British Leyland

HC Deb 29 October 1981 vol 10 cc1080-96

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

9.15 pm

Mr. Stanley Orme (Salford, West): I wish to discuss on the Adjournment the situation at British Leyland and the threat that that poses to British manufacturing industry and our economy.

After what the Opposition said in the House this afternoon, we regret very much that the Secretary of State for Industry has not seen fit to make a statement here this evening. Nevertheless, we are glad to see him present for this debate. We hope that he will be able to answer some of the pertinent questions about the dispute and to say, in particular, what action the Government will take to alleviate the situation.

I thank my hon. Friend the Member for Bishop Auckland (Mr. Foster) for withdrawing his Adjournment debate so that this debate could take place.

Mr. Joseph Dean (Leeds, West): When between 4,000 and 5,000 car workers lobbied the House of Commons last week because of the threat to the future of their industry, does not my right hon. Friend think that it is disgraceful that in this so-called bastion of democracy, and bearing in mind the fight that he put up earlier today, he has had to resort to asking one of our Back-Bench colleagues to give up an Adjournment debate so that this issue, which is of such importance, could be raised? Is it any wonder that some people outside this House decide that democracy itself is failing them?

Mr. Orme: I take that point. Now, however, we must make the best of this debate from our point of view. We must put to the Government some of the crucial issues on which we want answers.

As far as British Leyland is concerned, we are now at four minutes to midnight. We are within hours of the start of what would be one of the largest industrial disputes in Britain's recent history. I think that the Secretary of State is aware that the dispute is to start at midnight on Saturday and that on Sunday 1 November the first of the shifts will stop work. And this when there are about 3 million unemployed. In their inaction and ineptitude, the Government are not prepared to take any direct action.

I have an editorial from The Engineer, of 22 October, a monthly magazine for middle and senior management. It says:

"In another industry it might have worked. But at BL, 3.8 per cent. after three years of sub-inflation awards has reawakened the aggressive anger of the car workers. The Engineer warned a month ago that anything less than 4 per cent. would be insulting. The insult is now on the table and the value of employment by Britain's single most important manufacturer and exporter has dropped to the point where the reward for unemployment is worth within £10 a week as much as a pay packet. Even with nearly 3 million people seeking work, labour has a price below which it is not prepared to go. Sir Michael's advisers are better placed than most to measure that price, so it is perturbing that he should get it so badly wrong. Had the price of steel changed to the point where he had to alter his strategy, that change would be made."

Well it can be made in wages.

We referred this afternoon to ACAS and the negotiations that have taken place today. I shall quote again, because it bears repeating, the statement made by ACAS:

"The separate exploratory discussions which ACAS has held with the trade unions and senior management of BL cars have not today produced any basis for reconciliation of the differences which exist between the parties. ACAS officials remain ready to assist in any way they can and will be keeping in touch with both sides."

I have spoken to some of the senior negotiators of the trade unions tonight, and they tell me that, as they see the situation, the BL management has firmly slammed the door, that ACAS has exhausted its procedures, and that so far as they are aware no negotiations are taking place at present. If they are, perhaps the Secretary of State will tell the House the basis of those negotiations.

We have a right to ask the Government what action they propose to take. British Leyland is a publicly owned company, and the responsibility for its future lies with this House and the Government, not with Sir Michael Edwardes and the BL board. It is therefore vital that we discuss this matter.

I want to raise some of the issues with the Secretary of State, although not in a negotiating sense, because in my opinion the two sides are not far apart. It would be a disaster to allow this dispute to go on when there are means of resolving it.

We know that the company offered 3.8 per cent. That was rejected by the unions because it was on the grade rates. They felt that after 5 per cent., 5 per cent. and 6.8 per cent., they were entitled to a larger increase. Management said that it had some proposals on the bonus scheme. Eventually management came up with some proposals which would have given the minimum—a floor of 3.8 per cent. on the bonus scheme which no one would go below. Examination shows that only a small minority of workers would be involved in that floor.

The trade unions said "We have this bonus scheme. We are not parties to the way in which it is operated. It has caused a great deal of dissatisfaction within the company. However, if we have the bonus scheme and if the company would consolidate some, if not all, of the current bonus scheme on to the grade rates—in other words, transfer it over, and other benefits would arise because it would be on the grade rates—that would be a basis for negotiation." However, the management flatly refuses to take that action.

I should like to know whether the Secretary of State has been involved throughout the negotiations, because he made an unfortunate statement outside the conference hall at the Conservative Party conference in Blackpool. He said: I am supporting Michael Edwardes and the BL board right down the line. With those words he closed a crucial door which as Secretary of State for Industry he should have kept open. I ask the right hon. Gentleman, in the interests of the industry, to reassume his impartial position, look at the issues on their merits and, as a consequence, help to get the negotiations started again.

I was referring to the problem of consolidation. That would mean a transfer. It would also mean some new money—not entirely all new money, but some new money. We shall not get out of this dispute without some new money.

Mr. George Gardiner (Reigate): Whose money?

