HC Deb 20 January 1987 vol 108 cc865-72

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

11.47 pm
Mr. Michael Fallon (Darlington)

I am grateful for the opportunity to debate the closure of the Cummins component plant at Darlington and for the interest shown in this short debate by colleagues on both sides of the House, especially by my neighbours, my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), and the hon. Member for Sedgefield (Mr. Blair) who, I hope, will be able to catch your eye, Mr. Deputy Speaker.

The interest shown by hon. Members from both sides of the House is a reflection, partly of the importance of Cummins as a major engineering employer, not only in Darlington but on Teeside, and partly of the strength and vigour of the campaign that has been organised to try to save the plant and the skills that are associated with it. I am happy to pay tribute to the leaders of the campaign, Gerry Hunter, Ron Manning and their friends in the Amalgamated Union of Engineering Workers and the Association of Scientific, Technical and Managerial Staffs.

The campaign began with a march and a rally in Darlington and continued with a lobby at Westminster and now, as we pledged, we have brought the campaign right to the heart of Government and Parliament in the House of Commons. It has been a united, non-political, campaign, but it has also been a campaign which has grown in strength and confidence as it has proceeded since the original decision was taken. The case against the closure of the plant has also grown in strength as we have proceeded and the House should consider the reasons for that.

Cummins came to Darlington as part of the commitment made by the Government of the day and by the town, that the skills involved in engineering should not be lost when the North road shops in Darlington closed, but should be retained, enhanced, developed and passed on. After 20 years we should be failing the next generation, and our children, if we set that commitment aside lightly and allowed the plant to close. If we do not fight to retain the skills of that plant, we shall betray the trust that was placed in us 20 years ago.

The Cummins company is an integral part of Darlington and is involved, not simply in traditional engineering skills, but in the evolution of those skills and their adaption to meet the challenge of new technology, and in youth training. I know of no other Darlington employer which has made such as significant and important contribution to the youth training scheme than Cummins.

That commitment is recognised by everyone. The trade unions have consistently over the years, much against their will, accepted a huge number of redundancies, restructuring and the introduction of new technology. Management, too, has accepted the challenge of modernisation and faced up to the introduction of new engines. The Government have recognised that commitment and since 1979 invested in the two plants on behalf of taxpayers some £2,931,000 in regional development grant and selective assistance.

Since the decision to close the component plant was announced, the same degree of support and commitment has been shown by the trade unions, not simply in organising the campaign that has led to this debate or in playing a leading role in the fight to save the plant on both sides of the Atlantic but by being ready at any time to discuss with management ways in which the redundancies threatened by the closure may be avoided.

That commitment has been shown, too, by management. Since its initial decision, which we still do not accept, management has put together a team to find alternative uses for the skills and to explore the possibilities of attracting further fresh investment into that plant. Darlington borough council has shown commitment by appointing immediately a consultant to help in that work and by its readiness immediately to open discussions with the company. Everybody has shown commitment in the fight to save this particular plant. Therefore, it is only fair to ask my hon. Friend the Minister: what are the Government doing to assist in this campaign?

The Minister agreed immediately last month to receive a delegation at short notice, and I am grateful to him for that. As a result, he has taken up both with Leyland Trucks and with the Ministry of Defence the possibility of further orders that lie within the power of those two bodies. He has also made clear the willingness of the Department to assist in marketing the site, should the closure go ahead.

However, I must say to my hon. Friend that the first two commitments will not be recognised, except in the medium term. We are grateful for the assistance from Leyland Trucks and the Ministry of Defence, but that will help the company only in the medium term. As for the final commitment to help market the site, I do not accept, and I am sure that the trade unions and council do not accept, that we are anywhere near ready to say, "Yes, this plant will close."

What am I asking my hon. Friend tonight? I am suggesting three ways in which his Department could assist our campaign. First, the Department could use its good offices to become involved in the work of finding alternative uses for this major, modern and prestigious plant. The Department has a trucks and components division and a north-east regional office. If the company could put together a team to find alternative work, if the borough council could install a consultant, and if the trade unions were willing to help in the process, could not the Department second a man into the team to decide whether alternative uses can be found for the investment to which the taxpayer has already contributed heavily?

Secondly, will my hon. Friend consider an initiative from his Department on the question of component sourcing? It seems that too many United Kingdom manufacturers too easily rely on bases for components traditionally or historically sourced elsewhere in Europe or overseas. Parts of Astra cars come from Australia, Japan, Germany, Denmark and elsewhere.

