HC Deb 05 March 1986 vol 93 cc309-18 3.31 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)

With permission, Mr. Speaker, I wish to make a statement.

As I informed the House on 19 February, an invitation was extended to interested parties to declare by 4 March a firm intention to make a bid for one or more of the Land Rover, Freight Rover, Leyland Trucks and related businesses.

I can now report to the House that appropriate declarations have been made to BL's bankers by Schroder Ventures on behalf of some institutions and some members of BL management in respect of Land Rover, Range Rover and Freight Rover; by Lonrho in respect of Land Rover and Range Rover; and by Aveling Barford in respect of Land Rover only. General Motors has also confirmed its intention to make a bid for Land Rover, Range Rover, Freight Rover and Leyland Trucks.

The Laird Group and Aveling Barford are each in discussion with BL regarding the acquisition of Leyland Bus, for which proposals on behalf of some members of the management are also expected. Discussions in relation to Leyland Bus are taking place over a slightly different timescale from those concerning other Land Rover-Leyland businesses. I shall make a further statement to the House on these in due course.

The BL board is giving careful consideration to all the proposals received on or before 4 March and I hope to have its recommendations shortly. The board and the Government remain anxious to end the present uncertainty surrounding the businesses as soon as possible in the interests of the companies, management and work force and dealers and suppliers.

I take the opportunity to inform the House of a forthcoming change in the chairmanship of BL. Sir Austin Bide's appointment as chairman of BL was extended in late 1984 on the basis that he would continue as chairman until a convenient moment for his retirement was reached. Sir Austin has kindly agreed to remain as chairman until decisions have been made on the future of the main Land Rover-Leyland businesses. That will represent the start of a new phase in the development of BL and, on my nomination, the BL board proposes to invite Mr. Graham Day, at present chairman of British Shipbuilders, to join the board and to become full-time chairman of BL at a date to be determined. I express the Government's thanks, and add my warmest personal tribute, to Sir Austin, under whose leadership BL has achieved notable progress.

I am appointing Mr. Phillip Hares, the present deputy chief executive and board member for finance of the corporation, to succeed Mr. Graham Day as chairman of British Shipbuilders.

Mr. John Smith (Monklands, East)

As this tangled web becomes more and more confusing and complex, is it not clear that the Government should never have departed from the concept of British Leyland remaining a integrated and public sector operation strongly supported by the British Government?

Will the Secretary of State confirm that the Government approached General Motors as long ago as April 1984, and for 18 months General Motors has been able to consider and negotiate its position, while all other bidders have been given little more than 20 days? Does that not show that the Government were already predisposed to sell the lot to General Motors? In view of the representations made to the Minister of State by my right hon. Friend the Member for Swansea, West (Mr. Williams) and my hon. Friends the Members for Blackburn (Mr. Straw) and for Preston (Mr. Thorne), why is it that Lancashire Enterprises Ltd. does not appear in the list of those permitted to make a bid for parts of the operation?

What will the time scale be? Is it correct, as is widely rumoured. that the Government will impose a time scale whereby the whole operation has to be completed by the end of this month? Given the fact that the Secretary of State confirms that the only bidder for Leyland Vehicles is General Motors, has that not put the Government in a hopeless position whereby General Motors will be able to insist on acquiring Land Rover as a condition for acquiring Leyland Vehicles? How do any sensible Government put themselves in such a hopeless bargaining position?

After this asset-stripping operation is completed, what will the new chairman be chairman of? Should he not be called chairman of Austin Rover? The Secretary of State will have seen a report on the back page of the Financial Times today, of a speech by Mr. Bob Lutz, chairman of Ford of Geneva. The article says: Ford was willing to restart talks about a possible takeover of Austin Rover … He said the Government had panicked recently when it told Ford to end the talks". What is the Secretary of State's comment on that? In view of that ominous statement, will he give us a crystal-clear guarantee that, throughout the lifetime of this Government, there will be no talks by the Government, or by British Leyland at their instructions, with Ford about the Austin Rover Group?