Mr. Orme: That is a very good question. It is the British people's money, and it has been put in jeopardy by the intransigence of the management of British Leyland and the Government. We have £1,000 million of taxpayers' money invested in British Leyland. We have the promise that the company will break even in 1983–84. We have the success of the Metro. We have the new Acclaim in production. Here is a chance for us to climb out of the pit. Now is the chance for the British taxpayers to get some return on their investment. If the company goes into liquidation, so does the money of the British taxpayers, and the Government, who pay lip service to the protection of taxpayers and to investing in publicly owned industries, should now be considering seriously what action they can and should take.

Mr. Dennis Skinner (Bolsover): My right hon. Friend will recall that this Government tried a similar exercise in the early part of the year with another group of workers, namely, the miners. As a result of their bluff being called—we see the same principle today: it is a game of bluff, with the Government trying to outwit the workers—in that instance although they vowed and declared that the pits would close, because the workers stood their ground, as there is no doubt they will in this case, within a few days the Government had to find £40 million. They do not need £40 million to settle this one.

Mr. Orme: I accept what my hon. Friend says, and tonight's debate is about how we move from the present position. I shall press the Secretary of State very hard, because it is his responsibility to see that negotiations start tomorrow and that they are open negotiations. What is more, it would be very helpful if the right hon. Gentleman chaired a meeting of the British Leyland board and the trade unions, with all the facts and figures on the table, so that the matter could be discussed afresh.

Having talked to the trade union leaders concerned throughout this week, I know their concern about the threatened dispute and I know that they do not want it to take place. The people working in British Leyland do not want it, but the vast majority say that enough is enough. Therefore, they have a right to ask for some action.

It is a cause of great anxiety to many of us that below the surface certain comments are being made about liquidation and the selling off of vital parts of the company. It is acknowledged generally—Sir Michael Edwardes himself acknowledged it on the "Nationwide" programme last night—that the letter containing the threat of no redundancy payments was regrettable. Sir Michael went as near as he could to make an apology for the terms of that letter. But it is not sufficient to withdraw the letter. It is now important for Sir Michael Edwardes—and if he will not do it, someone else should—to get the negotiations going again.

A statement that I received from a merchant bank source recently gave the following quotation: Most likely the 3.8 per cent. wage offer will be accepted. If it is not and the company is broken up, its component parts may be quite successful and readily adapted to alternative activities. That quotation was by Professor Alan Walters, who is the special economic adviser to the Prime Minister. Are the Government sitting back so that the company can be broken up? We are entitled to know whether Professor Walters wants to see a successful car factory in one unit, such as British Leyland.

The sacrifices which the workers have gone through are sufficient for the company to survive and for the Secretary of State to tell the House what steps he will take. We cannot afford to sit back and wait until the disaster occurs and then hope that everything will be put back. The effects of the threatened dispute on the company are already sufficient in themselves to make people aware of the problems if the dispute took place.

Most hon. Members will have seen the article in The Times earlier this week by Sir Richard Dobson, a former chairman of British Leyland. He stated: I would say to the board of BL and to the politicians behind them, please think once more … Do not mistake rigidity for courage; posterity will not thank you if the ship sinks for the lack of a ha'porth of tar.

The general press comment has been unfavourable to British Leyland. People are now beginning to realise that Sir Michael Edwardes and the board have got it wrong. I fail to see why we could not have had meaningful negotiations. All week we have tried to help so that the negotiations could be started. We have not tried to exploit the situation politically. No one can give me evidence of that. We are trying to save the company because we are talking about half a million jobs in the British economy, skilled people who, it they are thrown out of work, will probably never return as there will be no such work available.

We are talking about areas in the United Kingdom—the Midlands and elsewhere—which are dependent on the motor industry. We are also talking about component manufacturers who employ hundreds of thousands of workers. Those manufacturers are in the private sector, not the public sector. Many of them are almost dependent on a company of the size and capacity of British Leyland for their survival. Therefore, the knock-on effect of the closure of that company would affect hundreds of thousands of families up and down the country. How can we stand that on top of unemployment which is now over 3 million?

The Secretary of State must act and take up his responsibility as Secretary of State. We want him to initiate negotiations tomorrow. We want to see the strike averted. In my opinion, it can be averted. There is no need for that strike. Perhaps some Conservative Members hope that the strike will take place, but I do not believe that the vast majority of hon. Members want the strike to take place. Many Conservative Members are seriously worried. I have heard them speak on the radio and have seen them quoted in the press. They have a right to be afraid of what might happen to their constituents. The problem will exist not only in Labour constituencies but throughout the country.

I hope that the Secretary of State will answer the points that I have made. This is a major debate of great importance. I hope that we can avert the dispute. However, fresh measures and a fresh initiative are needed. Both sides must get round the negotiating table if a settlement is to be reached.

Mr. Douglas Hogg (Grantham): Hot air.

Mr. Orme: The hon. Gentleman may say that while he leans back, but we are talking about half a million jobs in the British economy.

Having put those points to the Secretary of State, I ask him to make a positive response.

9.36 pm

The Secretary of State for Industry (Mr. Patrick Jenkin): I hope that it will be considered helpful if I intervene now in the debate. However, I am not sure how much I shall be able to add to the information that is available to the House.

