Rover Group

HC Deb 08 June 1988 vol 134 cc900-43

Mr. Speaker

We now come to the debate on the British Aerospace bid for the Rover Group. I must tell the House that I have selected the amendment in the name of the Prime Minister.

7.14 pm

Mr. Bryan Gould (Dagenham)

I beg to move, That this House believes that the recent improvement in Rover Group's performance owes much to the efforts of the workforce and demonstrates what can be achieved by long term investment and public ownership; sees no real industrial logic in the proposed takeover of Rover by British Aerospace; deplores the give-away terms on which Rover is to be disposed of; demands assurances that the investment will be made in a new model range in order to provide the essential guarantee for Rover to remain a volume car manufacturer; and calls upon the Government to manifest its belief in the need to maintain British volume car manufacture by retaining Rover in public ownership and ensuring that the necessary investment is made. We debated the proposed takeover by British Aerospace of Rover just five weeks ago, but I make no apology for returning to the subject because today we at least have a chance to vote on our motion. Five weeks have elapsed and we now have the opportunity to ask the Chancellor of the Duchy of Lancaster and his ministerial colleagues about the developments during that time. We also have a renewed chance to express our grave concern about the future of British volume car manufacturing.

In recent months we have debated and considered a whole range of different industrial questions. We have debated British Steel and British Shipbuilders and we looked at the Girobank only yesterday. Earlier today we considered Rowntree. In each of those cases the circumstances have been different. The issues have also been a little different but in each case the Government's attitude has been the same. They have made it perfectly clear that they will accept no responsibility whatever for the future fortunes of British industry.

I am reminded of the debate that we had towards, I think, the end of 1986 when the Chancellor of the Exchequer, confronted with the fact that British manufacturing industry had seen a deterioration in its trading performance since 1979 of £13 billion—the figure is now £17 billion—said that that was neither here nor there. That epitomises the Government's attitude to our manufacturing industry.

In this instance we see the Government's determination to wash their hands, on ideological grounds, of any part of British industry that happens to be in public ownership. Their prime concern, indeed their only concern, is to sell where possible at whatever price they can get. If they cannot get any price at all they will give whatever it may be away for nothing. That is true of the Govan shipyards and of the Rover Group.

When asked about jobs, about what happens to our strategic capacity in some of these important industries and about national interests, the Government are all too keen to say that from the moment privatisation is contemplated they cease to have any responsibility. They say that only the market prevails and that only the market must decide. Nowhere is this attitude more clearly demonstrated than in the British Aerospace bid for Rover, and nowhere is it more acutely important than in this case.

As I said on 4 May, we are talking about the future, indeed the survival, of the one remaining indigenously owned and controlled volume car manufacturer in Britain.

If, as a consequence of the Government's manoeuvring, and as a consequence of the British Aerospace takeover, Rover Group should go out of business after five years, and we should no longer have a volume car manufacturer in this country under British ownership, from that moment we would become the one advanced industrial country to have given up that capacity. Already, we are at the bottom of the league of the G7 countries. We have already been overtaken by Spain in terms of car production. If we were to lose the Rover Group as the last British-controlled volume car manufacturer, we would be left without any capacity whatsoever in that crucial sector of our economy. We would have departed from a major technology and we would be unable to control the future direction of what traditionally, and for very good reason, has been regarded as the linchpin of a modern industrialised economy.

Mr. Roger King (Birmingham, Northfield)

Rubbish.

Mr. Gould

I invite the hon. Gentleman to intervene. From a sedentary position he comments that that is rubbish. Perhaps he can explain, if we retain no indigenous capacity whatsoever and if our car manufacturing is entirely that of a branch production line, and a satellite economy, how from the national viewpoint we will control that new technology, new capacity and the whole hinterland of industrial activity that depends on motor car manufacture.

Mr. Tony Marlow (Northampton, North)

Will the hon. Gentleman give way?

Mr. Gould

Yes, by all means. Of course I was not referring to the hon. Member for Northampton, North (Mr. Marlow) a moment ago, but if he wishes to rush to the defence of his hon. Friend I am delighted to allow him to do so.

Mr. Marlow

I am doubly grateful to the hon. Gentleman for his courtesy. Does he consider that to stop what he would consider terrible things taking place, with which he is trying to frighten us at the moment, the next Labour Government, which he believes might come to pass, would immediately renationalise the Rover Group?

Mr. Gould

I can do better than that. I can tell the hon. Gentleman our response to a real and actual situation. We believe that there is absolutely no case for changing the ownership of the Rover Group. Evidence shows, and the record shows, that it has failed under private ownership and prospered as a consequence of taxpayers' investment under public ownership, and very grave risks are being taken quite unnecessarily and quite unjustifiably in disturbing its present ownership.

It is all too obvious that none of that matters to the present Government. I am not surprised that they are unwilling to be challenged on this point. They are concerned only with their ideology. If the worst comes to the worst they want to say that it is not their responsibility. Their sole concern is to get shot of that industry and to offload Rover Group so that they can say in future that it is entirely a matter of market forces and commercial considerations as to whether that indigenous industry survives.

It so happens that I have been passed a confidential document produced by the Conservative research department. It is a long document and is rather boring and uninformative, but it begins with a very interesting statement which I shall read to the House: The takeover of Rover by British Aerospace offers a quick and attractive way of fulfilling the Government's commitment of returning the Group to the private sector. I invite the House to notice the word "quick". That immediately and accurately sums up the flavour of what the Government are about. They are looking for speed, ease and lack of responsibility. It reinforces my contention that they are concerned simply with getting shot of the industry irrespective of the possible consequences to our economy.

Let me make it clear that we are committed to the future of the industry. We believe that it is important that this major industry should remain in British hands. We believe that, notwithstanding the remark of the hon. Member for Birmingham, Northfield (Mr. King), it is important to our industrial future, that we should retain that industrial capacity. I am astonished that anyone representing a midlands constituency should argue otherwise. No Government can escape their responsibilities for protecting and preserving that industry and giving it the chance to prosper and survive. The Government have a responsibility not to ensure profitability of a given company in a given year, but at least to ensure that we retain an essential industrial capacity. If that industrial capacity did not survive, it would have to be regarded as a failure of Government policy.

Mr. Roger King

I have been listening to the hon. Gentleman with keen interest and I have yet to hear an argument why we should riot privatise the existing Rover Group. If we consider the examples of privatisation within the car industry—Jaguar is a fine example—we can see exactly the benefits of privatisation. Nothing except taxpayers' money has helped Rover Group since it was nationalised. It has not developed in the way in which Jaguar has developed in the private sector. Presumably the hon. Gentleman would condemn the privatisation of Jaguar as a complete failure.

Mr. Gould

Anyone looking at the record in that sector of British industry would be bound to conclude that under private ownership it would have foundered, and it very nearly did founder. Public ownership came to its rescue and public ownership has maintained that industrial capacity. The last time that we debated these matters, my hon. Friend the Member for Coventry, South-East (Mr. Nellist) pointed out that if we are to go through a catalogue of the privatisation of various parts of British Leyland, or whatever it may have been called at the time, we have to consider Coventry Climax, Alvis and Self-Changing Gears. Those companies have disappeared and if we are not very careful exactly the same fate awaits Rover Group. Opposition Members want to make it very clear that it is the Government's responsibility to avoid that. In proposing to change the ownership of Rover Group for reasons of dogma alone they are taking a quite unjustified risk with the future of that industry.

Mr. Robert Hayward (Kingswood)

Will the hon. Gentleman give way?

Mr. Gould

No. I have a feeling that the hon. Gentleman is going to return to an arid issue which concerns some hypothetical question, when what we are intent on debating is the future, in hard practical terms—

Mr. Hayward

Will the hon. Gentleman give way?

Mr. Gould

No. I wish to press on with my speech.

There is no case for changing the ownership of Rover Group. As I said on 4 May, given the likelihood that it will happen, Opposition Members are realists and do not wish to do or say anything that would jeopardise the future of that group, and particularly of the industrial capacity and employment it provides. But we have the right to put to the Minister the legitimate concerns that we feel and that are shared by many others beyond this Chamber as to whether the deal provides the assurances that we think are necessary if the future of the Rover Group is to be guaranteed.

We are unimpressed, as are most of the experts who have commented on the matter, by the arguments about synergy. As I said on 4 May, we think that that is an attractive and fashionable term which no doubt comes out well in glossy television advertisements, but if one talks to the production engineers and the experts in the industry, they will confirm that synergy is an extremely elusive advantage. Let us set aside as being mere adman's babble the notion of synergy. No case in industrial logic has been made for the takeover. Let us now consider a much more important question.

We should consider whether the deal, if it goes through, will provide the investment that the Rover Group will need desperately if it is to survive as a volume car manufacturer. The best estimate is that it will need about £1 billion during the next four or five years. We are entitled to ask where the money is to come from. Where will that investment be generated?

When Roland Smith and others from British Aerospace said that they believe that the investment will be generated by Rover, they were living in cloud-cuckoo-land. Rover may have moved briefly into profit—that is a considerable achievement that owes a great deal not so much to the highly lauded Graham Day as to an excellent and dedicated work force who have put in a great effort for a long time—but the profit was about £27 million. There is little guarantee, for reasons that I shall come to, that even that level of profitability can be guaranteed, and it is inadequate to generate anything like the investment that will be needed if Rover is to develop the new model lines that will maintain it as a volume car manufacturer.

I suspect that when the attempt is made to convince us and others that the deal will provide the necessary investment, given its implausibility, what we shall really be told is that the deal is not intended to produce a continuing capacity in volume car manufacturing. That is what I think is in the mind of British Aerospace and of Graham Day, and it is what we are intended to assume from these highly incredible assumptions. Rover, with 15 per cent. of the market, is too small and not profitable enough to generate its own investment for the time being.

Mr. Roger King

What about exports?

Mr. Gould

We should consider what is likely to happen to our ability to compete in international markets. Like British Aerospace, Rover is directly affected by movements in the exchange rate. Indeed, Rover is much more sensitive and vulnerable to movements against the deutschmark than is British Aerospace, which is much more concerned with movements against the dollar.

Rover's ability to compete, and its profitability, will be and are being gravely affected by the pound rising against the deutschmark. There can be no doubt about that, and any Industry Minister worth his salt would be the first to say so and to argue, against his Treasury colleagues, that the rise in the exchange rate is doing great damage to important British industries.

Mr. Dave Nellist (Coventry, South-East)

Is my hon. Friend aware, as I am, that British Aerospace has in the past few weeks had to set aside £320 million to combat the effects of the changing value of the pound against the dollar? Since our debates on this topic on 4 and 12 May, British Aerospace has announced 1,100 redundancies at Filton in Bristol, so when it comes to investment and job security, aerospace and car workers are fearful and apprehensive about this privatisation, sell-off and false merger.

Mr. Gould

My hon. Friend is quite right. I shall come back to British Aerospace in a moment. We ought to be clear, however, that Rover is being adversely affected by exchange rate movements.

Mr. Phillip Oppenheim (Amber Valley)

Will the hon. Gentleman give way?

Mr. Gould

No. I have given way quite a lot already.

There are other developments in the pipeline that are equally worrying for Rover's profitability. If, for example, EC standards on exhaust emissions are adopted—I recognise that the Government have done all they can to resist them, but I suspect that it is in the nature of things that we shall get them in the end—Rover's profitability will disappear in a puff of exhaust smoke as it will find it expensive and difficult to convert its present model range to meet the new standards. [HON. MEMBERS: "That is nonsense."]

The hon. Member for Northfield asked about Rover's performance in international markets. The British market is very important to Rover. It has only 15 per cent., but it is by far its biggest market. After a welcome improvement which led to the share of imports in the British market dropping—miraculously one might say—to 49.5 per cent. last year, it is running at 54.5 per cent. this year. Last year was the first time for many years that imports fell below 50 per cent. of the market. Import penetration this year, however, is on the way up again and will cost us £1.4 billion on our balance of payments. That is the effect of the exchange rate on Rover and its profitability.

I shall return to the central question with which I wish to confront the Chancellor of the Duchy. If Rover needs, as it clearly does, substantial investment during the next four of five years to stay in business as a volume car manufacturer, where is the money to come from? It will certainly not come from Rover. Is it to come from British Aerospace? It too is most certainly unable to provide the investment. It has its own problems.

Last week, I visited the excellent British Aerospace plant at Chester. I saw the wonderful work that is being done there. Great investment has been made in Airbus wings and on the HS125. It is a most impressive plant. It was impressed on me—quite innocently, as my hosts were not to know that we would debate these matters in the next few days—that the development and the investment were immensely expensive. Millions of pounds are being invested in new equipment which was being installed even while I visited the factory.

That investment has embarrassed British Aerospace in terms of its cash flow. It cannot generate anything like the investment needed for Rover. Indeed, it probably cannot generate any investment as it needs help itself. I am sure that the Chancellor of the Duchy will confirm that it has been to the Government to ask for help to cover for losses now staring it in the face on its Airbus work.

The losses have arisen for exactly the same reason as Rover and every other sector of British manufacturing industry has been embarrassed recently—the exchange rate has made the Airbus and work on it extremely unprofitable. It is not just Airbus that is affected. British Aerospace is clear that if it is to sell civil aircraft such as the HS125 or the HS146, it can do so at a profit only if the pound stays at $1.70 or lower.

British Aerospace is having to make cuts, to seek Government help and to send hundreds of millions of pounds' worth of Airbus development on sub-contract to the United States to escape the exchange rate trap. It is short of cash, it is involved in a massive capital investment programme—for which it deserves great credit—and it has very little to sell in the short term. What does it do? It looks to somebody who at least has something to sell. Whatever its other weaknesses in the market, Rover has cars in the showroom. At the taxpayers' expense, Rover has made a great deal of the required expenditure.

We covered this ground when we last debated the subject. The likelihood—indeed, it is almost a certainty—is not that the takeover, or merger, between British Aerospace and Rover will generate a flow of cash or of investment capital from British Aerospace to Rover, for it will certainly not be anything like the volume needed to meet Rover's need for investment. The virtual certainty is that any flow will be in the reverse direction. It will occur for four or five years, which is the extent of the legal undertakings given by British Aerospace.

