HC Deb 31 January 1994 vol 236 cc619-32 3.30 pm
The Minister for Industry (Mr. Tim Sainsbury)

With permission, Madam Speaker, I should like to make a statement about BMW's acquisition of Rover.

This morning, British Aerospace announced its decision to accept an offer from BMW to acquire its wholly-owned subsidiary, Rover Group Holdings Ltd.

BAe bought the Government's shareholding in Rover Group in July 1988. In accordance with assurances given at the time of the sale, BAe has helped to transform Rover into one of Europe's most efficient vehicle manufacturers. Many factors have contributed to this—notably the management of Sir Graham Day, Mr. George Simpson and Mr. John Towers; the receptiveness of the Rover work force and of Rover's suppliers to changing demands; and the close involvement and valued support of Honda. BAe has played a major part, and has put in very substantial capital investment, averaging £200 million a year.

BAe wants to concentrate on its role as a world player in the defence and aerospace sector, and has been giving consideration to the future of its shareholding in Rover. Late on 26 January, BAe received a formal bid from BMW to acquire Rover Group Holdings Ltd. It was for BAe to take the commercial decision about how to respond to that bid. In particular, it had to have regard to the interests of its shareholders, whose approval at an extraordinary general meeting is still a condition of the deal. But BAe immediately informed us of the bid and, in the absence of my right hon. Friend the President of the Board of Trade on an overseas visit, I met the chief executives of both BAe and BMW to discuss their plans.

The reality is that BAe owns two cash-hungry businesses—Rover, and its defence and aerospace activities. BAe could not invest as much as it wanted in both businesses. The sale to BMW will therefore allow BAe to pursue plans for the turbo-prop and regional jet businesses in Prestwick and Manchester. This is good news for the United Kingdom's aerospace industry.

For Rover, the new relationship with BMW offers some significant opportunities. BMW has stated that it will: maintain Rover as a separate enterprise, with its own manufacturing plants and its own design and development capabilities; be able to offer better access to the very substantial funds needed for investment in new models; encourage Rover to build on the progress it has made in developing long-term relationships with its suppliers; and be able to offer Rover additional export opportunities, which should increase volumes. BMW has also stated that it hopes that Rover will be able to maintain and to build on the existing links with Honda.

Those intentions are set out in more detail in a letter that BMW sent to my right hon. Friend the President of the Board of Trade. Today, I am sending a copy of that letter, together with a letter from BAe confirming its strategy, to all right hon. and hon. Members, and I am placing copies in the Library.

BMW is one of the most highly regarded car and engine manufacturers in the world. The fact that BMW is making this very substantial investment in Britain is evidence of the dramatic improvements in competitiveness that have been achieved by the British vehicle industry. BAe and BMW believe that the deal can significantly strengthen Rover and consequently the whole United Kingdom vehicle industry. That should be welcomed by our vehicle industry and by all those who work in the industry.

Mr. Robin Cook (Livingston)

The Minister would agree that he has just made a statement of major significance to British manufacturing industry. He has confirmed the takeover of the last British volume car producer into foreign ownership. Was the Minister present last year when the President of the Board of Trade assured Britain: Our motor industry is now in better shape than our European competitors"? If that were true only a few months ago, can the Minister explain why the last big British car company has today been taken over by one of those European competitors?

The Minister did not talk figures but will he confirm that the purchase price agreed was £800 million? Does he recall that his Government sold Rover for £150 million gross, or £106 million after the deduction of the hidden sweeteners? Does he recall that at that time the National Audit Office, the Select Committee on Trade and Industry and the Opposition all said that Rover had been sold too cheap? Now that the company has been bought at five times the price for which the Government sold it, why does not the Minister admit that they were all right? Is not today's deal proof that Rover was sold at a knockdown price to British Aerospace and at a rip-off to the taxpayer? [Interruption.] Does not the Minister and those Conservative Members baying from the Back Benches understand the apprehension felt by Rover's work force today now that they have seen their company sold to BMW, with which they are in direct competition across Europe?