The Government are well aware of the grave concern about the danger that looms over British Leyland, which has been most eloquently expressed by the right hon. Member for Salford, West (Mr. Orme) and which is felt both inside and outside the House. The Government's position has been made clear by my right hon. Friend the Prime Minister, who answered questions on this subject on Tuesday and again this afternoon. The conduct of the negotiations over pay—for pay is at the heart of the dispute—is a matter for the management of the company and the unions involved. It is not, and cannot be, a matter for the Government—[Interruption.] I should like to develop that point, because it is at the heart of the issue.

The management of the company is that appointed by the last Labour Government to manage British Leyland and, if possible, to restore the company to viability. Our predecessors backed the board with substantial sums of public money. They allocated to it about £870 million of taxpayers' money. As the House will remember, my immediate predecessor—the present Secretary of State for Education and Science—announced in January a further sum by way of support to British Leyland, amounting to —990 million. Part of that sum has already been made available and there is provision for the rest—about £540 million—to be made available to the company during the rest of 1981–82 and 1982–83.

Confirmation that that sum will be available will depend, as in the past, on the company's submitting its annual corporate plan to the Government, embodying proposals consistent with the planned path to viability. The company has been making huge losses, which are continuing at the rate of about £500 million in the current year. But, thanks to very effective management, and with the full co-operation of the work force—Sir Michael Edwardes paid tribute to that on television last night—the groundwork has been laid for recovery and the results are beginning to show. The right hon. Member for Salford, West mentioned some of them.

As the House knows, there are now new and, one hopes, very successful models of cars on the market. They have appeared on time and within planned costs. That in itself is a striking change from the recent past of the company. BL's market share has not only stopped falling, but is now rising, despite the most difficult trading environment for some decades. The productivity of the company is rising, despite the fact that the overall market has been falling. I know, because he has told me so, that the last thing that Sir Michael wants is the success for which he and all his work force have striven to be dashed from his hands. His reputation as a manager depends on his achievements in setting BL on the road to economic viability.

Progress depends crucially—again as Sir Michael said on television last night—on the company keeping its costs firmly under control. Wage costs must be part of that process. If costs rise outside the limits of the corporate plan, that plan ceases to be viable and cannot be proceeded with.

Mr. Skinner: Sir Michael Edwardes got a 38 per cent. pay rise this year.

Mr. Clinton Davis (Hackney, Central) rose—

Mr. Jenkin: First, I shall answer the sedentary intervention of the hon. Member for Bolsover (Mr. Skinner). I heard what he said. He has a clear and unmistakable voice.

The auditors of BL are prepared to confirm that the average annual percentage compound rise in the period of Sir Michael's chairmanship of the company has been about 5 per cent. a year—[Interruption.] That is the cost to BL of his emoluments and pension.

Mr. Clinton Davis rose—

Mr. Jenkin: As I said, if costs rise outside the limits of the corporate plan, it ceases to be viable and cannot be proceeded with. It is against that background that the present dispute has to be seen.

The view of the board of BL has been made clear. It has said that if effective and financially damaging strike action takes place at BL, the board will have no option but to consult the Government on the steps that will be needed to liquidate those parts of the business that are prevented from working. That stage has not yet been reached.

Mr. Clinton Davis rose—

Mr. Jenkin: I hope that the hon. Gentleman will forgive me if I do not give way. I think that the House wishes to hear what I have to say. Hon. Members were asking loudly enough this afternoon.

Strenuous efforts have been made by both sides to find a solution. The right hon. Member for Salford, West said that he thought that the unions were very anxious to find a solution, and I believe that that is true. I understand that the separate exploratory discussions that ACAS has held with trade unions and senior management of BL today have not produced any basis for reconciling the differences between the two parties. However, ACAS officials remain ready to assist in any way they can, and they remain in close touch with both sides. At this stage, therefore, I do not believe that it would be helpful to add to what my right hon. Friend the Prime Minister said in answering questions on this aspect on Tuesday and this afternoon.

The right hon. Member for Salford West asked whether we wanted the company to survive. I go further: I want BL to succeed. I fully share his view that it would be a disaster for BL, a disaster for the industry and employment—not only in the West Midlands, but far beyond—and a disaster for the entire country if BL or any substantial part of it were forced by industrial action to close.

I cannot put the point more clearly than it was put by one of my predecessors, the right hon. Member for Chesterfield (Mr. Varley) when he was Secretary of State for Industry. He said: I want all workers at Leyland, including those on unofficial strike today,"— as some of them were— to be quite clear that their own future employment and the future of their company is now in their hands. They can kill it or they can save it. They will have no one else to blame or to thank."—[Official Report, 2 March 1977; Vol. 927, c. 391.]

The right hon. Member for Salford, West has made a direct plea to me to intervene. In the Government's view that would not be helpful, and it would be quite inconsistent with the responsibilities and duties imposed upon the board of BL by the Government of which he was a member. This point was put clearly by the right hon. Member for Cardiff, South-East (Mr. Callaghan), who as Prime Minister said: A new leader for the company has been appointed. He must be supported. When he chooses to follow any path, we cannot tell him that he should do something else. If we put him there, we must back him."—[Official Report, 31 January 1978; Vol.943, c. 240.] That is precisely the position that I am in today, and it is the position of the Government. Of course, we must all hope that those who at present earn their living, whether as managers or members of the BL work force, will be able to settle their differences in time to avert the disaster that will otherwise assuredly befall them.

