HC Deb 26 May 1977 vol 932 cc1554-64
The Secretary of State for Industry (Mr. Eric G. Varley)

With permission, Mr. Speaker, I should like to make a statement on British Leyland's investment plans.

On 2nd March I described three objectives towards which the National Enterprise Board considered urgent action had to be taken.

The first was that there should be a quick and complete return to normal working. The second was that agreed levels of production and productivity had to be sustained. The NEB considers that in these respects progress has been satisfactory. There was a return to work on 21st March and since the beginning of April output in Leyland cars has consistently met the level budgeted in British Leyland's plans, and in several weeks these levels have been exceeded.

The NEB's third point was that the period before the next tranche of funds was required had to be used for discussions between management, trade unions, and the work force, which would result in tangible measures offering the prospect of a radical improvement in industrial relations in the future. These discussions are still taking place, and an important meeting will be held in Birmingham tomorrow.

During March and April British Leyland undertook a searching analysis of the courses open to them in future. The NEB reported to me on 5th May. The NEB concluded that if the conditions set out in the Ryder Report could be met, it would still be in British Leyland's and the country's interests for the company to remain a producer of volume and specialist cars.

The most vital of these conditions is a substantial improvement in industrial relations and productivity. The NEB considers that, even allowing for the achievements of recent weeks, progress so far has not been encouraging. There have been real advances in productivity, but these have been short-lived. The participation machinery holds out important prospects for progress, but it has not been accepted everywhere. I take the opportunity of urging all in British Leyland to make use of this machinery.

In the light of this, the NEB recommended that a final decision on the choice of strategy should be deferred to enable it to review British Leyland's investment plans in greater detail and it will be reporting to me later in the year.

The work undertaken in the review has demonstrated to the satisfaction of the NEB that the Mini replacement programme has a vital part to play in re-establishing British Leyland's position in volume cars. If the company is to meet its launch date an immediate decision is required on this programme on which the company ordered a halt during the toolmakers' dispute. I have therefore authorised the NEB to allow work on this programme to be resumed as soon as it is satisfied that sufficient tangible progress is being made towards measures that will put industrial relations on a new basis.

The Ryder Report envisaged that British Leyland would require a further tranche of £200 million from public funds in mid-1977. The NEB now advises me that it expects British Leyland's requirement in the summer to be considerably less than this, but it expects that further funds will be needed within the current financial year. If progress is sufficient to justify an approach to the House for further advances, I shall accompany the request with a report by the NEB on performance to date. The House would be right to expect this as a basis on which it can form its judgment.

It was this Government who saved Leyland in 1975 and safeguarded hundreds of thousands of jobs. We as a Government remain ready to play our part in backing British Leyland. But the massive contribution required from public funds can be justified only by linking funding to performance. We have some good recent evidence, and we shall be looking for more before returning to the House.

Sir K. Joseph

We welcome such progress as there has been, although it is admittedly only partial and, as the Secretary of State said, measured over only a short period. We also welcome the Secretary of State's apparent caution before asking the House to commit large sums of money that can come only from savings or taxes on the people and at the expense of other potential activities.

We note that the decision on the Mini has been left to the NEB, if that body is satisfied about industrial relations. Will the Secretary of State confirm that he must also be satisfied that over half of any investment will be financed internally, as required in the Ryder plan? Will the right hon. Gentleman also confirm that, as recommended by the Central Policy Review Staff, the agreement of unions and shop stewards to internationally competitive manning schedules should be obtained before any investment is authorised?

Mr. Varley

On further funding, the Government have made plain—ever since April 1975 when my right hon. Friend the Member for Huyton (Sir H. Wilson), who was then Prime Minister, made the original statement to the House—that further public funds would be conditional on an improvement in the performance and industrial relations of British Leyland. That remains the position. We certainly expect that more than half the money required for investment in Leyland should be provided internally and we want the NEB to hold to that objective.

Substantial progress has been made in industrial relations during the last few weeks and performance has been pretty good. Since the difficulties in March, all the trade unions, and certainly all the senior trade union leaders, have been doing all in their power to bring about an improvement in performance and industrial relations. I have discussed the matter with them during the last few days, and they have told me that they will continue to use their best endeavours to bring about an improvement in performance and to help the company to move to competitive levels that will ensure the future of British Leyland.