The £800 million of taxpayers' money which is to be given away to British Aerospace will finance the process. Far from guaranteeing any investment or any future for Rover, we find a prospect of Rover and those who work in it being guaranteed a future lasting five years, financed by the taxpayer, during which they will be milked for cash.

British Aerospace will then say that it finds it difficult to maintain volume car manufacturing, that it is happy to keep the odd bit, that it has always been interested in Land Rover and that it might be able to make a go of it—that was what it wanted in the first place—but although it was offered such an attractive deal with so much cash in hand to keep the volume car business going for a short time, it is no longer viable. Thus, the Rover Group and volume car manufacturing in this country will come to an end.

What will the Government say, if they are still in power, and I pray that they will not be? They will say, "It is all to do with commercial considerations and market forces. If we lose that important industrial capacity"—and one or two midlands Conservative Members of Parliament at the same time—"that will be something over which we shall have no control." That is what is in prospect and is the logic of the position. We shall listen to the Chancellor with interest and see what logic he advances.

That is our persuasive interpretation of the position. We are entitled to ask the Chancellor what difference the past five weeks have made. What further can he say to allay our fears?

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)

Nothing.

Mr. Gould

That is extremely depressing news. On 4 May the right hon. and learned Gentleman failed to give any assurances about investment and the future of the industry. Notably, he failed to give any assurances—he repeated this performance before the Select Committee—about employment.

Those who work for the Rover Group are, with good reason, extremely concerned about their jobs. They know that, for the reasons that I have outlined, the possibility of British Aerospace remaining committed to car manufacturing is slight. They know that British Aerospace, which has no commitment to the car business, is likely to find major assets such as the site at south Cowley, which could be realised at a substantial profit, very tempting. That is the immediate danger, which is why those workers are right to be worried that they have not been given any assurances by British Aerospace or the Government.

It is generally agreed that the immediate future of the Rover Group depends to a large degree on its relationship with Honda. So far we have heard nothing more than bland and vacuous assurances about how benignly Honda looks on this arrangement. I hope that the Minister will say more about what Honda has in mind for continuing collaboration.

What about the problems that have arisen with the EC? The Minister will concede that he will have a substantial argument on his hands if he is to persuade Commissioner Sutherland that £800 million of taxpayers' money is not a hidden subsidy. It may be one thing to write off debts, hut, as the Rover Group's indebtedness amounts to no more than £560 million, the Minister will have the awkward task of explaining what the other £240 million represents. We therefore need to know what will happen if Commissioner Sutherland chooses to exercise powers under the treaty of Rome and says "No. I am not having the £800 million. I may accept £500 million or, if I am feeling generous, £600 million."

What will happen if the deal does not turn out as Professor Smith has been selling it to his shareholders? What will happen if the cash on the table is not £800 million but a substantially smaller sum? Will the deal be called off? Will Professor Smith be able to sell it to his shareholders? If the British Aerospace deal falls clown because it is vetoed by the EC, or because in a form approved by the EC it is unsaleable to British Aerospace shareholders, what will be the Government's fall-back position? What guarantee will they give that the Rover Group will stay in business? What are its other prospects? Who else has been interested? What other bids are likely to come forward, and how serious are they?

We need to know the answers to those questions because the Government have unwisely put all their eggs in the British Aerospace basket. To listen to Government Ministers one would think that there is no future for the Rover Group other than with British Aerospace. If British Aerospace departs the scene for any reason, we need to know—as does the Rover Group and its employees—where the Government will stand. Will they give a continuing commitment to invest in the Rover Group as a public sector car manufacturing company, or is there another bidder in the offing, who has been kept at arm's length so far? If so, who is it?

The Government are always interested in the Labour party's plans. They are obliged to say what is their contingency plan. If we do not receive answers to our questions, it will be perfectly clear that the charge that I levelled at the Government—that they have no interest or commitment to the maintenance of the industry—will be proved to the hilt.

We must not forget that British Aerospace is at risk as a consequence of this deal. It may be dragged down, as have others in the past, by its association with the less profitable parts of the British car industry. Those who work for the Rover Group and British Aerospace are concerned about their future.

Mr. Hal Miller (Bromsgrove)

The hon. Member for Dagenham (Mr. Gould) is not backing Britain.

Mr. Gould

I am backing Britain, but I want assurances, guarantees and some evidence of commitment from the Government to the maintenance of the industry. I want the issues to be debated properly and developed. We have not been given any commitment, assurance or guarantee but a solution that, in the words of the Conservative party's research department, is a "quick" one, a quick fix. It may be attractive to the Conservative party, but it is not to those who want a flourishing British car industry or those whose livelihoods depend on its existence.

7.46 pm

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)

I beg to move to leave out from 'House' to the end of the Question and to add instead thereof: 'believes that the recent improvement in Rover Group's performance owes much to the efforts of the workforce and management combined, that further improvement can best be achieved by returning the business to full private ownership, that the proposed takeover by British Aerospace is to be warmly welcomed and is in the interests of Rover Group's employees as well as those of its suppliers and dealer network, that future investment should be a matter for the management of the business and the prospective new owners, and that the overall terms of the sale agreement are in the interests not only of the companies but also of the taxpayer.' This is an Opposition Supply day and they have chosen the subject for debate.

The hon. Member for Dagenham (Mr. Gould) began by giving a brief explanation of why we are again discussing the Rover Group. We had a full debate five weeks ago about the agreement between British Aerospace and the Rover Group which is conditional on the conclusion of negotiations with the European Commission. Subsequently it will go to an extraordinary general meeting of British Aerospace shareholders.

The hon. Gentleman asked me to update the House about the events of the past five weeks, but there have not been any; we are having the same debate as we had five weeks ago. As we made clear at that time, we trust that discussions with the Commission will be concluded before the summer. As yet, they have not been, so there is little point in my again explaining the terms of the agreement, which I believe I explained to the satisfaction of most hon. Members in the previous debate.

A wide range of subjects could have been chosen if the Opposition had wished to continue their ideological obsession with the nationalisation of large parts of British industry and their objections to privatisation. At present, we are returning to the private sector the Rover Group, the British Steel Corporation, most British shipyards and Girobank. By returning to the agreement with British Aerospace, the Opposition have returned to the most popular and least controversial of our proposals. Contrary to the description that the hon. Member for Dagenham seemed to be giving, British Aerospace is a popular and successful company. I believe that there has been a widespread welcome for our proposals.

We are able to return those companies to the private sector because of the general well-being of the British economy and because the Government have given the managements of most of those companies their head and allowed them to apply commercial judgments to succeed in the market place. Those companies are now in a position to return to a booming and successful private sector economy.

The hon. Member for Dagenham said that he had returned to the subject of the car industry for this nationalisation versus privatisation debate because of his concern about this sector of the economy in general. He earlier expressed a fear about the chocolate-making industry and said that we are becoming a branch-line economy and moving out of the mainstream of important manufacturing industries. It is singularly ill-timed for him to make comments of that sort about the United Kingdom vehicle industry, into which the Rover Group is about to return as a private sector company. We have had a good time in the United Kingdom vehicle industry over the past year or two. The outlook for all our companies is better than it has been for a long time.

Let us look at the last complete year, 1987, to see what sort of environment British Aerospace is seeking to buy into. In 1987 we saw the highest production of cars in the United Kingdom for nearly a decade. Productivity in the vehicle industry has increased by almost 7 per cent. each year during the 1980s. That compares with the impressive enough record of nearly 5.5 per cent. a year in manufacturing as a whole. Import penetration continues to decline.

The hon. Member for Dagenham is concerned about short-term fluctuations in the exchange rate and the strike at Ford. Those issues have been the basis of his concern over the past couple of months. More new United Kingdom-built cars were registered in 1987 than in any year since 1973. Seventy per cent. of Ford's and Vauxhall's United Kingdom car sales last year were sourced from United Kingdom factories. Our export markets are being regained. In 1987, the value of United Kingdom car exports increased by 45 per cent. over 1986. There is a general rise in industry's profitability and we are in the splendid position—one in which we have not found ourselves for a long time—that all our major vehicle manufacturers are now in profit. It has been a long time since any Minister has been able to say that to the House.

Mr. Oppenheim

If the British car industry is so successful and if, as we have been told ad infinitum, we are great believers in the rather well-worn level playing field, and if the Government believe in the free market, why do we maintain the ludicrous so-called gentleman's agreement that puts an import quota on Japanese cars when it indirectly benefits the Japanese car industry by giving it a high-priced, cosy and uncompetitive market to sell into, when it compounds the inefficiencies that remain in the British car industry and when it costs consumers dear?

Mr. Clarke

That, as the saying goes, is a very interesting question. I would welcome the opportunity on a more suitable occasion to discuss the balance of argument between those who believe that the agreement protects the British car industry and those who believe that it gives the Japanese a rather easy way of making money. I agree with my hon. Friend that it is an interesting debate, but it is outside the scope of the Opposition Supply day.

Mr. Gould

I hope to put a question to the Chancellor that he will find easier to answer. When we debated this matter on 4 May, the right hon. and learned Gentleman made the unwise claim that Rover had secured record exports. It then emerged that he was claiming that that was true in money value. That it hardly a reliable basis. Will he now confirm that on the only basis that matters, which is the number of vehicles, he was wrong?

Mr. Clarke

The hon. Member does not have a very good record on answering questions. It is true that I was talking in value terms, and it was a record year in value terms. In one previous year it was better in terms of the number of vehicles. Nevertheless, the export record of the Rover Group now is very good and is going very well. As I have said, the export performance of the British vehicle industry is very good.

The background for privatisation is propitious. It is not a quick dash, at an ill-judged moment, for the Government to decide that this is the time to conclude a reasonable deal with a good British company—British Aerospace—which is interested in acquiring the Rover Group.

The only thing on which I agree with the hon. Gentleman is the congratulations he gave to all those responsible for the improvement in the performance of the Rover Group that has brought us to this stage. We all welcome that. It has been achieved not simply because the company is nationalised but largely because, although it is nationalised, the Government gave the management the freedom to run its own business without political intervention of the sort it had experienced in the past and enabled it to embark upon the major restructuring and fundamental reappraisal of the company's position that was necessary to return it to health and to provide what the customer wants. I am happy to join everybody in the House in commending the work force as well as the management of the Rover Group on the progress that has been made in order to reach the position that enables us to take the next step towards privatisation.

The Labour party's motion and the views of the hon. Member for Dagenham, apart from implying that the Labour party would prefer to return to the nationalisation of the past, present a number of other myths about the present state of the Rover Group, what its strategy should be and where it is going. The Social and Liberal Democratic party's motion is more accurate than the Labour party's. It appears to accept the repeatedly stated strategy of the company, which is that the Rover Group is not now and never will be a stand-alone volume car manufacturer along the lines of the six major European producers. Unlike the Rover Group, with its 500,000 or so vehicles a year production, the other six each turn out over twice that number of cars. Those firms enjoy economies of scale that are not available to the Rover Group and it is not open to the Rover Group to try to replicate their market strategies. That was a false analogy made by the hon. Member for Dagenham.

Under Graham Day's leadership, the Rover Group is pursuing an extremely good alternative strategy that is not based on running down the business. It is using progressive evolution of the product plan to take the business up-market and into specialist niches. It is building on the vital collaborative relationship with Honda. It is true that Honda has confirmed that it welcomes the continuity of management that the deal with British Aerospace represents. It is content with what is proposed. Also, the Rover Group is seeking further to improve its quality compared with other manufacturers. It has to win back its reputation for quality and reliability, and I am sure that we are all confident that it will do so.

Mr. Nellist

The Minister and I agree on one thing and that is that he has accurately stated Graham Day's position. I do not expect the right hon. and learned Gentleman to read the entire report of the Adjournment debate that his colleague the Minister and I had on 12 May. However, in that debate, I quoted Mr. Day as saying: We want to make money. People keep talking of market share, but the objective is to become profitable."—[Official Report, 12 May 1988; Vol. 133. c.578.] As my hon. Friend the Member for Dagenham (Mr. Gould) said, it is not about continuing volume car production, which is the only safe guarantee of the jobs of car workers.—[Interruption.]

When the right hon. and learned Gentleman gives figures about exports for the British car industry over the past couple of years, he is basing those figures on the artificial boom that we have had in the past couple of years in the British economy and on a specific set of exchange rates between sterling and the dollar. Given that Land Rover, Range Rover and Jaguar—[Interruption.] I can do without any more interruptions. Given that Land Rover, Range Rover and Jaguar export between 50 per cent. and 60 per cent. of their production, will the right hon. and learned Gentleman make the same boast for the next two years and say that the Japanese investment in America, Europe and Britain will riot mean retrenchment in the volume of production and the jobs in the British car industry?

Mr. Clarke

The hon. Member for Dagenham made it clear that he was pessimistic about the prospects of the Rover Group being profitable. He seemed to think that that was a temporary aberration. The hon. Member for Coventry, South-East (Mr. Nellist) does not even want Rover Group to aim to be profitable. He dismisses the strategy set out by Graham Day which aims to enhance its profitability. He obviously contemplates volume car production regardless of profitability and joins his hon. Friend the Member for Dagenham in the most dire forecast. I am not sure whether either of the hon. Members is converted to joining the European monetary system for exchange rate stability of the sort they talk about. It would be extremely unlikely in the case of either hon. Member. However, the future of the business depends on successfully carrying through a strategy aimed at profitability and selling into a part of the market place in which the Rover Group has a realistic chance of surviving. That is what Graham Day has done.

Jaguar was a bad example. The hon. Member for Coventry, South-East objected to Jaguar being privatised. Since privatisation, Jaguar's production and sales records have been broken repeatedly. It has introduced successful new models such as the XJ6 and the convertible XJS and employment has increased by 2,500. Productivity has risen threefold since the early 1980s. As the hon. Gentleman knows, it has recently opened its own engineering centre. In the face of that experience, it is no good saying that we have been through a temporary boom and that we will return to a state of decline soon. That may be what he wishes for political reasons, but it is not what is happening now.

Mr. Nellist

I am grateful to the Minister for allowing me a final question. What price is he prepared to pay for those figures from Jaguar? Does he have the same attitude as the hon. Member for Birmingham, Northfield (Mr. King)? In a six-week period at the end of 1987, 17 track workers at Jaguar in Coventry died of strokes and stress-related illnesses because of the speed-up on the production line, which has since been exacerbated by Jaguar management to compensate for the worsening relationship between the dollar and sterling. Is that the price that he is prepared to pay for profit—that magical word?