Mr. Clinton Davis: How does the right hon. Gentleman equate the Government's intervention in buying off the miners' dispute with their refusal to intervene in this instance?

Mr. Jenkin: The answer can be given clearly by referring to what the right hon. Member for Salford, West said. He said this was a public sector company, but he will know that although a substantial proportion of the shares are owned by the Government, both our predecessors and ourselves regard this as a private sector company. Indeed, the responsibilities conferred upon the board of a Companies Act company, which is what BL is, are precisely as set out by the right hon. Member for Cardiff, South-East. I quote his words again, because they are absolutely clear. He said of the leader of the company:

"When he chooses to follow any path, we cannot tell him that he should do something else. If we put him there, we must back him."

The Government are backing British Leyland to the tune of £990 million. When this dispute is settled, the balance of the money is there to become available on the submission of the corporate plan. We must all hope and pray that that is what happens.—[HON. MEMBERS: "Resign."]

9.48 pm

Mr. Derek Foster (Bishop Auckland): This is a crucial debate. I am only surprised that the Secretary of State took so long to come to the House and make any kind of statement.

Between 500,000 and 750,000 jobs are at stake. If parts of this company are liquidated, the whole of the West Midlands will be devastated. Many Conservative Members will not return to this House if that happens, and they know it. I wonder why they are not urging the Government to intervene at this stage to try to save the situation.

If parts of the company are liquidated, the repercussions will be country wide. They will certainly be felt in the North-East and in my constituency, because Eaton Axles in Newton Aycliffe and Tolwood Multifasteners do a lot of work for British Leyland. My constituents will suffer as a result of the Government's inactivity. It certainly looks as though they intend to do nothing and that they are trying to wash their hands of this whole dispute. The Prime Minister boasted yesterday of her flexibility, but here is another instance of non-intervention. Yesterday, she boasted of her intervention, but this evening the Secretary of State comes to the Dispatch Box and refuses to intervene.

Had I been allowed to move the Adjournment tonight, I should have raised the case of Chamberlain Phipps in Bishop Auckland. It is odd that the managing director of that company is a graduate of the Sir Michael Edwardes's school of charm. He boasts, too, about the art of brinkmanship. As a result of his brinkmanship, 43 people in his company—which has only 100 employees—were sacked for taking one day's industrial action. In the eight years of that company's life 43 people were sacked through sheer mismanagement of an industrial dispute. We are talking about exactly the same thing this evening.

The people who were sacked from that company were unable to claim unemployment benefit or supplementary benefit for themselves. When they tried to claim supplementary benefit for their families, it was docked by £12 a week. Many of them underwent great hardship. A man with six children received £22 a week to keep them and his wife. Another man received £9 to keep his wife for three weeks. That is the browbeating of work forces that is going on under the Government. We should like to make certain that it cannot happen.

Oddly enough, that managing director also sent his work force a letter—a threatening one—which said that the employees would be sacked if they took one day's industrial action. That sort of approach to industrial relations is sweeping the country. People have the false idea that brinkmanship can work.

I warn the Government to ensure that this goes no further. They will reap a bitter harvest if they try to browbeat the working people of Britain in that way. Then the situation will explode in their faces exactly as it has this evening. I plead with the Secretary of State to intervene and bring the two parties back to the negotiating table and let us have an end to this dispute.

9.53 pm

Mr. Peter Bottomley (Woolwich, West): An encouraging sign in the debate is that so far there have been no attacks on the trade unions. Many of the employees of British Leyland believe that a strike is the answer to what they consider to be too low a pay offer.

The question that the House needs to face—following the line of the right hon. Member for Salford, West (Mr. Orme) that this is not the place for negotiation—is whether it is right to put pressure on the management of British Leyland or the Government to increase the offer. I have not heard figures from the Opposition spokesman about the average earnings of BL employees. I believe that they are about the same as those of people in other car plants around Britain. [HON. MEMBERS: "Not true."] The figures would have been useful. If, as I believe, the average earnings are generally within pounds of each other—which I think the hon. Member for Workington (Mr. Campbell-Savours) has admitted—the question is whether British Leyland can afford another increase. It is no good considering more activity or intervention by the Government without being clear whether the Opposition or the unions are asking for extra money through the Government from other businesses.

It is also incumbent on us all to consider what is being asked for. If the Opposition are suggesting that the extra percentage of basic pay should be, say, 5 per cent. instead of 3.8 per cent.—we are told that the gap is narrow but not how narrow—if the argument is that an extra 1 per cent. or 2 per cent. on the offer would be acceptable, the House must consider whether such an increase in a company requiring vast sums of taxpayers' money is justified. Then, if 5 per cent. is justified for a company that still needs substantial financial support from the Government, how much will be argued for in profitable companies? Again, if companies that are profitable but are not increasing their productivity or competitiveness and output by more than the 5 or 10 per cent. that would therefore seem sensible for a profit-making company have higher pay increases, what pay increases will be looked for in the public sector, teaching, the hospital service and throughout the economy?

