the same company.

At the factory at which I worked in Manchester I could have been receiving a certain wage for working on a particular machine while a man doing exactly the same job less than 300 yards away, across the road, would be getting £5 or £6 a week less. That is the whole nonsense of the structure of engineering wages. Also, conditions have crept in in some firms where free collective bargaining has been manipulated by the employers at the expense of the workers. This is a phenomenon that has always been with us—it has not just arisen.

Unfortunately, I do not think that the men can possibly win, because of the way they have gone about this. The corner-stone of the AUEW is that any agreements made in any areas must have the full approval of the district committee. Now there has been some indication from the executive of my union that it wants to meet the men on this subject. I hope that they will be able to find a formula to get these men back to work as quickly as possible.

There is no question about it—tool makers are not the sort of people who proceed to high management positions because they are so valuable that they are kept where they are. Their demands often have not been recognised, and this is now catching up with us.

Mr. Nick Budgen (Wolverhampton, South-West)

Will the hon. Member tell the House, from his point of view, of one who has practised the craft, why it is objectionable for tool makers to form their own union, instead of being forced into a great union in which they do not feel confident?

Mr. Dean

Because eventually they may find that they have backed the wrong horse. Other sectors of the trade union movement may opt for the same thing and the result could be a weakening of the movement and the collective bargaining situation.

Personally I think that the tool makers have made their point with the AUEW. I hope that this will have the desired results. Eventually, any industrial dispute must be resolved and should be resolved between the trade unions—representing the workers nationally, locally, or on a factory basis—and the management. I do not want to see perpetual intervention by the Government in industrial disputes. I think that the best people to solve an industrial dispute are those with some involvement and interest in it. At this point in time there is no organisation in the field that can meet the management and put the case for the tool makers as it should be put other than the official negotiating body—the AUEW. The sooner that happens the better.

The tool makers do not have a history of being militant. They have behaved responsibly and have put their demands in a modest way and therefore have found themselves falling behind.

My hon. Friend the Member for Coventry, North-West (Mr. Robinson) talked about management. There is a complaint that has not been aired by anyone here today that the management of this factory has actually sub-contracted out the tool makers' work and then subcontracted it back into their own factory. I would like someone to explain to me how that can possibly reduce costs. In my opinion, that is management going absolutely mad. The work goes out at an enhanced rate and then there are overheads in processing it back. That is a nonsensical way of going about things, and if that is an indication of the efficiency of the Leyland management, it is time it was looked at.

I was saddened to hear the Secretary of State supporting the National Enterprise Board's threat of financial sanctions against the company at this stage. Even people like the toolroom workers, who have waited a long time and are now extremely frustrated, do not react kindly to threats. That sort of talk only exacerbates the situation and makes it worse. It also makes it extremely difficult for my own union to become involved as quickly as possible to discuss subjects like differentials. Also, in other places where the differentials have been destroyed it will be difficult for the trade union leaders to sit down and talk when threats like that are levelled at them.

Having said all that, I would hope that there has been an indication to the tool-makers in this dispute that they are not without friends. We are pressing for a way out and urging the Government to recognise that phase 3 of the social contract must fundamentally widen the areas of collective bargaining so that people can obtain a just rate for their services and special skills. If the Government do not do that, this will be the first of many cases, because the trade union movement does not want a situation perpetuated in which workers' rates of pay are decided in this Chamber. The sooner workers are allowed to negotiate some part of their wages by collective bargaining based on their special knowledge, skills and efforts, the sooner we shall get a better form of industrial peace than we have had for a long time.

5.48 p.m.

Mr. Reginald Eyre (Birmingham, Hall Green)

A number of very useful speeches have been made this afternoon. I shall speak very briefly. All sensible people in the West Midlands will welcome the statement by the Secretary of State, and many people will feel that it should have been made before. It is thought that further undertakings should have been required on production in 1975, and on subsequent dates.

There is some difficulty about what the Secretary of State has said because there are undeniable anomalies and unfairnesses in the present situation. The hon. Member for Leeds, West (Mr. Dean) made some telling points in this respect, particularly about the question of differentials and the impact of the Government's incomes policy. The Secretary of State should have gone further to match the words of the Prime Minister yesterday when he talked about the need for more flexibility in these matters. This is very important, because the tool makers feel very strongly and genuinely that they do not have an adequate place in the representational arrangements at this moment and that their case is not getting a full hearing. The Secretary of State should have taken more account of that point in his statement.

People in the West Midlands are increasingly realising what the failure of British Leyland in its present form would mean. Over 170,000 people would be unemployed as a direct consequence of failure and many thousands of other workers engaged in component construction, distribution, and sales forces would also lose their jobs. Therefore, the collapse of British Leyland would deliver a devastating blow to the economy of the West Midlands and would impoverish the area for many years.

I believe that the Secretary of State was right not only to refer to the present crisis in the negotiations but also to re-count the history of recent times involving the 700 disputes that took place during 1976. He made the important point that although the negotiating procedures had recently been reviewed and found to be correct, in this dispute the agreed procedures were not valid. The disruption that follows from the interruption of work of this kind causes sickening anxiety among families in the West Midlands and that situation in British Leyland and in the British motor car industry cannot be allowed to continue.

The second inadequacy in the Secretary of State's statement was that he did not give a good enough account of how the trade unions can be involved more effectively in seeing that the agreed negotiating procedure is carried out. This is essential to the health of British Leyland. Therefore, I ask the Government to take more account of the points made on differentials, incomes policy and the poor representational position of tool makers. They should also take account of the need for more effective involvement in seeing that the agreed procedures are carried out, so that we may avoid the terrible loss of production that has been such a contributing factor to the loss of blood to which the Minister referred the other day.

5.52 p.m.