Mr. Clarke

Death from a stroke or heart disease is a serious matter, so I shall not make the flippant reply that I am tempted to make. In fact, the performance of Jaguar has increased employment in the company by 2,500. I know that the hon. Member for Coventry, South-East believes that one should increase employment in manufacturing industry by getting everyone to work less—either by working shorter hours or retiring earlier or by slowing down the track so that extra workers need to be taken on.

Mr. Nellist

indicated assent.

Mr. Clarke

The hon. Gentleman agrees. That is not the future for British industry. It is a crazy way of trying to create jobs and we have found a better way, which is to put vehicle manufacture in private hands in thriving market conditions.

If we follow successfully the strategy upon which Graham Day has embarked—that will depend on markets and the company's performance in those markets—the company should and will prosper. It is not a strategy for contraction. High specification vehicles give more opportunity for added value by the assembler. In addition—this is extremely important for the midlands—they give more opportunities for the component suppliers which are also major employers and which, I may add, are major supporters of the proposed agreement with British Aerospace.

The Opposition's other serious concern, referred to in the motion, is the future of Rover's model range and investment. I do not propose to join the hon. Member for Dagenham in speculating about capital investment in future years. Our whole point is that Ministers should not be laying out their stall on such matters, and I shall certainly not give information relating to the nationalised company that would help Rover Group's competitors. However, if hon. Members seek reassurance about the product range and investment I can point to the facts now.

Rover has recently added to its investment in the executive sector with the launch of the new fastback range derived from the Rover 800 saloon. Rover is building on the welcome collaboration with Honda with the development of a new mid-range car, the production of which will significantly increase employment at Longbridge as Mr. Day announced two weeks ago—no doubt to the delight of all the hon. Members, especially my hon. Friend the Member for Northfield, who have an interest in the success of the motor industry and Longbridge in particular.

Rover Group is following up its major engine investment in the 2-litre sector. As we all know, its M16 engine is an award-winning engine. It is used in the 820 range, and has just won the added distinction of being selected for the Morgan sports car. In addition, the Rover Group is developing a new high economy small engine, the K series, which will strengthen Rover Group's presence in the small car market. Those examples—I deliberately cite only information so far made public by the company—highlight the major investment programme that is under way in the Rover Group.

The tenor of the Opposition's case is to denigrate all that. They say, "It is a temporary achievement. The company has got so far only because it happens to be in public hands. Only in public hands can we achieve even temporary improvement and the outlook now is extremely gloomy and difficult." In fact, the present strategy is being backed by the proposed purchasers. British Aerospace has made public its general support for the future plans of Rover Group under Graham Day. On the information that I have, I do not expect fundamental changes in either the magnitude or the broad direction of Rover Group's investment following the change of ownership. However, those decisions on investment must be for the management of the business and the prospective new owners of the company to determine. Market changes will dictate some changes of emphasis from time to time, as they have in the past. It is precisely to give the company flexibility to respond to the market that we want it to get away from the rigidity of public ownership. We think that the industry will benefit from that.

Now that we have returned the motor industry to reasonably good health, it is most important to build upon that by setting it free from Whitehall and Westminster and removing it from the political limelight. If we possibly can, we want to avoid a return to the public sector ownership and state-directed investment that we had in the 1970s. If that was really the answer—as Opposition Members clearly believe it is—we should not now be living with the sorry fact that £2.9 billion-worth of public money, which is more than £50 for every man, woman and child in the country, has had to be put into the business since the mid-1970s. That kept the company going through the losses incurred during nationalisation until we began the process of getting the company ready to return to the private sector. We are determined to put that history behind us completely and we believe that the deal negotiated with British Aerospace gives us that opportunity.

I am not quite sure of the Opposition's view of the agreement with British Aerospace. At one point the hon. Member for Dagenham realistically accepted that the deal was likely to go ahead and that Rover is likely to be privatised. He disputed the idea that there was synergy with British Aerospace. At least he does not accuse British Aerospace of being foreign, so we have not quite gone back to the chocolates debate. What kind of company would he prefer us to be dealing with? Does he have a view on foreign car companies that might have synergy with Rover being interested in taking over the company? He claims that he is worried about the company's cash flow and the future need for capital. That rather contradicts what he says about the financial agreement with British Aerospace. Does he, or does he not, think that it is a good thing that £800 million should he used to pay off the likely indebtedness at the time of the completion of the sale? He argues that that £800 million is too much and should be reduced. That is not altogether consistent with his argument about the imminent cash-flow problems of the newly merged company and the need for a proper balance sheet for the future.

It is important—and it should be important to the Opposition—that we make it clear to the European Commission that the deal has been arrived at on a reasonable basis. I shall not go over the terms again because the debate is short and I gave a full explanation when we last discussed the matter. However, when evaluating the financial arrangements, it is important to remember two things that demonstrate the bargain from the taxpayer's point of view, as the taxpayer has had to stand all the losses in the past. First, we achieve the prospective elimination of the contingent liability represented by the Varley-Marshall assurances—£1.6 billion-worth of contingent debt that still faces the taxpayer. Secondly, we eliminate the excessive carry-over of tax losses. After the previous debate I hope that we have helped hon. Members who had difficulty in understanding that extinguishing a tax loss is a benefit to the Exchequer and not a benefit to the company, which would otherwise carry the benefit of those past tax losses.

The Government remain clear—as we were five weeks ago—that the deal should bear examination by anyone. At this stage, we think that the deal should be allowed to continue and that the Rover Group should certainly not risk damage from ill-informed public comment and speculation of the kind in which the hon. Member for Dagenham wanted me to engage. It is in the interests of the company for the agreement to be concluded and for Rover Group to go into the private sector and to continue the strategy that it has set itself, which we trust will enable it to he successful in the market place, as it has been over the past year or two.

As I said at the outset, this is the most popular and welcome of our privatisation proposals. It arouses the least controversy with the work force and, indeed, anyone else. I cannot understand how the hon. Member for Coventry, South-East can think that a large number of Rover Group's workers are hostile. To the dealers, the agreement is welcome as compared with the speculations of the past. The component suppliers welcome the agreement, as does most of the work force. The principal trade unions involved with Rover Group have made clear their fundamental wish to make the deal work, and that should be the aim of all of us now. The Labour party remains almost isolated in its completely negative attitude to the idea of returning companies to the private sector. It is very out of touch on this subject, and I believe that now that it has given us the opportunity to vote the House will support the Government's amendment.

8.10 pm

Mr. Ken Eastham (Manchester, Blackley)

The Minister said that the debate was ill-timed. I appreciate that the Government are embarrassed that the Opposition have chosen to use a Supply day to debate such issues because they would like the deals to go through in stockinged feet. They do not want public accountability. They would prefer the Opposition to say nothing so that they can carry on with their little deals with various organisations.

The Minister said that he did not believe in planning. The Government often refer to the success of Japan, yet anyone who has visited that country knows that it believes in planning the economy. That has been the root of its success and is a serious problem for its competitors.

People seem to talk only about high finance, and this debate is no exception. I remind the House that behind any company are the workers. They are not simply pushing around money and exchanging pieces of paper; they are investing their lives. Any major changes in their companies affect not only them but their families. Any changes in the motor industry affect thousands of families, because it is one of Britain's most important industries.

I declare an interest, as I worked in the engineering industry throughout my life before I entered Parliament. I am a member of the AEU and secretary of the parliamentary group. A great number of our members depend on the industry for their livelihoods. It would be interesting and refreshing if, for a change, the Government showed a little more sympathy to those who create our wealth. I remind the Minister that most of the wealth in Britain has been contributed by the engineering industry—power engineering, the aircraft, shipbuilding and motor industries and numerous other industries. Engineers have paid a high price and made a great contribution to the wealth and the profits of this nation.

The Opposition are concerned not only with money but with the future of industry. The Minister's statement a few weeks ago highlighted a great lack of consultation. When making their little deals, the last people whom the Government consider are the workers. Their contempt for them is percolating through the system and there is no longer any respect for the work force or for the trade unions. Yet when the Government find themselves in difficulties, they want trade union organisers to bring sense and stability into industry.

There was no consultation about the sale of the Rover Group. The Minister said that the work force wanted it, but how does he know that? How does he know that, to a man, the work force want a takeover—[HON. MEMBERS: "Or do not want it."] Indeed. I am sure that the Opposition have more information on that than the Government have because we talk to our members.

When television interviewers take cameras to the factory gates, they ensure that they speak to two in favour and two against, so that all those watching television think that the views are equally balanced. However, the interviewers often have great difficulty finding anyone sympathetic to the Government's policy. They present a distorted view.

There were moves to sell Land Rover to General Motors about two years ago, but there was a public outcry and great indignation about the proposed sale. It was also feared that Austin Rover would be sold to Ford or some other foreign company. The Government finally had cold feet in the face of that public outcry, and they backed off. Since then, they have been seeking other ways to achieve their objectives.

If the company is to be sold to British Aerospace, what guarantees will there be that British Aerospace will not suddenly decide to sell it into foreign ownership? The Government will say, "It is nothing to do with us; we do not own the company; we have no influence over it; it is market forces." What the Government were seeking to achieve two years ago may well happen when the company has been privatised, and the work force is entitled to know about that.

During the past nine years it has been noticeable that the Government have never thought the producers of our wealth to be important. They glorify the buyers and the sellers who produce nothing, who simply push around pieces of paper and sell stocks and shares. It is yuppie land. The Government glorify money. They think that that can continue for ever, even though they had a shock last October when there was a sudden realisation that those pieces of paper had to be backed by production. We must manufacture goods. This country is dependent upon engineers, not people in the stock exchange pushing around pieces of paper with little thought for the future.

Thanks to the Government, this country now imports far more than it exports. That is a direct consequence of the Government's empty policy that is passed from one Minister to another. They always put off the ultimate. The future of British wealth lies in production, and investment is an important aspect of that. The Minister made snide remarks about £50 per head of investment in the industry, but he would not dare tell us how many billions has been put into farming—into food which we cannot consume and which is sold abroad, such as cheap butter to Russia. It is a rather jaundiced comparison. The Government say that the engineering industry is too expensive, but they dare not say that about keeping the farmers on their Back Benches fat. It is simply a matter of personal interest that should be exposed.

Perhaps the Minister would ask one of his staff to find out the extent of the subsidies paid to farming. I dare him to give us the figures tonight. He may smile, but I know that he dare not tell us. Perhaps he would like me to go to the Library to get the figures for him, but will he repeat them? I know that he will not. He wants only to talk about some massive subsidy to the engineering industry, yet it is only chickenfeed. We should be investing more in that industry, like our major competitors, the Japanese.

The workers are entitled to a decent deal and to full consultation. It is about time that there was less contempt for the work force and some recognition of the valuable contribution they have made and could continue to make to Britain's future wealth.

8.19 pm

Mr. James Cran (Beverley)

This debate graphically illustrates why we should get as many companies as possible out of the public sector. When Mr. Graham Day gave evidence to the Select Committee on Trade and Industry he alluded to the point that any company in the public sector—and I know that my right hon. and learned Friend will understand this comment—is lectured by Ministers and by civil servants. Here we are having a debate in the House. At the end of the day, it will not add much to the sum of knowledge as to what we should do with the company.

This debate is unfortunate, as was that in the Select Committee. The Rover company historically has been susceptible to uncertainty about its future. It is not just me who says that. In 1986, when there was speculation of a bid by Ford—and there have been a few rumours generated this evening by Opposition Front Bench spokesmen—£250 million of sales were lost and were gone for ever. The company also lost 2 per cent. of its market share and only now, two years later, is it beginning to get it back. That is exactly what we should try to avoid in debating this matter in the House—which proposition has not been accepted in the speeches made by Opposition Members thus far.

The Government could have invited bidders for the company in the same way that they have in respect of Girobank. However, that in itself would have resulted in exactly the kind of uncertainty to which I have just referred and which arose in 1986. In that regard, the advice of Mr. Graham Day, Rover's chief operating officer, was fairly crucial. If the Government had ignored his advice, that would have jeopardised the future of a great company which everyone wants to see rejuventated, and which is partly on the road to rejuvenisation. I cannot imagine that any hon. Member wants to see the status quo continued, and so we must consider the three alternatives left to the Government.

The first was acquisition by a competitor. That could have given rise to the 1986 situation, which no one in the House would want to see happen. The second was placement or flotation. There is no doubt but that that could have been possible. However, it must be remembered that Opposition Members would then have to deal with a factor which none of them mentioned: the company's accumulated historical debt would have to be written off. That was perfectly clear to the Government and would have been to any Government. The third alternative was acquisition by a non-competitor. That is what Graham Day and his board—and this was said in the Select Committee—recommended to the Government. If the men whose hands are on the tiller of the company, and who have worked wonders with it, make that recommendation, the Government would need an extremely strong argument against doing exactly that. In my judgment, the Government were perfectly correct in giving exclusive rights to British Aerospace.

Rover could operate as an independent company, but it was made clear to the Select Committee that there were a number of advantages in going in with British Aerospace. I will not indulge in a discussion about synergy; that is an argument which has been the subject of far too much hot air. If one considers the businesses within British Aerospace, there is not necessarily a great deal of synergy among some of their component activities. However, if one takes them altogether, they add strength to the total business as it is today.

I have not heard controverted the advantages described to the Select Committee. The first was that of size. Anybody who operates in the international engineering business knows that size is extremely important. We are meeting that requirement by bringing together large, multinational companies which, although they are in different businesses, and operate within different business cycles, will ultimately strengthen the overall group. I have heard nothing from the Opposition which controverts that suggestion.

Much has been said on the subject of investment. I will not say that if the company goes into the private sector, everything will be guaranteed for years hence. However, it was made very clear by Professor Roland Smith that his board accepted the five-year corporate plan. He did not evade it. That plan, as anybody who has studied this matter knows, involves investment of £1 billion over the next four of five years. Professor Smith did not evade that responsibility but clearly acknowledged it.