Does the Minister recall that, when the President was on the Back Benches, he backed a management buy-out of Land Rover and justified British ownership on the ground that promises made when ownership moved from British to multinational control had not materalised?

The Minister chose to repeat in the House the promises made to him by BMW. What collateral does he hold to ensure that BMW delivers on those promises? What remedy does he have if it does not deliver on those promises? Will he fill in a gap from that list of promises, which contained no commitment on jobs? What assurance can the Minister offer those currently employed at Rover that their employment is as secure today as it was yesterday?

The Minister acknowledged the valuable contribution made by Honda. The new Rover 600 was overwhelmingly engineered by Honda. Last year, Honda warned that it would be difficult to continue sharing technology and designs if Rover were sold to another manufacturer. Has the Minister noticed the concern expressed by Honda that today's sale negates its attempts to provide a firm future for Rover? Has he held any discussions with Honda, as he has with BMW? Can he give the House any assurance that the sale will not place at risk the valuable partnership with Honda that is integral to the range of Rover models?

The Minister conceded that British Aerospace's decision to sell the whole Rover company and not just the part that Honda wanted to buy had nothing to do with whether BMW is a better partner for Rover and everything to do with BAe's desperate need for cash. Is he aware that, since the start of this year, BAe has already announced five separate redundancy packages totalling more than 1,900 jobs among a most skilled work force?

Will the Minister now accept the invitation of BAe's chief executive to sit down to talk with him about a strategy for that industry? Will he accept the Select Committee's advice on the urgency of providing a national strategy for an industry in crisis? Will he do so before he has to come to the House to announce the passage of the British aerospace industry into foreign ownership, as he has today accepted Britain's last volume car manufacturer losing its British independence?

Mr. Sainsbury

The hon. Gentleman's remarks about the price paid display his total lack of understanding of what is involved in the ownership of a manufacturing industry. British Aerospace has invested more than £200 million a year since it bought the company. It has transformed its performance and the quality of its product. The fact that BMW is prepared to bid £800 million, put in the extra investment and take over the financing costs is a tribute to what BAe has achieved and, more importantly perhaps, to the British vehicle industry and its work force. If Rover had remained in public ownership, I suppose the hon. Gentleman would have expected the taxpayer to go on pouring in money to meet the losses that it would have sustained. In 14 years of public ownership, nearly £3 billion of taxpayers' money was wasted in paying for such losses.

I am happy to pay tribute to Honda's substantial contribution to Rover's achievements. BMW did so in its letter to my right hon. Friend the President of the Board of Trade, adding that it hoped that Rover will be able to maintain and to build on the existing links, both in terms of current and planned joint projects and in terms of the wider synergies between the two businesses. We share that hope with BMW.

The hon. Member for Livingston (Mr. Cook) did not say whether, in his view, the deal was good or bad for Rover and its work force. Is he not aware of the opportunities for increased exports? Is he not aware of the opportunities that will be available to Rover through the extra investment that it will receive from BMW? Is he not aware of the benefit that that will bring not only to the work force of Rover, but to its suppliers, its distributors and its dealers?

Mr. John Butcher (Coventry, South-West)

My right hon. Friend will be aware that many people in the midlands and in the Oxford region will be anxious to seek reassurances on the deal. Having heard what he said on jobs, let me press him on the subject of product development and design. For strategic reasons, no hon. Member would wish Rover to lose control of design and future development of products. Has he had any communication from BMW on future purchasing policy and the health of on-going component supply from the United Kingdom into the Rover Group and subsequently, hopefully, into the BMW group?