Mr. Channon

I shall try to deal with the points that the right hon. and learned Gentleman has raised. What he said about selling is unreasonable. It has been known for many years that the Government had every intention of privatising British Leyland and its component parts. That has been known ever since the last general election. There is no question of reopening talks with Ford or Austin Rover; and any rumours to that effect I disown and reject. I am satisfied that bidders had adequate time to put in a firm indication of interests. We shall study them carefully on their merits, and there is no question of any member of the Government having made up their minds before these careful considerations have taken place. I assure the House that that is the case. [HON. MEMBERS: "That is not what the Prime Minister said."] That is indeed what my right hon. Friend said.

We shall consider carefully the indications of interest that have come in. As to Lancashire Enterprises Ltd., people from it had meetings with my hon. Friend the Minister of State early yesterday, and every assistance was given to it to try to get it into a position to make a firm indication of interest, but I understand that by last night it had not given any such indications.

Mr. Michael Grylls (Surrey, North-West)

Does my right hon. Friend agree that, whatever the outcome of the consideration of these different bids, parts of BL are now desirable packages and it is a good thing to have several different bidders so that one can choose from them? Does he accept that the Government are no longer a good owner because these businesses need considerable sums of capital investment if they are to keep up with the international market, and the Government will always have more pressing demands on their money for things such as schools and hospitals, and industries in which they have an interest will always come bottom of the list? The sooner these firms are returned to the private sector, the better for the firms, the better for production and the better for the people who work in those firms.

Mr. Channon

I entirely agree with my hon. Friend. He has made three very important points. First, he draws attention to the fact that, under this Government, British Leyland is in a much better state than it was when the Opposition had control of it. Secondly, it is quite true that large sums of capital investment are required in various parts of British Leyland if they are to be in a position to compete in the long term. Thirdly, what we are trying to do and what we shall continue to try to do is to secure the long-term commercial future of these industries and the jobs of the people who work in them.

Mr. David Steel (Tweeddale, Ettrick and Lauderdale)

Having talked yesterday to both the management and the shop stewards at Land Rover, may I put a question to the Secretary of State that I have asked repeatedly both of him and of the Prime Minister? What formal consultations will there be with the 8,000 employees of Land Rover about their future before decisions are made? We appreciate that in terms of making a fast buck or short-term employment the case for selling the whole organisation to General Motors must seem attractive to the Government, but in terms of the long run—the design, manufacturing and engineering capacity of this country—surely it is worth while to take a little longer and to try to find British-based solutions for each division of the company?

Mr. Channon

On the right hon. Gentleman's last question, I think I am right in saying that Mr. Andrews makes it clear in his letter that he is anxious for a quick solution because he thinks that it is very damaging if this uncertainty drags on. I cannot therefore agree with the right hon. Gentleman that we should take a long time. We want to have a reasonable period in which to consider the indications of interest that have been expressed and to put forward proposals that meet the best long-term interests of the companies concerned. There the right hon. Gentleman and I are at one. Consultation with the work force is a matter for the companies concerned. They tell me that they are keeping their work force informed continually and that they will continue to do so. My hon. Friend the Minister for Industry has received deputations from the work force and from the trade unions, and we shall be delighted to continue to do so.

Mr. Hal Miller (Bromsgrove)

Will my right hon. Friend confirm that not only was it the long-standing policy of the Government to return these businesses to private ownership once they were profitable but that that was also the declared policy of the British Leyland board and of the subsidiary boards? Will he also confirm that we should welcome the fact that these enterprises have become successful, that a return to the private sector is now possible and that the Government's decision will be based upon the best interests of those who work for and supply those companies?

Mr. Channon

My hon. Friend is entirely right. As I have explained to the House on a number of occasions, the BL board agrees with that policy. It is entirely right that these subsidiaries should be returned to the private sector. If the Opposition had been in power, the companies certainly would not be in a profitable state.

Mr. Terry Davis (Birmingham, Hodge Hill)

Will the Secretary of State confirm that Freight Rover has consistently made a profit on the manufacture and sale of Sherpa vans in this country, whereas General Motors is making a loss on its van operations in this country? Will he also confirm that Freight Rover is now selling more vans than General Motors is selling in this country? Does he agree that for General Motors to take over Freight Rover would be for a loser to take over a winner?

