British Leyland

HC Deb 17 February 1986 vol 92 cc21-7 3.30 pm

Mr. John Smith (Monklands, East)

(by private notice) asked the Secretary of State for Trade and Industry if he will make a statement on the Government's policy on BL subsidiary companies in view of the increasing number of rival bids to acquire them.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)

The aim of the Government and of the BL board is to secure an internationally competitive United Kingdom commercial vehicle industry, and to improve the long-term prospects for BL's constituent business.

As I informed the House on 3 February, discussions are at an advanced stage between BL and General Motors in respect of Leyland Trucks, Land Rover, Freight Rover and certain related overseas operations. Discussions are also taking place with the Laird Group about the future of Leyland Bus.

I can confirm to the House that, of the companies that are willing to have their interest in the businesses made public, Lonrho is in contact with BL concerning Land Rover and Freight Rover; Aveling Barford has expressed an interest in Land Rover and Leyland Bus; and Volvo has expressed an interest also in Leyland Bus. Proposals for a management buy-out are also expected to come before the board.

The Government and the BL board will consider other proposals on their commercial merits in relation to the future of BL as a whole.

Mr. Smith

Is the Secretary of State not aware of the growing puzzlement, concern and dismay in this country that the Government appear to be presiding over an auction of some of the best of British industry? Can he tell us clearly why this is happening at all? Why is it necessary for this to be going on?

When it seems to make sense to General Motors to acquire Leyland Vehicles and Land Rover, when it seems to make sense to Lonrho to bid for Land Rover, when it seems to make sense to Aveling Barford to make a bid, and when it makes sense to Volvo to acquire Leyland Bus, why on earth does it not make sense to British Leyland to retain and develop these valuable assets in the British interest?

Can the right hon. Gentleman tell us what view the Government take about General Motors buying Jaguar shares with a view to acquiring that company, which, if the deal with BL that we are told is well advanced goes through, will mean that General Motors will, in more or less one operation, acquire a whole clutch of vital British interests and successes?

Does the Secretary of State not think that he should raise the question in the Cabinet later in the week, in the hope that the political results of his folly will be borne in upon his colleagues and this dishonourable sellout will be brought to an end?

Mr. Channon

As usual, the right hon. and learned Gentleman is interested only in trying to cause the maximum amount of trouble, without considering—[Interruption.] The attitude of the Opposition, in laughing at that, proves my point. They are not trying to consider the commercial future of the industries and the people who work in them; they are merely trying to get the maximum political capital out of them. [HON. MEMBERS: "Rubbish".] That is typical of the Opposition, with their irresponsible, hopeless and vindictive attitude.

Mr. Alex Fletcher (Edinburgh, Central)

I congratulate my right hon. Friend on the skilful way in which he has attracted British bids for BL and its subsidiaries. Will he give an undertaking that those bids will be considered entirely on their merits?

Mr. Channon

Yes, As I told the House on 12 February, and as my right hon. Friend the Prime Minister has said, we will consider these bids.

Mr. David Steel (Tweeddale, Ettrick and Lauderdale)

Does the Secretary of State agree that there is, or ought to be, a clear distinction between foreign ownership of the British car industry, or parts of it, and foreign participation or participation and co-operation, such as already exists between, for example, BL and Honda? In that connection, will the right hon. Gentleman register our surprise that the board of the Land Rover company did not know of the General Motors deal that was being stitched up until it became public?

Will the right hon. Gentleman give the House an assurance that if the Government are determined to go ahead with the privatisation—we assume that they are—they will give a fair wind and priority to bids from British concerns and participation and cooperative ventures from foreign concerns that do not involve foreign takeover of the companies?

Mr. Channon

I am surprised at what the right hon. Gentleman says about Land Rover. The BL board has always been in favour of the General Motors' proposals, provided that the assurances which I outlined to the House last week can be obtained to get the best possible results for BL subsidiaries. As I have told the House on many occasions, I am trying to get the best solutions for these companies, and, as my right hon. Friend the Prime Minister has said on a number of occasions, we shall naturally consider the other bids.

