HC Deb 23 February 1978 vol 944 cc1851-62

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

10.23 p.m.

Mr. Turn Litterick (Birmingham, Selly Oak)

I wish to discuss the proposed closure of the Cadbury-Schweppes tea blending and packaging plant at Bordesley. The proposal of Cadbury-Schweppes is basically a simple one and was decided by the determination of the company to maximise its profits. It has decided to remove a highly profitable enterprise, employing 600 people, from the centre of Birmingham and place the operation in a marginally profitable factory at Moreton near Wallasey so that it shall be more profitable.

The employment effects of this will be simple in Birmingham—600 jobs will be lost. Cadbury-Schweppes has no proposals to create new jobs in the city and considerably fewer than 600 jobs—probably fewer than 300—will become available at Moreton. In short, the economy will lose more than 300 jobs as a result of the closure.

With 40,000 people in Birmingham currently registered as unemployed, the chances of these 600 workers being re-employed are slender indeed, particularly as it is a stable labour force with a large proportion of women who, for social reasons, are relatively immobile. Many live within a few minutes of the factory. Because of the stability of the work force, there has been a community of spirit which has been of great value to the work people and this will also be irretrievably lost through the closure.

The cost to the taxpayer will be considerable if half the labour force is still unemployed six months after being made redundant. By that time, about £250,000 will have been paid in unemployment benefits.

Cadbury-Schweppes will benefit handsomely at the taxpayers' expense. If 300 extra jobs are made available at Moreton—that is the maximum—as a result of the closure, Cadbury-Schweppes will receive approximately £300,000 of the taxpayers' money in the first year of operation through the temporary employment sub- sidy. The firm will also receive an investment grant of about 22½ per cent. of the value of the plant installed at Moreton—in excess of £200,000 of taxpayers' money. In addition, it will receive grants in respect of the expenses of moving existing plant from Bordesley to Moreton and special tax relief on the depreciation cost of the new plant. This company will benefit directly at the taxpayers' expense to the tune of more than £600,000 during the first year of its operations at the Moreton plant.

To put it into perspective, the Minister of State at the Department of the Environment today advised me in a Written Answer that £2½ million is to be provided for the inner-urban area partnership strategy for the regeneration of the Birmingham central area, while £600,000 or more is to be given to a single private firm that proposes to remove from Birmingham 600 jobs from the central area of the city—the very area covered by the partnership strategy.

Nor is this the end of Cadbury's gains from this move. It will save on the elimination of the overhead costs of running the Bordesley plant and it will be getting its labour 10 per cent. cheaper in Cheshire than it is presently paying in Birmingham. The closure wilt give credance to the often repeated myth that Birmingham and the West Midlands are being deindustrialised as a result of Government policy—that is, the regional policy of successive Governments over the years.

In fact, as the West Midlands Economic Planning Council has pointed out more than once, 70 per cent. of all the jobs lost in the West Midlands economy during the last few years have been lost in the metal fabrication trades associated with the car industry and have been caused entirely by the contraction of those industries and not by the geographical relocation of those industries.

The myth of the IDC policy as a negative power devastating the economy of the West Midlands is hollow. It is without factual basis. It is also the case that this particular closure dramatises attitudes in a way which, in my opinion at least, is extremely unfortunate.

I would take, first, the attitude of the Cadbury workers themselves. It is shameful that the Cadbury workers—I mean the Bournville workers—would not lift a finger to defend their colleagues at the old Typhoo tea factory. They behaved like traditional institutionalised Cadbury workers. They would not raise their voices even to protect their colleagues at the Bordesley plant. That is shameful.

Shameful, too, is the attitude of the trade unions in the Wallasey area. They were clearly falling over themselves to steal the jobs of the Bordesley workers. One cannot describe it in any other terms. They were down here as quick as quick, demanding of the appropriate Minister that he insist that the jobs be relocated up there. Their attitude was shameful and is in direct contrast to the attitude, for example, of the Coventry British Leyland workers who, when they learned of the determination of Michael Edwardes to axe the Speke plant in Liverpool, sprang to the defence of their colleagues in Liverpool. That is working-class unity. It is something about which apparently the Cadbury Bournville workers and the trade unions in the Wallasey area know nothing. At the risk of sounding trite, those people will have to learn bitterly that the profits or rewards of disunity are weakness and further exploitation by their employers. This is the basic lesson of this closure.