Many manufacturers have pledged to reduce their overseas content. My hon. Friend's Department, perhaps acting through some of the indirect agencies that the Department use to promote British quality and design, could play a leading role in encouraging a United Kingdom initiative in reducing the amount of components that motor and truck manufacturers have to import from overseas and the rest of Europe.

Finally, I want my hon. Friend to consider whether there should be more flexibility in the regional aid package available in Darlington. I know that the regional director has been in contact with Darlington borough council and assured it that aid is available under section 7 of the Industry Act 1972 for an intermediate area. Far too often the type of project that section 7 aid might attract has been steered by the regional office to other parts of the northeast, to the development areas with their higher rates of unemployment further north or east and not to Darlington which has only slightly lower unemployment and where the traditional skills that the projects require are located and liable to be redundant.

I do not expect an immediate reply from my hon. Friend on those three points. However, I expect the Department to play as positive and as constructive a role as it can in the important campaign.

Mr. Deputy Speaker (Mr. Harold Walker)

I believe that the hon. Member for Sedgefield (Mr. Blair) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) have the consent of both the hon. Member for Darlington (Mr. Fallon) and the Minister to speak.

11.57 pm
Mr. Tony Blair (Sedgefield)

I welcome the opportunity to participate briefly in the debate. I thank the hon. Member for Darlington (Mr. Fallon) for allowing me to take part.

Earlier we debated the importance of manufacturing industry and, although the remedies from each side of the house might have differed widely, we all recognise the necessity and importance of manufacturing. Cummins is perhaps one of the best examples of manufacturing in the north-east of England. I do not think that any one would dispute the excellence of the plant or the product that Cummins produces. Indeed, I have been told that injectors produced by the Cummins component plant cost $90 less to produce than in the United States and a fuel pump costs $120 less. That is a good record on any basis.

Two factors have stood out in the Cummins campaign. First, it has had the support not just of the work force but of the town of Darlington, the local authority and the Members of Parliament with interests in the Cummins plant. Many of my constituents work at the plant and many of my neighbouring colleagues have constituents who work there. That cross-party support has been one of the most prominent features of the campaign.

The work force has been as assiduous in trying to save its jobs as it was in attempting to build the success of the company that it still serves. If anything showed the force with which the trade union side put its case in this matter, it was the offer that it made when it visited the United States to see the Cummins management. It took the trouble to go to the United States and what was put to management was a pretty impressive list of offers or inducements. The union side offered to end any demarcation problems that were causing difficulties for management, it offered to negotiate a wage freeze over a period of time giving up the productivity and annual increases to which the work force would otherwise be entitled, and it said that it would assist in any way the management wanted, either in diversification or in the introduction of new technology. That was an impressive performance by the Cummins work force, but it was representative of its attitude throughout the entire matter.

The company has said that it would put forward a team consisting of unions, management and consultants to see whether there is any way in which the company can diversify in order to save jobs. The company has also said that it would be prepared to go into any joint venture at the components plant in Darlington with any company that wishes to use the plant and introduce its own machinery or products.

That is not everything that we or the Cummins work force want, but there is that opportunity. There are two specific ways in which the Government can help. First—I hope that the Minister can give us some assurance—the Government must not stand in the way of any package or diversification or new products for the Cummins plant. Indeed, I hope that they will actively assist any such package, either through section 7 of the Industry Act 1972 or in any other way. Secondly, the Goverment should take a hands on, not a hands off, approach to intervention and put themselves in the position of assisting the team that will be set up. I hope that the Government will become involved in the process. There is nothing that smacks of ideology in that; it is simply a common sense approach. In a sense, I ask the Government to do what myself, the hon. Member for Darlington and other hon. Members are doing to protect the rights and interests of our constituents. I ask the Government to do that to protect not just our constituents but the country, because it is the country and our manufacturing industry that will suffer if the proposals go through in their present form.

I hope that the Government can respond in a positive way. They will have the support of both sides of the House if they do so.

12.3 am

Mr. Leon Brittan (Richmond, Yorks)

As about 100 of my constituents work at Cummins, I welcome the opportunity of speaking in the debate. I should like to pay tribute to the campaign that has been waged by the Cummins work force and to the leadership given by my hon. Friend the Member for Darlington (Mr. Fallon), who has been resourceful, imaginative and energetic, along with hon. Members of different political persuasions, in doing everything possible to deal with a difficult problem. I pay tribute to the work force for its flexibility, determination and readiness to make the changes that may be necessary to save jobs at Cummins.