Mr. Norman Atkinson (Tottenham)

When Mr. Speaker announced this debate, it was sad to bear in mind that the inevitable result would be that the Minister would have to make the kind of statement he did—namely, threatening Leyland workers with sanctions if they persisted in dispute. In other words, he implied that there would have to be second thoughts about the money that is to be made available by the National Enterprise Board. That is the most unhelpful step the Minister could have taken in this debate—and I have no doubt that there will be a great deal of sourness generated among British Leyland workers as a result of that statement.

Mr. J. W. Rooker (Birmingham, Perry Barr)

It will not send one worker back to work.

Mr. Atkinson

My hon. Friend is right. Furthermore, it will certainly not assist the executive of the AUEW in attempting to persuade toolroom members to return to normal working. That is is one of the penalties that we pay for a debate of this kind. If ever there were a case for an industrial sub judice rule, possibly this situation is it. We argued these matters throughout the night some years ago in discussions on the Donaldson Report. We believe that the inevitable effect of this kind of intervention militates against any kind of helpful response where public money is involved.

I wish to emphasise the quality of work undertaken in British Leyland, and particularly the quality of toolroom operations throughout the Leyland organisation. It is superb, and certainly second to none anywhere in the world. Engineers throughout the motor industry internationally recognise the quality of the work in Leyland. We do not need to apologise on that score. The design and cost-effectiveness of the tooling operation in British Leyland—work produced in Leyland's own toolrooms—is superb. Indeed, many of the toolroom methods and assemblies developed in this country have now been adopted elsewhere in the world, particularly in Japan, where they have used our design and development practice in their toolrooms. We do not need to make any apology for the work at Leyland or about the quality of production. The Leyland product competes with any throughout the world. Price for price, there is no area in which we need take second place to any other motor car complex. The quality of the toolroom is borne out by the product that is eventually sold on the market.

Leyland has now become a political punchball because the Opposition want the situation to be like that—[HON. MEMBERS: "Rubbish."] It is the purpose of many Opposition Members to seek to prove that Leyland will fail, and indeed that such failure is inevitable.

Mr. Percy Grieve (Solihull)rose—

Mr. Atkinson

No, I shall not give way. I have listened so often to Tory Members attempting to prove the inevitability of Leyland's collapse.

Mr. Budgen

Nonsense.

Mr. Atkinson

Opposition Members constantly claim that if the nation has the misfortune once more to be ruled by a Conservative Government, one of their highest political priorities will be the guillotine for Leyland and for the NEB. [HON. MEMBERS: "No."] Indeed, that is the case. The present occupant of the Tory Front Bench, the hon. Member for Kingston upon Thames (Mr. Lamont), time and again, speaking on behalf of the Conservative Party, said that he agreed with the rest of the Tory leadership that the first priority was to abolish the NEB immediately the Tories come to power. Is that not true?

Mr. Ian Gow (Eastbourne)rose—

Mr. Atkinson

I am talking not about the hon. Member for Eastbourne (Mr. Gow) but about the leadership of the Conservative Party and the priority to abolish the NEB as soon as the Tories return to Government. I take it that the silence of the Tory Front Bench confirms that that is the case. I believe that the future of Leyland workers depends on the continuity of a Labour Government. Those workers can look to the future only if there is a continuity in the funds to be provided by the NEB or from the public sector.

Mr. Norman Lamont (Kingston-upon-Thames)

Will the hon. Gentleman accept that we do not wish British Leyland to fail, and that if British Leyland can achieve a good level of productivity, can meet proper delivery dates, and can make substantial and satisfactory profits, nobody will be more pleased than the Opposition?

Mr. Atkinson

But the Tory view is that those workers will have to get on without any assistance from the NEB. The Opposition have said that their first priority is to get rid of the NEB and that statement is on record. I want to relate that point to what the Minister said about the use of sanctions or threats against those people who are attempting to make work better than at present the whole matter of industrial relations in British Leyland. That is the real problem that we must face.

It has already been said in the debate that if the thing that matters most in British Leyland is the rate of investment and the sequence in which investment decisions are taken, it would be utterly disastrous—in the event of some further disruption—for management to back out of the investment decisions that it had already taken. The whole business depends upon those investment decisions being allowed to be self-generative. Self-investment must be part of the process within the industry.

Certainly the future of the Mini, the decisions that have been taken by the NEB and Leyland, and the confidence that has been expressed by all those connected with that decision to build the Mini, will depend upon the continuity of investment and upon some smooth process whereby it will be possible to regenerate the investment funds that will be available at various stages in its production. That is important.

That brings us on to toolroom and the decisions that have been taken there because they are contradictory to the decisions that have been taken by those controlling the rate and timing of investment. Much of the toolroom work is now being taken out of Leyland and sent overseas. Leyland management is now placing sub-contracts for tooling overseas, for example, with certain German firms. That is symptomatic of the problems that Leyland has had in the past. Toolroom workers have never been able to develop confidence in their future because of this cyclical behaviour by management. Management has taken the easiest way out in deciding to sub-contract and use firms overseas yet in 1975 it announced 15 per cent. toolroom redundancies. What sort of announcement was that? Now there is a great shortage of toolroom skills and we cannot attract people into the toolroom, yet in 1975 management was sorting people out for redundancy saying that there was no future for those people and that they would have to go. That is the basis for the lack of confidence that has developed amongst tool-room workers throughout Leyland. They say that management has no confidence in their ability to deliver and that that is borne out by the sub-contracts that are now going overseas and adding further problems.

Mr. Dan Jones

Will my hon. Friend give way?

Mr. Atkinson

No. I have promised that I will restrict my speech to as short a time as is necessary to make my case.