At the end of the day, Rover is being taken over by a British company. Of course there can be no guarantees for years hence, but as matters stand Rover is being taken over by a British company. By golly!—I can imagine the outcry there would have been from the Opposition if the Government had come forward with a takeover proposition from a foreign company. I would not have been one of those arguing in support of that proposition, but there is in the British takeover a benefit that the Opposition have not recognised.

I wish to re-emphasise a point made by my right hon. and learned Friend when he commented that the response to the proposed takeover has been positive all round, except from the Oppposition. Perhaps that is predictable because Oppositions have to oppose, and that is exactly what they are doing. That is why we should all discount what the Opposition have to say on the matter. As was said by my right hon. and learned Friend, the dealer network is extremely pleased with the proposal that has been put before it. The network employs 31,000 people, many of whom are in the constituencies of Opposition Members who are opposing the takeover. The turnover of those dealers totals a massive £4 billion plus. That is the importance of the dealer network, which is delighted with the arrangement worked out between British Aerospace and Rover.

I have also taken the trouble to speak to many of the 1,600 suppliers, who are also delighted at the arrangement. I remind the Opposition that those suppliers enjoy orders of £1.6 billion. Again, many of them may be in the constituencies of Opposition Members. I refer also to Honda, about which we have heard nothing this evening from the Opposition. Honda has a collaborative agreement with Rover, which it could have severed as a result of the takeover. Has it done so? Of course not. In the Select 'Committee, Professor Smith stated that in conversations with Mr. Kume, Honda's chairman, he said that he was delighted with the arrangement and is prepared to go forward step by step with Rover. That shows a level of confidence in the company that is not shared by the amateurs on the Opposition Benches—although I accept that there are amateurs on the Conservative Benches as well, which is precisely why company business should be debated in board rooms rather than in the House.

I strongly believe that the taxpayer should also be delighted at the arrangement. Opposition Members have said that 2.7p per share is not much, and indeed it is not a very high price. But those of us who remember Austin Rover a year or two ago will recall that the shares were worthless: they were paper money. Opposition Members who have suggested, not here but elsewhere, that the shares have been traded on the open market at 55p to 60p—and indeed they have—should remember that the board of directors has repeatedly pointed out to shareholders that the underlying asset value did not support that price. The board went out of its way time without number to say that. Given the historical circumstances—the debt and the underlying asset value—I believe that the price is right.

I shall not blush when explaining to my constituents or anyone else that the Government are having to put a cash injection of £800 million into British Aerospace. Those who argue the proposition have conveniently forgotten about the company's accumulated historical debt. That debt is pretty massive, and the company would not have been a marketable proposition unless the Government had been prepared to cover it. This is not working capital, as has been suggested on other occasions by some Opposition Members. It is to pay off a historical debt. No other circumstances would have been possible, whichever Government had decided the future of the company and whichever disposal option had been chosen.

As my right hon. and learned Friend has mentioned, the taxpayer benefits from the £1.1 billion accumulated trading losses surrendered by British Aerospace. Who on the Opposition Benches, or anywhere else, will say that this great company is not capable of making the profits that it should make in the future? I believe that it can, because of the design and type of vehicle that it is now producing, which strikes me as what everyone wants to buy. And if the company makes profits, the taxpayer stands to save £400 million in the coming years. That too has been conveniently forgotten by the Opposition, but not by Conservative Members or, I suspect, by the taxpayer.

The Varley assurances meant a Government standing behind a company, prepared to pay for all its losses whatever the circumstances. How can Opposition Members possibly defend such a position, which allows a company—board of directors, management and work force—to care nothing about efficiency in the market place because Government and taxpayer stand guarantor to every penny that it loses? That is a heinous arrangement, and I applaud the Government's package, which ensures that such obligations will cease.

Mr. Roy Hughes (Newport, East)

Does the hon. Gentleman agree that there is an omission from his speech? He has not mentioned the people employed in the industry. Moreover, consultation has been negligible. The hon. Gentleman also seemed to deny the right of hon. Members to debate these matters in the House. Will he not take into consideration the fact that where public money is involved it is up to hon. Members to ensure that it is properly accounted for?

Mr. Cran

I am extremely grateful for that intervention. I concede to the hon. Gentleman that I had forgotten to mention, as I meant to at the beginning of my speech, that the one part of the motion with which I agree is the statement that Rover Group's performance owes much to the efforts of the workforce". With that proposition I entirely concur, and I am very grateful to the hon. Gentleman for giving me the opportunity to say so.

The question of job guarantees arose during the Select Committee hearings, but Mr. Day said that no one in the market place was prepared to guarantee to buy Rover cars. That is the case with any car company, indeed any company. If there is no guarantee of purchase, there can, perforce, be no guarantee of employment. The hon. Member for Newport, East (Mr. Hughes) may be interested to learn that Professor Smith gave the Select Committee a guarantee—and he did not do so lightly; I am sure that the hon. Gentleman knows the powers of a Select Committee—that there would be no redundancies as a direct result of the merger. That does not cover the possibility that in future the public may stop buying Rover cars, but it is none the less a guarantee.

When hon. Members vote later this evening, they must not ignore what the Rover board has said. The board has said that it believes the merger to be in the interests of not only the company, the shareholders and the employees, but the creditors. Opposition Members who vote for the motion must tell us what alternative they would choose.

Mr. Austin Mitchell (Great Grimsby)

Keep it.

Mr. Cran

I have heard no alternatives being suggested. It is all debate and no answers.

Mr. Mitchell

Keep it!

Mr. Cran

What this arrangement gives the company is stability. For far too long, the company has been susceptible to debates of this kind in the House and to snide comments from Opposition Members and many others. What it needs now is to be left alone, like the divine Greta Garbo, to get on with the job that it has set out to do. I believe that it will do that, not only because it is Britain's biggest vehicle manufacturer but also—this too is forgotten by many—because of the £4.27 billion that it puts into not only the south and west midlands and Wales but the rest of the United Kingdom. That is another reason why it is important to ensure that the company survives.

For all those reasons, we must be very careful about the signals that we send out from the House tonight. The signals that we should send out, not only to the Community but to the EC Commission, are positive signals, showing that we believe in this proposition. If we give the opposite signal, the result will be merely a return to the uncertainty of which I have spoken, and which I cannot believe that any hon. Member wishes to see again.

8.38 pm

Mr. Matthew Taylor (Truro)

It came as something of a surprise, although a welcome one, to be congratulated by the Minister on the quality of our amendment—not least because he rather ignored some of the important points in it. He failed to explain why no alternative bidders were considered, and why the deal is being done on what Lord Bruce-Gardyne has described as "golden giveaway terms".

I desperately hope that, if the deal goes through, it is a success. There is no question about that. There is no point in hoping for failure from the Government's decisions. Having said that, there must be serious worries about whether it will do so and whether the Government have given the company the best possible chance of continuing the success which has been built up by the work force, management, and the suppliers, who have also put in hard work and sacrificed in order to achieve the turnaround that the company has itself achieved.

I agree with the Government that one of the things from which this industry has suffered, not just since Rover and its predecessors were rescued, but way before that, was Government neglect, and especially Government interference. However, one of the problems with this deal, and the basis on which it is launched, is that it shows every sign of being another Government political manoeuvre and not one of industrial logic within the industry. The Government are not looking at the needs of the Rover Group as a car manufacturer and as an industry.

The Government say that this deal is all about taking the car industry out of politics. However, the nature of the agreement which we embarked upon is essentially a political one. It is one of ideology, with the Government trying to make their own political escape from a prison which they built themselves by their commitment. The Government made it clear that their intention was to privatise the Rover Group before the next election. It was a commitment that they were unlikely to want to go back on. However, as has been made equally clear by those involved in the industry, and by the comments of the Secretary of State, there was no chance at all of a successful flotation of the Rover Group as an independent entity before the next general election. They ruled out any possibility of that.

Those involved have said that, at the very least, four to five years' profits would he needed to establish the profit record of the company were it to be successfully floated, and that takes us beyond the next general election. Therefore, the Government, whatever they might have said previously, cannot ever have had any intention of a flotation. Equally, they were not prepared to take the political flak from a sale to a foreign bidder. Thank goodness for that. That was their motive, because they had discussed it previously with Ford, but had been forced out of agreeing to that purchase by the political flak that they had run into. They could not take that option, so they had to find a British buyer if they were to stand by their commitment.

It is no wonder that, when BAe came along, the Government threw up their arms in joy, rolled over onto their back and let BAe tickle them into giving it those golden giveaway terms. That is why the Financial Times editorial on 30 March said: the real objection to the proposal continues to be that the bases on which the Government has chosen to negotiate appear more designed to save political face than to protect the taxpayers' interest. That was the starting point of the entire problem. That is the first anxiety that we must address. The Government have not embarked on this matter as they claim to have done. However, perhaps they could have come up with a successful deal. It was an unusual route, but they could have come up with a deal that gives security to integrated motor manufacturing in this country, security that will ensure the success of the Rover Group.

The giveaway terms of the deal with BAe have nothing to do with industrial logic. That is not why BAe is happy about this deal. It is not synergy, but the commercial money gain that the Government are giving them. It is "monergy", not synergy, that this deal is all about. That is why BAe is so happy with the deal. I have no doubt that BAe has the best of intentions for the group. I have no doubt that it will do what it can to see that the Rover Group is a success. However, that is not why it feels that it has a good deal. It is not that it feels that it has gained the synergy in industrial logic. It is because it has made a guaranteed commercial gain. It cannot lose.

The elements of the deal clearly spell that out. BAe is to pay £150 million for 99.9 per cent. of Rover, while the Government give Rover's debtors £800 million in cash. Thus, £1.1 billion of Rover's tax losses will effectively be eliminated. The remaining £500 million is to be set against Rover's profits—of course, not against those of the rest of BAe. Finally, the Government eliminate for themselves their guarantee through the Varley-Marshall-Joseph parliamentary assurances on the £1.6 billion of Rover debts. That is why Lord Bruce-Gardyne described the proposal as being on "golden giveaway terms".

One only has to go back a couple of years to the debate on the possible sale of Land Rover to General Motors to see that it is a golden giveaway. At that stage, Land Rover by itself was valued at £250 million. Therefore, somewhere along the line the taxpayer appears to have made a loss. One can see that reflected in the value of 2.7p that the Government have put on the shares of the Rover Group. The hon. Member for Beverley (Mr. Cran) said that the shares were priced at market value. Of course, that is the value that the market chooses to put on them. However, he also said that they had been worth nothing previously. I have looked at the history of these shares and I cannot find a time when they went down to 2.7p. They have not reached that level since the introduction of the investment programme or during the 1980s. They have been down to 15p, or 12p, but that is several times the value that the Government are prepared to put on the shares at present.

If BAe cannot lose, and if the Government feel that it cannot lose, it appears to he always at the expense of the taxpayer. However, will it be to the advantage of either Rover or British Aerospace? Again, the evidence casts doubt on that. I hope that it will be to their advantage. However, the evidence does not support the idea that this deal, in terms of the industrial success of those two companies, is giving anything like guarantees or even the best possible launch for the companies.

Again, the Financial Times editorial of 30 March 1988 rightly said: Past experience, especially in the British motor industry, suggests that putting together two sets of problems can simply create a new problem even greater than the sum of the problematic parts. Considering the difficulties that both companies face, because of the nature of the industries in which they work, one has to say that that appears to be true. Against the background of the history of the British motor industry, it appears even more true. One has only to go back to the much-heralded merger between BMC and Leyland to see that all that happened was successful Leyland was brought down by transfers of cash to ailing BMC. That is a past example of Government interference causing problems. That was the Government acting for political reasons rather than on the industrial logic of the companies concerned.

By combining these different companies, we potentially jeopardise both of them. We do not know which way the scales will fall, but the likely benefits are minimal. Aircraft manufacture is based on high-cost, low-volume production, with design engineering coming to the fore, whereas car manufacture is high-volume vehicle manufacture, with high sales and production engineering. Aerospace products are marketed on the basis of long-drawn-cut negotiations, often between Governments—certainly with few potential customers—while vehicles are sold continuously. In other words, vehicles are sold direct to the consumer with a mass-marketing campaign.

Of course, BAe was originally interested in Land Rover. Perhaps Rover Group sales are more like those that British Aerospace is involved in. We know, from what Graham Day has said, that he wants to take Land Rover out of the mass market, away from competing with the Japanese, and into military, governmental and similar markets.

There is no guarantee whatsoever that after five years assets will not be stripped or that the company will not be sold as a whole to a foreign bidder. In the meantime, there is nothing in what the Government have said to stop a distress sale. I cannot believe that, if the joint company gets into difficulties, the Government will say, "If you save yourself, we want the benefits of your saving yourself and to put you back into the difficulties that you were in before you sold off the Rover Group."

The truth is that, if the company gets into difficulties and feels that the best way out of them is to sell the Rover Group, there is absolutely nothing that the Government—or any Government in those circumstances—can do to stop it. Different Governments might take different attitudes to what happens on the Rover side of things, but surely they will not demand that the company goes under just for the sake of honouring agreements made now. 'The truth is that the guarantees are not worth the paper they are written on.

Why BAe of all companies? The Government have still not told us whether another suitable bidder emerged after the original approaches from BAe were announced in the House. We know that there were four bidders arid that some were from other car manufacturers, probably foreign, but we do not know whether any British-owned company was in the bidding or whether any non-manufacturing company was in the running. We also know that, in saying what it would do with the company, BAe has not come up with any new marketing ideas or any dramatic change of direction. It has not come up with a phenomenal plan to change everything that has been happening, turn the company round, or massively increase productivity.

All that BAe has said is that it will follow the same corporate strategy that the Rover Group already has in place. This takeover adds only a political gain for the Government, not the chance of industrial benefit for the Rover Group. Confident that the EC will accept the proposals, the Government will not tell us what will happen if the company really runs into difficulties or what their view will be. If the EC throws out the proposal, will the Government just wash their hands and let the whole thing fall? That is why we are worried about it.

The Government are very fly with the figures about taxpayers' benefits, but their claim that, for an injection of £800 million—less the £150 million that BAe is paying—the Varley-Marshall-Joseph guarantees of £1.6 billion are being wiped out ignores the simple fact that the guarantees will be called in only if the Rover Group goes under; and the Government seem convinced that it will not. Moreover, if it did, assets would be realised which would have largely compensated for that, if the Government had not already chosen to sell it off to some other car manufacturer. So the Government's claims that the taxpayer has been compensated look weak.