Mr. Robinson

Is my right hon. Friend aware that all of us on this side of the House will welcome the positive and constructive tone of his statement but that there has been slight doubt about what, precisely, has been authorised? May I press him on this point? May we take it that the Mini programme has been authorised in its entirety by the Government but that it is up to the NEB to authorise the release of funds to Leyland and that the NEB has the money to do that? Will this go ahead at full speed—because it is clear that speed is of the essence if the car is not to be too late for the success that it must have if it is to earn a return on the huge sums that will be committed?

Mr. Varley

We are satisfied and confident that the Mini programme should go ahead. The decision is for the NEB, and it is for the NEB to monitor the performance of British Leyland. The NEB will want to look at Leyland's performance during the next few days, and important discussions are taking place. I believe that the programme will go ahead.

My hon. Friend asked about finance. Resources will be made available for the Mini programme. I am advised that the new Mini will be profitable and that it will make an important contribution to not only jobs but exports. I want to see the programme go ahead. It is important that site work should be resumed as quickly as possible, but it is for the NEB to give the final decision.

Mr. Hal Miller

Will the Secretary of State come clean? Is work now to be resumed on the West works at Long-bridge in preparation for the laying-down of the new advanced production facilities for the new Mini? The right hon. Gentleman has said that he hopes that it will and that the decision is now for the NEB. Can the right hon. Gentleman not understand there is a need to give confidence to people working in Leyland that there is a future, to the dealers that they will have a product to sell so that they will stay with the company, and to the public that the money already spent is not just being thrown away?

Mr. Varley

I do not want to throw away money and nor does any other hon. Member. I want to back the Mini programme.

Mr. Hal Miller

The right hon. Gentleman has not said that.

Mr. Varley

The hon. Member for Bromsgrove and Redditch (Mr. Miller) always jumps to conclusions and I should have thought that today of all days—after his remarks last week when the hon. Gentleman jumped to conclusions—he would be more temperate in his anger. Perhaps I can return to that later.

The backing that we have given to British Leyland during the past two years should not be in question. I laid before the House the decision to go ahead and acquire British Leyland with £246 million of public money—£46 million to acquire the shares and another £200 million in new equity—as well as a further £100 million. I want the Mini programme to go ahead. I have taken the decision, and the NEB can authorise it when it is satisfied about progress.

Mr. Urwin

I warmly welcome my right hon. Friend's statement and I am sure that he appreciates that most of us believe in the vital importance of maintaining the car industry, as represented by British Leyland, as a vital part of the British economy. In this developing situation of competing demands on the financial resources that can be made available by the Government, will the Secretary of State particularly bear in mind the requirements of the development areas? Does my right hon. Friend realise that it is extremely important that he. should ensure that Government investment is well placed and that the need for it is well qualified and justified?

My right hon. Friend referred to the important meeting that will take place tomorrow. What will be the terms of reference of that meeting and who will be represented there?

Mr. Varley

There is no doubt that I want to see Leyland become a successful company and I have said that on umpteen occasions in the House. Progress has been made, and I have no doubt that, given good will on everybody's part, Leyland will succeed. Leyland's car production last year rose by nearly 14 per cent. and exports rose by 25 per cent. in volume terms. That point should not be lost to the House. I am with my hon. Friend on that matter.

I know of my hon. Friend's general interest in the development areas. Many companies in those areas supply components to British Leyland and rely on the investment and success of the company.

I cannot give my hon. Friend the names of the people who will be at tomorrow's meeting in Birmingham, but he will know that, following the difficulties in March, two working parties were set up to consider the dispute. The members of those working parties will be at the meeting, along with senior members of British Leyland's management.

Mr. Richard Wainwright

Is the right hon. Gentleman aware that his statement is reassuring because it leaves the responsibility for British Leyland with the NEB rather than throwing on to the Floor of the House intricate questions of new car model policy? Does he accept that the long pause in British Leyland investment gives him an excellent and badly-needed opportunity to prepare a coherent outline plan for Government investment in the whole motor car industry and in relation to other manufacturing industries that are in need? Does the right hon. Gentleman accept that such a plan is necessary and, if so, what progress has been made in that direction?

Mr. Varley

I want to give the hon. Gentleman and the House as much information as I can about the progress of British Leyland. There have been calls, though none so far today, for the commercially-confidential plans of the company to be laid before the House. The hon. Gentleman knows that this is impracticable. It would be to the disadvantage of British Leyland and would only hamper its prospects. However, I shall give the House as much information as I can.

