HC Deb 11 February 1981 vol 998 cc863-7
Mr. Allan Stewart (Renfrewshire, East)

(by private notice) asked the Secretary of State for Scotland whether he will make a statement about today's announcement that the Talbot factory at Linwood will be closed in June?

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)

I am replying on behalf of my right hon. Friend the Secretary of State for Scotland, who has had to remain in Brussels to represent the Scottish interest in the vitally important discussions on the common fisheries policy which are now in train.

Mr. Norman Buchan (Renfrewshire, West)

On a point of order, Mr. Speaker. While there is some understanding of the problem facing the Secretary of State for Scotland over his absence in Brussels, there is none whatsoever when the Secretary of State for Industry is here, and could answer but does not. It is a disgrace.

Mr. Speaker

The hon. Gentleman knows that I do not decide who answers questions.

Mr. Fletcher

As you will know, Mr. Speaker, the question was addressed to my right hon. Friend.

I very much regret the loss of jobs to West Central Scotland which will follow the closure of Linwood announced by the Talbot Motor Company earlier today. My right hon. Friends the Secretary of State for Scotland and the Secretary of State for Industry and I have been in close touch with the top management of PSA/Citroen and Talbot about future manufacturing operations in the United Kingdom, particularly at Linwood, for some time. We have explained in detail the Government assistance available for new investment projects in assisted areas, both through regional development grants and selective financial assistance under section 7 of the Industry Act. We have expressed the strong hope that PSA would maintain manufacturing in the United Kingdom to the full extent envisaged in the declaration of intent, to which the company subscribed in 1978. Despite a significant improvement in labour relations and productivity since PSA took over at Linwood, it was the company's decision, against the background of very severe market competition, serious financial losses in 1979 and 1980 and the high investment costs of introducing new models, that it could not maintain production at the plant.

It emerges clearly from the company's statement today that its productive capacity in the United Kingdom considerably exceeds its present and prospective market share and that concentration of its facilities, rather than expansion, was the only realistic course open to it.

Apart from the 4,800 jobs which will be lost at Linwood itself, there will be consequences for suppliers. Linwood has, however, been operating at a low level of production for many months and the local sourcing of components is limited.

The company has, however, made it clear that it intends to maintain a substantial presence in the United Kingdom, concentrated in the Midlands. An important investment proposal to introduce another model at its Ryton, Coventry plant is at an advanced stage of planning. The company is confident of the secure future of its plants at Stoke, Dunstable and Luton. My right hon. Friend and I are considering urgently, in advance of the shutdown at Linwood by the end of this year, what measures we can realistically take to generate new employment in the area. My right hon. Friend and I shall, for this purpose, be seeking urgent discussions with the local authorities concerned, the Scottish Development Agency, the Scottish TUC and the CBI in Scotland.

Mr. Stewart

In the light of this economic catastrophe, does my hon. Friend agree that it is tragic that the 1978 agreement with PSA has proved to be so full of loopholes as to be worthless? Will my hon. Friend broaden his discussions about new jobs with all the interested parties? Does he agree with me that the existence of a skilled, responsible work force in West Central Scotland ought to be of considerable attraction to Nissan?

Mr. Fletcher

I agree with my hon. Friend. We shall broaden our discussions in every way possible, including any prospects of persuading Nissan—if it finally decides to come to the United Kingdom—to take up the facilities available at Linwood. However, my hon. Friend will know that Nissan's specification is for an 800-acre green field site. My right hon. Friends are fully aware of the contents of the agreement between the Government and PSA/Talbot. That matter has already been raised with PSA.

Mr. Bruce Millan (Glasgow, Craigton)

With no personal disrespect to the Under-Secretary, who has been left to carry the can, and even taking account of the difficulties of the Secretary of State for Scotland, it is utterly deplorable that a statement of this seriousness should not be made by a senior Minister, particularly when the Secretary of State for Industry is present on the Treasury Bench. He should be making this statement.

Does the Minister realise how disastrous today's announcement is to the West of Scotland, which has already been devastated because of the effects of Government economic and industrial policies? Will he also note that we treat with great scepticism what is said in the statement about the Government's efforts to persuade Talbot to stay in the United Kingdom, specifically at Linwood? We also note the defeatist nature of the statement. Labour Members remember that the Conservative Party voted against the Labour Government's original rescue of the Chrysler operation in the United Kingdom.