Mr. Sainsbury

I appreciate my hon. Friend's concerns. I assure him that those were some of the points raised in my discussions with the chairman and chief executive of BMW. The letter from BMW to my right hon. Friend the President of the Board of Trade states: We want to protect that asset"— referring to the distinctiveness of products and brands— and therefore intend to maintain BMW and Rover as separate enterprises each with their own manufacturing plants and their own design and development capabilities. BMW has also made it clear that it will maintain the purchasing departments. Indeed, it sees opportunities for British component suppliers to gain increased volume, not only through increased sales by Rover, but through increased access to BMW because it recognises that British component manufacturers are very competitive.

Mr. Malcolm Bruce (Gordon)

Does the Minister accept that there is some regret that a company that has achieved the success of Rover is unable to find a British buyer that is capable of taking on that success and continuing the investment? Does he accept that members of the Select Committee on Trade and Industry who have visited Rover and BMW in the past few months have seen the enormous turnaround that has been achieved in Rover? Does he also accept that tribute should be paid to its management and work force for ending their confrontational approach and introducing industrial partnership, new innovation and working practices which have achieved flexibility and success?

What assurances can the right hon. Gentleman give that consumer interests will be protected and that, as a result of the merger, we will be able to ensure the manufacture of quality cars at a lower price? Will BMW honour its commitments and recognise that, as we produce cars of greater quality and more competitively than Germany, it should not just maintain employment and investment in Britain but increase it?

Mr. Sainsbury

I am happy to join the hon. Gentleman in paying tribute to the achievements of Rover's management and work force, and to the extent to which the business has been transformed since leaving public ownership—and since the Government changed the framework of industrial relations law.

The hon. Gentleman referred to the value of Rover's products. BMW clearly recognises the quality that the company is achieving, and considers the Rover range—both four-wheel drive and conventional vehicles—entirely compatible with its own. It will seek every opportunity to increase sales, not only in the United Kingdom but in important export markets in some of which Rover has so far enjoyed limited distribution.

Several hon. Members


Madam Speaker

Order. The House will recognise that an enormous number of hon. Members wish to question the Minister. Questions cannot continue unless hon. Members put them briskly and briefly and the Minister responds in kind; if questions become long statements, I shall have to intervene. We are not in the middle of a debate.

Sir Teddy Taylor (Southend, East)

The Minister has rightly paid tribute to the huge role played by Honda in transforming a loss-making white elephant into a profitable company. Would it not be regrettable if the negotiations for sale were initiated, and the sale completed, without the consent—or, initially, the knowledge—of Honda? Given that some consider that Rover would have a better future linked to Honda than linked to an ailing German giant, will the Minister take steps to ensure that the link between Rover and Honda is maintained?

Mr. Sainsbury

I do not accept my hon. Friend's description of BMW. It is an extremely successful company, which has maintained its profitability when other car manufacturers have been losing theirs. I assure my hon. Friend that my Department will do what it can to ensure that BMW's wish to maintain the valued links between Rover and Honda is honoured, and that the benefits of that co-operation are maintained for both companies.

Mr. Terry Davis (Birmingham, Hodge Hill)

What is the difference between those assurances and what we were told when the Sherpa van factory was sold to DAF? When DAF got into trouble, the Dutch owners wanted to close the factory in Birmingham, sack all the workers and transfer production to Holland.

Mr. Sainsbury

The hon. Gentleman may recall that the whole of that enterprise went bankrupt. Factories on both sides of the Channel were in a similar position. Having sought a market-led solution, the British side is now flourishing, without a great investment of taxpayers' money.

Mr. Simon Coombs (Swindon)

Does my right hon. Friend agree that both the fact of the takeover and the price that is to be paid constitute a tribute to the excellent achievements of the work force in many parts of the country, including my constituency? Should not tribute be paid to that work force, and to management, for the complete turnaround that has been achieved in a few short years?

Will my right hon. Friend also learn a lesson from the fact that there is no potential British purchaser of this excellent company? Will he now direct his Department's attention to the need to work out why that is so? Will he also ensure that Honda—another company in Swindon—will have a major part to play in Rover's future?