There has been a good deal of speculation in the Press about the management of British Leyland, and I cannot condemn too strongly recent attempts to undermine the confidence of the management. Speculation about changes in the structure has damaged morale. The organisation of the company is primarily a matter for the NEB, and I have received no recommendation from it in favour of changes.

Mr. Silverman

Is my right hon. Friend aware that I welcome his statement about the Mini? However, are he and the NEB fully aware of the urgency of the Mini project and the investment as a means of helping the export of cars and, more important, import substitution? I have a large Leyland plant in my constituency, and the declaration that the Mini is to proceed is an act of faith in the company that will improve the morale of workers and help to improve industrial relations.

Mr. Varley

I thank my hon. Friend for his remarks. It is certainly an act of faith, and I hope that the faith is not misplaced. I do not believe that it is. I want to see British Leyland remain a volume car producer for the reasons given by a number of hon. Members. It is sometimes thought that the NEB consists of staff only and that it has no industrial expertise. Hon. Members sometimes forget that the Board is composed of senior industrialists and senior trade unionists. I am acting on their advice, and the decisions that I have taken, together with today's announcement, come from the Board.

Mr. MacKay

Is the right hon. Gentleman aware that there is a great deal of concern in Birmingham and that we are pleased that it looks as though the Mini project is going ahead? Is he aware that those of us directly involved in the motor car industry and who know something about it believe that the Mini will be a great success provided we get the project started quickly? Will he ensure that the NEB concentrates its mind in the next few weeks on finding ways of financing extra new models rather than on the irrelevant topic of slush money which is completely out of context and should be ignored by the Board?

Mr. Varley

I do not want to comment today on the latter part of the hon. Gentleman's question because I shall be reporting the results of inquiries that I have asked to be carried out into allegations that have been made.

I want the Mini to be successful. The existing Mini has been very successful over the years and has made a massive and wonderful contribution to the economy of this country. We now need a replacement. That is what it is all about.

Mr. Loyden

Is my right hon. Friend aware that the part of his statement dealing with the deferment of the options open to Leyland and the review will be met with dismay and disappointment by workers in my constituency who relate the morale in the industry and the Merseyside plant to the indecision over the options open to Leyland and consider that this is related to the poor production effort that my right hon. Friend mentioned? Will he ensure that a statement is made as quickly as possible to remove the uncertainty facing the workers in my constituency?

Mr. Varley

I do not believe that the uncertainty mentioned by my hon. Friend exists. I hope that he will read and consider my statement in more detail. We have given the go-ahead, subject to the NEB making the final decision, to the Mini replacement programme, and that is a substantial investment in itself. It involves more than £200 million, which is not something to be sneered at. I envisage that before the Summer Recess I shall have to come to the House and make a further report about future public money that will be required.

Mr. Eyre

On the important questions of production and confidence, is the Minister aware that the change from piece-work to measured day work made relations in the company worse? Can he assure us that serious consideration is being given to a system of incentives based on a shop floor production system, because that could have an encouraging effect on production and the quality of production, both of which are so important to the future of the company?

Mr. Varley

I understand that the two working parties that are looking into the industrial relations of British Leyland are considering the points raised by the hon. Gentleman and no doubt they will report their conclusions in due course.

Mr. Rooker

I thank my right hon. Friend for his statement, although I think that when I have read the small print it will turn out to be not as good as my right hon. Friend makes out. Is he aware that in industrial relations it takes two sides to work together and that the working party did not start its work until six weeks after the toolmakers went back? Is he aware that there is still a great deal of doubt about the Mini programme because the NEB is answerable not to Parliament but to my right hon. Friend and that we cannot ask the NEB about the Mini?

Is my right hon. Friend aware that his statement was not as clear as he may have wished and that I do not believe that British Leyland workers will know tonight whether the Mini is going ahead? Whether we read the small print or not, can my right hon. Friend say that the Mini will go ahead and that there will be no more prevarication by the Board or the Government? Will he also consider ceasing the management of British Leyland by holding a shot-gun to the heads of the workers, because that is implied when he speaks about a further report and review being due later in the year?