In the past two years we have witnessed a decline in industrial production and nominal earnings increases of 50 per cent. or more. In the next year, presumably, it will be more. We have seen a vast increase in unemployment, not solely because of nominal pay increases but in large part because of agreements made by employers and trade unions. I do not argue that we should solely blame trade unions for taking what they are offered or what they can force out of employers. We need a basic degree of realism.

It is accepted that this is not the place for negotiation, but it is the place to put forward the public interest. It is in the public interest that the general level of pay increases in the forthcoming year should be kept down. Those pay increases will be nominal and not real, because we are not producing extra throughout the country to justify, or even make possible, an increase in the real standard of living. We are talking of artificial pay increases anyway. If we are talking about the level of artificial pay increases and we are concerned about the pensioner and people bringing up dependent children and all the other things that we want to do with real output, we should ask "If the pay increase for a loss-making company is more than 3.8 per cent. on basic rates, what about the rest of us?"

The Government announced that they were thinking of a basic 4 per cent. cash limit in the public sector. We should have done the same for ourselves at the beginning of the pay round, so that we were not open to snide jeers from the Opposition Bench below the Gangway.

Mr. D. N. Campbell-Savours (Workington): Will the hon. Gentleman give way?

Mr. Bottomley: Not at the moment.

We should be willing to set an example. Even more than that, whether in the Labour Party or on the Government Back Benches, we should all be prepared to admit that the argument about more or less than 3.8 per cent. is artificial, because we have not even earned 3.8 per cent. extra on basic rates. I am prepared to give way to the hon. Member for Workington if he will answer my earlier question about the differences in average earnings among BL, Ford, Talbot and so on.

Mr. Campbell-Savours: The hon. Gentleman misses the point. It is not what the wage settlement costs. It is the cost to the industry if the dispute goes ahead. That is proved by the steel strike. According to Mr. MacGregor, the decision to take industrial action cost hundreds of millions of pounds. Will that happen again? The hon. Gentleman should consider what it will cost the country.

Mr. Bottomley: I gave way to the hon. Gentleman on one understanding and he made a different point. If he will keep quiet for a moment, I will deal with the point he mentioned. My sole aim was to make the public interest case.

There has been no argument that the cost to the nation of artificial pay increases of 3.8 per cent. is justified. The cost to the nation of the influence of a higher basic settlement per loss-making company is far greater than the Labour Party has been willing to admit.

We may not be talking about comparability. We are certainly talking about a grave disadvantage to those now in work who may lose their jobs, to those out of work at the moment and to the whole range of public services that most of us are trying to protect. We hope to achieve a situation that will enable us to build on those services. It would be highly irresponsible of the Government to offer new money to British Leyland to pay for an artificial pay increase.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

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

Mr. Bottomley: I fully understand that British Leyland employees desire larger pay increases. Arguments this week that British Leyland should get extra money will be followed, as hon. Members said, by calls for extra money for the miners, followed by other such calls in a week's time for another group. Eventually we shall be led into a vicious spiral.

I would take more seriously the special pleading for a case like British Leyland if the trade union movement as a whole, through the TUC or in another way, were willing to say a year in advance who were to be the special cases during a 12-month period. What is clearly wrong and inappropriate is to find a special case each week and month.

The money being put into British Leyland is being put in by us as a whole. Other car workers, people in other industries, retired people and the whole community put money in. One union official said that one of the justifications for an extra increase was that the number of cars produced per man by British Leyland was vastly higher than it was a year ago. That is the kind of increase that should be paid for by bonuses and incentives. It is not justication for a substantially higher pay increase across the board.

Until British Leyland can get into the position of a company like Ford, of producing profits and getting the right level of output across the whole range of vehicles, there is no justification for extra pay. The public interest demands that there should be a better case than saying that, because workers are going on strike, more public money must be paid. If that happens we are all lost.

Several Hon. Members rose—

Mr. Speaker: I hope that we can have brief speeches, because the wind-up is proposed for 10.20 pm.

10.3 pm

Mr. David Winnick (Walsall, North): It would have been unthinkable if the House had prorogued tomorrow without having a debate on this very important issue. I praise my hon. Friend the Member for Bishop Auckland (Mr. Foster), who has provided the time to enable us to debate this important issue. It is absolutely disgraceful that the Secretary of State for Industry was not willing to intervene earlier on.

Let there be no doubt about the effect of any BL closure on the East Midlands. Registered unemployment in the East Midlands is now over 15 per cent. In my local travel-to-work area it is over 17 per cent., compared with less than 6 per cent. in May 1979. There can be no way whatsoever for British Leyland to be closed down. That would turn the West Midlands into an outright industrial wasteland.

It is important to recognise that the matter affects not only those directly employed by British Leyland, for example, in Coventry and Birmingham, but many others. In my constituency and nearby—the Black Country areas of the West Midlands—much work is done for British Leyland—contract work, sub—contract work, component manufacturing and so on. A closure of British Leyland would have a devastating effect throughout the West Midlands. There can be no doubt about that.