Difficulties have been imposed upon management and industrial relationships as a result of the national need for some form of voluntary incomes policy. That is the thing that we must look to now. Unless in phase 3 of the wage negotiations we can devise a scheme whereby we can contrive price ceilings within which wage agreements can be freely bargained—in other words, free collective bargaining within price ceilings—there is no way in which we can restore differentials. Negotiators will not have negotiating freedom and sufficient flexibility to restore the differentials involved without cutting across the whole effort to reduce the rate of inflation within the time scale that has already been referred to. We must look for such a solution.

It is most difficult to do this in industry today, but there is sufficient sophisticated understanding and experience within trade unions, particularly the craft unions, that they should be able to find such a solution. For instance, Leyland now knows the actual work load that is required to fulfil the four-year programme. The company knows that it needs 1,600,000 hours of toolroom work and the conditions under which that work may be done. The work can be costed. Enough is known of what is required in the running and timing of that programme for conclusions to be reached about cost. That can be fitted into the phase 3 programme in which prices will be of the utmost importance. The company will be able to say to toolmakers' negotiators that they can bargain within that framework, knowing that the company will be able to deliver within the costs set and the work required in order to ensure success of the four-year programme. Of course that can be done.

I am referring to some of the most experienced cost estimators in the business. The Americans would pay a fortune for some of these lads and girls who are able to use their analytical skills in proportioning cost to such a production programme. It is not beyond their wit to devise such a system to overcome the problems facing Leyland, a system that would give the flexibility required in the restoration of differentials, that would still keep within a price strategy and programme, and that will deliver, at the end of the day, something for the company and something for the nation.

The negotiators now ought to say to Leyland that the toolmakers are not asking for an immediate increase in their earnings, but they are asking for an understanding on phase 3. Such an understanding can now be given without pre-empting all the discussion that is to take place with the TUC and the others who will be involved in phase 3. It will not involve the Chancellor of the Exchequer and tax concessions. That is another matter. Leyland can now come to some conclusions that would be a basis for saying to the toolroom workers "Yes, we shall honour the commitment that we are now making and restore the differentials in the way that you ask. We know that we can do that without breaching the principles upon which the Chancellor hopes to conclude some sort of reasonable phase 3."

That can be done by free bargaining within that framework. There is a possibility of transitional arrangements being made and of a decent industrial understanding that will ensure greater smoothness, particularly in a company such as Leyland, being achieved.

I know that the Minister cannot take back the words that he has said. It is too late for that. He has said "Look, if there is any more of this the money will not be forthcoming". He said that without making any attempt to analyse the cause of the bad industrial relations in Leyland and without making any effort to understand. He suddenly thought that the stick without the carrot was essential to make sure of getting some return. That is the last thing that he should have done. I appeal to the Minister to try to get over some of the damage that has been caused by his statement that from now on all these things will be conditional. That statement applies to management as well as to workers. The money will also be conditional upon management decisions.

We must now make a much more constructive suggestion about the investment programme. We must say that we have sufficient confidence in the self-generative prospects within Leyland and that the Government will meet what is coming from the NEB. The Government must consider the proposals that have been made for a reorganisation of top management.

The Minister must be helpful by rephrasing the terminology that he used about sanctions and the statement that he made. He must present it in a different way. I do not believe that he meant all that he said, and I doubt that anyone else does either. If he can rephrase the presentation of his statement I am sure that there will be a response in Leyland and in the toolroom. We can then start to look to the immediate future with a great deal of confidence, knowing that the Government are behind the workers of the nation. We shall then see that we have a car industry with a future, with a quality of production second to none, and with toolroom workers and other workers who know what they are doing and who are intent on making the industry a success.

6.10 p.m.

Mr. David Madel (Bedfordshire, South)

I am sure that we are all grateful to my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) for initiating this debate, because many of us see it as the first of many debates on what, if anything, should be done about stage 3 of the incomes policy. There is nothing unique in skilled men getting restless after a pay policy has compressed differentials for two years.

I start with a few words about my constituency interest. The Leyland plant at Dunstable employs more than 300 people, and about 120 toolroom men are in dispute. The plant has had no strike for more than 22 years, and some of the employees are aged over 50, have worked for 30 years and have never been involved in an industrial dispute before. This therefore underlines the deep feeling of the toolroom men.

I wish to emphasise the point made by other hon. Members that if this great British company collapses it not only will bring down with it the Dunstable plant and goodness knows what else locally, but will create a real risk of an uncontrollable whirlpool that will bring down hundreds of other firms as well.

The problem over toolroom rates has built up over many years. The employees at Dunstable made the point to me in a letter in December which I should like to emphasise to the House. They said: Many thousands of toolmakers are turning to other employment, because in other jobs it is so much easier to obtain better rewards for a less exacting occupation without any of the frustrations involved as a toolmaker. They underlined the point at a meeting with me this morning, when they said that the apprenticeship required for a toolroom worker was four years and was, therefore, considerably longer than other apprenticeships generally and much longer than those for many jobs in the car industry.

I wrote to the Minister of State at the Department of Employment, following the letter from the Dunstable plant, and he replied: As I understand it, the British Leyland Toolroom Committee is seeking to put right the problems to which it has drawn attention, by securing recognition from the company of the Committee's rights to negotiate on behalf of its members employed in BL UK toolrooms. This, of course, is a matter to be resolved between the company and the Committee and is not an issue in which the Government would seek to intervene or influence the parties concerned. The Government cannot he so neutral, given the number of men laid off and the financial position of Leyland.

The background to the dispute and the whole question of rates for skills is underlined in the Government's consultative document "Training for Vital Skills", published last summer. The document refers to the sort of skill short-ages that might occur when there is the next industrial upswing and refers specifically to mechanical, instrument, electrical, shipbuilding and marine engineering. The Expenditure Committee's Report on the motor industry underlined this when it referred to the danger of a shortage of tool makers unless there were more training for skill. In chapter 5, under the heading: The Industry's Significance and Strengths the report says: there is a world demand for the body department of the former Pressed Steel building technology of the tool and die Company". There is a world-wide demand for many of the skills that we go to great trouble to train people to acquire. If the dispute continues, there is a danger that many British Leyland toolroom workers will take up the advertisements now appearing in newspapers for skills required abroad. This is the general difficulty and background facing the Government in training people for skills and what their pay should be. When in their consultative document, the Government talk about collective funding of training for skills being needed, they rightly underline the fact that among the occupations that might be considered for inclusion in collective funding are toolmakers, tool fitters and markers out. That is further evidence of how seriously the Government regard the present situation in relation to skills.