The Government are inclined to paint this issue entirely in terms of those who are for nationalisation and those who are for privatisation. Too much of this and the previous debate have focused on that. Hon. Members should turn their minds to whether there will be an industrial long-term benefit from this particular sale, carried out in this particular way, at this great cost to taxpayers in terms of their previous investments.

Of the motions and amendments on the Order Paper, ours is the only one to consider the issue in this light. The Government's answers give us no confidence. If the deal goes ahead, I give my best wishes to all those involved—the work force, the management and the suppliers—but my confidence in their success is certainly no greater than it was before, when the company was state-run; in many respects it is less. Given that the House is unlikely to vote on our amendment tonight, I shall support the Labour motion—not for what it says about state industries, but because the self-congratulatory attitudes of the Government inspire no confidence that they have any real idea of the needs of the Rover Group or British Aerospace. That issue should be addressed by the House and by the Government.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Harold Walker)

Order. I see six hon. Members seeking to catch my eye. This is a short debate and, unless speeches are shorter, some hon. Members will be disappointed.

8.53 pm

Mr. Hal Miller (Bromsgrove)

I shall do my best to be brief, Mr. Deputy Speaker. I cannot say that we were surprised to hear that the Liberal Members would support the Opposition. The hon. Member for Truro (Mr. Taylor) addressed all his remarks to the Opposition. The only surprise is that he has declared so early which side of the leadership battle in his party he is on. He is obviously not after replacing the Labour party.

The hon. Member for Truro appears to misunderstand—perhaps deliberately, but perhaps by innocence—the fact that it has been the declared policy of the Rover board since the last election—not since Mr. Day, but going right back—that the company should be returned to the private sector as soon as possible. Therefore, this is no great Government machination, no great political intrigue and no great wedding to ideology. It is, in fact, freeing the company to pursue what the company's own board wants. The hon. Member for Dagenham (Mr. Gould) made absolutely no attempt to deal with that point, nor did he say what he would do if, by some mistake, his party should have to deal with the problem. How would he tackle the company's board? Obviously he would fly in its face.

I learned of this debate with some expectation. After all, the Opposition have made such a salad of the original statement that we had to have a debate four weeks after that. They lost the argument on that occasion, so I thought that this afternoon we would get something new.

I parted company with my right hon. and learned Friend the Chancellor of the Duchy of Lancaster when he said that nothing has happened since the last debate on this issue. Well, I have some good news for him. Lots of things have happened. There has been an announcement of another 1,500 jobs at Longbridge on the R8. Sales for the first five months of this year are 6,000 ahead of any previous figure. The 800 fastback has been launched. Land Rover and Range Rover report record sales for May. In the case of Land Rover, they are the best for 11 years. Exports are the best ever. The build increased by nearly 200—that is quite an astonishing record. Production has increased on the Sherpa vans and there are plans for further increases. Exports of that vehicle have again increased. A lot has been happening.

Mr. Terry Davis (Birmingham, Hodge Hill)

rose—

Mr. Miller

I am sorry, I shall not give way because time is short. I am sure that the hon. Gentleman will forgive me.

My right hon. and learned Friend appears to have overlooked the fact that a leadership election is developing in the Labour party. Perhaps that has something to do both with the recurrence of this motion and the attitude taken by the hon. Member for Dagenham. Did we get any glasnost or perestroika? Not at all—it was back to the hard line. I noted that the hon. Member for Dagenham carefully said that there is no case for changing the present ownership. There was no mention of social ownership. The hon. Gentleman has been hauled back into line for the politics of the internal Labour party elections.

I half expected to hear that wonderful chatterer the hon. Member for Great Grimsby (Mr. Mitchell) talking on the water as he crossed the Humber to offer his support to the hon. Member for Kingston upon Hull, East (Mr. Prescott) in those elections about bringing him a successful debate on the Rover sale. Dearie me—if it were not so serious, it would be quite a comedy. I was almost anticipating "The Two Ronnies". Perhaps we would have had the revelation that Mr. Ron Todd would offer Rover the Dundee electronics plant, without commitment, as an earnest of commitment to the success of the motor industry in this country and to the updated, high-value, high-technology industry in which Opposition Members keep asking us to invest. The Opposition have not spoken about how they destroyed that investment. But, I thought, perhaps there is time for repentance. Perhaps we could have heard from the other Ronnie, the hon. Member for Edinburgh, Leith (Mr. Brown). Incidentally, I never thought of the showers in the House of Commons as sin bins. Perhaps he had intended to offer to place orders from Afghanistan for Sherpa vans or Land Rovers for Libya to reconquer Chad. I had hoped for great things from this debate.

Mr. Roy Hughes

On a point of order, Mr. Deputy Speaker. The hon. Member for Bromsgrove (Mr. Miller) is the joint chairman of the all-party motor industry group. I believe that his contribution to this debate is simply a disgrace and certainly out of order.

Mr. Deputy Speaker

I do not believe that I can rule the speech of the hon. Member for Bromsgrove (Mr. Miller) out of order, but I hope that he will have regard to what has been said and the fact that other hon. Members are seeking to speak in the debate.

Mr. Miller

I promise to be brief, Mr. Deputy Speaker. I was discussing public ownership, which is one of the main planks in the Opposition's motion.

The Opposition have also talked about a give-away, but I believe that they have given away what is going on in the Labour party and the reason for this debate. It is nonsense for the Opposition to complain about Government support for the company and at the same time to complain that the Government are not giving enough support to the company. The Opposition must make up their minds as to which way they want to go.

Finally, heeding your advice, Mr. Deputy Speaker, I wish to discuss investment. We heard the hon. Member for Dagenham—the so-called "new wave" of the Labour party—go back to talking about throwing money at the problem. The hon. Gentleman ignored the fact that the Rover Group plan, with its investment connotations, had been accepted by British Aerospace—a point made in the powerful speech of my hon. Friend the Member for Beverley (M r. Cran).

The hon. Member for Dagenham appeared to go hack to the days of the Ryder plan and spoke about a volume car producer, ignoring the fact that currently, unfortunately, Rover is not a volume car producer. His solution offered no prospect of the company becoming such a producer.

The hon. Member for Dagenham, never mind ignoring the lessons of the Ryder plan, suggested that a lot more investment and technology would produce results. On the last occasion that we discussed this matter, I said that there had been too great a reliance upon a strategy for technology. In that context I mentioned Professor Battachatiya, who is one of the most plausible and persuasive advocates of such a policy. He offers a technological short-cut for dealing with the problems of Rover. I am afraid that that spirit is still alive and well despite the Japanese experience. In our last debate I quoted the experience of Toyota. This week I made inquiries in Japan about Honda. That company is extremely concerned at the line that has been taken by Professor Battachatiya and his reliance on technology rather than dealing with the problems of leading, managing and co-operating with the work force. I am sure that Labour Members would agree that they are the most important ingredients for the success of a company.

I found the Opposition's case most disappointing. There was no advance, but a retreat from the glimpses of the change we have had. That is why they are the real conservative party because they are unable to meet the challenge of change. They have retreated from any suggestion of perestroika or glasnost. I am afraid that we have nothing to look forward to from the Labour party and nor has the work force. The Labour and Liberal parties expressly keep on referring to the problems. They have done everything to undermine confidence in and run down the achievements and potential of two fine British companies.

9.3 pm

Mr. Terry Davis (Birmingham, Hodge Hill)

I shall not respond to the speech of the hon. Member for Bromsgrove (Mr. Miller), who, for most of the time, indulged in a knockabout speech that dealt with personalities and made partisan points that had nothing to do with the debate. I do not intend to demean myself by following him into that gutter.

I wish to refer to the speech of the hon. Member for Beverley (Mr. Cran), which was based on his experience in the west midlands and concentrated upon the issue facing the House tonight, the gift of the Rover Group to British Aerospace. The hon. Gentleman is absolutely right to express concern about the effect of the present uncertainty on the prospects for the Rover Group. He was right to draw attention to the effects of that uncertainty on sales. If it continues, those sales will be greatly affected. The hon. Gentleman is wrong, however, to say that this debate is responsible for that uncertainty. This debate is the result of the Government's proposals.

The hon. Gentleman was right to say that we should let Rover Group get on with the job. I agree with him that we should leave it alone and not disturb it, and in one way I agree with him that we should not be having this debate tonight. We are having the debate only because the Government have destabilised the position. It is the Government's proposals that we are debating. They have introduced uncertainty by wanting to give Rover Group to British Aerospace. The hon. Gentleman must place the blame where it rests—on the Government.

The hon. Gentleman resented the debate for another reason—because we should not debate the future of the motor industry in general, or Rover Group in particular. I disagree with him on that point. He said that the debate should take place in the board room. We think that it should take place in public, not behind closed doors, because we are debating the future employment of thousands of people and the means of living of thousands of families. Therefore, the debate should take place in public where the public and those who work in the industry can make up their minds on the arguments expressed. I disagree with the hon. Gentleman's wish, which is shared by the Minister, to keep this private.

The Minister seemed to be equivocal and ambiguous about whether the past investment of £2.9 billion by Governments of both parties was good or bad. He seemed to regret it. I do not. That investment has saved Rover Group. Without it we would not be having this debate and the Government would not be giving Rover Group to British Aerospace. There would not have been a Rover Group. In fact, it would have gone out of existence 14 years ago if the Conservative party had had its way because it opposed the rescue, perhaps for the reason that the hon. Member for Beverley adduced—that it is for the Opposition to oppose. We would not have had this debate, a Rover Group or a British motor industry to debate, either in private or in public on that basis.

There are two crucial issues. The first relates to the strategy which is appropriate to the Rover Group. The Minister seemed to think that the Social and Liberal Democratic party agreed with him on that, but I am not sure. When I read the terms of its amendment I thought that it did, but the hon. Member for Truro (Mr. Taylor), did not agree with the Government. The Minister made the Government's position clear. They want the Rover Group to have higher profits as a result of lower sales of high value cars. They want lower volume sales.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins)

No.

Mr. Davis

The Minister says no. I am afraid that there is another division among the Government, but I shall not pursue that.

We on the Labour Benches are united in saying that, we want a Rover Group with the ambition, objective and target of higher sales. We want it to return to being a volume car manufacturer with higher sales and higher volume and more jobs. That is the crucial point.

The argument is not about whether the motor industry and Rover Group should be profitable. It is about how those profits should be earned, whether from low volume sales of high value cars or from high volume sales of cars which generate, not only high profits but more jobs. We are fearful that the Rover Group's strategy will lead to fewer jobs for our constituents, albeit with higher profits. We want higher profits from higher sales, so more jobs. When the Minister talks about going up-market he only confirms our suspicion that he is going up-market for cars and customers but down-market for jobs for our constituents.

The second crucial issue is whether Rover Group should remain in public ownership or be sold. During the previous debate we went into the terms of sale in detail. The hon. Member for Beverley did not seem to be aware of that, but we discussed the terms of the proposed sale, or the gift as we see it, in great detail. This debate has concentrated rightly on whether the Rover Group should remain in public ownership or be given away. We are clear that it should continue in public ownership. The Minister said that we had an ideological obsession with nationalisation. However, at the centre of the debate is the Government's ideological obsession with private ownership. I have not heard any justification for the Government's belief that in some way private ownership would be beneficial for this section of the motor industry which failed before under private ownership. The only reason that it was taken into public ownership was to rescue it and to allow it to survive. The Government provided the investment which was needed to save jobs.

Mr. Eastham

Does my hon. Friend recall that only a few years ago there was a serious failure in engineering at Rolls-Royce and that the Conservative Government decided in a matter of days to nationalise Rolls-Royce, otherwise there would have been no industry?

Mr. Davis

My hon. Friend is correct. I was a Member at the time and we supported the Government. I regret that only a few months afterwards the Conservative party, hell-bent on opposition, decided to vote against the salvation of the Rover Group. Tonight we see the result of that change in the Conservative approach. We are debating the ideological obsession of the Conservatives and their doctrinaire, dogmatic hostility to public ownership. They are politically hostile to the public ownership of the Rover Group precisely because it is successful.

One of the few constructive parts of the speech of the hon. Member for Bromsgrove was his reference to the recent good news from the Rover Group. Of course, that was good news from the Rover Group in public ownership. Let it be said that the 1,500 extra jobs at Longbridge are being provided by a publicly owned company. Such good news will not continue in future.

The Minister referred also to the success of Jaguar in recent years. That company is successful, again because it was saved by a Labour Government. It, too, would have closed 14 years ago—[Interruption]. In an intervention from a sedentary position the Minister has said that it was saved from Geoffrey Robinson. That is rubbish. Geoffrey Robinson was the managing director of Jaguar for a time and he helped to save the company. I give credit to him, just as I give credit to John Egan and other people who played their part, and I am sorry that the Minister chooses to make that petty, spiteful comment from a sedentary position; it demeans the Dispatch Box.

One reason why Jaguar has been more successful in recent years is that Geoffrey Robinson, among others, helped to lay the foundation of better quality cars. There was also a drastic change in the exchange rate. I am referring not to recent changes but to the decline in the pound against the dollar. That is the real secret of the success of Jaguar. It did not have anything to do with private ownership. Jaguar was successful under public ownership in the same way as the Rover Group has been successful under public ownership. The success has been the result of 14 years of hard work and investment by the taxpayer. The Government resent the success precisely because it has happened under public ownership.

My hon. Friend the Member for Dagenham (Mr. Gould) was unnecessarily kind to the Minister when he said that the future was guaranteed for five years for people who work in the Rover Group. That is not correct. The Government have had a guarantee that the Rover Group will not be sold by British Aerospace within five years without the money being returned to the Government. That is not the same as saying that the jobs are guaranteed for five years.

I listened carefully to the hon. Member for Beverley. He said that the chairman, Graham Day, had given a guarantee to the Select Committee on Trade and Industry that the jobs would be guaranteed insofar as they could be. We understand the exigencies of the market place but the hon. Gentleman told us that British Aerospace has said that there are no plans to declare redundancies. We will put that guarantee in the bank. I hope, for the sake of my constituents, that I do not have to take it out and show it to the hon. Member for Beverley within the next five years. My information is that British Aerospace will declare redundancies in the Rover Group in the same way as that company has declared not once but several times, not hundreds but thousands of redundancies, not only among AEU members, to whom my hon. Friend the Member for Manchester, Blackley (Mr. Eastham) referred, but among all levels of staff and employees at British Aerospace. As a result of so-called rationalisation there will almost certainly be redundancies at the Rover Group under British Aerospace.