Mr. Reginald Freeson (Brent, East): Will my hon. Friend bear in mind that it goes far wider than that and will affect places as far away as London? The largest single ratepayer in my constituency is largely dependent upon the success of British Leyland. If BL goes, a large chunk of employment in the so-called prosperous Greater London area will also go.

Mr. Winnick: I take my right hon. Friend's point. The attitude adopted by the chairman of BL and his colleagues towards the unions and the work force has been unfortunate. I would describe Sir Michael's attitude as abrasive and hostile. There is a great deal of suspicion and mistrust in British Leyland plants, and a feeling that Sir Michael is doing his best to undermine the authority of the unions and representatives of the work force.

Sir Michael's latest ploy seems to be similar to one that he has adopted previously, namely, going over the heads of the unions and saying to the work force, in effect, "Do not worry about the unions, ignore them, disobey what they say and do what we suggest". This time he will find that the ploy has not worked.

A group of Labour Members from the West Midlands went to see the chairman and some of his colleagues on Monday. Sir Michael laid great emphasis on the bonus. One would imagine that it would be paid to all BL's employees, but that is not the case. I understand that it is likely to be paid to only about 5,000 of the 58,000 employees. Moreover, the bonus is complex. Far from its being easily understood, even senior managers do not understand how it will be worked out. It is wrong for the public relations machine at BL to give the impression that the bonus will be enjoyed by a majority of the work force.

The Government have laid down a norm of 4 per cent. for wage rises, and I believe that the Secretary of State for Industry and his Cabinet colleagues are encouraging Sir Michael's attitude. It is all very well for the hon. Member for Woolwich, West (Mr. Bottomley) to say that there is a shortage of money. We understand all the problems involved, but the BL work force has taken wage increases well below the rate of inflation in previous years. The current rate is over 12 per cent., yet the workers are being offered a wage rise of only 3.8 per cent.

Mr. Nicholas Lyell (Hemel Hempstead): Will the hon. Gentleman give way?

Mr. Winnick: No, I will not.

Of course one also has to bear in mind the point that we made to Sir Michael when we met him on Monday, namely, his salary increase of 38 per cent. It does not matter what the Secretary of State says about a 5 per cent. increase on the salary bill. There was a 38 per cent. increase for the chairman, and in those circumstances one can understand why the work force wants a bigger wage increase than 3.8 per cent.

Mr. Patrick Jenkin: It is important that no hon. Member should continue to spread wrong statements on this matter. I understand precisely what the hon. Gentleman is saying, and the topic has caused some misunderstanding and aggravation among the BL work force. I want to put on record again that the cost to BL of Sir Michael Edwardes's remuneration will have increased at an annual rate of 5.1 per cent. compound over the five-year period of his service, excluding early retirement arrangements. British Leyland's auditors have verified that figure.

Mr. Winnick: The Secretary of State can play with figures as much as he likes, but the work force of BL understands only too well what a substantial increase has been received by the chairman.

The Government have a direct responsibility to act to avoid a strike. The Secretary of State must not encourage Sir Michael in his obstinate attitude or encourage him to go over the heads of the unions. The right hon. Gentleman must recognise the impact that any prolonged strike in BL will have not just on the West Midlands, but throughout British industry.

My view remains that the present chairman of BL is not capable of winning back the trust and support of the work force. It would be far better if Sir Michael Edwardes went. But for the immediate moment the responsibility falls on the Secretary of State. It is his job to make sure that there are meaningful discussions between management and unions. If they were to take place before Monday, there would be every possibility that the strike would not occur. I want the Secretary of State to act in a serious way and to avoid the devastating effect of a prolonged industrial dispute at British Leyland.

10.10 pm

Mr. Les Huckfield (Nuneaton): I speak as a Member sponsored by the Transport and General Workers Union, which has the largest membership in British Leyland, and also from a constituency point of view.

It is worth bearing in mind that for the past three years the Leyland workers have accepted wage increases of 5 per cent., 5 per cent. and 6.8 per cent., and that the increase that Sir Michael. Edwardes gave himself—and it does not matter how the Secretary of State calculates it—was £38,000. One cannot get away from that. The average take-home pay, including bonus, of workers on grade rates at British Leyland is £72 a week, and that includes the vaunted bonus about which we have heard so much in the press recently.

The 3.8 per cent. on offer to those on grade rates means a pay increase of £2.25 a week. That is what the company is offering. Sir Michael Edwardes, the company chairman, is saying that after a 40 per cent. productivity increase at Longbridge the workers can have a weekly increase of only £2.25, including the bonus guarantees that we have been talking about. That is after a productivity increase of 40 per cent. at Longbridge and 30 per cent. overall. With that kind of reward, Edwardes is saying that if the worker dare strike against it they will lose their jobs. That is tantamount to withdrawing the right to strike from British Leyland workers.

What British Leyland workers have learnt is that accepting moderate wage settlements over the past three or four years simply does not guarantee their jobs. Since Sir Michael Edwardes has been chairman of the company, 70,000 workers in BL have lost their jobs.

According to the Henley forecasting center, if after this collapse Jaguar were to be bought by private interests and if Land-Rover were to be bought by private interests, no fewer than 427,000 workers, employed either by British Leyland or its suppliers, would lose their jobs. That is the calculation that the Henley forecasting center has made, even if Jaguar, Land-Rover and Unipart—the so-called profitable parts—were to be bought by other interests. If the Secretary of State does not think that it is worth intervening to save that number of jobs, when will he intervene?

