BRITISH LEYLAND (SPEKE PLANT) (Hansard, 7 March 1978)

§ Mr. Eddie Loyden (Liverpool, Garston)

The Adjournment debate tonight 1389 is about the proposal to close British Leyland's No. 2 plant at Speke, and it has to be set against the background of Merseyside's unemployment, because my view is that the proposal is completely unacceptable on a number of counts.

The House will be well aware of the unemployment and job opportunities position on Merseyside. It will be readily appreciated that the loss of a further 3,000 jobs represents a serious setback to any hopes of industrial recovery. This not only applies to Merseyside; it extends into the North-West Region. It will have a serious effect on the attempts being made to reduce unemployment in the area, which is at present running at a level of 11.6 per cent. It will also affect job opportunities in an area which is already starved of jobs It will make it even more difficult for young people to find employment and certainly it will create serious problems for the new generation of job seekers going into industry in the near future, it paints a picture of real despair.

This is happening at a time when both the Department of Employment and the Department of the Environment are attempting to remedy the problems in that part of the world. The inner city or inner area programme of the Department of the Environment and the Department of Employment's youth opportunities programme are designed to deal with areas like Merseyside, in terms of job creation.

These policies are directed towards bringing resources to the area in order to improve the social, economic and industrial fabric of hat part of Merseyside. While this is going on on the one hand, the axing of 3,000 jobs—if this proposal is carried—means that much of the work being done by those Departments will come to nought. It makes a nonsense of almost every policy designed for this purpose.

Merseyside is a special development area. The efforts that have been made by this instrument will be of no avail if jobs in Merseyside are slashed at their present rate. In addition to the Speke closure, we have heard that the Birds Eye factory in Kirkby intends to close, Courtaulds has already declared that 400 with the loss of a further 1,200 jobs. 1390 jobs will go from the Aintree plant. The accumulation of these job losses represents a most serious loss for Merseyside.

One can well imagine the amount of investment that will be needed to create the number of jobs that I have outlined. We all know that it is not simply the jobs that I have mentioned that will be lost. If we apply the multiplier, it means that we are talking of about 10,000 or 12,000 jobs. The sub-contractors at Speke, transport, the small shopkeepers, the community generally, the loss of £750,000 to the rates, will all have a dramatic and serious effect upon industrial recovery and employment opportunities on Merseyside.

Indeed, it was through the industrial development certificate that British Leyland first went to Merseyside. It seems an absolutely blatant contradiction of Government policy that in view of the way that this industry was brought to Merseyside we should now be talking about the axing of jobs in the car industry to the extent suggested. On another count it also means that the plans of British Leyland have virtually taken a U-turn. Indeed, that is as serious an argument and problem as the one relating to Merseyside jobs.

What has really happened to the plans of yesteryear and to the Ryder concept of a British-based, British-owned car industry? At the time this House supported the rescue of British Leyland and the Ryder plan which gave hope and opportunity for the development of a British-based, British-owned car industry. My right hon. Friend the Member for Huyton (Sir H. Wilson), the then Prime Minister, said on receiving the Ryder Report: The choice facing the Government on receiving the Ryder Report, the choice now facing the House, is this. Is Britain to have a major indigenous automobile industry, or should we have decided that British Leyland could survive profitably on a diminished scale, selling up-market cars together with trucks and buses? Are we, through a lack of courage in responding to a tremendous and costly challenge, to endanger a million jobs, and at the same time to see a shrinkage of exports, and vastly greater imports for the home market, which would be bound to affect our balance of payments disastrously? The Government have decided that Britain must remain in the world league so far as a British-owned automobile industry is concerned."—[Official Report, 24th April 1975; Vol. 890, c. 1747–8.] 1391 It would appear that the Government have at least begun part of that U-turn, when one considers closure of the Speke factory and the context of the whole corporate plan.

There may be differences among us as to how the objectives of the Ryder plan could be achieved, but one thing that we all know is that one way of not achieving it is to close the second most modern plant in the Leyland network. That is what is happening at Speke.

