HC Deb 10 April 1978 vol 947 cc975-82
Mr. Radice (by Private Notice)

asked the Minister of Agriculture, Fisheries and Food whether he will make a statement about the Spillers French announcement on Friday, 7th April on the closure of a number of bakeries involving about 8,000 redundancies.

The Minister of Agriculture, Fisheries and Food (Mr. John Silkin)

Spillers Limited announced last Friday that it had decided to withdraw from bread baking. We understand that over the last six years its losses on bread making have amounted to £28 million. Spillers has decided that the only way in which it can continue as a sound and viable group is to give up bread baking altogether. The company is selling 13 bakeries to Rank Hovis McDougall and Associated British Foods. This will ensure that the jobs of 5,100 employees are maintained. But the closure of the remaining 23 bakeries means the loss of 6,370 full-time and 1,620 part-time jobs.

In order to complete this transfer the companies concerned needed to know whether a reference to the Monopolies and Mergers Commission would be made. Immediately before Easter, therefore, Spillers approached the Government in strict confidence, through the Bank of England, on this question.

After following the statutory procedures and in the light of the advice of the Office of Fair Trading, my right hon. Friend the Secretary of State for Prices and Consumer Protection decided, on the information before him, not to make such a reference. This decision took account of discussions between the Ministers concerned and the major baking companies in the course of which various points were clarified and a number of assurances given.

In particular RHM and ABF have given assurances that they will keep open the bakeries transferred to them for at least a year. They have said that they are taking over all the Spillers bakeries for which they can see a profitable future. They also expect, subject to agreement with the unions on working procedures, to recruit the equivalent of over 2,000 additional employees at their existing bakeries, including those in Liverpool, Glasgow and the North-East.

The companies have said that the closures will not endanger bread supplies. ABF and RHM have stated that they do not expect to pre-notify a further price increase before late 1978.

It is clearly a matter for serious concern that the measures now taken involve sudden large-scale redundancies in a single firm. The Government greatly regret that they have not had more notice of the closures. But, having regard to the substatial over-capacity in the baking industry and Spillers' financial difficulties, Ministers concluded in the circumstances that the reorganisation proposed is probably the least unattractive of all the unattractive courses of action available.

Mr. Radice

I thank my right hon. Friend for that statement. Can he tell the House why Spillers gave such short notice of its withdrawal from the baking industry and the making of so many production workers redundant, including 700 in my constituency? Is my right hon. Friend aware of the impact of decisions such as these on areas with high unemployment? Will the Government see whether anything can be done to save any of the jobs?

Mr. Silkin

I sympathise with my hon. Friend and his constituents. I know that Birtley will have about 700 redundancies. My hon. Friend asked what could be done at present. The Secretary of State for Employment asked the Employment Services Agency to go into this at once and approached the other bakeries involved to see what can be done.

Spillers took the view that consultation with the unions could not have taken place without open debate. Spillers felt that this would lead to a loss of orders and would jeopardise its sources of finance and the whole deal, with even more adverse effects upon employment. I should have thought that if ever we needed justification for our belief in industrial democracy, we do not need it now.

Several hon. Members rose

Mr. Speaker

This is a Private Notice Question but I propose, exceptionally, to call four supplementary questions from each side—apart from the Front Benches—because of the interest that I know exists in this matter.

Mr. Fell

I wonder whether the Minister is aware of the statement which was made by the Secretary of State for Scotland on Friday in which he claimed that this came as a complete surprise to the Government? The right hon. Gentleman has now told us that the Government knew about this before Easter. What is the matter with the Government's liaison, apart from anything else? Can the Minister bring whatever pressure is possible to bear on Spillers to see that my constituents—about 750 of them—receive proper compensation for the loss of their jobs? Many of these workers have been in their jobs for over 20 years.

Will the Minister persuade the Secretary of State for Prices and Consumer Protection who is sitting next to him, to look again at a reference of the new set-up—which is almost a complete monopoly of baking and milling—to the Monopolies and Mergers Commission?

Does the right hon. Gentleman realise that I shall support the three bakeries unions at their meeting in Manchester later this week in whatever reasonable propositions they put forward to persuade the company that has now gone out of the bakery business to pay proper compensation to my constituents?

Mr. Silkin

Taking the first point, about my right hon. Friend's statement on, I think, Friday, I did not read him to say that at all. As I read what he had stated, what he said was that he deplored the lack of consultation with the unions. The fact is, in any event, that the Government were informed, as I pointed out in my statement, a couple of days before Easter. That really did not give very much time to come to any basis of restructuring.