The position gets even worse than that, for if British Leyland collapses we shall begin to see the accelerated pull-out from this country of the component manufacturers. If the component manufacturers leave, so also will what is left of the machine tool industry, and a good part of the engineering industry. Once they have gone there will be no need for Ford to stay in this country, there will be no need for General Motors, and there will be no need for Talbot. We have to calculate the effect that that would have on the steel industry and on all the other supplying and distributing industries.

If the Secretary of State still does not think that it is worth intervening to save all those jobs—and we could be talking about well over 1 million jobs—he should resign, because now a major chunk of Britain's industrial base is directly in the hands of the Secretary of State. If the right hon. Gentleman does not intervene on behalf of the Government, he will have deliberately forfeited a major part of our industrial base that we shall never recover. My hon. Friends and I have supported our constituents against Sir Michael Edwardes in the past, and we shall support them against him again. What they are striking for or what they may take industrial action for is the right to work in British Leyland for a living wage and a right to save the industry in which they are employed.

10.15 pm

Mr. Terry Davis (Birmingham, Stechford): The hon. Member for Woolwich, West (Mr. Bottomley) asked why those who work at British Leyland should be given an increase of 5 per cent. when the company is making losses. The answer that someone working at British Leyland would give to the hon. Gentleman is "Why should Sir Michael Edwardes have a 5.1 per cent. increase?" The losses are Sir Michael's losses as well as the losses of the other people who work at British Leyland.

Secondly, Conservative Members must understand that the country will pay whether a bigger increase is given to the employees of British Leyland or the company is closed. My right hon. Friend the Member for Salford, West (Mr. Orme) talked about the taxpayers' investment, but that is not the only issue. The country will pay because of the unemployment that will arise if British Leyland is closed.

I know that there is an argument about whether British Leyland employees would receive unemployment benefit if they lost their jobs through being involved in an industrial dispute. We have been through that in the West Midlands in recent months with Ansells. But thousands of other people will also lose their jobs in other firms if British Leyland closes. They will receive unemployment benefit and supplementary benefit. Thousands will not get jobs at British Leyland and other companies if British Leyland closes. They will also receive supplementary benefit. School leavers will not have jobs and they, too, will qualify for supplementary benefit.

Every taxpayer will lose as a result of losing the income tax that is currently paid by those who work at British Leyland. The country will lose because our balance of payments will suffer. We shall lose exports and we shall have more imports. The point is that the country will pay whatever decision is taken during the next few days or weeks.

I urge the Government not to make the mistake that has been made by Sir Michael Edwardes. He has wholly misjudged the feelings of those who work at British Leyland. The auditors may say that Sir Michael has had an increase of only 5.1 per cent. for each of the years for which he has been at British Leyland. However, he has had a massive increase this year at the time of the current negotiations. It is what people feel that matters. Those who work at British Leyland feel immense resentment at learning that Sir Michael Edwardes has had an increase amounting to thousands of pounds when they can have only an increase of 3.8 per cent. As they see it, that is what is being presented to them on the basis that they can take it or leave it.

The misjudgment was compounded by the infamous letter. That was the greatest mistake that Sir Michael Edwardes and his board could ever have made. I urge the Government not to make matters worse by underestimating the feelings of British Leyland employees about Sir Michael Edwardes.

I urge the Government to intervene and to talk to trade union representatives and directors. The Secretary of State has admitted during this short debate that he has already been talking to Sir Michael Edwardes. He referred to what Sir Michael told him. Why will the right hon. Gentleman not talk to trade union representatives in an attempt to prevent the closure of British Leyland?

At the very least, if British Leyland closes and all those who work there lose their jobs, will he make it clear that it will apply to Sir Michael Edwardes as well as to the rest?

10.19 pm

Mr. Nicholas Lyell (Hemel Hempstead): The arguments advanced by Labour Members in this debate do not hold water. They are asking the Secretary of State to intervene for one of two reasons—to take over the negotiations or to put up more money. They cannot seriously be asking him to take over the negotiations in place of one of Britain's most skilled managers, whatever they think about individual handling of the issue. That would spell disaster for the management of every independent business in the public sector that they wish to preserve.

Secondly, they call for more money to be put up at a time when the unit labour costs of Leyland, although they have improved massively, have not reached the good levels necessary to compete internationally. The notion that the Government should put up more money for a pay increase that is not justified largely because Labour Members do not like the way in which negotiations have been handled spells, once again, disaster. The third and worst argument put forward is that if this company were allowed to go to the wall it would have a disastrous effect on a large number of jobs. That is an argument that can, sooner or later, be used in any strike anywhere.

It is not a question in principle of the number of jobs. The more jobs that are involved, the more important it is that we as a nation should face up to the problem. If we pay more money simply because a large number of jobs are at issue and thus reduce the ability, whether in the mines or in Leyland, to get the right unit labour costs to compete in the long term, we shall never solve our problems.