According to a report in today's Financial Times, British Leyland hopes to agree the centralisation and integration of the group's vital engineering facilities by 1979. Has there been sufficient consultation with the shop floor on that programme, and can it be brought forward from the date that the company intends?

There is a need to solve the dispute very quickly. Tool room workers are leaving the industry, and many people aged between 25 and 45 are going abroad in response to the demands for their skills. This leaves us with many people aged over 50 who have done the apprenticeship for the skill and many young people of 18 or 19 who might just be starting the apprenticeship.

We are in danger of knocking out a vital section of the labour market—men who have been trained in these skills. They have done the work and we must keep them if the motor manufacturing industry is to survive.

The efforts that the Government are putting into training for skills are shown in the report of the Manpower Services Commission, which sets out a programme that involves £400 million being spent in two years' time on training for skills. That is an increase on the present expenditure of £363 million.

If we do not get this right and fail to keep skilled men the Government will be indirectly financing overseas technology and development by the efforts that they are putting into training for skills.

There are three points that must be borne in mind if we are to find a way out of this situation. First, British Leyland in public ownership is a new venture for any Government, and the negotiating procedures must always be open to change. Unlike other industries in public ownership, such as coal, gas, electricity and British Rail, the motor industry does not have trade union stability or stable relationships between trade unions in the industry.

Nothing has made it more difficult to get the relationships right in the motor industry than the wild fluctuations in demands for its products that have been caused by constant changes in tax policies by successive Governments of both parties. The problems of the company against this background must be borne in mind.

Secondly, the management and unions of the company have been so overwhelmed with problems and disputes that they need easy access and reference to a third party to help them. The obvious third party is a unit of ACAS which should be permanently on hand to help the management and the unions sort out their difficulties that we have, alas, become too accustomed to in British Leyland.

Thirdly, the Ryder Report envisages rising output and a reduction in manning levels over the next few years. I suggest that it is possible to get that reduction only if there is some growth in the economy. If there is not some growth, the Government will not even get stage 3 of the pay policy.

The first step in that direction, which will make it easier to implement the Ryder Report's recommendations, lies with the Chancellor in his Budget on 29th March.

This is a tragic dispute and it underlines the difficulty that we have in this country in paying the right amount for skills. Unless we get it right quickly, our overseas competitors will benefit from the trainig and education that we give in this country and we shall slip further behind.

6.9 p.m.

Mr. Dan Jones (Burnley)

I agree with the hon. Member for Bedfordshire, South (Mr. Madel) in one respect, and that is that this is a tragic dispute. With apologies to no one, I shall reduce the political emphasis in the debate and increase what I call the social and industrial emphasis.

I am concerned with the thousands of people walking the streets in towns that have Leyland factories who are virtually unemployed through no fault of their own and under circumstances with which I tremendously sympathise.

I should not have participated in the debate had it not been for the report in the Evening Standard last night in which it was said that the Chairman of the National Enterprise Board had declared that there was no more money available That appears to be an ultimatum, and that is wrong. Such an ultimatum at this time could be more inflammatory than the occasion demands.

On whatever side of the political spectrum one is, there can be no arguing that the dispute is doing harm to the nation, to the company and to the workers in that company. Those of us who have suffered unemployment have a realistic approach to the situation. Few Opposition hon. Members know anything about it. I do not blame them for that. They have been fortunate. But hon. Members on this side of the House know the situation well and I sympathise with my hon. Friends.

However, one can truthfully say that if one aspect of this dispute were settled the present situation would not continue much longer. We have been told of past disputes, but I am directing my remarks to the present situation.

Since I have worked in a toolroom I can say that anyone who expects tool-room workers to accept the type of differentials that exist at British Leyland is totally devoid of experience. From 1945 to date there have been various levels of unemployment in the country but throughout the whole of that period there has never been an occasion when tool makers have been unemployed. The need for them has been constant.

Mr. Budgen

Will the hon. Member explain why he voted for an incomes policy when he is now making a speech about the importance of differentials?

Mr. Jones

I do not see the necessity for allying those two aspects. It is a matter of common sense. There were differentials when the incomes policy was first introduced and those differentials should be maintained. Perhaps I shall be criticised for that opinion, but at least people will now know what I think. The toolroom is the centre of any engineering enterprise and to erode differentials is to ask for trouble.

Mr. Grieve

The hon. Member is saying that the consequence of the incomes policy, when it is applied rigidly is to erode the very differentials that he says are essential for the well-being and well-working of industry.

Mr. Jones

That is an opinion that one must respect.

I keep in mind that the Minister who spoke in today's debate was employed in the coal mines, as I was. Differentials are maintained in the coal mines. If they were not, there would be hell on earth. Only working-class logic with no pretensions can solve the problem, and I cannot understand how tool makers, who are so vital, can be excluded.

Opposition Members have never had to go through the process of apprenticeship, but we realise that apprentices spend three nights a week at evening classes in technical colleges and often have to study at weekends. If British Leyland go out, if we reach the stage that tool makers are regarded in this manner, it is possible that these young people will say that there is no point in their spending three nights a week and all the weekend studying. They are likely to say they might as well enjoy themselves with their pals rather than suffer the burden of study. If that happened, it would be more costly and more damaging to our nation than the dispute at British Leyland.