Mr. Sainsbury

Again, I am happy to join my hon. Friend in paying tribute to Rover's work force, including the work force in his constituency. As I have said, my Department will do all that it can to help the relationship between Honda and Rover to continue to work to the benefit of both companies, as it has in the past.

Mr. Stanley Orme (Salford, East)

The Minister referred to the excellent work force. What guarantees have been given to the work force that their jobs will exist in future? Thousands of highly skilled engineers are in jeopardy because of the deal. There is no guarantee that they will be employed in future. Quite frankly, the Minister's statement is a disaster for British industry.

Mr. Sainsbury

Quite to the contrary; the right hon. Gentleman should realise that any job is best secured by a company having good products and the money to invest in continuing innovation and product development. That is what the deal gives to Rover, and that is why Rover jobs are probably more secure today than they have been for 20 years.

Mr. John Carlisle (Luton, North)

May I declare an interest on the basis that I have had the privilege of selling Rover cars through my company to hon. Members on both sides of the House? Indeed, I have frequently taken inquiries for BMWs from Opposition Members.

Mr. Derek Enright (Hemsworth)

I would not trust the hon. Gentleman.

Mr. Carlisle

Many hon. Members have trusted me.

Will BMW preserve the current dealer network and ensure that the excellent deals which Rover has offered, to Members of this place and to people outside, are still available?

Mr. Sainsbury

I can assure my hon. Friend that it is BMW's intention that Rover will continue to offer excellent deals to all its customers, whether inside or outside the House.

Mr. Robert Ainsworth (Coventry, North-East)

The Minister has told us about BMW's intentions in respect of Rover. What role will the Minister's Department play in trying to obtain commitments which will make the letter from BMW mean anything at all? Has BMW said anything about the continuation of Rover in the part of the market which is in direct competition with BMW—for example, in respect of Rover's 600 and 800 series?

Mr. Sainsbury

I hope that the hon. Gentleman and the House will recognise that no company would invest £800 million to bring a business to an end. BMW has made it quite clear that it intends to take advantage of the investment to expand Rover sales and to expand the opportunities for Rover's work force and suppliers. I have every confidence that that is what BMW intends to do, and the £800 million is evidence to prove that.

Mr. Roger Gale (Thanet, North)

Is not the difference between what we have heard from the Government Front Bench and from the Opposition Front Bench that the Government Front Bench understands the value of pan-European, multinational investment while the Opposition Front Bench incredibly still yearns for nationalisation and subsidy? Will not the deal mean better investment and more opportunity for Rover and for British Aerospace? Is it not a tragedy that, to coin a phrase, "that lot over there" cannot understand that?

Mr. Sainsbury

My hon. Friend has made his point very effectively. What we have heard from the Opposition is another demonstration of their failure to understand the nature of modern manufacturing industry.

Mr. Richard Burden (Birmingham, Northfield)

The Minister referred to meeting the chief executives of BMW and British Aerospace. Did he consider the fact that my constituency and the work force at Longbridge first found out about the deal from reports on the radio this morning? Is that an acceptable way of going about things? How would the Minister react if the company for which he worked, which he had turned round and made a success, was sold off over his head and without any consultation?

Does not the Minister accept that the time has now come for workers in Britain to be given proper consultation rights and proper information rights? May I ask the Minister one more time: will he please answer the question and tell us what guarantees he will give and put in place to ensure that the jobs of Rover's work force will remain secure, not next week or next month, but next year and the year after that?

Mr. Sainsbury

I find it strange that the hon. Gentleman, who has substantial manufacturing, including car manufacturing, in his constituency, still seems to think that it is for the Government to offer job security to anyone in industry or in any other form of employment. The job guarantee comes from the effective and competitive operation of a company. The deal will contribute very substantially towards that. It is time that the hon. Gentleman recognised that his work force at Longbridge will have been relieved to know that the ownership of the company is now in the hands of a group which can invest the substantial sums needed for the new model development that is required at Longbridge.