However, I must tell the hon. Gentleman that I myself, last August—and I repeated it at the turn of the year—knowing that there were difficulties of overcapacity and of dropping demand in this industry, asked the Bakers Federation whether it would wish the Government to assist it in any way, with advice or in any other way in restructuring. I am still waiting for a response to that.

[Interruption.] I am the responsible Minister.

As to the question of redundancies and compensation, I think that the whole House would agree that proper redundancy payments must be made in this case, of course.

Mr. Cledwyn Hughes

In view of the substantial production capacity of Spillers, can my right hon. Friend give us an assurance that there will not be a shortage of bread in any part of the country as a result of this?

Mr. Silkin

Certainly there will not be a shortage of bread as a result of this, and I hope that there will not be a shortage of bread for any other reason. The fact is that even now the industry is still working slightly above capacity—although, it is true, only slightly.

Mr. Peyton

Does not the right hon. Gentleman think it a little odd that he should be answering this Question when the fingerprints of his right hon. Friend the Secretary of State for Prices and Consumer Protection are to be seen all over this miserable affair?

Secondly, may I ask the right hon. Gentleman to make the effort to recall the clear warning given by the Monopolies and Mergers Commission in July last year that the unprofitability of the bread baking industry was due largely to statutory price control and to other forms of official intervention?

Thirdly, may I ask the right hon. Gentleman whether he agrees that the inevitable consequence of all that, and particularly of his right hon. Friend's contribution to it, was bound to be the inability to invest, which would lead in turn to less competition, fewer jobs and higher prices?

Finally, does the right hon. Gentleman agree with the estimates made by the union leader responsible that this miserable development could well lead to an increase in the price of bread by up to 8p a loaf?

Mr. Silkin

Taking the last point first, I do not agree with it, and I do not agree with it for many reasons—one of them being that, in fact, as the balance of supply and demand will be much nearer, the unit costs of production, inevitably, will go down.

Secondly, Spillers will now have a very large amount of flour, for which previously there was an outlet within its own bakeries, which it will have to sell to other bakers. This and the fact that most supermarkets are now dealing only with two of the three bakers concerned lead me to assume that there will be no increase in bread prices. Indeed, the bakers themselves have said that they do not see it at least before the end of this year. Therefore, concerning this matter, I do not think that there is any difficulty.

Concerning the first point, I have noticed that my right hon. Friend the Secretary of State for Prices and Consumer Protection is very well able to look after himself and is capable of doing so. I have not the slightest doubt that had this Question been asked of him, he would have answered it. But the Question was asked of me.

As far as the other question is concerned, I do not blame the right hon. Member for Yeovil (Mr. Peyton). After all, he was not a member of his own Cabinet at that time. But the Price Code to which the Price Commission referred was the code introduced by the right hon. Gentleman's Government. If the right hon. Gentleman had listened to the statement—I hope that he did so—he would have realised that Spillers, in fact, said that it had been losing money for over the past six years. That takes us back to 1972 and well within the time of the right hon. Gentleman's Government.

The truth of the matter, as I say, is the fact that bread demand has dropped by 36 per cent, since the 1950s and, secondly, that there is over-capacity in the industry.

Mr. Peyton

Will the right hon. Gentleman at least recollect that he and his hon. Friends have been responsible for the last three years? Their performances as historians are not good. Their performance in office is very much worse.

Mr. Silkin

I should like someone to tell the right hon. Gentleman that the Price Code has been relaxed in those three years.

Mr. Ashley

Is my right hon. Friend aware that the arrogant and contemptuous action by Spillers Ltd, without any consultation, negotiation or discussion with the trade unions, workers or Member of Parliament involved in sacking 8,000 workers, including hundreds in my constituency, should not be tolerated by a Labour Government, because it will embitter industrial relations throughout Britain? Therefore, what we on the Labour Benches want is, first, a recognition either that the jobs will be preserved or that alternatives will be found and, secondly, a full debate to uncover the secret negotiations that have been conducted by the company, certain Ministers of the present Government, the Monopolies and Mergers Commission and the Bank of England? I believe that these discussions should have been held in public and that the facts must be made known.