Mr. David Madel (Bedfordshire, South-West)

As the talks between General Motors and BL Trucks are to do with livelihood of thousands of people who want to work in a successful British truck company, is my right hon. Friend able to say whether there have been any signs from General Motors as to how long negotiations are likely to continue?

Mr. Channon

I confirm what my hon. Friend said in the first part of his question. As I have said before, it is in the interests of all concerned in the industry that these negotiations should come to a successful end as soon as they conceivably can, so that we can remove the damaging uncertainty and the worries. I hope that the talks will come to a conclusion soon.

Mr. Michael Foot (Blaenau Gwent)

Is it not a fact that BL, under public ownership, had a fine record of ordering components from British firms? Could not this record be put in jeopardy if either of the alternative sell-offs proposed by the Government should go ahead? Can the right hon. Gentleman give any guarantee that, if BL is sold off, such purchases will continue?

Mr. Channon

I have already been through the assurances with the House on a number of occasions and, clearly, satisfactory assurances will have to be obtained. In spite of the great progress that has been made, we must face the fact that Leyland Vehicles lost £61 million in 1984, on top of £70 million in 1983, that Land Rover is only just in profit, and that there is a serious commercial problem which the House should address seriously.

Mr. Roger King (Birmingham, Northfield)

During his negotiations, will my right hon. Friend look carefully at the position of Freight Rover, which is an exceedingly profitable part of the Leyland Land Rover organisation? In particular, in the event of a sell-off, whether to Lonrho or anybody else, will he pay particlar attention to the 300 Austin dealers, who will not have a light van to sell, and to the number of component suppliers in the west midlands who may, as a result of any sale, find their sales of components jeopardised?

Mr. Channon

We shall consider all the points that my hon. Friend makes, and I am sure he will agree that, in the interests of all dealers and everybody else concerned, we should get a speedy and satisfactory conclusion, to provide a good long-term future for these businesses.

Mr. Terry Davies (Birmingham, Hodge Hill)

How do the Government intend to consult those who work at BL?

Mr. Channon

There will be talks with the employees through the usual consultation machinery.

Mr. Nicholas Soames (Crawley)

Grateful though my right hon. Friend will no doubt be for the helpful intervention of Mr. Rowland of Lonrho, will he resist that blandishment? Land Rover already has a satisfactory market in the middle east and Africa. Is not Land Rover's greatest need for major opportunities to sell in the United States of America—something that one of the options at which my right hon. Friend is looking will provide?

Mr. Channon

It is the case that if the General Motors deal goes ghrough, one of the major attractions will be the opportunites that will be available in the United States.

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

Is the Secretary of State aware that my attempts to promote a joint venture, and my invitation to Volvo to visit the BL plant in my constituency was blocked by a member of the BL board? Is he aware that the meetings that I arranged this week with the Parliamentary Under-Secretary of State for Transport, with the Minister of State, Department of Trade and Industry with two senior Leyland Bus managers, including the managing director of Leyland Bus, was blocked once again by a member of the BL board? Will he remove these blocks and ensure that when proposals for a management buy-out in Leyland Bus are submitted, they will be given the fullest possible consideration by members of the board—that is, in the event that the Minister insists on pressing on down this route?

Mr. Channon

I assure the hon. Gentleman that any such proposals will be considered on their merits. Volvo has expressed an interest in Leyland Bus, which will be carefully considered. The Minister of State is to meet the hon. Gentleman later this week, with the managers to whom he referred. I hope that I have given satisfactory answers on all three points.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does my right hon. Friend accept that many of us welcome the first few words of his statement, in which he said that his aim was to have a viable industry? That is right. Does he further accept that the lorry industry's problems, both General Motors' and BL's, are different from those of Land Rover and Freight Rover? Is it not a good idea to separate the two? In view of the interest by Aveling and Lonrho—and I believe, by others—in Land Rover, surely there is no reason to offer a sweetener. If my hon. Friend must sell, why not have a proper auction, so that everyone knows that for once the country is getting the right price?

Mr. Channon

I am fully aware of my hon. Friend's views. I assure him that in any solution that comes forward in due course I shall bear in mind what he has said. I am particularly anxious to ensure the best possible future, not only for the freight business, but for Land Rover itself. That is one of the prime aims of the consultations and discussions.