Some of my hon. Friends and I have met the Leyland management. I for one remain basically dissatisfied with the reasons that it has given for the proposed closure of Speke. The question of the number of sales of the TR7 has remained unanswered. I understand that shop stewards have been unable to elicit information on sales of the TR7 in the United States.

Also, why were the plans for the closure of Speke not made known at the meeting when Mr Michael Edwardes was presenting the broad lines of the corporate plan to the trade union movement? Why was the closure decision taken when the trade unions had made the strike official, and there was every likelihood of a quick return to work? Why was the decision not discussed in the car council? One of the things that we agreed on was a worker participation scheme for Leyland. Participation means the involvement of workers in their industry. Yet at no time was the question of the closure of Speke discussed in the car council. Nor were there any discussions about the broader implications of the corporate plan.

Why, also, did the management take so long to decide to adopt the next stage of the procedure in the recent dispute? It was evident that the plant was working under a procedural agreement and that had the next stage been proceeded with the issue could have been settled. Yet there was resistance by the management to take the next steps.

As a shop steward of 30 years' experience I know that the procedural agreement forms a very important part of industrial relations. In many cases it is the Bible of industrial relations. Yet here is the management refusing to take the next steps on the procedural agreement, resulting in a prolonged dispute, a further lowering of the morale of workers, 1392 and the beginning of the justification for the closure of the plant.

If the full capacity at Speke was not being reached why was other work not sent there? Obviously, there is work going from Leyland to other parts of Europe. I do not want to argue the case for Liverpool against that for other parts of Europe, or even other parts of the world, but there was an obligation on Leyland to see that additional work that was being done in Belgium was done at factories that were working under capacity. None of these decisions emanated from the workers. They are all part of management's responsibility. One very much doubts whether the reasons given by management for the closure of Speke are the real ones.

When the management was asked whether the closure had occurred because of the bad performance of the Speke work force, the company's representatives said that there was a poor record of performance. But when figures were requested, they were not available. There were merely vague statements that the work force was somehow or other responsible for the situation.

The management was also asked whether, if Speke had produced every car asked of it, it would still have been closed, and the answer was in the affirmative. Therefore, despite the tirade of abuse from the Press and the Opposition directed against the workers at a factory, it has undoubtedly been market considerations rather than anything else which have led to the present situation. The Leyland management said that Speke had in a sense been self-selected as a plant for closure.

Many people wonder whether there is not a more sinister motive behind the closure. Let me quote one headline from the Runcorn Guardian. Plant closure manufactured by bosses". The writer claims to have evidence in leaked documents showing top secret sales figures appearing to indicate market resistance to buying the TR7, or "the Bullet" as it is called. The figures show that even after a month's strike and lost production, when not a single car was produced, there were still 2,263 "Bullets" in the showrooms. The argument is that if production had continued at its normal rate of 12.5 cars per hour on a 17-hour 1393 shift, by now the market would be swamped. That situation was not the responsibility of the Speke factory workers.

Accusations have been made about poor performance and disputes at Speke, but figures issued by the National Enterprise Board in 1976 show that in the last five or six years Speke has been more affected by lay-offs than by disputes. In other words, the situation over the last five or six years has been reasonably peaceful.

That position is borne out by the National Enterprise Board report. It shows that from October to March 1975 349,000 man-hours were lost through disputes as against 629,610 through lay-offs. In the period to April 1975, 117,366 man-hours were lost through disputes and 500,093 through lay-offs. In the period October 1975 to May 1976, 151,492 man-hours were lost through disputes and 250,380 through lay-offs. The Speke plant, even prior to the recent dispute, had a lay-off of six weeks, which meant that it had been idle for six months.

