HC Deb 28 November 1985 vol 87 cc1109-16

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

10.10 pm
Mr. D. N. Campbell-Savours (Workington)

On a point of order, Mr. Deputy Speaker. You will know that I applied for the Adjournment debate which, according to the Order Paper, concerns the future of Matthew Brown, following the Monopolies and Mergers Commission Inquiry. The subject for tonight's debate is the report of the Monopolies and Mergers Commission, yet it is noticeable that the Department of Trade and Industry has refused to send a Minister to the House to answer—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. The hon. Gentleman knows that the choice of which Minister replies to the debate is not a matter for me.

Mr. Campbell-Savours

Earlier I sought to place on record the fact that I am sorry that the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food has been sent to the House instead of a Minister from the Department of Trade and Industry. Although I have every respect for the Parliamentary Secretary, I do not think that she has been briefed in a way that will help us to debate the matter effectively.

I rise to raise a matter of deep concern to me, to my hon. Friends the Members for Blackburn (Mr. Straw) and for Carlisle (Mr. Lewis), to the hon. Member for Penrith and The Border (Mr. Maclean) and to nearly 200 hon. Members who have signed early-day motion 137. I refer to the current hid for the north-west based brewer Matthew Brown by Scottish and Newcastle breweries, which is one of the big six brewers in the United Kingdom. As anyone who has visited the north-west during the past few months will be aware, a huge groundswell of popular opinion against the proposed takeover has been building up. There have been marches through the streets of the north, letters by the hundred to local newspapers, petitions signed in pubs and on street corners, and all sorts of activity supporting the board and the employees of Matthew Brown in their fight against this unwelcome and unnecessary bid.

This takeover bid should not be taking place. We do not want it, and I appeal to all shareholders tonight, both private and institutional, with all the powers I have at my disposal, not to sell their shares. Please do not sell to Scottish and Newcastle at any stage.

One of the most remarkable aspects of this affair has been the quite inexplicable response of the Monopolies and Mergers Commission. In this instance, despite a strong reference by the Office of Fair Trading, the commission appointed has singularly failed in its duty to protect the public interest. The report's conclusions are a farce, a miscarriage of justice and a betrayal of its own so-called commitment to objectivity. The conduct of its investigation is riddled with irregularities, some of which demand the closest of inquiries by the Minister. No wonder the board of Matthew Brown found its recommendations staggering, especially since, as some hon. Members have now been informed, those people seem to have been the last to have been informed of them.

One must ask, whose unseen hand is to be discerned in the presentation of the report? Who is behind its conclusions? Was it the members of the Commission? Was it the Scottish Lobby of Members of Parliament? They are certainly not registered as having made a submission, and my inquiries show that they were not active. Was it the Scottish brewing lobby? We do not know, but we know that the Scottish Department of Industry recommended in favour. That is remarkable because in making its recommendation it was supporting the closure of breweries in Workington and Carlisle. Every utterance of Scottish and Newscastle should have told the Department that it should have been aware of the dangers. Heads should now roll. The Department had no right to support a case which involved the closure of plants in England. It has exceeded its responsibilities. It is not the task of a Conservative Department of Industry in Scotland to approve the closure of profitable industry in England. Its task is to support the further expansion of industry.

On every issue affecting the public interest, the Commission's findings were inconsistent with the evidence. The Commission acknowledged the inevitable reduction in competition as "undesirable" but regarded it as "insignificant". How many of the Commission bothered to go to Cumbria and Lancashire to see what statistical reduction in competition meant? Most of the national brewers choose not to trade there. The loss of choice, the closure of village pubs and the disappearance of the amenity in rural areas will be disastrous in every way.

The Campaign for Real Ale has repeatedly expressed anxiety about the effect on consumer choice, and with reason. Scottish and Newcastle's past record on acquisitions shows no commitment to the preservation of local beers. It seeks one result from the takeover only—more outlets from which to sell its products, and thereby to minimise surplus capacity in its existing plants. Yet it talks about some reduction in licensed outlets trading, and the fact that those trading would in general he improved and would operate to better standards. It does not matter to Scottish and Newcastle that a tenant or manager should lose his livelihood, or that the customer must travel twice as far for a drink. The public interest is again the loser.

I mentioned surplus production capacity. At present Matthew Brown operates four breweries profitably in areas where unemployment is running well above the national average—in particular, in Workington and Carlisle. A job lost there is a catastrophe, and closures will condemn hundreds of people to a lifetime on the dole. Yet the report positively encourages Scottish and Newcastle to rationalise production, with its immediate redundancies, not to mention the knock-on effect on local contractors who rely on the local brewery for work. All that is supported by the Department of Industry in Scotland.