Mr. Varley

My hon. Friend will want to look at my statement pretty closely. The Government want the Mini programme to go ahead, but at the end of the day the decision is for the NEB, which was established under an Act of Parliament. I hope that the decision will be taken very quickly, but it depends on the progress in industrial relations over the next few weeks. My hon. Friend should not disparage the NEB. He was an enthusiastic supporter of the concept and of the Industry Act 1975—

Mr. Rooker

I was an enthusiastic supporter of planning agreements as well.

Mr. Varley

My hon. Friend is an enthusiastic supporter of some things and selective on occasions, but he was an enthusiastic supporter of the NEB and the 1975 Act. There are senior industrialists and senior trade union leaders on the Board and I am relying on their advice.

Several Hon. Members rose—

Mr. Speaker

Order. I shall call the four hon. Members who still wish to ask questions.

Mr. Crouch

Is the right hon. Gentleman aware that there is continuing concern on the question of accountability? The Beard is a relatively new body and I am not seeking to knock it, but we have the Minister coming to the House from time to time seeking new tranches of money to fund new activities of selected companies operating under the NEB. We are concerned about accountability—

Mr. Speaker

Will the hon. Gentleman be kind enough to ask a question?

Mr. Crouch

Is the Secretary of State aware of the concern felt by hon. Members about the accountability of the NEB to this House? Will the Secretary of State say whether he is concerned and whether he will not just leave it to the NEB to decide which facilities will be given to Select Committees of the House, such as the Public Accounts Committee and the Expenditure Committee, to see the progress of this funding?

Mr. Varley

Perhaps the hon. Gentleman is not aware that the Public Accounts Committee has already taken steps.

Mr. Crouch

I am a member of it.

Mr. Varley

The hon. Genteman says that he is a member of that Committee. He will be aware that the NEB has been before the Public Accounts Committee to discuss its plans and progress. It is open to the other Select Committees to ask the NEB to appear before them. I understand that the Public Accounts Committee is very much in the lead, but I know that on occasions the NEB has given evidence before the Trade and Industry Sub-Committee.

Mr. Pavitt

Will my right hon. Friend take account of the fact that delay in taking the policy strategic decision is a cause of anxiety not only to car workers but also to the people making buses in my constituency? Will he make a clear statement that the increase of the Mini programme and the present strategic arrangements for cars will not cause any cutback in the production of buses, which have been good export business?

Mr. Varley

The bus and traffic division of British Leyland is no way affected by the current review.

Mr. Emery

Does the Minister accept, as the Opposition accept, that British Leyland is one of our greatest British assets and that we want to see it as successful as he does?

One of the phrases used by the Secretary of State must cause some concern. In his preface he said that the choice of strategy would be delayed. I wonder whether he can begin to put a time scale to that? He will realise that such delay is bound to cause concern.

Secondly, will he take some positive steps with the NEB to ensure that investment and work is put into the successful areas of British Leyland—such as the Jaguar and Range Rover lines, where there are vast order books unfilled—to maximise the profitability and the production of this great company?

Mr. Varley

When I referred to the choice of strategy, it is generally known to hon. Members that British Leyland and the NEB consider varying strategies, from staying in volume car production to reducing the line of products and vehicles to specialist cars. They are considering that further. The Government want to see British Leyland stay in volume cars. But there is further work to be done on that. I envisage that before the Summer Recess I shall come before the House with a further report.

Mr. Atkinson

Will the Minister consider his own statement again, in the sense that he would never dare apply investment sanctions of this sort against other industries' industrial relationships, as he is doing in the car industry with British Leyland? He would never do that with the coal industry—certainly as it applies to the National Union of Mine-workers, of which he is a member. Does the Minister not recognise that in using sanctions of this kind he is enunciating the worst practice in terms of industrial relationships, that therefore he must reconsider whether the long-term planning of the industry should be conditioned in this way and whether he should not get down to the job of restoring confidence and morale? Is not the best way to do that to guarantee a long-term future?

Mr. Varley

That is precisely what I want to do. I want to play my part in trying to guarantee a long-term future. But I cannot do it alone. I did not create the uncertainty earlier in the year. My hon. Friend has no right to suggest, after the support that I have given to British Leyland since April 1975, that the decisions I have advised my colleagues to take indicate that I am creating uncertainty. I am not creating the uncertainty. I want the programme to go ahead. I want the jobs with British Leyland to be secured. I cannot do it alone. It depends to some extent on the reaction in the House. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will have great influence in these matters in the car production areas. Above all, it depends upon the managers and workers in British Leyland.