On every occasion the media and the Opposition have hit out at the workers. They have made no constructive proposals. As has been evident from Day 1 of the Leyland rescue, they have been opposed to the concept of a British car industry. Many of us believe that the decision to close Speke could lead to further closures and the breaking up of British Leyland. The attacks on Leyland and its work force, especially by the Opposition and sections of the media, will be welcomed by Tokyo, Bonn and other car manufacturing capitals. They do nothing for Leyland workers, except to undermine them and the British car industry. This is at a time when we are talking about the major problem of the penetration of the United Kingdom market by Japanese and other car manufacturers.

When the car industry came to Merseyside it was hailed as a turning point for the area's industrial future. Some of my hon. Friends who were members of the city council will recall that when Fords, and then Standard Triumph, came to Liverpool those developments were in accordance with the general policy of the then Government, namely, that regions with areas of declining industry and 1394 declining job opportunities should be the places where there should be industrial development.

I feel that we have reached another turning point for Merseyside. It is a turning point for the northern regions as well as Merseyside. It appears to be one of the arguments used by the Leyland board and the car industry in general that the industry should be located in geographical centres. If that is to be the industry's policy, the future of the northern regions will be grim.

I do not believe that the decision will stop at Speke No. 2, and neither do many of my hon. Friends. The decision will be divisive. It will turn worker against worker. I believe that in many ways that is intended. It will turn area against area. That will be done in pursuing a policy of reducing employment in the industry. That is not the policy to be pursued by a Labour Government.

The House has the responsibility to examine in the closest possible detail all aspects of Leyland's decisions. Before any decision is made by the Government on the Speke No. 2 plant or on the corporate plan generally, the Government must go through every aspect of the plan with a fine-toothed comb, with a view to meeting two objectives. One objective is to ensure that the social consequences of those decisions are taken fully into account by the Government. The second objective is to see that British Leyland is not starting on the road to break-up and, therefore, missing the opportunities that are presented in fulfilling the objectives of a free-based British car industry.

I hope that even at this late stage the Minister will be able to say that the Government will do just that and keep in line with the policies and ideologies upon which the Government were elected.

§ The Under-Secretary of State for Industry (Mr. Les Huckfield)

I am grateful to my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) for giving me an opportunity to speak on an issue which has understandably raised a great deal of concern. That is because the proposal to close Speke No. 2 assembly plant has some wide-ranging implications for British Leyland and for Merseyside. As my hon. Friend has 1395 said, I am sure that on both sides of the House we all wish that the British Leyland management did not need to take difficult decisions of this sort.

That need is dictated primarily by the state of British Leyland, which, as the chairman of the company, Mr. Michael Edwardes, made clear in his speech to employees on 1st February, is critical. The company has made no secret of the fact that its performance has been unsatisfactory. That is reflected in the fall in British Leyland's market share from 33 per cent. to less than 25 per cent. last year, and to 21 per cent. in January.

I am glad to note that provisional indications are that British Leyland's market share for February has shown some signs of improvement. Nevertheless, one thing is clear: the company needs a period of sustained production accompanied by a major effort to reduce costs so that British Leyland can compete with other European manufacturers both at home and in export markets. This means adjusting capacity and manpower in line with realistic market prospects, taking account of the impossibility of recovering market share overnight and of the fact that British Leyland still has power and manpower levels geared to production on the pre-Ryder scale.

If the company fails to adjust capacity now and its market share continues to decline, the result will be that many more jobs will be lost than those affected by the closure of Speke 2. The collapse of the company would have unthinkable consequences for employment in this country. Not only is British Leyland dirt country's seventh largest employer; thousands of wage earners in supplier industries are dependent on the survival of the company. As Michael Edwardes has made clear, without realistic measures to improve production and reduce costs, that survival must be in doubt.

This is the task facing the management at British Leyland. It is the management which, in consultation with the National Enterprise Board, must decide on the specific measures necessary to restore the company's fortunes. The Government have accepted the view of the British Leyland Board and the National Enterprise Board that British Leyland's capacity, including manpower, must be brought into line with market prospects, but the 1396 Government cannot set themselves up as an alternative manager of the company, so that means to achieve this must be left for British Leyland management to decide in consultation with the National Enterprise Board.