A few weeks ago the Prime Minister referred to the greater need for technical education. I agree with him. At the same time I do not despise the artistic patterns of education. My own sons and daughters have chosen that course—not with my blessing or by my wish, but they are entitled to choose for themselves. The apprentices are the young people who will experience that form of technical education by which the economy of the nation can thrive and without which we could be in grave trouble.

I turn to the strikers themselves. Clearly, they are asking for public sympathy for their present position and I endorse that request. However, they must also recognise that they are keeping thou- sands of people on the streets as a result of their action. If they feel that they can ask for sympathy from the people, they should appreciate the plight of those people who are on the streets as a result of their actions.

I know Hughie Scanlon well. I also know members of the national executive council well. It appears that these admirable, efficient people have been sidetracked. If one has the responsibility and the ability to carry out that responsibility, one cannot be pleased to realise that those people who are one's representatives are being sidetracked. I appeal to those people to turn to Hughie Scanlon and the national executive of the AEUW. I have been an official of that union for many years. I know these people and they will not let anybody down. It is not too difficult to say "Very well, there has been a serious dispute. We will go on record as saying that at the next pay review all differentials will be restored." I trust Hughie Scanlon to work to that end.

Mr. Litterick

My hon. Friend has said that before.

Mr. Jones

I cannot speak for Hughie Scanlon.

Mr. Litterick

Is my hon. Friend aware that not six weeks ago the advisory officer of the AEUW flatly refused to meet the toolmakers at Birmingham? Now he is playing a different tune because they are on strike.

Mr. Jones

I was not speaking for the divisional organiser for the Midlands; I was speaking for Hughie Scanlon. I know him very well, and I shall defend him. I appeal to those on strike at British Leyland to think of those out of work as a result of their action, to think of their own families, to think of the basic needs of the nation, and to turn to work so that the negotiations can go on and their own rights be effectively restored.

6.30 p.m.

Mr. Michael Grylls (Surrey, North-West)

I think that towards the end of this debate we should pay our respects to the Secretary of State for Industry, who made a firm statement. It would be churlish not to respect his statement. He has responded to, sadly, yet another crisis in British Leyland with a firmness which has been missing in the past. We are grateful to him for firmness now.

The history of British Leyland is sad. One of the severest blows dealt to it was, ironically, by the present Secretary of State for Energy, when he forced through a shotgun marriage under the auspices of the Industrial Reorganisation Corporation in 1967. Many of British Leyland's troubles, which it has had to struggle against since then, arise from that decision. But that is past history. We are dealing now with the aftermath of the situation created by the Ryder Report. As I said earlier in an intervention, I believe that the Secretary of State will have to renegotiate the Ryder Report and that the sums will have to be done again. As the right hon. Gentleman admitted, British Leyland is not producing its share of the investment that it needs in order to prosper.

As my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) said, we on this side wish British Leyland well. All we are saying is that there is a firm rôle for this House and the Government in monitoring the taxpayers' money going into it, and that must be in British Leyland's interest as well as in the interest of the whole country. I am sure that the Secretary of State and the National Enterprise Board realise that the huge losses of the past in the Austin-Morris Division must be stemmed somehow. I understand that up to this most recent crisis some of the losses have been reduced over the last few months, and we should be glad of that.

I suspect, however, that the strong words of the right hon. Gentleman today will not really be believed by the work-force. The trouble is that there is a credibility gap. One questions whether the right hon. Gentleman's statement that he is withholding funds will be believed. We have heard firm words before from the right hon. Gentleman and also from the right hon. Member for Huyton (Sir H. Wilson) in April 1975. On 21st July last year, the Secretary of State said that there had to he firm action. Whether the Leyland work force believes it, is part of the problem.

I was disappointed not to have from the Secretary of State, despite what he said in a letter to me this morning, more information as to whether British Leyland is meeting its targets, what its productivity is, how much is being lost through the strikes and what its share of the United Kingdom market now is Its share of the United Kingdom market dropped from 32 per cent. to 27 per cent. in July. These are things we want to know.

There is a certain ridiculousness about these debates. When we had short debates on 21st July and 4th August, we were not given this information. We are having another short debate today, and we are still not getting the information. We are given a firm statement, and that is all. It is difficult for us, who are supposed to be the guardians of the taxpayers' money, to know the state of profit and loss in British Leyland.

Again, the House approved £100 million for British Leyland on 4th August, and I understand that £25 million of it was drawn last week. It seems an odd time to draw that money when 40,000 workers are on strike. I noted carefully that the Secretary of State did not promise my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) that the balance of £75 million would be with-held until British Leyland started showing better results. In a sense, therefore, the Secretary of State's earlier promise to freeze the investment money has not been kept.

The Government must make their firm words stick with British Leyland. They have to do so on behalf of the taxpayer, who has a commitment. I believe that the taxpayer will not grudge that commitment if British Leyland is successful, but he will grudge it if the money goes in and the results are not forthcoming. What was the £25 million apparently put into British Leyland last week for? Was it for buying new machines or for covering current losses? We should be told. Will the balance of £75 million be frozen? That was the original understanding of what the right hon. Gentleman said, but it seemed to weaken when he was cross-examined by my right hon. Friend. We should expect a firm answer.

If this debate shows that the Government are standing firm, we should applaud it to that extent. But the Government must watch their credibility. If they stand firm, there is some hope of getting British Leyland moving again and of getting the internally-generated funds—this was, indeed, the basis of the Ryder Report when it argued that £1.4 million could come from British Leyland itself through internally-generated profits—and the public at large will not mind making their contribution, because it will mean that at the end of the road British Leyland will be successful, profitable and viable. That should be the target. If the Government take the right path in pursuing that target, they should have support from this side of the House.

Mr. Litterickrose—

Mr. Rookerrose—

Sir K. Josephrose—

Mr. Speaker

In calling the hon. Member for Birmingham, Perry Bar (Mr. Rooker), I ask him to be kind enough to confine his speech to a few minutes, because I see that the winding-up of the debate is about to begin.