The Government profess to support small businesses. They even give grants to enable small firms to start. Why then can they not prevent this unnecessary take over, which is unanimously opposed by customers, tradesmen and employees alike, and seems destined to achieve nothing but gratuitous redundancies? Even at this late stage I call upon Scottish and Newcastle's board to stop misleading the public about the continuation of brewing production, and to give some categoric unertakings about current employment levels at all Matthew Brown's breweries. It has refused to do that to date.

In its submission to the commissioners, Scottish and Newcastle said: We have stated categorically, publicly and in writing, that without any question whatsoever the Blackburn and Masham breweries are sacrosanct for continued brewing purposes. No such assurances have been given for Workington or Carlisle.

Mr. John Watson (Skipton and Ripon)

The hon. Gentleman referred to the Masham brewery at Theakstons which, as he will be aware, is in my constituency. Is he interested in knowing that the pledge to maintain brewing facilities refers to only six jobs out of 50 and that well over 80 per cent. of the jobs at the Masam brewery remain uncovered by any pledge that might have been given by Scottish and Newcastle?

Mr. Campbell-Savours

The hon. Gentleman only further confirms my view that that company has made many misleading statements. I was under the impression that that brewery was to be kept open. We now find that it is to be kept open with a substantially reduced work force.

The commission went on to say: the continued operating of all four breweries of Matthew Brown could prove uneconomic in the longer term and its programme of rationalisation could result in brewing being discontinued at Workington, Carlisle or both. To add the final injustice to injury it concluded: In due course the Carlisle and Workington breweries would be closed by Matthew Brown even if the company remained independent. That is nonsense. It is a lie. Matthew Brown has repeatedly given me assurances about the future of brewing in Workington. Its representatives have told me in writing and in conversation that that brewery is safe. I regard its future under Matthew Brown as as safe as the Bank of England, as I have said previously in the House.

Mr. David Maclean (Penrith and The Border)

I agree with much of the hon. Gentleman's argument and share his anxiety and indignation that the Monopolies and Mergers Commission has come, in my opinion, to the wrong conclusion on the evidence. Does he not find it extraordinary that the commission says that there is no real risk to jobs and no evidence that the breweries will close while extolling Scottish and Newcastle's marvellous redundancy scheme?

Mr. Campbell-Savours

The hon. Gentleman, as his hon. Friend the Member for Skipton and Ripon (Mr. Watson) did, further shows the misleading nature of Scottish and Newcastle's claims.

Matthew Brown is a well-run, profitable company with a proud history of over 150 years of brewing in the northwest. It is not a lame duck and nor does it need Scottish and Newcastle's help. It should not be sacrificed to fulfil Scottish and Newcastle's objectives of solving its internal commercial problems and consolidating its position in the national brewers' league table.

The two companies' philosophies are completely opposed. Matthew Brown is a regional company with a strong involvement in the local community, locally based management and short lines of communications. According to the submissions, Scottish and Newcastle is proud of its successful policies, as the hon. Member for Penrith and The Border said, in handling redundancies and closures. I can understand that. It has had its fair share of them as, indeed, it has had its fair share of industrial action. There has been a seven-week strike in Manchester which has only been settled during the past few days. I can only assume that Scottish and Newcastle's management is appalling. Its work force has been reduced by nearly 7,000, or 25 per cent., since 1980.

In contrast, Matthew Brown can be proud of its employment record—an increase of nearly 500 jobs, or 30 per cent., over the same period. Matthew Brown's industrial relations record shows only four days' work lost in the past 20 years and one 10–day work to rule in 1983. What a record. It must be unsurpassed in the British brewing industry.

In employment terms, the takeover will do nothing for Matthew Brown other than to turn back the clock five years. In every respect, in recent years Matthew Brown's performance is superior to that of Scottish and Newcastle's. I call upon the House to applaud Matthew Brown's profit performance—£7 million on a turnover of £44 million last year; to applaud its contribution to the prosperity and quality of life of the regions, in particular Blackburn, Workington and Carlisle; and to applaud the way in which it has served its employees, customers and shareholders well. The fate of Matthew Brown now lies with the shareholders.

I sincerely hope that institutions and individuals alike remember the part that management and employees of Matthew Brown have played in the successful growth of their investment in the past. They deserve better than to see their company go under the hammer to satisfy the desperate desire of a national giant to expand at all costs and resolve its own internal problems. Matthew Brown deserves better than to see the company broken up, with wide-scale redundancies. I emphasise that it deserves the right to continue to operate as a successful, regional, independent company.