Mr. Silkin

As I told my hon. Friend the Member for Chester-le-Street (Mr. Radice) in my statement, the position concerning Spillers was that it believed, rightly or wrongly—I take no point on this at all—that if it had held a longer period of consultations, that would have meant the collapse of the whole of the Spillers' organisation, with a corresponding loss of employment of, perhaps, three times the amount. I make no comment on it, except to say that this was Spillers' view.

Concerning the discussions, my right hon. Friend the Secretary of State for Prices and Consumer Protection was the chairman of the Ministers who met the various groups. As I have told the House—and I have told the House absolutely frankly and clearly what happened—the aim was to get the proper assurances from the other companies that would be taking over some of the factories, and thus at least to safeguard some jobs, and, secondly, to raise this very question—which my right hon. Friend did raise—about consultation with the unions. I have told the House what Spillers' view was. Clearly, it is a matter for the House to make up its own mind whether this was right or wrong.

Miss Fookes

As the Plymouth bakery will not be one of those saved, will the Minister undertake to liaise with his right hon. Friend the Secretary of State for Employment and to have a statement made to the House in due course about the practical measures that will be taken to try to alleviate the unemployment caused?

Mr. Silkin

As I told the hon. Lady and the House earlier, my right hon. Friend has already set in motion the introduction of the Employment Services Agency, with all that that entails, into the bakeries concerned. I shall pass on to him what the hon. Lady has said.

Mr. Heffer

Is my right hon. Friend not aware that in Liverpool, for example, the district secretary of the bakers' union discovered this redundancy and closure while visiting another factory which had nothing to do with the company? The trade unions were never informed. Also, the 90-day notice which is supposed to be given under the law has not been given. These workers will be thrown on the streets within a few days. I cannot understand why this matter was not sent to the Monopolies Commission and I do not accept the excuses put forward by my right hon. Friends. Is it not time for the Government to think again and intervene again in this matter before it is too late? We cannot afford another 600 workers unemployed on Merseyside. It is just not good enough. It is time that the Government began to act positively in this direction.

Mr. Silkin

On the question about a reference to the Monopolies Commission, that is a very difficult decision which had to be made. My right hon. Friends who formed the group of Ministers concerned came to the conclusion that it was better to safeguard employment and indeed to get some back—

Mr. Heffer

What—in Liverpool?

Mr. Silkin

If my hon. Friend reads my statement when it appears in Hansard, he will see that I made special reference to Liverpool—

Mr. Heffer

How many of them?

Mr. Silkin

That I cannot tell my hon. Friend at the moment.

Mr. Heffer


Mr. Silkin

I am simply giving the reason why no reference was made to the Monopolies Commission. It was in an endeavour to obtain the necessary degree of employment. As for the 90-day notice under the Employment Protection Act, that Act was designed among other things to give that sort of notice. We did not want the old days back again. I understand that. However, whether there was a breach of that or not is a question of law. Obviously, Spillers took its own legal advice and came to its own conclusion. It is not for me to intervene on that matter, because it is a matter of law.

Mr. Grist

Does the right hon. Gentleman realise the bitter effect that this closure will have in my constituency in Cardiff, coming as it does, on top of the closure of the East Moors steelworks? Will he comment on the likely difference between the compensation paid to redundant steelworkers and that paid to those made redundant by Spillers?

Mr. Silkin

I should not very much like to comment on it, beyond saying that in my experience Government and nationalised industries are very good employers.

Mr. Ryman

Can my right hon. Friend say more clearly why a deliberate decision was taken not to refer this matter to the Monopolies Commission, bearing in mind the overall criterion for referring such matters—the public interest?

Mr. Silkin

I hope that my hon, and learned Friend heard me say that this was a very difficult question. But my right hon. Friends were determined to safeguard as much employment as possible. That was the basic element in the whole of their decision, and that seems to me to be absolutely right.

Mr. Pardoe

Does the right hon. Gentleman accept that this decision was due mainly to the reduction in bread sales brought about by a change in national taste and exacerbated by recent industrial action? Will he also note that, as a result of that reduction in bread sales, Spillers has become a lame duck and that the Conservative Party, through its Front Bench today, is supporting the sustenance of lame ducks?

Mr. Silkin

I thought that the view of the Opposition was to attack the Government whenever they acted properly, as they have on this occasion, in my view. But I take the hon. Gentleman's point. As I said, there has been a 36 per cent, reduction in the demand for bread since the 1950s. That has led to a great deal of over-capacity and perhaps, as it were, to over-competition. So in that respect the hon. Gentleman is perfectly correct.