6.38 p.m.

Mr. J. W. Rooker (Birmingham, Perry Barr)

I appreciate your calling me, Mr. Speaker, and I shall be even more brief than I had intended to be. I have watched the right hon. Member for Leeds, North-East (Sir K. Joseph) tear up one speech earlier today because my right hon. Friend the Secretary of State for Industry had clearly made it for him. That was certainly my impression. Some-where in this Chamber there is stored a black top hat. I think that my right hon. Friend has laid claim to it today and will appear in the cartoons tomorrow as a nineteenth century capitalist in black top hat holding a shotgun at the heads of the workers.

I make an unabashed speech in favour of the strikers. Many of my hon. Friends have referred to them in glowing terms, and I appreciate that they have done so. I also appreciate that they are members of the AUEW and feel a certain inhibition in drawing the attention of the House to the problems of the toolroom workers.

The leaders of the strike came to this House three weeks ago to talk to Labour Members. They gave chapter and verse to show how, in the last two years, they have tried to get this issue raised through their normal, legitimate trade union machinery, not as unofficial shop stewards in an unofficial committee but at district meetings. They failed. I want to refute some of the allegations that these workers do not care a tinker's cuss about the company, the country or their industry.

Most of the tool makers are long-service men with 15 to 20 years' service, and many of them have put their sons into the trade but are now beginning to regret having done so. It is to the credit of Mr. Fraser, chairman of the unofficial shop stewards' committee, that his son is an apprentice tool maker. It shows that he has confidence in the future of a company.

These workers are concerned because British Leyland is pushing out to overseas contracts work that they should be doing. Only 15 months ago Leyland made 400 tool makers redundant, and the tool makers saw the work go abroad. Lord Ryder admitted that Leyland wants to recruit 600 tool makers but cannot find the men in the Birmingham or Oxford areas because skilled men are not prepared to work for the rates of pay that British Leyland is offering. My concern is that of the skilled craftsmen, of whom I was a member at one time.

I know that you want to shut me up, Mr. Speaker, so that we can listen to the guru on the Conservative Front Bench, so I shall come to my final point. My right hon. Friend has to decide whether to have a major inquiry into the engineering profession. Although it may not look like it, that is part and parcel of the same problem. Many hon. Members have said that the problems facing the tool makers is lack of promotion prospects. This is because the major institutions in the engineering profession have closed their doors to them. Workers cannot use the door that I used to come from the shop floor to obtain chartered engineer status. The fact that the avenues of promotion in their industry are closed to the engineers is all part of the decline in their status. When my right hon. Friend considers an inquiry into the engineering profession, I hope that he will take this into account.

6.41 p.m.

Sir Keith Joseph (Leeds, North-East)

I think the whole House will agree with me in regretting that it is not my hon. Friend the Member for Oswestry (Mr. Biffen) making this speech this evening. We are very sorry that, for reasons we understand and respect, he is not taking the very full part in this debate that we would all have hoped.

I do not think it is necessary for me to give all the ingredients of the story that we are discussing. My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller), in an excellent opening speech—he has explained that he would have to be absent during part of the debate—set the picture before us, and Members on both sides, including my hon. Friends the Members for Devizes (Mr. Morrison), Bedfordshire, South (Mr. Madel) and Surrey, North-West (Mr. Grylls) have filled in much of the detail.

My right hon. and hon. Friends, as Labour Members have suspected, welcome the general tone of the Secretary of State's statement. We are glad that he and his colleagues in the Government have decided to stand by the conditions on which the Leyland rescue plan was postulated, but we believe that he is on a slippery slope and that it will need great resolve by him and his colleagues to hold firm. We know that he will come under what we regard as ill-conceived pressure from Labour Members below the Gangway to take a much softer attitude. We think that the right hon. Gentleman's Friends below the Gangway misunderstand the interests of the people whom they are particularly trying to help.

We know the sequence of errors, reaching back a long way, with which the Government are having to try to cope. We regret, and regretted at the time, the creation of British Leyland and the NEB. Some would say that the Ryder Plan itself was ill-conceived. The NEB has succeeded in giving the impression of a casual attitude to its own conditions and to public money, which must have contributed to the demoralisation of the workers in British Leyland. All these problems have been compounded by the incomes policy and the social contract. As my hon. Friend the Member for Surrey, North-West has rightly emphasised, what has made the Government's task particularly difficult, after they have embarked on an ill-conceived strategy, is the credibility gap. That is the problem that the Secretary of State has to overcome. We respected his words this afternoon. He gave the impression to the House of firmness.

Mr. Flannery

He would be embarrassed by the right hon. Gentleman's support.

Sir K. Joseph

The hon. Member for Coventry, North-West (Mr. Robinson), with his experience of the motor industry, expressed doubt about the effectiveness of conditions established by the source of finance. The Government must stick to the resolve expressed by the Secretary of State, not just because of British Leyland and the disaster that could come about if the Secretary of State withdrew from his resolution, but because of the infection elsewhere in the country, an infection which will spread if his word is seen to be alterable.

After all, the attitudes that the experts have always identified as the principal problems of British Leyland—negative attitudes to wealth creation, productivity and co-operation with management—are evident not only in British Leyland but in many other parts of industry, particularly where the Government are the owners or the source of subsidy. If the Secretary of State, either because of his own lack of resolution or because his colleagues do not back him up, with-draws from the position that he took up this afternoon, he will do great harm to the industrial future of this country, as well as to his Government.