It also raises the character of the company which is bringing about the closure. The background to the matter is a reputation by Cadburys in its previous incarnation—that is, as a benevolent employer. That was, first and foremost, the kind of benevolent society which would see to it that the interests of the people and the community came first. This event demonstrates very clearly that Cadbury-Schweppes is simply a multi-product conglomerate like any other multi-product conglomerate which is interested in neither the people who work for it nor in the communities in which it operates, except in so far as it produces a profit. It has done its sums, and those sums indicate clearly that it will profit by this move alone by about £1 million at the taxpayers' expense simply by shifting existing plant from Moreton. Its accountants have told it that, and that is why the move is being made.

These are the same reasons that motivated the people who devastated my home in the Clyde Valley two generations ago. They did not care what happened to the people they left behind because in the ruthless pursuit of profit they were prepared to leave in their wake nothing but human and social ruin. That is the lesson of the closure that Cadbury-Schweppes is ruthlessly pressing home. We should ignore its bland rhetoric of benevolent intentions and look at the facts instead—look at what it is doing to Birmingham. We should dismiss for once and all the myth that regional policy has anything to do with this. It is nothing more or less than capitalism rampant in search of profits.

10.33 p.m.

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


Mr. Speaker

Order. I understand that the hon. Member agreed with the Minister and his hon. Friend that he should intervene in the debate.

Mr. Rooker

Yes, Mr. Speaker. I am most grateful to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) and my hon. Friend the Minister. So that it is on the record, may I say that I am delighted to see my right hon. Friend the Member for Birmingham Sparkbrook (Mr. Hattersley) in the Chamber for the debate? He has taken a personal interest in the plight of the employees in this factory, many of whom are his constituents, just as many of them are mine.

I do not want to repeat what my hon. Friend said but I wish to add a little meat to the bones of the reasons behind the move and refer to the money that this company has received from the taxpayer. In its latest annual report it states that 1976 was a successful year for the Typhoo brand, which is involved in this closure. So it was, to the extent that the company was able to donate £10,000 to the Conservative Party. That is hardly surprising, since on the board sits Lord Carrington, a member of the Shadow Cabinet. The company made £46 million in profit before tax and is alleged to have paid £25 million in tax.

The workers at the factory might think that the company has made a substantial contribution to the British economy with that tax figure, but one deduces from the balance sheet and accounts that that is not the full story. Of that tax, £9.5 million was paid to overseas Governments. Only £2.2 million, as far as I can tell, was paid to the United Kingdom Government. That is a total of £11.7 million in tax paid. What happened to the other £14 million? I can tell you, Mr. Speaker, as I have told my constituents. Of that sum £13.3 million was given back to the company by the Government by way of deferred corporation tax. That sum goes well over and above the money that my hon. Friend said the company will be getting from the taxpayer. But there is an accumulated amount of deferred tax substantially greater than that simply because of the stock appreciation relief scheme operated by the Government since we came to power in 1974.

This, then, is not as clear cut as when the company says that it is moving for economic reasons. There are economic reasons, of course. But the true economic reasons have not been made clear to the employees or to the hon. Members whose constituents are employed by the company.

We were given various reasons for the closure. Each time a reason was given it was knocked down by either Back Benchers or Ministers who had access to other information. We are now left with the bare bones that it is a closure for financial reasons. As I have made clear, the company is nowhere near bankrupt and has received substantial financial benefit from the Government in the past couple of years.

The other aspect of the closure that deeply affects those who represent Birmingham is the more than apparent contradiction in policy. In the Financial Times of Tuesday 21st February the Midlands correspondent wrote: The decision announced yesterday by Cadbury-Schweppes … with the loss of 550 jobs, has exposed a clash of interest between Government departments. Indeed, The Birmingham Post went further and commented that following the announcement it was known that the Minister for Housing and Construction—my right hon. Friend happens to hold a most relevant chairmanship—met Mr. Adrian Cadbury, the company chairman, as he was going to do if the closure was announced.

The political correspondent of The Birmingham Post, John Lewis, wrote earlier this week: There is apparently resentment that Mr. Freeson, who has done much of the pioneer work on inner cities, should have involved himself. Amazingly, there have been objections to the meeting with Mr. Cadbury taking place. There have been objections from other Whitehall Departments, from other Ministers. It is deplorable that the impression has been given that my right hon. and hon. Friends in the Department of Industry do not give a tinker's cuss about this issue because it conforms broadly to regional policy.