The hon. Member for Renfrewshire, East (Mr. Stewart), only last week, in a question to the Prime Minister, told us how buoyant the Scottish economy was. He should tell that to the workers in Linwood now. Does the Minister note that the agreement with Chrysler, which was taken up by Peugeot when it took over the obligations in 1978, included the most specific pledges to keep Linwood as well as the other British manufacturing plants open? If it had not been for those pledges, the considerable sums of Government money given to the company would not have been given. We expect those pledges to be kept by the company now.

Does the Minister realise the sense of bitterness that there will be among the workers at Linwood who have co-operated in every way possible with higher productivity and so on during the past few years? They now see all their hopes and efforts dashed by the statement.

Is the Minister aware that if there is any feeling in Coventry that what has been said today is optimistic for those workers I should like to disabuse them of that, because if pledges about Linwood can be broken, pledges about Coventry can also be broken? We may be seeing today the first step towards the complete withdrawal of the Talbot operation from the United Kingdom.

Finally, talk about alternative jobs in the West of Scotland is so much hot air. In Scotland, we shall not accept today's announcement. We shall fight to see it reversed.

Mr. Fletcher

That was very much a rallying call from the right hon. Member for Glasgow, Craigton (Mr. Millan), but he has said nothing constructive or positive. I agree with him that this is disastrous news for the West of Scotland. That is fully appreciated on both sides of the House. The workers of Linwood, who have been on a tightrope, not just for the past few months but for the past few years, will be deeply disappointed at the decision that has been reached.

My right hon. Friends the Secretaries of State for Scotland and Industry have been fully involved in discussions with PSA over many months. There is no justification for the right hon. Gentleman, a former Secretary of State for Scotland, to criticise my right hon. Friend the Secretary of State for deciding to remain in Brussels and conduct negotiations on behalf of the Scottish fishing industry—negotiations that may well bring benefit to Scotland—instead of coming to the House today for presentational reasons or some other gimmickry. Most people in Scotland, examining the options facing my right hon. Friend, would agree that he made the right decision by deciding to stay in Brussels today.

The right hon. Gentleman's scepticism about the negotiations with PSA about the prospects of further investment in Scotland are unjustified. I was present at the discussions, and I do not believe that any offer of Government funds would have induced PSA to make a new and substantial investment at Linwood, for the simple reason that it is suffering from over-capacity.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

In view of the calamitous nature of the statement for Scotland, surely the Minister is under obligation to tell us more about the discussions between his colleagues and the company. In particular, will he say how much public money has gone into the company, and with what strings attached, over the past few years?

Mr. Fletcher

The conversations with the company were perfectly straightforward. It was very much a matter, on our part, of ensuring that the company was fully aware of the Government financial support that would be availabe to it in the event of its deciding to make a substantial investment in a new car at Linwood. For reasons of over-capacity however, it decided that it could not proceed along those lines. As for the extent of Government funding, apart from the usual Industry Act assistance for projects, the Government have met some £60 million of losses incurred in the United Kingdom business of Chrysler.

Several Hon. Members roseߞ

Mr. Speaker

Order. Although this is an extension of Question Time, I propose to call two more hon. Members from either side before we move on.

Mr. Barry Henderson (Fife, East)

As one who has always bought Linwood-produced cars as long as they have been available, may I ask whether this tragedy is accounted for, on the one hand, by the preference of our people to buy other types of cars and, on the other, by trade union militancy over many years which seriously affected the effectiveness of the Linwood plant in the early days and disgraced Scotland's generally excellent industrial relations record? Will my hon. Friend give an assurance that PSA will not be able to frustrate the occupation of that factory by any other organisation that might be able to give a fresh, new private enterprise start?

Mr. Fletcher

The question of the future ownership of the plant will be a matter for negotiation between the company, the Government and other parties. Clearly, PSA/Talbot is suffering from the highly competitive market. On productivity, the company has told us that since it took over the management of Linwood productivity has increased by 20 per cent.

Mr. Allen Adams (Paisley)

Does not the Minister agree that the central question to which we must now address ourselves is what the Government are going to do about this problem?