Mr. Andrew Faulds (Warley, East)

Will consultations with the work forces be held before, or after, any deals are completed?

Mr. Channon

I have already answered that.

Mr. John Mark Taylor (Solihull)

Does my right hon. Friend accept that the recovery plan for Land Rover is seen to be working and that vital steps have been taken at Land Rover to put it on a promising and prosperous road? If that continues just a little longer, could we not have a promising flotation, like that for Jaguar?

Mr. Channon

That is possible. Although there has been a great deal of progress in Land Rover, there is a great deal further to go. In 1984 Land Rover's United Kingdom turnover was £490 million, but its profits were only £2 million, following a loss of £14 million the year before. A serious commercial problem must be addressed.

Mr. George Park (Coventry, North-East)

I accept that public money has gone into Land Rover and Freight Rover, but now that part of BL is emerging into profitability and has good prospects, would it not make more sense to allow the taxpayer to have the benefits, indirectly through the Treasury, than hive off the company so that the benefits go to Detroit?

Mr. Channon

I note what the hon. Gentleman says, but I repeat that I am trying to find a solution that is in the long term interests of Land Rover and Freight Rover.

Mr. Robert Adley (Christchurch)

I sympathise with my right hon. Friend in the problems that he had to pick up when he took over his new job, but does he remember telling me the other day that he had received no other bids or expressions of interest other than from General Motors? Will ne now make it clear that he welcomes this widening of interest? In view of the warfare between predecessors in his Department and Lonrho, will he ensure that new interests are considered even-handedly with everyone else?

Mr. Channon

I have made it clear to the House that all serious proposals will be considered on their merits.

Mr. Tony Benn (Chesterfield)

Does the Minister recall that over 20 years ago when a previous Conservative Government agreed to the sale of Rootes to Chrysler a number of assurances were given that were not worth the paper on which they were written? Since the sale of a profitable British company is a matter of great concern, why can we not have a ballot of workers to allow them to determine the future of the company, whose wealth they have created through their own labour?

Mr. Channon

The right hon. Gentleman is right. I, too, recall similar declarations in the past, and that is very much in my mind. The usual consultation will take place with the work force.

Mr. Nicholas Lyell (Mid-Bedfordshire)

Will my right hon. Friend bear in mind that the people of Luton see real potential advantages from a merger between General Motors and the truck division of BL?

Mr. Channon

I appreciate what my hon. and learned Friend has said. We want a solution that will help, not hinder, the prospects of all sections of that business.

Mr. Doug Hoyle (Warrington, North)

Does the Secretary of State accept that the Opposition speak for the national interest, the interests of the lorry industry, the interests of the Leyland workers and, unlike some in this House, the interests of those who work in Luton?

The right hon. Gentleman said that Leyland Commercial Vehicles was not profitable, that the bus company was not profitable and that Land Rover has only just broken into profitability. Can he explain, therefore, why so many people want to buy those vehicles? Now that taxpayers' money has been put into that business, will he reconsider and allow it to move forward as a financial success in public ownership?

Mr. Channon

I have given the House the figures for the losses in the truck division for 1983 and 1984. I do not have the 1985 figures, which will be published in the usual way when they are available.

Great progress has been made in Land Rover and other parts of BL. However, the House is deluding itself if it imagines that the problems are over, that hard decisions can be avoided, or that there is some magic road down which we can go without making difficult choices.

Mr. William Cash (Stafford)

Does my right hon. Friend agree that we cannot continue to kid ourselves all the time, and that it is about time that the management and work force of BL reached the conclusion that they have to produce the goods in competition with Japan and other countries? If they reach that conclusion, perhaps they will produce quality goods that can compete fairly in world markets.

Mr. Channon

Substantial strides have already been made. If we can, we must achieve an increasing share of the market and a solution that is in the long-term interests of all the companies in the BL group.

Mr. Tam Dalyell (Linlithgow)

I thank the Minister of State for his courteous attitude towards my hon. Friend the Member for Falkirk, East (Mr. Ewing) and myself when we visited him last Wednesday to discuss the problems of Bathgate.