The points that have been made by my hon. Friend the Member for Darlington and the hon. Member for Sedgefield (Mr. Blair) should be given serious and sympathetic consideration. I realise that when rationalisation appears to be necessary and desirable for a company, the role of a Government and the possibilities before them are not infinite. The Government cannot just wave a wand. However, that does not mean that they are totally without power, influence or, more particularly, the ability to assist in coming up with a package that others are more than ready to work on.

My hon. Friend the Member for Darlington requested that serious consideration be given to using the good offices of the Department of Trade and Industry to work out alternative uses and as flexible as possible an approach to a regional aid package. That is a reasonable request. I know from my own period in the Department that that request will not fall on deaf ears.

I had occasion to deal with sourcing when I was at the Department. By persuasion, I was able to achieve a measure of success in the motor industry. The suggestion made by my hon. Friend the Member for Darlington that that effort should be mobilised and organised in a more formal but just as flexible way is worth considering. I hope that, in the various ways, the Department will show its readiness to help those who are more than ready to help themselves and who, I hope, will be considered to have been fully and admirably assisted by their Members of Parliament.

12.5 am

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)

I congratulate my hon. Friend the Member for Darlington (Mr. Fallon) on securing this Adjournment debate to discuss a matter that, obviously, is of the highest importance to his constituents. I also thank my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) and the hon. Member for Sedgefield (Mr. Blair) for their contributions to the debate.

All hon. Members will agree that manufacturing is of the highest importance as the key wealth creator within our economy. I appreciate, as I was reminded by the hon. Member for Sedgefield, that this is not the occasion for a general debate on macro-economic policies or, indeed, on how various approaches have been put forward to champion the interests and provide a better environment for the manufacturing sector within our economy.

I should like to record my agreement with the proposition that manufacturing is exceedingly important. It is the key wealth creator within our economy. In that context, I listened with great sympathy to the arguments deployed by the three speakers in the debate. I fully understand and appreciate the concern of my hon. Friend the Member for Darlington about the decision of the Cummins engine company to close its components plant in his constituency by the end of 1987 or early 1988. As my hon. Friend knows, my right hon. Friend the Minister of State received a delegation from Darlington on 10 November last year, and that was within a fortnight of the company announcing its decision on 28 October. I am sure that my hon. Friend will agree that this rapid response clearly demonstrates the Government's concern for his constituents who are currently employed at the components plant and for all who are affected by the company's decision. As we were reminded earlier, this issue has occupied the attention of Darlington and, indeed, many hon. Members.

As my hon. Friend will be well aware, the various parties have brought the decision of the company to the direct attention of my right hon. Friend the Prime Minister. I can say with confidence that the Government fully appreciate the anxieties that that decision has brought to those affected by it. Therefore, I am grateful for this opportunity to make known to the House the Government's equal concern and to make clear their position on the company's decision.

Of course, it has been the consistent policy of the Government to create a climate in which industry can prosper. I do not intend to refer in detail to the various policies, but our policies recognize the importance of manufacturing. We accept that a healthy manufacturing sector can provide the basis for an expansion of employment in a local economy and, indeed, in the economy as a whole. As a result, we now have a much more favourable climate in which industry can operate.

The House will, of course, appreciate that it is for industry to operate in that climate and not the Government. The Government cannot seek to intervene in the commercial matters of private companies and it is not for the Government to intervene in the decision of the Cummins engine company to close its component plant at Darlington. As painful as it may be, this is a decision which only the company can properly take in the light of its commercial judgment.

Similarly, it would be quite inappropriate for the Department to intervene in such commercial matters as the marketing of Cummins engines. It is for potential customers to judge for themselves the engines they want in their vehicles, and that applies to the Ministry of Defence as much as to any other potential customers. It is the customer who makes the demand for a particular engine and not necessarily the supplier of the vehicle. Certainly, it is not a matter for the Government generally.

My hon. Friend has correctly referred to the Government assistance which Cummins has received in respect of the components plant. I must explain that, in respect of the components factory, an offer of selective assistance under section 7 of the Industry Act 1972 was made in October 1980. That Act made no provision, for example, for the recovery of any assistance paid under it and it would not be appropriate to seek to recover that assistance should the components plant in fact close. Similarly, the plant has been the beneficiary of regional development grants, but again it would not be appropriate to seek to recover those grants.