Mr. Channon

I had better give the hon. Gentleman the figures for 1983 and 1984 for Land Rover (UK) Ltd. I can give him the published figures for the first half of 1985; I do not have the later figures. In 1983, Land Rover (UK) Ltd.—which includes Land Rover, Freight Rover and parts and equipment—made a loss of £14.5 million. In 1984 there was a small profit of £2.4 million. In the first half of 1985 the profit, before interest and tax, was £5.7 million.

Mr. Davis

Freight Rover.

Mr. Channon

Of course, one has to split the figures between Freight Rover and Land Rover. I agree with the hon. Gentleman to the extent that, in so far as one can appropriately work out the interest payments and apportion them correctly, Freight Rover is more profitable than Land Rover.

Mr. John Mark Taylor (Solihull)

In considering the options for the future of Land Rover, will my right hon. Friend take all factors into account and not merely the biggest bid?

Mr. Channon

Yes, I have explained to the House that we are trying to seek the best long-term future for the companies and, as my right hon. Friend the Prime Minister said yesterday, for the jobs of those concerned.

Mr. Tony Benn (Chesterfield)

May I ask the Secretary of State about the interests of the American Government in this sale? Have the Government been in touch with the United States Government and is it a fact that General Motors has been able to say to the British Government that, if it is allowed to acquire parts of British Leyland, the United States will place orders with British Leyland following the sale and that that is the real reason why the sale is going through?

Mr. Channon

No, Sir; I repudiate what the right hon. Gentleman says.

Mr. David Madel (Bedfordshire, South-West)

In relation to the bid from General Motors, can my right hon. Friend assure me that the Government will be seeking clear and firm assurances from General Motors on the future of jobs and investment in the Bedford truck plant in Dunstable before deciding whether to accept GM's bid? There is great anxiety in Dunstable, for obvious reasons.

Mr. Channon

Yes, I understand my hon. Friend's concern, and naturally I shall want to discuss that matter before coming to any decision. Indeed, we should discuss what will happen in either eventuality — whether the General Motors bid goes through or whether it does not.

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

Is it true that the chief executive of the Laird Group has written to the chairman of British Leyland saying that the only basis on which Laird is willing to take over Leyland Bus is if the two plants at Workington and Lowestoft are closed and the Farington plant reduced but retained? Will the Secretary of State rule out that option today at the Dispatch Box? Will he also give me the assurance that in the event that the management buy-out is submitted and is fully funded, it will be given the maximum consideration by the Department, but that if it is not fully funded it will still be treated as a new corporate plan and an alternative option for a Leyland Bus reporting direct to the Leyland board and being retained in public ownership?

Mr. Channon

On the hon. Gentleman's last point, we shall naturally consider any properly funded management buy-out proposals from the management of Leyland Bus. Indeed, I say in my statement that we expect that proposals may come. We shall naturally consider them carefully.

I understand that Laird has given a preliminary view of its proposals to British Leyland. Nothing final has been proposed and we shall consider that on its merit on the same criteria — what will be best for the long-term commercial future of the company.

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

Will my right hon. Friend accept that, as my hon. Friend the Member for Solihull (Mr. Taylor) said, when we come to a solution as to how the Land Rover problem in particular is to be dealt with, we shall not be preoccupied with making a quick buck—the best sum—but what is in the best long-term interests of the motor manufacturing companies of Britain?

Bearing in mind the Government's preoccupation with those over the other side of the Atlantic solving our problems, was there no British industrialist who would have had the confidence of the manufacturing entities in Britain who could have been appointed instead of yet another person from across the Atlantic? There are good people in Britain who have the confidence of the manufacturing companies in the west midlands and the whole of Britain. Why always overseas?

Mr. Channon

I am rather surprised by my hon. Friend's last point. Mr. Day is a British citizen and he comes from Canada. That has not usually debarred people from appointment in Britain. As to my hon. Friend's first point, I can confirm that we are looking at the long-term interests of the companies concerned.

Mr. Andrew Faulds (Warley, East)

As to the work forces and the managements of the various parts of BL, is it a question of management informing the work forces about developments or consulting the work forces about developments?