Mr. Richard Page (Hertfordshire, South-West)

As it costs hundreds of millions of pounds, if not billions of pounds, to produce a new model today, and as vehicles have to be sold on an international basis, not merely a European basis, in order to survive, manufacturers will have to come together. Is not that even more true for aircraft manufacturers? Do they not need even more resources to produce new models? If they do not have resources, they will go down.

Today's news is good news for Rover and for British Aerospace because it will ensure their ability to survive. Together they would have had a doubtful future, but separate they will stand a chance. Is it not sad to reflect that, if Rover had had today's industrial relationships in the 1970s, it might be doing the buying rather than the selling?

Mr. Sainsbury

I am grateful to my hon. Friend for emphasising the international nature of the motor and aircraft industries. He is quite correct to say that the deal offers excellent opportunities for both industries, because it will enable 13Ae, as it stressed in its letter, to devote resources to its operations in Manchester and Prestwick on regional jets and Jetstream which might otherwise not have been available.

Mr. Richard Caborn (Sheffield, Central)

Is the Minister concerned that this is the second company in the British aerospace industry that has had to go to BMW to be rescued financially? I refer to Rolls-Royce in respect of the 700 series, the 49.51 deal, and the present deal to liberate cash for British Aerospace and it aerospace sector. Is the Minister concerned that the lack of finance going into British manufacturing is forcing our best companies to sell off sectors or go into partnership, selling certain technology when somebody else brings a cheque? Is that a satisfactory industrial policy?

Mr. Sainsbury

I refer the hon. Gentleman to what my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) said about the international nature of the car industry and the aerospace industry and the fact that both industries are now characterised not only by manufacture in many different countries or by drawing their supplies from many different countries but by many partnerships and international consortia. I expect that trend to continue. The arrangement to which the hon. Gentleman refers between Rolls-Royce and BMW as a manufacturer of lower thrust aero engines is proving to be extremely successful.

Mr. John Wilkinson (Ruislip-Northwood)

Does my right hon. Friend agree that it is quite erroneous to seek to draw a comparison between the joint venture which was freely entered into between BMW aero engines and Rolls-Royce aero engines to produce the 700 series of turbo fans and the proposed acquisition of Rover by BMW? That arrangement will keep Rover not only a going concern but, we hope, a successful and profitable company, and will free the funds necessary for the restructuring of the commercial aircraft divisions of BAe. In other words, there is much in it for British engineering and the future of British industry.

Mr. Sainsbury

My hon. Friend is correct to say that the deal releases opportunities for the aerospace and car industries. BAe, in the letter which it sent to my right hon. Friend, referred to it as an excellent opportunity for the future development of Rover, and it also referred to the deal enabling it to progress plans for the turbo-prop and regional jet businesses. Both elements of the deal should be welcomed by those who work in those businesses.

Mr. Andrew Smith (Oxford, East)

In view of the enormous achievements of the Rover work force, including my constituents at Cowley, in securing the transformation to which the Minister referred, do not the workers deserve the firmest guarantees on the future of jobs and investment in the model range?

Although I welcome what BMW has said so far on the matter, will the Minister tell us more about the guarantees that he was given? How long will they hold? Will they hold indefinitely? Will he say more about the link with Honda, which has been crucial to Rover's success? What guarantees has he sought? What was he told about the future of the Rover pension fund? That matter is also of enormous concern to everybody.

Mr. Sainsbury

I am glad that the hon. Gentleman recognises and welcomes what BMW said to the work force about accepting the new Rover deal and the assurances that it has given about jobs, as well as the general assurances about its intentions for the business. The business of Rover will continue; the company goes on. The ownership of the company is now in the hands of BMW, which believes—and I agree—that it can contribute substantially to the benefit of the company both in the form of cash for investment and in the form of access to markets. As the hon. Gentleman knows, investment is much needed.