In the last two years we have witnessed in the British Leyland saga a textbook demonstration of the damage done by public ownership. We are not here discussing good intentions, about which we have heard so often. Public ownership, however well-intentioned, erodes self-discipline, and the recognition of the reality that money is limited, and that sustainable jobs depend on pleasing the customer at home and abroad. The moment that public ownership arrives, it is supposed that there is a bottomless purse and that there is, for those who work in the firm concerned, immunity from closure and redundancy. We have seen these illusions at work in British Leyland, and the result tends to be—

Mrs. Audrey Wise (Coventry, South-West)rose—

Sir K. Joseph

I apologise for not giving way to the hon. Member for Coventry, South-West (Mrs. Wise), but she has not been here for all of the debate. [HON. MEMBERS: "She has."] I beg her pardon.

The result of these illusions tends to be overmanning, bad value for money, and a take-it-or-leave-it attitude by those employed in public industry. Public ownership tends to create industrial pensioners, whether it is British Leyland, British Rail or British Steel. Labour Members below the Gangway who object to the Secretary of State's attitude, in their obsession with jobs, would destroy far more jobs than they would create. Every penny that the Government pay out, either directly or through the NEB by way of subsidy to nationalised industries, or to British Leyland, has to be paid for through higher taxation, by printing money, by borrowing and the consequent increase in interest rates.

Mr. Flannery

The right hon. Gentleman wants to get rid of British Leyland.

Sir K. Joseph

The hon. Gentleman regards the Secretary of State as automatically wrong because for once I am supporting what he has decided to do. Yet my hon. Friends and some sensible Labour Members realise that it is the secretary of State who will do far more for employment and job creation in this country by injecting realism into places where public ownership has destroyed realism. The crusading destroyers of jobs—hon. Gentlemen below the Gangway—are not serving the public interest at all.

In paying the cost of subsidies to British Leyland, as many jobs are destroyed as are maintained. The money has to come from the consumers or from investors. The jobs destroyed are generally sound, sustainable wealth-creating jobs and those saved are often wealth-destroying jobs and not sustainable. The jobs that are destoyed stay destroyed, and the jobs that are saved will not long remain safe.

I believe that the Secretary of State and his colleagues will do more to help employment by standing in their posture this afternoon than by being what hon. Gentlemen below the Gangway wish him to be—a soft touch at the expense of the British taxpayer and of other people's jobs.

The hon. Member for Coventry, North-West said that it was unthinkable that the volume car decision in the Ryder Report should be reconsidered, but the logic of what the Secretary of State said to the House is that that decision may have to be reconsidered if management and labour in the relevant parts of British Leyland cannot fulfil the conditions laid down. [Interruption.]The alternative is that—[Interruption.]

Mr. Speaker

Order. Sustained interruptions from a sedentary position are unfair in a debating chamber.

Sir K. Joseph

The alternative is that British Leyland should be subsidised permanently. That means that other people will be put out of jobs in order that money which could have gone to pay them in wealth-creating jobs will go to wealth-destroying, loss-making jobs in British Leyland. Surely Labour Members cannot wish for that. It is another illusion that jobs are destroyed, but not replaced.

Overmanning is probably this country's biggest industrial handicap. I have looked up some figures. In the 10 years or so following 1960, when there were some years of a Conservative Government and other years of a Labour Government, 400,000 mining jobs were destroyed. It is said that 200,000 jobs in textiles were destroyed. Also, 200,000 jobs on the railways were destroyed. That makes a total of 800,000 fewer jobs in just three industries. Yet, at the end of that decade, there was not less employment, but 1.2 million more people were employed than at the beginning of that decade. If the economy is run on an encouraging basis more than enough jobs are created to replace the jobs that are destroyed by inevitable change and the occasional areas of inefficiency.

We are told by the experts that British Leyland can be as competitive in productivity and performance as its rivals. If the conditions called for by the Ryder Plan are fulfilled, the debilitating, demoralising belief in immunity may be removed. If the conditions are not fulfilled, the belief that jobs in publicly owned companies are immune from redundancy will be shown to be an illusion. That depends upon the Government standing by their resolution.

The Government have a number of options before them. Inside this sprawling giant of British Leyland are several lean, potentially efficient, competitive and even world-beating companies. Those companies need not necessarily be forced to cross-subsidise one another as they are doing now. It may be necessary to rescue British Leyland from the British Leyland rescue, and it will be necessary at least to rescue the British taxpayer from the British Leyland rescue. So much depends on the resolution of Ministers.

The story has it that over Chrysler the Secretary of State was right, but that he was defeated by his colleagues. The right hon. Gentleman deserves credit belatedly for calling a halt to what is going on at British Leyland today. I think that he will be serving the interests of all in this country by getting British Leyland to accept conditions, or by reviewing the whole of the Ryder Plan.

6.55 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

I join the right hon. Member for Leeds, North-East (Sir K. Joseph) in regretting the departure of the hon. Member for Oswestry (Mr. Biffen) from the Opposition Front Bench and the reasons for that departure. I regret his departure not only because of the personal regard in which we all hold the hon. Gentleman but because we would have heard from him this evening a very different speech from the one to which we have just listened.

The hon. Member for Oswestry, who was a former parliamentary candidate in Coventry, is acquainted with industrial problems. The right hon. Member for Leeds, North-East, on the other hand, whose access to the Opposition Front Bench in his present rôle I certainly welcome with considerable glee, seems to forget his participation in industrial policy as a member of the previous Conservative Cabinet. It is fascinating to hear him denounce public ownership. It is intriguing to hear him call public ownership a soft touch at the expense of the British taxpayer. Yet he was a member of the Cabinet which pushed the nationalisation of Rolls-Royce through Parliament in 17 hours, much to the satisfaction of his hon. Friend the Member for Derbyshire, South-East (Mr. Rost), who supported the remarks made by his right hon. Friend this evening.