Mr. Channon

The management and the work force must carry out the normal procedures in cases of this kind. I am extremely anxious, as my hon. Friend the Minister of State has shown, to receive deputations, if they are appropriate, from any of the trade unions that wish to come and see me and make their case direct to the Government.

Mr. Richard Page (Hertfordshire, South-West)

May I endorse the calls by my hon. Friends for a long-term solution and ask my right hon. Friend to ignore the siren voices for short-term expediency? Has not the way in which the Opposition have tangled the publicity on this matter added to the time constraints faced by my right hon. Friend in finding the right solution and restoring market confidence to British Leyland as soon as possible?

Mr. Channon

My hon. Friend is entirely right. It is essential to bring these talks to a reasonably early conclusion after full consideration has been given to these matters. I repeat what I have told other hon. Members: we are anxious to achieve the solution that is best in the longterm interests of those in the company.

Mr. Stan Thorne (Preston)

Is the right hon. Gentleman aware, following the meeting yesterday morning with the Minister, that Lancashire Enterprises Ltd. sent a telex to Hill Samuel stating its intention to make a bid? Will the right hon. Gentleman confirm that that has not happened?

Mr. Channon

My information is that the company had not, by the close of play, expressed a firm indication

Hon. Members

Play?

Mr. Dennis Skinner (Bolsover)

Public schools coming out now.

Mr. Speaker

Order. The Secretary of State.

Mr. Skinner

The right hon. Gentleman should declare his innings.

Mr. Channon

I shall answer the question if I am allowed to do so. My hon. Friend the Minister saw a deputation yesterday led by the hon. Member for Blackburn (Mr. Straw). The deputation was given a full opportunity to declare a firm indication of interest but it did not do so.

Mr. John Carlisle (Luton, North)

Will my right hon. Friend accept that there is some significance in the fact that only General Motors has bid for the whole package, including the loss-making aspect of Leyland Trucks? Will my right hon. Friend refute the allegations by the Opposition and by my right hon. Friends the Members for Old Bexley and Sidcup (Mr. Heath) and for Henley (Mr. Heseltine) that General Motors is not a good employer? We in Luton refute those allegations and look forward to the amalgamation of the two companies.

Mr. Channon

I am sure that General Motors has been an excellent employer in the Bedford region. I think that that is well recognised.

Mr. Skinner

What is the right hon. Gentleman's average?

Mr. Channon

Very bad, I would say. My hon. Friend the Member for Luton, North (Mr. Carlisle) is quite right. We must consider what will be best in the long-term interests of the truck industry.

Mr. Dave Nellist (Coventry, South-East)

Is the right hon. Gentleman aware of the overwhelming opposition of trade unionists inside Leyland and of working people in Coventry, the midlands and elsewhere to selling off to private profiteers, whether American or British, any part or all of Leyland? Will the right hon. Gentleman get in touch with the Leyland board and condemn its actions in the past two weeks in attempting to soften up the work force by dismissing two Transport and General Workers Union conveners at Land Rover, Solihull and Unipart, Coventry for their stated opposition to privatisation?

Mr. Channon

I regret that I am unlikely to be able to please the hon. Gentleman in conducting these negotiations. I think that an early-day motion has been tabled about the point he raised. That is another matter.

Mr. Patrick Cormack (Staffordshire, South)

Can my right hon. Friend give the House an unequivocal assurance that the Government would prefer a British solution?

Mr. Channon

We want a solution that is in the best long-term interests of those involved.

Mr. Norman Atkinson (Tottenham)

If the bid from General Motors for the Leyland heavy vehicle division is rejected, what contingency plans have the Government made for heavy vehicle manufacture?

Mr. Channon

We must first of all consider all the indications of interest that have come in, and then decide what to do.

Mr. Den Dover (Chorley)

Will my right hon. Friend pay particular attention, if the truck division is separated from the bus division, to the 2,000 workers at Multipart, Chorley, which is a highly computerised, extremely efficient and profitable operation? The workers want to ensure that they can service both Leyland Bus and Leyland Trucks and other manufacturers in future.

Mr. Channon

I will certainly bear in mind what my hon. Friend has said in his important intervention.