In announcing its decision on 28 October last year, the Cummins engine company said that it had for several years been pursuing a vigorous policy of reducing costs, enhancing quality and improving performance to ensure that the company maintained its position as a leading international diesel manufacturer. It explained that the present industry overcapacity and the additional impact of new manufacturing technology had led it to take action to reduce further its manufacturing floor space and thus its costs. This had led to the decisions to close the company's components plant and its parts distribution facilities in north America and also the components plant at Darlington by the end of 1987 or early 1988.

These arguments by a company with substantial manufacturing capacity in this country reflect the need for industry to be internationally competitive in terms of price, quality and performance. Only in this way can companies of any sort hope to secure their long-term future. The Government are also confident that the company, which said that minimising the number of people who will be affected by the closure of the components plant at Darlington will be a prime consideration, will indeed bear in mind the concerns of those people.

I have referred to the fact that Cummins is closing two of its facilities in north America and I would remind the House that the company is an important United Kingdom employer. It employs some 2,500 people in this country—in Darlington, Daventry and Shotts, near Glasgow—and, as I have already said, is committed to minimising the number of people who will be affected by the closure of the plant. Certainly, I am satisfied that there has been no question of targeting the redundancies on the United Kingdom. Some 1,500 people are losing their jobs with the company in America.

I turn to future grants and to future proposals that may come from the company. Grants are available in the Darlington assisted area on a selective basis to help companies undertaking manufacturing or service projects which create or safeguard employment and also have an identifiable regional and national benefit. Some projects may also qualify for assistance from European funds. The Government, in designating Darlington an assisted area, have recognised the special circumstances of the area, and the selective assistance available provides an incentive for companies to consider Darlington in preference to other non-assisted areas.

My hon. Friend knows that my hon. Friend the Minister of State, following his meeting with the delegation from Darlington, asked the Department's north-east regional office to work with Cummins and all those concerned with the promotion of Darlington and the region generally to make sure the attractions of the modern components factory, should it close, are well known to interested parties. Subsequently, the regional director and his staff have kept in close touch with the Cummins management at Darlington and the borough council. The Department will certainly continue to offer all the help and advice it can.

I can also inform the House that my officials have been in touch with Cummins today to discuss further the company's position. I understand that Cummins has established an internal committee that includes management and union representatives, advised by an outside consultant nominated by the Darlington borough council, with the aim of seeking alternative work for the components plant or the area, in an endeavour to minimise any redundancies which may be declared.

I also understand that the company is not planning an immediate closure but an orderly phasing out of its work at the components plant. Of course, it must be recognised that in its need to maintain competitiveness the company must act in accordance with its commercial judgment and it would be wrong for me to suggest that the company should delay closure of the plant if its present efforts to find alternative work for it fail.

A number of questions have been raised and I am sure that hon. Members would expect, at least, a preliminary response. My hon. Friend the Member for Darlington raised three points. He asked me to consider the question of secondment, to consider an initiative on component sourcing, and to consider the flexibility of the regional aid package. I shall consider his observations most carefully and I am sure that my hon. Friend will understand why, after full consideration of his questions, I should like to respond to him in a letter. I am grateful to him for giving advance notice of those issues in this Adjournment debate. I will endeavour to give him a comprehensive response.

The hon. Member for Sedgefield asked whether, if the Cummins position were to change, the DTI would refrain from standing in the way of any diversification plans that might be brought forward by Cummins. I trust I have stated his point correctly. I understand that he wants to know whether we would adopt a positive attitude to entertaining applications under section 7 of the 1972 Act. If the company's position were to change and it came forward with projects that complied with the guidelines, well known to the company, we would consider our position. In advance of those circumstances, there is no preliminary negative attitude from the Department.

My right hon. and learned Friend the Member for Richmond, Yorks asked us to be vigilant in considering alternative uses for what is a magnificent site. I have not visited the plant, but on two recent visits to Teesside I have seen it and I can vouch for the fact that it is a magnificent facility.

I have faced similar problems in my constituency, and I can understand why the hon. Member for Sedgefield, my right hon. and learned Friend the Member for Richmond, Yorks and my hon. Friend the Member for Darlington wish, beyond all else, that that magnificent facility should continue to be staffed by the existing work force. I have explained that for the Government—

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

Adjourned at seventeen minutes past Twelve o'clock.