The final two paragraphs of the conclusions of the Monopolies and Mergers Commission read: We discern no material advantages to the public interest arising from the proposed merger; but the question before us is whether the merger may be expected to operate against the public interest, and in our view there are not sufficient grounds for such an expectation. We conclude that the merger situation which will be created if arrangements in contemplation by Scottish and Newcastle Breweries plc for the acquisition of Matthew Brown plc are carried into effect may be expected not to operate against the public interest. What could be more against the public interest than a reduction in competition? What could be more against the public interest than a reduction in consumer choice, an increase in prices, a loss of employment and a rationalisation of amenities—all admitted tacitly in the export?

That brings me to an area of the whole affair which certainly needs further examination. Paragraph 7.27 of the Monopolies and Mergers Commission report says: We accept that Matthew Brown has no present intention of closing these two breweries, but we believe that in the long run the closure of one or both of them might come to appear to Matthew Brown to be inescapable in the interest of greater efficiency and cost saving. We believe that, whether the merger takes place or not, the future of these breweries cannot be regarded as totally secure. That is a remarkable statement. Indeed, the commission has no right to make it. It is not its role to propose the closure of highly profitable breweries, or to talk about something being inescapable in the interest of greater efficiency". Who do the members of the Commission think they are? What are they trying to do—make recommendations to the management of a company? It is none of their business. They should have kept their noses out of our affairs. It is not their role to interfere in the management of Matthew Brown. They have exceeded their responsibilities and gone beyond their remit.

The Fair Trading Act 1973, in placing investigative powers in the hands of the commission, was never intended to be used in this way. It was never intended that the commission should sanction the closure of profitable enterprise. Why should the members of the commission have the right to overrule Parliament in such issues? one third of the members of this House signed the early-day motion, and if Conservative members had been free to sign it a majority of this Parliament would have signed it. It opposes the takeover. Should not the Government now repeal legislation that removes from Ministers the right to protect jobs in the public interest?

Why not amend the law to give the Secretary of State the power to consider Monopolies and Mergers Commission recommendations on takeover, but reserving to him the final right to decide for himself or herself, after parliamentary debate and/or consultation? Surely it is the government that must be accountable. It is the Government that we hold accountable in terms of job losses on this occasion.

Another solution would be to require that it be proved that a takeover is in the public interest as against the need to prove, as at present, that the matter is not in the public interest. On that benchmark, without doubt, the Monopolies and Mergers Commission would have refused approval in this case. It is quite unreasonable to leave it to a so-called independent committee of inquiry or commission to decide on such matters. The old proposals, which were also the subject of a committee of inquiry, will be coming before this House. The House will have a vote. We need legislation to control the reaction of creditors who are out to secure closure to resolve their own commercial problems.

Two weeks ago, the Under-Secretary of State for Trade and Industry—the hon. and learned Member for Folkestone and Hythe (Mr. Howard)—told us that the inquiry into the leak which took place on the Thursday would be dealt with internally within the Department. He would not give undertakings that the findings of that inquiry would be brought before the House. I, along with some of my hon. Friends, will start pressing the Minister in a few weeks for the conclusion of that inquiry. We believe that we are entitled to know what happened. We believe that, if we are not told, a cover-up must be going on. That would be against the interests of the House.

10.30 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner)

I am sorry if the hon. Member for Workington (Mr. Campbell-Savours) was expecting another Minister to respond. However, the Order Paper states that the hon. Gentleman proposes to raise the subject of the future of Matthew Brown, following"— I stress the word "following". My Department has responsibilities for the brewing industry.

Mr. Campbell-Savours

Not "before."

Mrs. Fenner

The Order Paper states: following the Monopolies and Mergers Commission Inquiry. I am grateful to the hon. Gentleman for providing this opportunity to debate the future of the company, not least because it has allowed us also to focus more generally on the future of the brewing industry in the light of the recent report of the Monopolies and Mergers Commission.

I cannot accept the hon. Gentleman's allegations about the impartiality of the commission. It is an independent body. Its role is to evaluate the varying views put to it. The commission could only take the evidence and the views put to it by the parties. They made a categorical statement about the future of the brewery at Masham. They intend to continue to brew there and to market this traditional brand. It is not for me to defend the statements to the commission by either party. The report fairly sets out the evidence and arguments that were put to the commission. Although I respect the hon. Gentleman's right to take a different view and to reach different conclusions, I cannot accept that the commission did other than examine the facts objectively.

My right hon. Friend the Secretary of State for Trade and Industry has announced a review in 1986 of competition legislation.

I fully understand the hon. Gentleman's concern for the future of Matthew Brown, a company acknowledged to be a highly successful regional brewer making a valuable; contribution to the local economy and amenity in the hon. Member's constituency and, more generally, in the north of England. Much of the evidence that was before the commission argued for its continued existence as an independent brewery and for Government action to prevent its acquisition. I would not want to say anything which detracts in any way from the deserved tributes paid to the company. One must be clear, however, about the role of the Government in these matters.