Mr. Doug Hoyle (Warrington, North)

Will the Secretary of State accept that he is not playing a cricket match and that this matter affects people's livelihoods? The hon. Gentleman said that he wants a quick decision, so will he give us the actual timetable as that is very important? Will the right hon. Gentleman bear in mind that the employees of British Leyland have no confidence in being informed by a management that previously denied that any talks were taking place? It is not information but consultation that is needed. Can he say what wages will be paid to the employees? The employees should have a say in the matter when their jobs are at risk.

Mr. Channon

I have already answered the hon. Gentleman's last point in the reply that I gave to his hon. Friend the Member for Warley, East (Mr. Faulds). In reply to his point about the speed of the decision, I have tried to explain to the House on a number of occasions that we want the quickest conclusion possible that is consistent with arriving at a decision after a detailed examination of the indications of interest that have been put forward. It is in no one's interest that the matter should be dragged out. I cannot today say what the timetable is, as a detailed study has not yet been made of the indications that have come forward.

Mr. John Stokes (Halesowen and Stourbridge)

Is my right hon. Friend aware that the main concern among the hard-headed workers in BL is the security of their jobs? They do not like the politicking on the Opposition benches. Is my right hon. Friend further aware that not all BL employees and BL suppliers wish to remain pensioners of the taxpayer?

Mr. Channon

I am grateful for my hon. Friend's comments, and I agree with them.

Mr. Robin Corbett (Birmingham, Erdington)

What time scale has the Secretary of State given to the British Leyland board? Is the Secretary of State aware of the complaints from bodies such as the West Midlands enterprise board that they were denied access to information from British Leyland? Will he ensure that all those who need information to which General Motors has had access for about 18 months, will now get that information?

Mr. Channon

I am assured that anyone who has asked for information has received it. I have already tried several times to answer the question about the time scale. We shall be as quick as we can but the matter will require some study and the House would expect that proper study would be made before proposals were put forward.

Mr. Robert Adley (Christchurch)

On that last point, is my right hon. Friend aware that I was informed this morning that Lonhro was unable to have meetings with the management of BL, was unable to meet the work force and was not supplied with the information which it would have normally have expected to receive if it was to put in a bid? Will my right hon. Friend give the House a simple, straightforward assurance that what I have just said is wrong and that all the bidders were provided with precisely the same information as was available to General Motors?

Mr. Channon

Lonhro, and everyone else who asked, was given a packet of information which I am assured by my advisers, as well as by the advisers to BL, was normal practice. Lonhro has made a firm indication of interest and we shall treat that seriously and consider the proposals.

Mr. Ian Wrigglesworth (Stockton, South)

Does the Secretary of State accept that the motor industry plays a central and strategic role in manufacturing industry in any country in the western world? Will he therefore give us an assurance that at least one motor manufacturer in this country will remain under the control of people in this country so that that strategic role can be properly performed?

Mr. Channon

I have already told the House, in answer to the right hon. Member for Chesterfield (Mr. Benn), that there is no question of any talks going on in connection, for example, with Ausin Rover. I think that that answers the hon. Gentleman's point.

Mr. Alan Howarth (Stratford-upon-Avon)

Does my right hon. Friend accept that those who are prepared to be rational on this subject are actually much more numerous than he may have supposed at times in recent weeks and today, that they agree with him that British Leyland ought to be in the private sector and that, if it is to be successful there, it will need access to substantial capital and to major markets? If British participants are credibly able to offer those benefits, so much the better. Would my right hon. Friend agree that last-ditch little Englander attitudes threaten jobs and the future prosperity of British Leyland?

Mr. Channon

I am sure that my hon. Friend is right. We must have a solution that takes account of the points that he has made and one that is in the interests of those who will work in the industries and so keep a viable industry in this country.