As my right hon. Friend the Prime Minister said in the House on 31st January, the Government have full confidence in the new management at British Leyland and are committed to supporting Michael Edwardes in his attempt to improve the company's performance. A start has been made. As hon Members may know, steps have been taken to restructure the company, and at the meeting at Kenilworth on 1st February Michael Edwardes secured the backing of employees for his proposals. At the same time the British Leyland board has submitted to the National Enterprise Board its corporate plan for 1978 outlining its proposals for a future strategy for the company.

It would, however, be difficult for the Government to justify both to this House and to the public at large further investment in British Leyland, especially on the scale that British Leyland is likely to need, unless the management can clearly demonstrate that firm steps are being taken to tackle the company's problems. Those steps may be unpleasant and, in the case of the proposal to close Speke 2, they have been made all the more difficult to take by the fact that the plant is located on Merseyside.

I fully understand what my hon. Friend said about the situation on Merseyside. It was because of our concern for Merseyside that we designated it a special development area in August 1974. This means that Merseyside gets regional development grants, Government factories, regional selective assistance, removal grants and grants to encourage the movement of offices and other service industries. In fact, Merseyside is among those places which are given the highest priority in the steering of new investment.

We estimate that Merseyside received about £302 million of regional financial assistance over the five years 1972–73 to 1976–77. The assistance under Section 7 of the Industry Act has safeguarded or created 40,000 jobs since 1972.

As my hon. Friend realises, we had a report from the NEB on investment 1397 potential in the North-East and North-West. That report made recommendations particularly in favour of widening the differential in regional selective financial assistance in favour of special development areas. The Government also increased the maximum rent-free periods on Government factories to five years.

The role of the NEB has been strengthened following the establishment of an NEB regional board for the North-West. We have commissioned a firm of consultants to identify the types of business most likely to prosper close to the port of Liverpool. The Liverpool partnership area, which Speke immediately adjoins, will benefit from increased resources under the Department of the Environment's urban programme, and the greater powers to assist industry given to them under the Inner Urban Areas Bill. I could give my hon. Friend more details about my Department's small firms information centre in Liverpool and about assistance under Section 8 of the Industry Act.

Under the Hardman decisions on the dispersal of Government work from London, Merseyside probably comes out as one of the best areas. The bulk of the 4,000 dispersals to the North-West, nearly 3,000 posts, will go to Merseyside. The Hardman dispersals will inevitably take some time to carry out, but I am sure that hon. Members will welcome these additional office jobs and appreciate that this shows recognition of the serious problem.

There are achievements on the plus side. I shall name but a few. Vauxhall has recruited 2,000 workers at Ellesmere Port. The Co-operative Bank will provide 600 new jobs at hard-hit Skelmersdale. Cross International has announced a £2½ million investment programme with 200 jobs to come over four years at Knowsley. YKK is recruiting at Run- 1398 corn. Tate & Lyle is investing heavily. Shell Chemicals has planning permission for a £50 million plant at Stanlow. These are a few of the projects in Merseyside.

In co-operation with the Manpower Services Commission, the Government have introduced a wide range of special schemes designed specifically to alleviate increased unemployment. They include the job creation and work experience programmes, the youth employment subsidy, the job release scheme, the temporary employment subsidy and the small firms employment subsidy.

It is estimated that over 41,000 persons, many of them young people, have been assisted by these measures in Merseyside. The temporary employment subsidy has been of particular benefit—with applications approved in respect of over 16,000 workers in the area.

It is difficult to satisfy my hon. Friend in a debate such as this. I fully appreciate the statement that he has made on behalf of his constituents. I and the Department understand the problems of Merseyside.

There are plans for a new 100-place skillcentre to be established in the Wirral and for a smaller 60-place centre for adults and young people in Liverpool itself. Both of these should be in operation by 1980–1981.

It is, as I have already made clear, for British Leyland management to take the difficult decisions necessary for the company's survival and, in this particular case, to decide whether to proceed with the closure after—