In making its report, the commission is obliged by the Fair Trading Act 1973 to report if a merger situation qualifying for investigation has been created and the creation of that situation operates, or may be expected to operate against the public interest". It is only if the commission so finds, and specifies the adverse effects that it foresees, that my right hon. Friend the Secretary of State for Trade and Industry is empowered by the Act to intervene. In this case, the commission's report makes it clear that, while the commission could discern no material advantages to the public interest arising from the proposed merger, there were not sufficient grounds for a conclusion that acquisition of Matthew Brown plc by Scottish and National Breweries plc might be expected to operate against the public interest.

Dependent on one's point of view, of course, it is possible to argue over the details and the balance of the evidence that the commission received. Naturally, both sides put forward claims and counter-claims, allegations and denials.

Mr. Campbell-Savours

Will the Minister answer a simple question? Is the loss of 170 jobs in the county of Cumbria in the public interest?

Mrs. Fenner

The commission's view was that the merger is not against the public interest. Furthermore, representations from different interests, unsurprisingly, took different views on the desirability or otherwise of a merger, reflecting, of course, differing perceptions about the effects of a merger. No purpose would be served by our debating tonight the differing views expressed. The commission's task was not an easy one, but its report sets out very clearly the evidence it received, the conclusions it reached and its own careful reasoning. As was made clear in the statement on the report on 13 November, in the light of the commission's conclusion, my right hon. and learned Friend the Secretary of State for Trade and Industry has no power under the Act to prevent the acquisition nor to attach any conditions should a renewed bid involving the two companies in their present form be successful.

I understand that, following the MMC report, Scottish and Newcastle has renewed its bid, which the board of Matthew Brown continues to find unacceptable. There being no grounds for Government intervention, the future of Matthew Brown lies in the hands of its shareholders.

I recognise, however, that the hon. Member for Workington is concerned that if the bid is successful the merged company may, as part of a rationalisation programme, decide to close the brewery in his constituency with the resultant loss of jobs. He is, perhaps understandably, not persuaded of the fact that the future of this brewery cannot be regarded as completely secure, even if, the merger does not occur. Nevertheless, that was the conclusion that was reached by the commission after careful study of all the evidence. I recognise that that conclusion offers little comfort.

The question of reduced competition in north and west Cumbria and in the north east in both the tied and free on-trade should the merger proceed, was one that concerned the hon. Members for Workington and for Blackburn (Mr. Straw) in their submissions to the MMC, which the commission studied very carefully. The commission's well-argued conclusion was that the merged company's increased share of business in the north west would not affect the ability of other brewers to continue to compete for the free trade business there. It noted that the merger would have little effect on competition as far as tied houses were concerned because Scottish and Newcastle currently owns relatively few public houses in the area. While accepting that in principle the elimination of Matthew Brown as a separate competitor in the north east was undesirable, the commission noted that the company's presence there was not yet a significant factor in competition and concluded that the likely effects of the merger on competition in the north east would not be detrimental to the public interest.

The hon. Member also expressed fears that Matthew Brown's smaller public houses—he mentioned village pubs—would be under threat of closure by the merged company, that there would be the loss of amenities in small communities in his constituency and that this would affect tourism, which is very important to Cumbria. This question was fully exposed and thoroughly aired in the commission's report—

Mr. Campbell-Savours

But it ignored it.

Mrs. Fenner

I cannot agree with the hon. Gentleman. It was fully exposed and thoroughly aired in the commission's report, but it did not see closures of pubs as being a material consequence of the merger.

In the short time remaining in this debate I should like to say a word about the wider issue which concerned many people with an interest in the future of our brewing industry. There has been considerable speculation that if this bid were allowed to proceed, it would signal to the major national brewers that the Government would take no action to restrain a flood of takeovers of the smaller regional brewers. While the Monopolies and Mergers Commission found no grounds for Government intervention in this case, it made clear its view that in the interests of healthy competition, and also in the general interests of the areas in which they operate, it is desirable that there should continue to be viable and vigorous regional brewers. It forewarned that there could well be a strong case on public interest grounds against acquisition of a regional brewer by any of the five largest national tied estate brewers. That message is clearly one to which the Government must pay full regard in considering whether any bids arising in the future should be referred to the commission.

The hon. Member for Workington raised another point at the end of his speech. As my hon. Friend the Under-Secretary of State for Trade and Industry has announced, an investigation is under way to establish whether a leak occurred. However, it has not been the practice of this or previous Governments to publish reports on internal inquiries.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Eleven o' clock.