Mr. Harry Ewing (Falkirk, East)

Is the Secretary of State aware that, under the chairmanship of Graham Day, more than 20,000 employees of British Shipbuilders lost their jobs and that, far from giving BL employees confidence in the future, Graham Day's appointment alone will strike fear into their hearts? Will the Secretary of State confirm that the bid from General Motors includes a substantial sum for the immediate declaration of 1,000 redundancies in BL and that GM is on public record as saying that 1,000 people will lose their jobs almost on the day that it takes over BL

Mr. Channon

None of the indications of interest have been examined in detail, but that is clearly a point that one would wish to consider in detail with anyone who comes forward with suggestions. I am surprised at the hon. Gentleman's comments about Graham Day, as he was appointed by the Labour Government in the mid-1970s. The hon. Member for Liverpool, Walton (Mr. Heffer) said of Graham Day: He was well thought of on Merseyside, particularly in Cammell Laird. He did a first-class job."—[Official Report, 9 December 1976; Vol. 923, c. 629.] I can give quotations from any number of Labour Members if the House wishes.

Several hon. Members

rose—

Mr. Speaker

I will call those hon. Members who have been rising in their places.

Mr. Tony Favell (Stockport)

If the talks between Austin Rover and Ford are truly dead, will my right hon. Friend tell the board and workers of Austin Rover to get their fingers out because in the past 25 years British car manufacturers' share of the home market has dropped from 90 per cent. to 34 per cent.? Does he agree that if yesterday's prophecy by the chairman of Ford (UK) turns out to be right and the abandonment of the talks turns out to be a tragedy for Britain leading to widespread job losses and Austin Rover ends up in the lap of Honda of Japan, a lot of people will have a lot to answer for, including Members of Parliament who blocked that deal?

Mr. Channon

I agree to some extent with my hon. Friend—at least to the extent that it is exceedingly important for Austin Rover to increase its share of the United Kingdom and European car markets. It has under 4 per cent. of the European car market. I very much hope that it will achieve that increase. It has already made some improvement and I hope that that will continue.

Mr. Eddie Loyden (Liverpool, Garston)

Will the Secretary of State resist making quick decisions on this matter and give careful consideration to the long-term future of the British car manufacturing industry? Will he now respond to the question asked by my hon. Friend the Member for Warrington, North (Mr. Hoyle) and say what weight he believes should be given to the opinion of the work force about the future of the industry in which they work?

Mr. Channon

We will, of course, give careful consideration. We must try to achieve reasonably speedy but careful consideration. The House must understand that the two aspects are not necessarily inconsistent. I hope that the closest talks will take place with the work force. Indeed, the companies concerned tell me that they are engaged in talking to the work force, and my colleagues and I are very happy to receive any further deputations.

Sir Paul Bryan (Boothferry)

Can my right hon. Friend explain why Labour Members are happy to implore the Japanese Nissan company to set up in this country but will have nothing to do with co-operation with American companies which have already supplied far greater and better employment than BL in the past 20 years?

Mr. Channon

It is impossible for me to explain the workings of Labour Members' minds.

Mr. Bill Michie (Sheffield, Heeley)

Have BL workers and ex-BL workers who have a share interest in BL been properly and legally consulted in this matter?

Mr. Channon

I understand that all legal requirements are taking place. Now that the indications of interest are in, it is essential that the usual procedures be followed.

Mr. Frank Dobson (Holborn and St. Pancras)

What interest has Aveling Barford shown in Leyland Bus and how is that company's interest connected with the Laird bid?

Mr. Channon

So far, we have had only preliminary indications from Aveling Barford. Subject to correction, I do not think that there is any connection with the Laird Group. I will certainly take advice on that, but I am not making a statement about Leyland Bus today.

Mr. Jeff Rooker (Birmingham, Perry Barr)

Just as BL came into the public sector largely by accident, are we not in danger of getting rid of it by accident? Is the Secretary of State bound to accept the views of the BL board, as he said in his statement? What is wrong with workers having a vote in their own and their families' future?

Lastly, will the Secretary of State place in the Library a copy of every statement made by Ministers since the last general election which could be taken by business men outside as an invitation to the effect that BL or parts of it were up for auction? Where is the evidence for that and can it be placed in the Library?

Mr. Channon

My own statements in the past month would fill a book, so anxious has the House been to hear from me in the past few weeks. The House knows that we have always made it clear that in our view the best future for the car industry and other industries is a return to the private sector, which is far better for them than the public sector.