Mr. Peter Thurnham (Bolton, North-East)

Does my right hon. Friend agree that, while under this Government the import content of new registrations has reduced, under the last Labour Government it doubled from 28 per cent. to 56 per cent.? Does not that prove that this Government is a true friend of the British motor industry?

Mr. Sainsbury

My hon. Friend draws attention to an important point. What we want to see for jobs in this country, not only directly in the industry but in its suppliers, is more cars being produced. Indeed, that is what we have seen in the past year: when the rest of Europe's car industry was in deep recession, output in the United Kingdom car industry increased. I believe that this deal will provide an opportunity for further increases.

Mr. Jeff Rooker (Birmingham, Perry Barr)

Does the Minister accept that today's statement is a symbol of the collapse of British capital in funding British industry? That said, the company purchased today is not the company that was sold five years ago. If the alternative must be that it is sold to the far east or within Europe, the creeping "Japanisation" of British manufacturing industry must be halted. If we do not succeed in building a European-based mass-market manufacturing industry in terms of vehicles, frankly, there is no future because the United Kingdom and other countries in the European Community will never be able to compete with the far east. Will the employees of Rover now benefit from the social chapter? Will they benefit from the supervisory board style of management in Germany, which is so detested by the British Government?

Mr. Sainsbury

With productivity in manufacturing industry rising sharply and at record levels, with exports at record levels, and with Britain having been more successful in attracting inward investment than any other country in Europe, I think that outlook is very positive. If we had had the social chapter, I suspect that investment in Britain would not have looked so attractive to BMW.

Mr. Phil Gallie (Ayr)

Does my right hon. Friend agree that there has been considerable investment by British Aerospace in Jetstream aircraft in Prestwick? Given the current difficulties in the marketplace, does he acknowledge that that investment needs to continue? Will he join me in welcoming today's statement whereby the deal suggests that investment will be forthcoming?

Mr. Sainsbury

I entirely agree with my hon. Friend that there has been substantial investment and, as he rightly points out, there needs to be continuing substantial investment in that important business. That is why I have emphasised, as has BAe in its letter to my right hon. Friend, that the deal is good for aerospace, and particularly Jetstream at Prestwick, as it will provide excellent opportunities for Rover cars.

Mr. John Spellar (Warley, West)

Will the Minister take the opportunity of dissociating himself from the sneering, jeering and frivolous attitude of many Tory Back Benchers, especially the hon. Member for Dover (Mr. Shaw), on what is, frankly, a sad day for British industry?

What assurances has the right hon. Gentleman received that Longbridge and Cowley will not become dispensable satellites of Bavaria in any future downturn in the motor industry? Can he tell us what firm assurances he has secured for the motor components industry which employs many more people than actually work in assembly, especially in the black country? Equally importantly, what assurances has he received about the future of engine manufacture, which is the core of vehicle assembly?

Mr. Sainsbury

What I am happy to dissociate myself from is the attitude of Labour Members who seem to be unable to appreciate the opportunities that the deal will bring to the car industry, suppliers, the component supplies industry and the aerospace industry in this country. They seem to be extraordinarily reluctant to recognise the international nature of those industries. I can assure the hon. Gentleman that if the car industry in this country is strong, the component suppliers and the engine suppliers have increased opportunities.

Mr. Patrick Nicholls (Teignbridge)

In rejecting the Opposition's knee-jerk xenophobia, may I ask my right hon. Friend whether he agrees that one of the things which must have attracted the German company was the fact that it would not have German work practices such as the social chapter inflicted upon it? Could there be any better vindication of the stance adopted by my right hon. Friend the Prime Minister during negotiations on the Maastricht treaty than the fact that that German company is now choosing to invest in this country?

Mr. Sainsbury

My hon. Friend has made a good point. I notice that the letter from BMW to which I have referred states that, like other German manufacturers, BMW is aware of the major improvements in competitiveness which have been made by the United Kingdom supply base. Factors such as those to which my hon. Friend referred may have contributed substantially to this major improvement in competitiveness.