A private company wants to pull up the stumps and move to a special development area, or an area that has priority over the inner cities. It is unthinkable that the Department of Industry should have been unrepresented at today's meeting, but that is what I am informed. At a meeting when the shop stewards lobbied some of my hon. Friends and Ministers last week, there was a notable lack of effort on the part of the Department. I hope that my remarks will not escape the attention of the Minister responsible for answering the debate and those trying to get something worth while from the policy to regenerate the economy of the inner cities.

I hope that my hon. Friend will not give us the usual Adjournment debate reply—a few platitudes—but will be positive. I hope that he will tell us what happened today and what the Government will do about it tomorrow and next week, so that we may report back to our constituents that the issue has been treated seriously at the highest levels. Indeed, there is suspicion that that consideration has not been given. It is incumbent upon my hon. Friend to salvage some vestige of credibility for the Government's policy from this debacle.

10.39 p.m.

The Under-Secretary of State for Employment (Mr. John Golding)

My hon. Friends the Members for Birmingham, Selly Oak (Mr. Litterick) and Birmingham, Perry Barr (Mr. Rooker) have expressed with great feeling and eloquence the real concern that is felt in Birmingham about the Typhoo closure. Previously my right hon. Friends the Members for Birmingham, Small Heath (Mr. Howell), the Minister of State, Department of the Environment, and Birmingham, Spark-brook (Mr. Hattersley), the Secretary of State for Prices and Consumer Protection, whom I am delighted to see in the Chamber, together with my hon. Friends the Members for Birmingham, Northfield (Mr. Carter), the Under-Secretary of State for Northern Ireland, Meriden (Mr. Tomlinson), the Under-Secretary of State for Foreign and Commonwealth Affairs, and Nuneaton (Mr. Huckfield), the Under-Secretary of State for Industry, have made their concern about the problem known to me.

Although the unemployment figures for Birmingham as a whole are much lower than those for the Liverpool travel-to-work area, I appreciate that unemployment in the constituency of my right hon. Friend the Member for Small Heath is very much worse than it is in some other parts of Birmingham. I recognize, too, that the situation could create a difficult atmosphere for the new partnership committee as it begins its work of revitalising the worst hit areas of Birmingham. I hope not, because I believe that the partnership has much to offer. Indeed, I am very sorry that the next meeting of the partnership, on Tuesday, clashes with Department of Employment Questions and so I shall be unable to attend to face the music.

There are likely to be some hard words spoken, because it is not possible for the Government to agree to what the Birmingham and other West Midland MPs and the shop stewards of Bordesley Street have asked us to do. We cannot say to Cadbury-Schweppes that it should not make the move. We cannot say to Cadbury-Schweppes that we will block any grants to which the company may be entitled. When we introduced the partnerships we made it clear that the assisted areas would continue to have priority over partnership areas in non-assisted areas.

I have listened to the Birmingham and Moreton shop stewards putting quite opposite points of view, each group stressing the problems faced by its own town and tending to minimise the difficulties of the other. I have had to face deputations from each town explaining to them separately the problems facing the other town. With the Minister of State, Department of the Environment, I have also discussed the problem with Sir Adrian Cadbury.

Perhaps I can outline the position as seen from the firm's point of view. The firm believes that there is need for a change. First, the amount of tea being drunk has dropped significantly. Secondly, there is a need for new machinery because of metrication. The firm has made it clear that the present machinery is old and would have had to be replaced shortly by new machines which, because they are five times faster, would have caused redundancies in any case.

The company was faced with deciding how to make the change. I was told, as I was by the Moreton shop stewards, that it would make sense to concentrate tea production undertaken at both Birmingham and Birkenhead in one place. The Birkenhead stewards tell me—and this is just their word—that it was agreed amongst the trade unionists that the decision about where to go should be left to management and that, once made, the decision would be accepted.

In the event, Cadbury-Schweppes chose Moreton.

Mr. Reginald Eyre (Birmingham, Hall Green)

That is not true at all.

Mr. Golding

Of course the firm had some financial reasons in mind. The Moreton site, being single storey, is in the firm's view better, as are communications. The firm also took into account the possibility of a Government grant, although it did not regard this as crucial.

I take the opportunity to say publicly to my hon. Friend the Member for Perry Barr that no Government pressure has been put on the company to move.