Is there not a dilemma, in that millions of pounds of public money have been poured into the huge Bathgate site by the West Lothian district council, the Scottish Office and the right hon. Gentleman's Department? Therefore, should not the district council and the civil servants in the Scottish Office and the Department have some say in the future of that site? Surely that should not be left entirely to a commercial decision by Leyland Vehicles? A moral issue is involved in determining the future of that site that affects the whole of central Scotland.

Mr. Channon

As the hon. Gentleman knows, decisions on Bathgate were taken some considerable time ago. Nothing that I have said today or on earlier occasions changes the position. The hon. Gentleman and his hon. Friend the Member for Falkirk, East (Mr. Ewing) raised important points with my hon. Friend the Minister of State, and those matters will receive careful consideration.

Mr. Gerald Howarth (Cannock and Burntwood)

Does my right hon. Friend agree that, in large measure, BL's problems stem from the Labour Government's encouragement of a merger in 1968 between Leyland and the British Motor Corporation and the number of plants that were kept open? Does he further agree that it is not the business of the Government to build motor cars? However, if there is to be a disposal, would it not be more sensible, if possible, to sell to a British bidder rather than to a foreign bidder?

Mr. Channon

I had better not delve into the history of BL. Strong views are held in many quarters of the House on the issues that my hon. Friend raised. I am trying to achieve the best possible solution for the future of the subsidiary companies. I shall inform the House when negotiations are completed.

Mr. Wrigglesworth (Stockton, South)

Why does the Secretary of State continue to talk down the achievements of Land Rover? Does he not agree that it has made profits every year, barring 1983, since it was established in 1948? Is he not aware that in its interim statement BL forecast greater profits than those about which the right hon. Gentleman has just told the House and, that it has now achieved record sales? Is he aware that we are not asking for a magic solution, but simply for the same solution for Land Rover that Jaguar had in the past?

Mr. Channon

I am not in the least talking Land Rover down. I have said again and again, and I repeat in case there is any doubt, that the Land Rover products are excellent. They have a worldwide reputation, of which all those involved can be proud. What I must do is to give the House the actual figures, and those that I have given the House this afternoon show the company's financial position.

Mr. Patrick Cormack (Staffordshire, South)

If we have excellent British products and if we have had recent improvement, why the hurry to flog off BL?

Mr. Channon

Because, as I told the House last week, there are serious commercial problems in many of the companies. We must try to get them on to a basis of certainty for the future. [Interruption.] I am extremely surprised that the Opposition would like this damaging uncertainty to go on—the damaging uncertainty which has largely been created by the irresponsible tactics of the Opposition.

Mr. Jack Straw (Blackburn)

Why does the Secretary of State deliberately set out to rubbish the achievements of BL, and Leyland Trucks in particular, and of the thousands of people who work in the company, as he has done from the Dispatch Box this afternoon, when last month the figures issued by the Society of Motor Manufacturers and Traders showed that Leyland was at the top of the league for the sale of heavy trucks and that General Motors' Bedford subsidiary had slipped to fifth place? What is in it for Leyland to be taken over by the failing General Motors? What information has the right hon. Gentleman of General Motors' plans to produce a world lorry, which would seriously undermine any design and development capability of Leyland Trucks?

Mr. Channon

I have in no sense rubbished the achievements of Leyland Vehicles. [Interruption.] I certainly have not. If it is rubbishing the achievements of Leyland Vehicles to tell the truth about the figures, that is astonishing. The House should recognise that there is immense over-capacity in this area. There are serious commercial problems and substantial losses between Leyland Vehicles—£61 million in 1984 and £70 million in 1983. To imagine that those problems can be wished away by a magic wand is simply ridiculous.

Several Hon. Members

rose—

Mr. Speaker

Order. This is an extension of Question Time. I regret that I cannot call everyone, but I shall ensure that those who are not called get preference when we discuss the matter again.

Mr. John Smith

On a point of order, Mr. Speaker. It is my intention to move an application under Standing Order No. 10 in view of the inadequate response that we have received from the Secretary of State and his deliberate evasion of a number of important questions. May I have your advice on when I should do so?

Mr. Speaker

At the appropriate time, which is after private notice questions.