Mr. Buchan

Nothing.

Mr. Adams

You are sitting there like a rabbit that has been frightened by a stoat—

Mr. Speaker

Order. I do not think that the compliment was intended for me.

Mr. Adams

I apologise, Mr. Speaker; I was referring to the Minister. I shall repeat the question. Does the Minister agree that he and the Government are behaving like Pontius Pilate—they are washing their hands and walking away? They are in no way attempting to retain the company at Linwood or to put real and meaningful pressure on the company to stay. When will the Minister start to apply real pressure?

Mr. Fletcher

The hon. Member is well behind the times. For many months my right hon. Friends and I have been discussing with the company the prospect of major investment in a new model at Linwood. We have been making it clear to the company that Government assistance would be available for that purpose. We have now reached the stage where the company has decided, because of overcapacity that it has no commercial reasons for making such investment, and has decided to withdraw.

For the future I have already indicated that my right hon. Friend and I will pursue every possible avenue to find a new company and a new industry to take over the plant at Linwood.

Mr. Albert McQuarrie (Aberdeenshire, East)

The right hon. Member for Glasgow, Craigton (Mr. Millan), in his criticism of the Government, seemed to have forgotten the serious strike record of the employees under Chrysler which fortunately improved during the time of Talbot. In view of that improved productivity, does not my hon. Friend agree that there are adequate green field areas in and around Linwood to suit the requirements of Datsun which could take over the factory and retain the labour force that is threatened with redundancy?

M. Fletcher

That would be a matter for Nissan to decide, but we shall certainly bring the point to its attention. My hon. Friend is right to refer to the fact that in previous years productivity and labour relations at Linwood were bad. I am happy to repeat what the company said in the statement today. In the past couple of years there has been a 20 per cent. improvement in productivity and a good improvement in industrial relations. That will be helpful to the Government and others in trying to find new owners for the premises.

Mr. Buchan

Is the Minister aware that for 16 years I have fought to preserve that factory and the town of Linwood? His weak acceptance of the company's decision will spell the death of the town as surely as happened in Jarrow in the 1930s. Does the Minister have any sense of the bitterness and anger that exist? Does he know that male unemployment in Strathclyde is running at 17½ per cent., and that the closure will push that to 19 or 20 per cent. in the Paisley and Linwood travel-to-work area?

Does the hon. Gentleman recognise that the Government have a responsibility here because they were a co-signatory of the declaration of intent, although I admit that that did not come from the Conservative side. I have heard too much from the Conservatives indicating a willingness to destroy the factory. However, there was Government involvement in the declaration of intent, and that promised a continuation of manufacturing at Linwood. When in the name of God will the Government face their responsibility and do something?

Mr. Fletcher

We have been facing those responsibilities since we inherited the British economy from the Labour Government in May 1979. Let me remind the hon. Gentleman that the first company to go into the Linwood factory was Rootes, and it went bankrupt. The second was Chrysler. It has reduced its international business substantially. Now Talbot is pulling out. That is some measure of the difficulties of producing cars successfully at that plant. Across the river is the former John Brown yard. When John Brown pulled out, UCS took over. When UCS left, Marathon took over. Therefore, that yard had three lives as well. However, a fourth was added last year when we were able to negotiate the French company UIE into the yard. These matters are relevant in looking at the efforts of both Governments to find new owners for these businesses when, unhappily, a decision of this nature is made.

Mr. Gordon Wilson (Dundee, East)

On a point of order, Mr. Speaker. May I ask you to reconsider your earlier decision, which I know must be final if you do not reconsider it, about the contraction of Question Time—

Mr. Speaker

Order. I allowed extra time for this private notice question. If the hon. Gentleman had watched the clock as I did he would have seen that I allowed 16 minutes. Normally I allow 10 minutes, or less, on a private notice question, which is an extension of Question Time.

Mr. Donald Stewart (Western Isles)

On a point of Order, Mr. Speaker. This matter, which is of desperate concern for Scottish employment, and which also reflects on employment in other parts of Britain, should not have been the subject of a private notice question. There should have been a statement from a Government Minister.

Mr. Speaker

The right hon. Gentleman knows that he has not raised a point of order but has expressed his point of view.