10.20 pm

Mr. Orme: With the leave of the House, I wish to put one or two points again to the Secretary of State. This has been a short but important debate but next week we may face a major crisis in British industry. For that reason, we feel that the Secretary of State this evening has not answered the central points that we have made. He has referred—

Mr. Nicholas Baker (Dorset, North) rose

Mr. Orme: I have only a couple of minutes. I shall not give way.

The right hon. Gentleman has referred to previous positions and statements made by previous Ministers. No previous Minister or Prime Minister has been faced with the threat of a closure of a major company employing so many people. I ask the Secretary of State not to quote previous Ministers but to stand on his own feet and take positive action. He has discussed the matter with Sir Michael Edwardes and the board. Knocking on his door tomorrow will be some major trade union leaders asking the right hon. Gentleman to intervene in the dispute. They will include Mr. Alex Kitson of the Transport and General Workers Union Mr. Cure of the AUEW and other trade union leaders. Will the Secretary of State see those trade union leaders tomorrow before the dispute starts, listen to their side of the argument and see whether they can play a major part at this eleventh hour?

Comparisons have been made with other companies and car workers generally. I am informed that there is a type of guaranteed payment at some companies, such as Ford, which are not paralleled at British Leyland. Car workers generally are not at the top of the scale in earnings. They are very low down the scale. We are talking about men who work on a conveyor belt for 40 hours taking home net payments of about £72 a week, including bonus.

We do not want the matter to be left where it is. I welcome the fact that there has been a large attendance of Labour and Conservative Members for this important debate. I have not seen any members of the Liberal Party or the Social Democratic Alliance. We welcome the fact that the debate has taken place. We have had to force it out of the Government, but it has taken place. However, the debate is not the end of the issue. We do not sit back now and wait for the dispute.

I hope that the Secretary of State will take away the views put by Opposition Members and initiate negotiations over the weekend that can get this dispute resolved. It is on that basis, I believe, that the Secretary of State has a duty not just to his Government but to the British people and to this Parliament.

10.24 pm

Mr. Patrick Jenkin: With the leave of the House, Mr. Speaker, I should like to reply very briefly to the debate.

The debate has served a useful purpose. The poll in The Sun this morning showed that only about 30 per cent. of the work force of BL believe that a serious strike will result in the closure of the company or large parts of it. I think that the remaining 70 per cent. are very wrong. Virtually every word that has been spoken by every speaker in this debate has shown very clearly that that is not a view shared in this House. I think that everyone has recognised that with this prospective strike at BL we are facing a desperately serious situation which could well result in the closure of the company or large parts of it.

One of the most important facts that will emerge from this debate is that right hon. and hon. Members are in no doubt whatever that it is for real. If the debate serves no other purpose, that will be a valuable result.

My hon. Friend the Member for Woolwich, West (Mr. Bottomley) and a number of other hon. Members asked about figures for pay. Perhaps it would be helpful if I placed one or two figures on the record.

Mr. Winnick: Will the right hon. Gentleman give way?

Mr. Jenkin: No. I shall answer the hon. Gentleman, because he raised a specific point which I should like to answer.

The fact is that, whatever the basic pay increases may have been over two or three years, in both 1980 and 1981 the increase in average earnings of BL employees has been above the increase in prices. In 1980 the rate of inflation was virtually 18 per cent.; the increase in average earnings was 20.6 per cent. In 1981—for the 10 months since 1 November 1980—the rate of inflation has been 9.6 per cent.; the increase in average earnings has been 13.5 per cent. Although the increases in basic rates have been of the low figures quoted by the right hon. Member for Salford, West (Mr. Orme), the increases in earnings—I am quoting them before tax and national insurance, in the normal way—have been higher than the increase in the cost of living.

The right hon. Gentleman suggested that pay at BL was significantly below that of other car workers. A great many comparisons can be made; some are below, and some are above. However, the average production worker at BL, including the average bonus, earns at present £105.50. The average production worker at Fords, getting the attendance allowances that Ford pays, earns £103.50. So the BL worker—

Mr. Les Huckfield: It is guaranteed money.

Mr. Jenkin: With the greatest respect, it is earnings. It is money in the pay packet, and it is that which counts.

I come to the hon. Member for Walsall, North (Mr. Winnick). The fact is that the average bonus that has been earned in BL is £11.50. Most of BL's employees already earn good bonuses. The hon. Gentleman seemed to suggest that only 5,000 people were earning the bonus, if I understood him rightly. The effect of guaranteeing the first £3.50 of the bonus would help 5,000 people who at present do not come up to the level of the guarantee—the first £3.50—so the hon. Gentleman got it completely wrong. The full offer that has been put on the table by the management of BL would help those 5,000 who at present do not reach that level.

I make one other point in closing. Opposition Members have been free in their criticisms of Sir Michael Edwardes. It is their perfect right to be critical of me. They have concentrated, quite wrongly in some cases, on his salary. What is a little sad is that not one Opposition Member has seen fit to recognise that in the last two and a half years Sir Michael Edwardes and his board have given—[Interruption.] Of course, as I have said, with the full co-operation of their workers. They have given the company something that it has not had for many years—the chance of a real and viable future. That is what we want—

The Question having been proposed at Ten o' clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o' clock.