The Minister gave the game away when he said that the Government were taking this opportunity to return the Rover Group to the private sector because of the general well-being of the economy "at the moment". He said that it was propitious to return the group to the private sector "at the moment". What happens when the moment passes and the economy runs into difficulties? What happens when it becomes more difficult to sell cars abroad because of the exchange rate? By that time the Government will be able to avoid any responsibility for redundancies or for the future of the Rover Group.

The group should remain in British public ownership. It is important for the future livelihood of my constituents and for the livelihood of thousands of people in the west midlands who depend not only on the Rover Group but on its suppliers and dealers. It is vital that that heart of the motor industry remains in existence. If it does not, other jobs will be lost. The only way in which we can give a guarantee to the people who work in the Rover Group and to the people who depend on it is to say that the group will survive. The only way it can survive is by being kept in public ownership and that is the alternative the hon. Member for Beverley asked for.

9.17 pm

Mr. Roger King (Birmingham, Northfield)

The hon. Member for Birmingham, Hodge Hill (Mr. Davis) and many other Opposition Members have said that the Rover Group should remain in state ownership because it is only state ownership that has saved our car industry. We shall never know that because if instead of being brought into state or public ownership 14 years ago it had been allowed to go into liquidation it is highly possible that today we would have a motor industry of greater volume than we have at the moment.

The history of the British motor industry is of companies going out of business or being taken over by other businesses. Daimler, Singer, Standard and Wolseley come immediately to mind. They fell on hard times and went bankrupt. People picked up the pieces and made a success of them, but then they faded from the industrial scene as they were merged into bigger companies. We shall never know whether state ownership could have saved the car industry. However, we do know that, as a result of state ownership, our motor industry is nothing like as big as it was. It has been reduced and it is only by separating the units and by privatising companies such as Jaguar that future success and prosperity can be guaranteed. There are now more people working for Jaguar than worked for it when it was state-owned and included companies such as Alvis and Self-Changing Gears. Jaguar is successful and it has maintained that success and built on it because it knows that if it does not succeed it will go out of business and there will be nobody to provide a blank cheque.

The Rover Group wants to be privatised to get out from underneath the state company. I know that because I live among the work force, as does my hon. Friend the Member for Bromsgrove (Mr. Miller). We live and work among the people of Birmingham and we know that they are sick and tired of being the subject of public debate year in and year out. They are subjected to that by the Opposition who are anxious to point the finger and say that Rover is a failing company. They try to run it down and to do a hatchet job on it, and that is what they have been trying to do in this debate.

The Opposition talk about the survival of the business, say that it cannot provide the investment and that it will go out of business. They are saying that at a time when the group is fighting for all the sales and registrations that it can get in August. The Opposition are anxious to convey the message to the public not to buy Rover cars because they can have no faith or confidence in the company and that it will go out of business as a result of what the company—not the Government—wants to do. It is not the Government who are seeking to privatise the business. The managing director and the chief executive of Rover and British Aerospace got together and said that they have some degree of rapport because they are both in highly technical engineering.

Britain has many companies making all kinds of things and with all sorts of subsidiaries. Vickers is a classic case. It makes Rolls-Royce cars and lithographic plates. There is no direct synergy between the companies but the same disciplines, corporate investment, opportunities and facilities are at head office for use by all the subsidiary companies. I am confident that under the new arrangement the Rover Group in partnership with British Aerospace will prosper.

Of course there is a cost element involved, but there is absolutely no doubt that the Rover Group could maintain its present financial position as a state company. Somewhere along the line the debts have to be written off and the Government have to restructure the company financially. By assisting in its restructuring and allowing it to go into the private sector, they are getting a remarkably good deal for the country and for the company.

The hon. Member for Dagenham (Mr. Gould), who represents a Ford constituency, made great play about lack of investment in the Rover Group if it goes into private hands. He said that it will be knocked apart by exhaust emission controls and has no hope of being able to surmount that. That is an insult to the engineers and to the company. Of course it can surmount that. New engines and new cars are on the way. It already has new engines running, and of course it sells cars to the United States of America where exhaust emissions are of paramount importance.

It is a fallacious argument and a wicked one to boot. It says that if Rover fails we shall become a branch line in engineering. Obviously, the hon. Member has no idea at all about engineering in the motor industry today, because Rover Group is in partnership with Honda in gearbox assembly and the use of engines. It is in partnership with Volkswagen over gearboxes and it will soon be in partnership with PSA/Peugot-Citroen for the manufacture of gearboxes. That is the name of the game in the British motor industry and in the world car industry. For years the Rover Group has been buying automatic gearboxes from General Motors, and from Chrysler before then, for certain up-market cars. That is the name of the game. It is not branch-line engineering; it is making the best use of the available products in the market place and that is as it should be.

I have spoken to the work force and I know that the workers look forward to the new arrangement because it solves the problem that they know the company has to address. Will it find its future in the state sector where it becomes a subject of public debate and abuse, or can it get into the private sector, free from the shackles of Government controls, constraints, debates and interference and be allowed to prosper on its own? Having spoken to many of the employees in Birmingham, and I am sure that the same could be said for those in Cowley, I have absolutely no doubt that they know that their future lies in the private sector and they have but one thing to say to the Labour Opposition, and to those who insist on debating the future of the company, and that is, "Lay off it."

9.21 pm

Mr. John Hughes (Coventry, North-East)

I have listened to many speeches tonight, and I have little affinity with them, especially with those of the Bernard Mannings on the Conservative Benches who treat this very important subject and people's jobs in a jocular manner.

I have listened to the statisticians in the debate. That was an unexpected ploy from the Government Benches, but it bears little resemblance to the physical realities of people. The British people know that Rolls-Royce, British Telecom, BP, British Gas—and Rover, if it happens—have been stolen from them. They have lost out in those deals in an inhumane way. The revenue from those companies which originally went to the Treasury bought hip joints for the elderly, provided dialysis machines for renal cases, provided wheelchairs for the disabled and operations for cardiac patients in the Birmingham children's hospital. That is what the revenue from British Leyland meant, and you ignore that.

Mr. Speaker

Order—not me.

Mr. Hughes

It would have continued to meet that very humane need but for the obscene greed of the Government which has diverted revenue from humane needs into the well-lined pockets of the shareholders. In the case of Jaguar, 50 per cent. of the shareholders are American.

Anyone who has been employed in the car industry must view the Government's latest proposals with deep apprehension. They have suffered horrendously from the Government's strategies. Government appointees—so-called experts—had a brief to make Leyland as competitive as the Japanese manufacturers. The product of their pruning and slashing is the equivalent of a Japanese bonsai tree. It is stunted and fragmented. Indeed, the industry is so small that only the sweat and skill of the workers have prevented it from going to the wall.

I have experienced the effects of these industrial entrepreuneurs. Morris Engines, where I worked, provided homes, and clothed and fed families. It was reduced to rubble by Government appointees. Coventry car manufacturers, who were of world repute, were wiped off the map. Coventry was blighted, and it has yet to recover. That is what threatens workers who will be affected by these proposals.

I can only hope that the European Commission will not permit the merger. If the deal is permitted, I can only say that, if it were made outside the House, it would put the perpetrators in gaol. It is the result of connivance by a Government who lack humanity and refuse to fund the Birmingham children's hospital adequately. They are prepared to jeopardise the lives of children who suffer from major cardiac complaints. You should be standing up and talking about the child who has died in your constituency because you have argued for revenue—

Mr. Speaker

Order. I remind the hon. Gentleman that he must put his speech in the third person.

Mr. Hughes

Revenue from the company will be handed over dishonestly to shareholders. It will line the pockets of shareholders of British Aerospace if the privatisation goes ahead.

9.27 pm

Mr. Robert Hayward (Kingswood)

I represent a primarily British Aerospace constituency, but I was astonished by what the hon. Member for Dagenham (Mr. Gould) said. I have listened to him in Committee for many hours, and it was unfortunate that his speech tonight in no way matched speeches that I have heard him make on many other occasions.

I have rarely listened to so much criticism, complaint and denigration of the prospects for British industry. Everything that has gone wrong he blamed on the Government and on private industry; everything that has gone right has been claimed as a success either of public financing or of a change in the exchange rate. I find that amazing. The hon. Gentleman made not one reference to the achievements of the Rover Group or of British Aerospace. All we heard about was failure, failure, failure.

I was fascinated, but not surprised of course, to hear no reference to the debate on 11 March 1987 about Leyland—DAF and the general state of what was then the Austin Rover Group. It was all doom, gloom and despondency. We were told that Leyland Trucks would disappear. What has happened? The latest figures show that Leyland Trucks' sales have increased because it has had access to the dealer network throughout Europe provided by DAF. That is precisely what Conservative Members said 15 months ago, especially my hon. Friend the Under-Secretary of State for Industry, who was then on the Back Benches. We heard constant carping about the state of British Aerospace and its capacity to cope with the intake of a major motor manufacturer. British Aerospace faces difficulties with airframe manufacture and the exchange rate is causing further difficulties. Opposition Members fail to recognise that two years ago the exchange rate, instead of being £3.10p to the deutschmark, was £4 to the deutschmark. It has increased and decreased, and somebody must say whether that benefits the aerospace and motor industries.

Rationalisation in the aerospace and motor industries has cost jobs. It has not cost 1,100 redundancies at Filton, as the hon. Member for Coventry, South-East (Mr. Nellist) suggested. I should know because I represent the area; he does not.

We are debating the proposed merger between British Aerospace and the Rover Group. Significantly, we have not heard one serious alternative proposal from the Opposition. The hon. Member for Dagenham referred over and over again to an indigenous motor manufacturer. Is it indigenous with a link with Honda? If it is to be purely indigenous, would the hon. Gentleman drop the link with Honda or would he extend it and allow it to operate?

If the Opposition are saying that the merger with British Aerospace should not go ahead, they must say what they would do with the Rover Group. I was surprised that, in denigrating the two companies, no Opposition Member referred to the massive funding given to Renault. The hon. Member for Coventry, South-East suggested that the European Community should refuse to allow the merger to take place. What is the alternative? Is it merely to pour in more money? The amount involved in the merger is insignificant compared to the amount given to Renault. The deal is good for both companies, and it is about time that the matter was resolved, cleared off the decks and both companies became one.

9.31 pm

Mr. Andrew Smith (Oxford, East)

The hon. Member for Kingswood (Mr. Hayward) needs to learn the important difference between a link and complete absorption. The Labour party recognises and values more than anyone else the importance of the link with Honda. If British Aerospace had something to add, and it may have something to add, there would be no reason why a link should not be established. Complete takeover is a different matter.

The takeover is clearly motivated by the Government's pathological hatred of the public sector and, I suspect, by the fact that they will not recognise the importance of the public-sector contribution to the many achievements that the Minister rightly mentioned earlier.

The critical question for the future is from where the capital will come. It is no good saying that undertakings have been given, that money may be available from British Aerospace or that the takeover will depend simply on the market. What we are being offered depends not only on the car market—to which the Rover Group's work force and all the other companies involved have been gearing their efforts—but on the aviation market, which is very uncertain. We have not been given any guarantees that capital investment will be made available in the future, which is the major worry that the workers at Cowley have expressed to me in recent months. I agree wholeheartedly with one comment that was made by the hon. Member for Bromsgrove (Mr. Miller). He said that a lesson that must be learnt from the Japanese is how to co-operate with and motivate the work force.

The best signal that could he given to the public and Rover Group's work force—especially at Cowley, where my constituency responsibility lies—is an announcement about the forthcoming model range. The lack of a new model for Cowley is of major concern. I shall not rest until I have been given undertakings that the future of the work force will he secured.

A question has to be put to the Government. If the deal goes ahead and they have shrugged off their responsibility and washed their hands of this vital strategic industry, what happens if it goes wrong?

9.34 pm

Mr. Austin Mitchell (Great Grimsby)

This debate has been a fascinating exercise; it has made me realise that, having failed the viva we gave the Government on 4 May, all the opportunities for revision, all the hard work done by Central Office and all the advice of the Civil Service have not produced in tonight's re-examination any better arguments than they had before. Essentially, the Government's only argument throughout the debate, which has been echoed by every Conservative Member who has spoken, is, private good, public bad; private good, public bad. They have chanted that like Orwell's pigs as if it was the key to economic regeneration.

It has been a sad spectacle watching hon. Members whose constituencies are affected by the exercise having to whistle in the wind because they do not have the guts to speak up for jobs, the integrity of the industry, investment or the new models and because they do not have the intelligence to see what is happening to the industry and what is implicit in the deal. All they have been able to do is reiterate the chant. Greater love hath no man than that he lay down his constituency and his industry for his leader's prejudices. It certainly helps in that process if one does not understand what is going on. We shall see the consequences of that.

As our motion states, no good will come of the merger. It has no logic. It helps neither company and contains the danger that it could harm both. That is a real probability. The Government, with no higher wisdom than to get rid of public assets—the Lady Macbeth syndrome: "Out, damned spot", or "Out, damned Rover"—are washing their hands of their responsibilities in an attempt to get rid of Rover at this opportunity.

Every country faced with a crisis in its car industry has seen the centrality of that industry to manufacturing, the balance of payments, employment and technology in that country. It does not involve just electronics but ceramics and plastics. Every country has intervened to save its threatened car industry. Even in the United States, the Government intervened to save Chrysler. That is the Government's responsibility. That has happened in this country too. Several countries are still supporting their car industries generously—Spain, France and Italy and, to a limited extent, West Germany.

The important point is not the endless argument between privatisation and nationalisation but the support necessary to build the industry up into a state in which it could survive on its own feet if it was Government policy that it should do so. The strength of the industry is the crucial factor, not the doctrinaire arguments about public or private ownership.