My hon. Friend the Member for Tottenham (Mr. Atkinson) was right in what he said about deploring the short-comings in the nature of the debate that we have had today. The debate has been triggered by and has dwelt largely on a number of industrial disputes. But that misrepresents the nature of the problem and crisis at British Leyland. The crisis at British Leyland is not simply one of industrial disputes or of pay policy. Hon. Members on both sides have referred to the pay policy having created grievances among workers at British Leyland. We know all about that. I have discussed this problem with workers at British Leyland. I visited British Leyland, Solihull, last Friday and met the convener and his fellow shop stewards. They told me quite flatly that if the lid were lifted off the pay policy and free collective bargaining were to operate tomorrow, that would not provide a solution to the problems facing British Leyland.

Therefore, I point out to my hon. Friend the Member for Birmingham, Erdington (Mr. Silverman) and the hon. Member for Colne Valley (Mr. Wainwright) that spelling out the pay policy at this stage would not solve British Leyland's problems. In any case, there seems to be the misapprehension that it is in the Government's hands alone to spell out such a pay policy. But it is not the Government's pay policy alone. It is the pay policy of the Government and the Trades Union Congress. It is as much the pay policy of the TUC as it is of the Government. The pay policy would not be possible if it were not as much the policy of the TUC as of the Government. It is impossible therefore, to spell out what the pay policy will be, because to spell out the Government's ideas on the next stage of the policy is not to spell out the next stage of the pay policy which has to be negotiated with and agreed by the TUC.

As this is not a statutory pay policy—unlike the policy of the previous Government—it will not be for the House of Commons to pass an Act imposing a counter-inflation policy as was twice done in the period 1970 to 1974. That is why, in what was otherwise, I thought, a valuable contribution, my hon. Friend the Member for Leeds, West (Mr. Dean) was not accurate in saying that the rates of pay are decided in this Chamber. They will be decided upon the basis of the negotiations, when they are concluded.

Just as it is not simply a question of the pay policy being only the Government's pay policy, so it is not simply a question of the finance for working capital and investment in British Leyland being only Government finance. My hon. Friend the Member for Tottenham said that in what he had said today the Secretary of State was threatening Leyland workers with sanctions. However, the problem is that what the Secretary of State said is that Government money could not be advanced through the NEB or through the Department of Industry if the matching money which was essential as part of the Ryder scheme was not flowing forward.

There is provision for £1,500 million to be part of the Ryder investment scheme as part of the cash flow of British Leyland. If that cash flow is not forthcoming, the Government can advance every tranche of money ever year and the Ryder strategy still will not be fulfilled, because the Government tranches, if they are all transmitted, will amount, as I have said, to less than half the money that is needed.

That money can be advanced only through profits earned by Leyland, and, if Leyland is not meeting its production targets and the profit, the failure of Leyland to generate the finance will destroy the Ryder strategy even if the Government at every stage advance all the money which is expected from them.

Mr. John Mendelson (Penistone)

The issue between us is not that the Minister and his right hon. Friend have restated the policy correctly. The issue is that restating it today is not helpful. What we need is a way out on the lines suggested by Mr. Scanlon. The Government should add their weight to what the President of the AUEW is saying.

Mr. Kaufman

We certainly give Mr. Scanlon full support in his efforts to solve this problem: I say that unreservedly. Mr. Scanlon has been a great help and has been acting constructively throughout.

Mr. Tebbitrose—

Mr. Kaufman

I hope that the hon. Gentleman will forgive me; I have very little time. I undertake to give way to him a little later if I have time.

It is important that I make it clear that the money has to be generated by profits provided by the products of British Leyland being produced competitively and on time. The problem has been, quite apart from the present crisis caused by this series of industrial disputes, that Leyland is just not meeting any of its production targets. That has been a consistent failure.

When he announced the Government's approval of the tranche last summer, my right hon. Friend the Secretary of State was able to point to a number of encouraging developments which justified the Government in approving that £100 million and in requesting the House to grant £30 million under Section 8 of the Industry Act. But the sad fact is that since then the situation has deteriorated and Leyland has been failing to meet its targets.

I want to make something else clear. I agree with my hon. Friend the Member for Penistone (Mr. Mendelson) that the very nature of this debate has not been illuminative of the problems and the necessary solutions for Leyland. Leyland is foundering not just because of the toolroom grievances, on pay or otherwise. Leyland's problems extend far beyond pay differentials and the pay policy. Its problems are inherent in the experience which has been undergone.

That is why, while I would not agree with every particular of the speech of my hon. Friend the Member for Coventry North-West (Mr. Robinson)—he would not expect me to—his analysis of the situation has certainly been relevant in the sense that it sought to deal with the deep-seated problems of Leyland and the way in which the Ryder strategy can be achieved rather than on the basis of, we trust, transitory industrial disputes, certainly immensely damaging but nevertheless irrelevant to the basic problem.

The disputes are immensely damaging. It is essential, as my hon. Friend the Member for Burnley (Mr. Jones) said, that they come to an end. But the end of the disputes will not be the end of the Leyland crisis. Let us be clear about that. My hon. Friend the Member for Leeds, West said that the tool makers did not stand alone in their problems. With his great experience of the engineering industry, he was of course right.

On Monday afternoon I told the House that other workers in other industries faced similar problems—not identical problems, of course, because every industry has its own specific circumstances. But I would say through my hon. Friend to the workers in Leyland who are taking industrial action that after I went from Solihull to Coventry on Friday I discussed with the shop stewards at Alfred Herbert these very same problems of differentials. They are concerned about them and they told me that they required to be dealt with, if they could be, in the next stage of pay policy.

These are problems in many spheres, but the workers at Alfred Herbert do not feel it necessary to take industrial action to draw attention to their grievances. They are drawing attention to their grievances through the procedures—

It being three hours after the commencement of the proceedings, Mr. SPEAKER interrupted the proceedings pursuant to Standing Order No. 9 (Adjournment on specific and important matter that should have urgent consideration) and the motion for the Adjournment of the House lapsed, without Question put.