Mr. Eyre

Will the Minister acknowledge that there is a direct contradiction between the assisted areas policy and the inner city areas policy which operated in this case to the detriment of Birmingham?

Mr. Golding

Yes. Of course, this is, a very difficult case. The choice has to be made whether jobs go to one area of high unemployment or to another area of high unemployment. That is the dilemma which faces me as a Minister for employment. Therefore, I certainly do not dodge the difficult situation that we are in.

The company also argued that the move to Moreton could reduce overheads. In addition—and this is both a financial and a social argument which has carried most weight with the Moreton stewards—the move to Moreton could secure the future of that site, where 3,000 are presently employed. I make this point because the issue is not a straight one of the loss of 570 jobs, full-time or part-time, in Birmingham to gain 300 jobs on Merseyside. With the new machinery, it is unlikely that there would have been 570 jobs in Birmingham, anyway. But more important, as the Birkenhead stewards laid it on the line very hard—and I met them in Newcastle-under-Lyme, not in London—without the move of the tea production to Moreton, 3,000 jobs on Merseyside could be in doubt.

Mr. Rooker

My hon. Friend has to accept that this is outrageous. There is no indication whatsoever that the whole 3,000 jobs would have gone. There are many, many highly profitable lines at Moreton. There would have been a cut-down on some loss-makers. It is not the fact that it was 3,000 jobs at Moreton or 500 in Birmingham. The fact is that it would have been about 500 in Moreton for 500 in Birmingham. My hon. Friend is swallowing the company's line wholesale, and it is totally false.

Mr. Golding

What I said was not what the company told me, not on this not that the company believed this. What I said very carefully was that the Birkenhead stewards laid this on the line to me, and I have just put it as the view of the Birkenhead stewards.

I am a born Brummy, as my hon. Friends know, but I really have an obligation to put to the House tonight the view of the Birkenhead stewards, as I have to put the view of those in Birmingham. Certainly, what was made clear to me by the Birkenhead stewards was that there would have been an immediate loss of tea jobs in Moreton if tea production had been centred on the Bordesley Street site. Therefore, it has not been a case just of the Birkenhead men wanting to steal jobs. A real decision had to be taken. Both groups of workers stood to lose jobs as a consequence of the decision. I do not think that one can direct criticism at the Birkenhead stewards for the stand that they took on behalf of their membership.

Mr. Litterick

Does not my hon. Friend agree, however, that the tea operations at Moreton were marginal to the Moreton operation, whereas they are the sole occupation to the Bordesley Street factory?

Mr. Golding

The stewards from Birkenhead told me that the jobs of the workers at Moreton dependent on tea were of extreme importance to the workers engaged on them—

Mr. Litterick

It is fewer than 200 from 3,000.

Mr. Golding

—and the loss of 200 jobs on Merseyside is as difficult for them to accept as the loss of jobs in Birmingham is to the Birmingham stewards.

Mr. Rooker

Not 3,000.

Mr. Golding

Cadbury-Schweppes told me—and here I am repeating what the firm has told me rather than what the Birkenhead stewards have told me—that, apart from the financial considerations, it took into account the possibility of finding alternative work on Merseyside and in Birmingham. The firm said that it was a real possibility in Birmingham, because there are 1,000 vacancies a year at Bourneville alone, but virtually impossible for those at Moreton.

I do not underestimate the difficulties of redeployment. In fact, I share a lot of the concern of the Birmingham stewards about this point, because of difficulties of travel and because there are married women involved, and because of this I have asked the Manpower Services Commission to look at this carefully with the firm.

We shall take a continuing interest in the welfare of those who will be declared redundant. I am sure, too, that the partnership committee will want to express a point of view. Between now and the closure date we shall do everything to minimise the hardship.

I also realise that we are not dealing only with the problems of individuals. I realise that the loss of jobs to Birmingham and to the partnership area is also an issue. Here I think that there is a real possibility of consultation about the feasibility of an alternative use for the Bordesley Street site. I would expect the partnership committee on Tuesday to discuss this and to draw some conclusions.

I am sorry that tonight I cannot bring more comfort to my hon. Friends who represent Birmingham seats. This has been a difficult situation from a Government point of view—two groups of workers in desperate trouble. But the rules are such that it has not been possible for the Government to intervene. In any case, it is a situation in which it would have been a very difficult decision to make, even if we were in a position to make a judgment.

Question put and agreed to.

Adjourned accordingly at ten minutes to Eleven o'clock.