Rover cannot stand on its own two feet as an independent producer. It is still trapped in its central dilemma. It is too small to be a volume car producer, but it is not yet sufficiently well invested to be the quality up-market producer we would like it to be. A production total of just over 400,000 a year is not adequate to generate the investment or the new models. It is not a firm enough base to generate the profits that would allow the company to survive.

A previous top executive of Rover, Ray Horrocks, said in 1986 that to survive and to generate profits sufficient to make the investment self-sustaining Rover needed an output of 600,000 vehicles a year: in other words, a third higher than the present output. That is what it needs to survive. The Government's responsibility is to keep supporting and helping Rover and to keep it in the state stable until it achieves that figure. Then we can talk of its being viable. Then we can talk about returning it to the private sector, if that is the Government's doctrine. Until then, Rover cannot survive on its own. That is the crucial factor.

Ministers have not told us how a company that is now surviving and investing in new models only because it is in the state sector will manage on its own in the long term. Putting it into the stable with British Aerospace is effectively much the same as putting it out on its own. It needs a scale of production that it does not have. Until the company has that scale, the state has no alternative but to keep it. Endless questions have been asked about Labour's alternative. Our alternative is to keep Rover Group where it is, to build it up and invest in it and to produce the new models that will allow it to survive. That is the only sensible strategy, and that is the strategy we advocate.

The Government have prevaricated, chopped and changed and wombled and wandered all over the place alternating their policies. For a period, we have had the Graham Day treatment. If I am not well disposed to Graham Day, it is not only because he has dropped the name Austin. He has inflicted the anorexia nervosa treatment on Rover. He has constantly gone for profits and financial return rather than scale, investment and building up the company. That is the crucial thing. He has shed functions and services. He has shed Unipart, Bos, trucks, Llanelli Radiators, Beans Foundry and Leyland CVT—all functions that a car industry needs for integrated production. They have all been chopped off one by one in the desire to pretty up the profits and get the company back into the private sector as quickly as possible to raise money. In other words, Rover Group has shed everything that it needs in its association with British Aerospace.

Now the Government have gone in for another zig-zag phase. A previous zig-zag was to flirt with sale to competitors. Frankly, that would have brought in more money for the taxpayer, if that is what the Minister thinks is important. A competitor would undoubtedly have spent more to run it down—

Mr. Joseph Ashton (Bassetlaw)

Is it not the case that the Government would have preferred to sell on the open market—if necessary to the Japanese—but that the Secretary of State for Wales, who represents Worcester, and the Secretary of State for Employment, who represents Sutton Coldfield, knew the political consequences of selling to a car competitor from abroad and used the interim period to sell the company to British Aerospace so that that company can sell it in five years' time? No guarantee has been given to the Select Committee on Trade and Industry that that will not happen.

Mr. Mitchell

My hon. Friend is extremely well informed on these issues, from his work on the Select Committee. That scenario is quite likely. Perhaps the Government are postponing the evil day. They were rightly stopped from pursuing that strategy. They could not carry out the only test of a company's ability to survive: they could not float the company, because they knew it would sink. The genuine way of privatising the company is not to lean it on another company but to float it off as an independent company.

Why did the Government not do that? If the company is ripe for privatisation, why not keep it going until it has the necessary scale and then float it? They did not do that, but they were desperate to give it the Lady Macbeth treatment. I am reminded of a joke from "Beyond the Fringe": what we need at this stage of the war is a futile gesture. The Government have found the futile gesture. They can get rid of it. It is the wind of opportunity; something that fell off the back of the devaluation expansion from 1986—the improvement in the fortunes of the company.

The Government were in a dilemma. Enter at that moment—not with a "Shazam!"; not from Krypton but from Harrods—Captain Britain, that industrial Toby jug, Professor Smith, who is not, it has to be said, as daft as he looks. He wants a good price for taking the company off the Government's hands. He has nothing to offer. British Aerospace has nothing much to offer except casual conversations between engineers. There is no synergy. Frankly, there would be more synergy if Rover merged with the manufacturers of dangling dice for the back window or plastic car upholstery.

British Aerospace works on a long-term investment strategy and it takes 15 years for its investment runs to come home. To sustain it now it needs a cash cow, something like an insurance company or, perhaps, Harrods. Instead, it is being offered Rover because it is clear that, for the next two years, Rover will boost its earnings per share. Phillips and Drew estimate that earnings per share will jump to 62p this year and 96p next year, as against 48p per share without the merger. It is all about giving British Aerospace survivability and the earnings that it cannot get from the cash cow that it should have had. All that British Aerospace has given in return is a guarantee that will last for only five years, with the possible consequences that my hon. Friend the Member for Dagenham (Mr. Gould) rightly mentioned. It is nothing more than a short-term measure.

As my hon. Friend asked, what happens if the European Commission deems that the Government's contribution to the merger is too great? The Select Committee asked Professor Smith whether it would affect his willingness to purchase if that contribution was cut. He said, "Quite dramatically." In other words, it will all be up for grabs again. That is the danger, and the Government have given no guarantee of what might happen then.

Both companies are vulnerable in the same way. They do not supplement each other; they simply amplify each other's weakness. Both are vulnerable to a rising exchange rate that is threatening British manufacturing once again. It does not matter which aspect of Government exchange rate policy we consider, whether it be the Prime Minister's or the Chancellor's—the one is only slightly dafter than the other—or a combination of those policies: the pound is now too high for the health of manufacturing. What is more, the Government are refusing to allow the free market, which they praise in every other respect, to operate on the pound. Why not let the free market operate on the pound, bring down interest rates and bring down the pound with that? Industry must bear the double burden of an over-valued pound supported by interest rates that are far too high.

Our real exchange rate against the deutschmark is up 16 per cent. on 1987 and up 40 per cent. on the last quarter of 1976. That is what will strangle British manufacturing industry. The Government cannot blame pay increases, because labour costs increased only slightly last year because of expansion. The Chancellor has discovered a secret—expand the economy and labour costs come down. Now, because production is falling, labour costs will increase again.

The terms of trade for manufacture now stand at 107, so they are worse than the 105 at which they stood in the first quarter of 1981. Everybody knows that the exchange rate then was disastrously high, with ruinous consequences for British industry. It is now worse. We are heading for a position in which both British Aerospace—especially its commercial planes and the Airbus contract—and Rover will be vulnerable. Our exports will be down and our imports up. Jaguar's exports to the United States are down 20 per cent. in the first quarter of this year, and the imported share of the British car market will increase to more than 50 per cent. this year. A repetition of the disaster of 1979–81 will result from over-valuation of the pound.

When both companies are weak in the same areas, they are not helped by being shackled together. They compound each other's problems. Whence will come the investment for new models? The Government have given no answer to that, yet new models are crucial if the company is to continue. All this has happened because the Government want a quick fix. There are no guarantees about redundancies, plants or new models. There is no provision for investment, and no provision for the future.

That is the economics of irresponsibility. The Government have betrayed the British car industry, which has seen a bigger rundown than has occurred in any other country since 1979. There has also been a bigger increase in imported cars than in any other country since 1979, and now Rover is about to be betrayed.

The danger is that a company in that situation will not survive but will have to be brought back into the state stable by a Labour Government as a central part of the expansion of manufacturing industry, because this Government, irresponsibly, made no provision for its future. That is the betrayal which a Labour Government will reverse.

9.50 pm

The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins)

There have been four debates on this subject and at long last the hon. Member for Great Grimsby (Mr. Mitchell) has admitted that if—God forbid—the Labour party ever returns to government it will renationalise a privatised Rover Group. At last we have that on the record. We have been trying for some time to get that response and now we have it—and we shall not forget it.

It is inevitable that in the course of my remarks this evening I shall repeat myself, as on the three previous occasions—31 March, 4 May and 12 May—when the House considered this matter at considerable length all the points raised tonight by Opposition Members were discussed. Nothing has changed and we have nothing further to report in relation to progress in our discussions with the EC.

It is a measure of the lack of the Opposition's originality that they cannot find anything else to talk about except to repeat themselves. I was warned by the hon. Member for Coventry, South-East (Mr. Nellist), in one of his Adjournment debates, that the chairman of the parliamentary Labour party was pressurised by him into having a further debate on which the Opposition could vote. He told me so, and he speaks with some authority on motor industry matters, as he frequently reminds us. Therefore, the hon. Member for Dagenham (Mr. Gould) had to do what he was told. That is why we are where we are today.

I remind the House again of my constituency involvement with British Aerospace, Leyland-DAF and Leyland Bus with the town whose name was once given to the company we are discussing today. That involvement has enabled me to see—contrary to the jibes of some Opposition Members, to the effect that many of my hon. Friends and myself do not pay attention to those working in the industry—the logical development that is represented—

Mr. Gould

The Minister has nothing to say.

Mr. Atkins

Opposition Members have chosen today for their debate. They have spoken at length, and on the basis of a lack of information. The least that they can do is to listen to the Government's response—albeit for the fourth time—because they do not have anything original to talk about.

In the short time left to me, I remind the House that we discussed this matter at considerable length on the Floor of the House and in the Select Committee.

Mr. Gould

He has nothing new to say.

Mr. Atkins

The hon. Gentleman is right; we have nothing further to add to what was said in the previous debates which the Labour party initiated. We have reminded the Opposition yet again that that is the case. It is not my fault that I am here answering the debate—it is the fault of the Opposition, because they chose this day to repeat themselves ad nauseam.

Mr. Ashton

rose—

Mr. Atkins

No, I am not giving way. If the hon. Gentleman has something to say, he can write it up in his article for The Star and we shall all read it with great interest.

Mr. Ashton

rose—

Mr. Atkins

Go on, then.

Mr. Ashton

Is the Minister aware that the Select Committee on Trade and Industry has discussed the matter at length for many hours? It is apparent that the Government are stalling and refusing to reply to any debate until August because they do not want to respond to the Common Market point.

Mr. Atkins

I assure the House that my right hon. and learned Friend the Chancellor of the Duchy of Lancaster has told me that he will be on holiday in August, and I shall certainly be. I suspect that the hon. Gentleman will he as well. On that basis, nothing of such importance is likely to happen.

From my knowledge of my area and from talking to people working in the industry, particularly the component manufacturers and a number of the dealers who have written to us, I am satisfied that the deal will be extremely good news for my constituents, and those of many other hon. Members on both sides of the House. Having talked and listened to them, I know that they want to stay within a British company, and that is what British Aerospace is—a company that has dedicated and devoted itself to doing great things in the export as well as the domestic market. I believe that their interests, and those of constituents of other hon. Members, will be protected by a speedy implementation of the terms of this conditional agreement.

Do the Opposition really want to return to the days when Leyland was a music-hall joke, the butt of every cheapskate comedian'? Do they want to return to the days when morale was at rock bottom, and many employees—my constituents, working orginally for Leyland Motors and before that for Spurriers—resented the dreadful image created under their management? Do they not recognise the achievements of the present management in rebuilding the company in co-operation with the work force—a management that wants the company to be returned to the private sector? Need I quote Graham Day yet again'? His classic comment was: For me it is not simply a matter of ideology, it is a matter of very good common business sense". I want to draw particular attention to some of the speeches that have been made. My hon. Friend the Member for Beverley (Mr. Cran) made an excellent speech, as many hon. Members on both sides of the House will have recognised. He speaks as a knowledgeable former director of the CBI who understands industry. He is also a member of the Select Committee which, as he rightly said—as did the hon. Member for Bassetlaw (Mr. Ashton)—considered the matter. He is right in his assessment that the continuous spotlight on the company is not necessarily doing it all the good that it should do. My hon. Friend the Member for Bromsgrove (Mr. Miller) speaks with considerable authority, because he knows what is going on—backed by my hon. Friend the Member for Solihull (Mr. Taylor), who is prevented from contributing to the debate but whose advice we find invaluable in the Department, and without whom we could not make the decisions that we make.

There were jibes from Opposition Members that my hon. Friend the Member for Birmingham, Northfield (Mr. King) has never made so much as a mousetrap. Yet he was an engineer working for the British Motor Corporation, and he has set up a company that supplies components to the motor industry. He knows what he is talking about, unlike Opposition Members, and the sooner they realise that the better.

That is the point. Conservative Members, speaking about constituencies where they live and understanding what the work force has to say, speak with authority. Opposition Members are in the desperate straits of old-fashioned Victorian Socialism. All that they believe in is nationalisation at all costs, and the hon. Member for Great Grimsby, that master mixer of metaphors, has given a commitment to renationalise the company if and when Labour ever come into office.

We have made it clear that we believe that this is a good agreement, good for the company and good for the taxpayer. We believe that it will again demonstrate the benefits of privatisation, enabling a business to develop in response to the market, not Whitehall or Westminster. We believe that Rover Group will benefit from shaking off once and for all the perceptions associated with more than a decade of state ownership. The agreement with British Aerospace offers the prospect of a new future and a new period of stability for Rover Group, removed from the spotlight of political controversy. It is a good deal and we should support it.

Question put, That the oiginal words stand part of the Question:—

The House divided: Ayes 198, Noes 307.

Division No. 344]	[9.59 pm
AYES
Abbott, Ms Diane	Brown, Ron (Edinburgh Leith)
Adams, Allen (Paisley N)	Bruce, Malcolm (Gordon)
Allen, Graham	Buchan, Norman
Alton, David	Buckley, George J.
Anderson, Donald	Caborn, Richard
Archer, Rt Hon Peter	Campbell, Menzies (Fife NE)
Armstrong, Hilary	Campbell, Ron (Blyth Valley)
Ashton, Joe	Campbell-Savours, D. N.
Banks, Tony (Newham NW)	Canavan, Dennis
Barnes, Harry (Derbyshire NE)	Clark, Dr David (S Shields)
Barron, Kevin	Clarke, Tom (Monklands W)
Battle, John	Clay, Bob
Beckett, Margaret	Clelland, David
Benn, Rt Hon Tony	Clwyd, Mrs Ann
Bennett, A. F. (D'nt'n & R'dish)	Cohen, Harry
Bermingham, Gerald	Cook, Frank (Stockton N)
Bidwell, Sydney	Cook, Robin (Livingston)
Blair, Tony	Corbett, Robin
Blunkett, David	Cousins, Jim
Boateng, Paul	Crowther, Stan
Boyes, Roland	Cryer, Bob
Bradley, Keith	Cummings, John
Bray, Dr Jeremy	Cunliffe, Lawrence
Brown, Nicholas (Newcastle E)	Cunningham, Dr John

Dalyell, Tam	Mahon, Mrs Alice
Darling, Alistair	Marek, Dr John
Davies, Rt Hon Denzil (Llanelli)	Marshall, David (Shettleston)
Davies, Ron (Caerphilly)	Marshall, Jim (Leicester S)
Davis, Terry (B'ham Hodge H'l)	Martin, Michael J. (Springburn)
Dewar, Donald	Martlew, Eric
Dixon, Don	Maxton, John
Dobson, Frank	Meale, Alan
Doran, Frank	Michael, Alun
Douglas, Dick	Michie, Bill (Sheffield Heeley)
Duffy, A. E. P.	Michie, Mrs Ray (Arg'l & Bute)
Dunnachie, Jimmy	Millan, Rt Hon Bruce
Eastham, Ken	Mitchell, Austin (G't Grimsby)
Evans, John (St Helens N)	Moonie, Dr Lewis
Fatchett, Derek	Morgan, Rhodri
Fearn, Ronald	Morley, Elliott
Field, Frank (Birkenhead)	Morris, Rt Hon J. (Aberavon)
Fields, Terry (L'pool B G'n)	Mowlam, Marjorie
Fisher, Mark	Mullin, Chris
Flynn, Paul	Nellist, Dave
Foot, Rt Hon Michael	Oakes, Rt Hon Gordon
Foster, Derek	O'Brien, William
Foulkes, George	O'Neill, Martin
Fraser, John	Orme, Rt Hon Stanley
Fyfe, Maria	Patchett, Terry
Galbraith, Sam	Pendry, Tom
Galloway, George	Pike, Peter L.
Garrett, John (Norwich South)	Powell, Ray (Ogmore)
George, Bruce	Prescott, John
Godman, Dr Norman A.	Primarolo, Dawn
Golding, Mrs Llin	Quin, Ms Joyce
Gordon, Mildred	Radice, Giles
Gould, Bryan	Randall, Stuart
Graham, Thomas	Rees, Rt Hon Merlyn
Griffiths, Nigel (Edinburgh S)	Reid, Dr John
Griffiths, Win (Bridgend)	Richardson, Jo
Grocott, Bruce	Roberts, Allan (Bootle)
Harman, Ms Harriet	Robertson, George
Hattersley, Rt Hon Roy	Robinson, Geoffrey
Healey, Rt Hon Denis	Rogers, Allan
Heffer, Eric S.	Rooker, Jeff
Henderson, Doug	Ross, Ernie (Dundee W)
Hinchliffe, David	Rowlands, Ted
Hogg, N. (C'nauld & Kilsyth)	Ruddock, Joan
Holland, Stuart	Salmond, Alex
Home Robertson, John	Sedgemore, Brian
Howell, Rt Hon D. (S'heath)	Sheerman, Barry
Howells, Geraint	Shore, Rt Hon Peter
Hoyle, Doug	Short, Clare
Hughes, John (Coventry NE)	Skinner, Dennis
Hughes, Robert (Aberdeen N)	Smith, Andrew (Oxford E)
Hughes, Roy (Newport E)	Smith, C. (Isl'ton & F'bury)
Hughes, Sean (Knowsley S)	Smith, Rt Hon J. (Monk'ds E)
Illsley, Eric	Snape, Peter
Ingram, Adam	Soley, Clive
Janner, Greville	Spearing, Nigel
John, Brynmor	Steel, Rt Hon David
Jones, Barry (Alyn & Deeside)	Strang, Gavin
Jones, Martyn (Clwyd S W)	Straw, Jack
Kaufman, Rt Hon Gerald	Taylor, Mrs Ann (Dewsbury)
Kennedy, Charles	Taylor, Matthew (Truro)
Kirkwood, Archy	Turner, Dennis
Leadbitter, Ted	Vaz, Keith
Leighton, Ron	Wall, Pat
Lestor, Joan (Eccles)	Wallace, James
Lewis, Terry	Walley, Joan
Lloyd, Tony (Stretford)	Wareing, Robert N.
Lofthouse, Geoffrey	Welsh, Michael (Doncaster N)
Loyden, Eddie	Williams, Rt Hon Alan
McAllion, John	Williams, Alan W. (Carm'then)
McAvoy, Thomas	Winnick, David
McCartney, Ian	Wise, Mrs Audrey
Macdonald, Calum A.	Worthington, Tony
McKelvey, William
McNamara, Kevin	Tellers for the Ayes:
McTaggart, Bob	Mr. Frank Haynes and Mr. Allen McKay.
Madden, Max

NOES
Adley, Robert	Evans, David (Welwyn Hatf'd)
Alison, Rt Hon Michael	Evennett, David
Amess, David	Fallon, Michael
Amos, Alan	Farr, Sir John
Arbuthnot, James	Favell, Tony
Arnold, Jacques (Gravesham)	Fookes, Miss Janet
Arnold, Tom (Hazel Grove)	Forman, Nigel
Ashby, David	Forsyth, Michael (Stirling)
Aspinwall, Jack	Forth, Eric
Atkins, Robert	Fowler, Rt Hon Norman
Baker, Rt Hon K. (Mole Valley)	Fox, Sir Marcus
Baker, Nicholas (Dorset N)	Franks, Cecil
Baldry, Tony	Freeman, Roger
Banks, Robert (Harrogate)	French, Douglas
Batiste, Spencer	Fry, Peter
Beaumont-Dark, Anthony	Gale, Roger
Bellingham, Henry	Gardiner, George
Bendall, Vivian	Gilmour, Rt Hon Sir Ian
Biggs-Davison, Sir John	Goodhart, Sir Philip
Blackburn, Dr John G.	Goodlad, Alastair
Blaker, Rt Hon Sir Peter	Goodson-Wickes, Dr Charles
Bonsor, Sir Nicholas	Gorman, Mrs Teresa
Boswell, Tim	Gorst, John
Bottomley, Peter	Grant, Sir Anthony (CambsSW)
Bottomley, Mrs Virginia	Greenway, Harry (Ealing N)
Bowden, Gerald (Dulwich)	Greenway, John (Ryedale)
Bowis, John	Gregory, Conal
Boyson, Rt Hon Dr Sir Rhodes	Griffiths, Sir Eldon (Bury St E')
Braine, Rt Hon Sir Bernard	Griffiths, Peter (Portsmouth N)
Brandon-Bravo, Martin	Grist, Ian
Brazier, Julian	Ground, Patrick
Bright, Graham	Grylls, Michael
Brooke, Rt Hon Peter	Gummer, Rt Hon John Selwyn
Brown, Michael (Brigg & Cl't's)	Hamilton, Hon Archie (Epsom)
Browne, John (Winchester)	Hamilton, Neil (Tatton)
Bruce, Ian (Dorset South)	Hampson, Dr Keith
Buchanan-Smith, Rt Hon Alick	Hanley, Jeremy
Buck, Sir Antony	Hannam, John
Budgen, Nicholas	Hargreaves, A. (B'ham H'll Gr')
Burns, Simon	Hargreaves, Ken (Hyndburn)
Burt, Alistair	Harris, David
Butcher, John	Haselhurst, Alan
Butler, Chris	Hawkins, Christopher
Butterfill, John	Hayes, Jerry
Carlisle, John, (Luton N)	Hayhoe, Rt Hon Sir Barney
Carlisle, Kenneth (Lincoln)	Hayward, Robert
Carrington, Matthew	Heathcoat-Amory, David
Carttiss, Michael	Heddle, John
Cartwright, John	Heseltine, Rt Hon Michael
Cash, William	Hicks, Mrs Maureen (Wolv' NE)
Chalker, Rt Hon Mrs Lynda	Hicks, Robert (Cornwall SE)
Channon, Rt Hon Paul	Hind, Kenneth
Chapman, Sydney	Hogg, Hon Douglas (Gr'th'm)
Chope, Christopher	Holt, Richard
Churchill, Mr	Howard, Michael
Clark, Dr Michael (Rochford)	Howarth, Alan (Strat'd-on-A)
Clarke, Rt Hon K. (Rushcliffe)	Howarth, G. (Cannock & B'wd)
Colvin, Michael	Howell, Rt Hon David (G'dford)
Conway, Derek	Howell, Ralph (North Norfolk)
Coombs, Anthony (Wyre F'rest)	Hughes, Robert G. (Harrow W)
Couchman, James	Hunt, David (Wirral W)
Cran, James	Hunter, Andrew
Critchley, Julian	Hurd, Rt Hon Douglas
Currie, Mrs Edwina	Irvine, Michael
Curry, David	Irving, Charles
Davies, Q. (Stamf'd & Spald'g)	Jack, Michael
Davis, David (Boothferry)	Jackson, Robert
Day, Stephen	Janman, Tim
Devlin, Tim	Johnson Smith, Sir Geoffrey
Dickens, Geoffrey	Jones, Robert B (Herts W)
Dicks, Terry	Jopling, Rt Hon Michael
Dorrell, Stephen	Kellett-Bowman, Dame Elaine
Douglas-Hamilton, Lord James	Key, Robert
Dover, Den	King, Roger (B'ham N'thfield)
Dunn, Bob	Kirkhope, Timothy
Durant, Tony	Knapman, Roger
Dykes, Hugh	Knight, Greg (Derby North)
Eggar, Tim	Knight, Dame Jill (Edgbaston)
Emery, Sir Peter	Knowles, Michael

Knox, David	Rowe, Andrew
Lamont, Rt Hon Norman	Ryder, Richard
Lang, Ian	Sackville, Hon Tom
Latham, Michael	Sainsbury, Hon Tim
Lawrence, Ivan	Scott, Nicholas
Lawson, Rt Hon Nigel	Shaw, David (Dover)
Leigh, Edward (Gainsbor'gh)	Shaw, Sir Giles (Pudsey)
Lennox-Boyd, Hon Mark	Shephard, Mrs G. (Norfolk SW)
Lester, Jim (Broxtowe)	Shepherd, Colin (Hereford)
Lightbown, David	Shepherd, Richard (Aldridge)
Lilley, Peter	Shersby, Michael
Lloyd, Sir Ian (Havant)	Sims, Roger
Lloyd, Peter (Fareham)	Skeet, Sir Trevor
Lord, Michael	Smith, Tim (Beaconsfield)
Lyell, Sir Nicholas	Soames, Hon Nicholas
McCrindle, Robert	Speller, Tony
Macfarlane, Sir Neil	Spicer, Sir Jim (Dorset W)
MacKay, Andrew (E Berkshire)	Spicer, Michael (S Worcs)
Maclean, David	Squire, Robin
McLoughlin, Patrick	Stanbrook, Ivor
McNair-Wilson, M. (Newbury)	Stanley, Rt Hon John
McNair-Wilson, P. (New Forest)	Steen, Anthony
Madel, David	Stern, Michael
Major, Rt Hon John	Stevens, Lewis
Malins, Humfrey	Stewart, Andy (Sherwood)
Mans, Keith	Stewart, Ian (Hertfordshire N)
Maples, John	Stokes, John
Marlow, Tony	Stradling Thomas, Sir John
Marshall, John (Hendon S)	Sumberg, David
Marshall, Michael (Arundel)	Summerson, Hugo
Martin, David (Portsmouth S)	Tapsell, Sir Peter
Mates, Michael	Taylor, Ian (Esher)
Maxwell-Hyslop, Robin	Taylor, John M (Solihull)
Mellor, David	Taylor, Teddy (S'end E)
Miller, Hal	Tebbit, Rt Hon Norman
Mills, Iain	Temple-Morris, Peter
Miscampbell, Norman	Thompson, D. (Calder Valley)
Mitchell, Andrew (Gedling)	Thompson, Patrick (Norwich N)
Mitchell, David (Hants NW)	Thorne, Neil
Moate, Roger	Thornton, Malcolm
Monro, Sir Hector	Townend, John (Bridlington)
Montgomery, Sir Fergus	Townsend, Cyril D. (B'heath)
Moore, Rt Hon John	Tracey, Richard
Moss, Malcolm	Tredinnick, David
Mudd, David	Trippier, David
Neale, Gerrard	Trotter, Neville
Needham, Richard	Twinn, Dr Ian
Nelson, Anthony	Vaughan, Sir Gerard
Neubert, Michael	Viggers, Peter
Newton, Rt Hon Tony	Waddington, Rt Hon David
Nicholls, Patrick	Wakeham, Rt Hon John
Nicholson, David (Taunton)	Waldegrave, Hon William
Nicholson, Emma (Devon West)	Walden, George
Onslow, Rt Hon Cranley	Walker, Bill (T'side North)
Oppenheim, Phillip	Waller, Gary
Owen, Rt Hon Dr David	Walters, Dennis
Page, Richard	Ward, John
Paice, James	Wardle, Charles (Bexhill)
Patnick, Irvine	Watts, John
Patten, John (Oxford W)	Wells, Bowen
Pattie, Rt Hon Sir Geoffrey	Wheeler, John
Pawsey, James	Widdecombe, Ann
Peacock, Mrs Elizabeth	Wiggin, Jerry
Porter, Barry (Wirral S)	Wilshire, David
Porter, David (Waveney)	Winterton, Mrs Ann
Portillo, Michael	Winterton, Nicholas
Powell, William (Corby)	Wolfson, Mark
Price, Sir David	Wood, Timothy
Raison, Rt Hon Timothy	Woodcock, Mike
Redwood, John	Yeo, Tim
Renton, Tim	Young, Sir George (Acton)
Riddick, Graham	Younger, Rt Hon George
Ridley, Rt Hon Nicholas
Ridsdale, Sir Julian	Tellers for the Noes:
Rifkind, Rt Hon Malcolm	Mr. Robert Boscawen and Mr. Tristan Garel-Jones.
Roberts, Wyn (Conwy)
Rost, Peter

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House believes that the recent improvement in Rover Group's performance owes much to the efforts of the workforce and management combined, that further improvement can best be achieved by returning the business to full private ownership, that the proposed takeover by British Aerospace is to be warmly welcomed and is in the interests of Rover Group's employees as well as those of its suppliers and dealer network, that future investment should be a matter for the management of the business and the prospective new owners, and that the overall terms of the sale agreement are in the interests not only of the companies but also of the taxpayer.