Mr. Peter Shore (Bethnal Green and Stepney)

Is not the heart of the matter that all future decisions affecting jobs, investment, exports and other major policies of this great British company will in future be decided, not in Britain, but in Germany according to the interests of that great German company? Does not the Minister consider that that is a shameful sell-out of major long-term British interests for short-term financial gain?

Mr. Sainsbury

It is the marketplace which will make effective decisions on the future of the Rover company and other companies. Rover will be in the same position as businesses all over the world which have British ownership, such as Burger King, Jacuzzi and Hilton, where those who use those companies are not aware of British ownership.

Mr. Tony Marlow (Northampton, North)

Given that the Labour party is now the party of the European Union, was not my right hon. Friend amazed—if it is possible to be amazed by what the Labour party does—that the spokesperson for the Labour party complained about the sale of Rover to a foreign company? Given also that all Jacques Delors has to do is twinkle his eye for the Labour party collectively to open its manifesto commitments, is not its response to the statement the most dishonest and disingenuous—

Madam Speaker

Order. The hon. Gentleman is not asking questions on subjects for which the Minister has any responsibility. He is abusing the time of the House. I will give the Minister a minute to answer.

Mr. Sainsbury

Thank you, Madam Speaker. I can scarcely add to what my hon. Friend has said. I am glad that I do not have responsibility for the matters to which he referred.

Mr. Bruce Grocott (The Wrekin)

Is not one of the alarming things about today's statement the fact that we are assured that the deal has the blessing of Downing street —the same Downing street from which the present Prime Minister and the previous one have overseen the inexorable decline in investment and jobs in our manufacturing industry? Is it too much to hope that there will be just one word of regret from the Government Front Bench at the decline of the British motor industry? The whole of our industry now is owned by American, German and Japanese companies. Is the message from the Government that, as long as they remain in office, there is nothing—not the railways, not water, not the broadcasting industry or the motor industry—that is not for sale?

Mr. Sainsbury

I suggest to the hon. Gentleman that, before he makes another absurd intervention, he might like to study the sales for the United Kingdom car manufacturing industry. He would then recognise how wrong he is to refer to a decline.

Mrs. Angela Browning (Tiverton)

Is my right. hon. Friend aware that, in 1977, Rover—previously trading as British Leyland—was described as the weakest motor car manufacturer in Europe? Is he also aware that today's news clearly shows that, in the private sector and subject to the Japanese style of management and production methods which the Labour party opposes so vigorously, it has now become a leading manufacturer and has attracted investment from BMW?

Mr. Sainsbury

My hon. Friend makes an effective point. I suppose that if the Labour party had been in power, another £3 billion of taxpayers' money would have been wasted in losses sustained by an industry in public ownership. As it is, we have a profitable and growing industry whose quality and competitiveness have been recognised by one of the most respected companies in the entire industry.

Mr. Roy Hughes (Newport, East)

Is not the decision a kick in the teeth for the thousands of workers who made the enterprise such a successful one? Rover can now compete on quality and performance in the markets of the world, yet this is the time that has been chosen to sell it off to a foreign competitor. Does it not mean that under the Conservative Government we have lost all pride in British enterprise?

Mr. Sainsbury

From what I have heard about the reaction of the work force, they are somewhat more realistic than the hon. Gentleman. They recognise the opportunities that the deal provides for the companies in which they work.

Sir Thomas Arnold (Hazel Grove)

Is my right hon. Friend aware that the announcement that British Aerospace wishes to concentrate on its core aircraft business will be greatly welcomed in Greater Manchester, as it would appear to mean fresh investment for both Woodford and Chadderton? May I invite him to ascertain from the company whether it will now seek to reverse the recently announced programme of redundancies, due to take place between now and November?

Mr. Sainsbury

I agree with my hon. Friend that the deal provides significant increased opportunities for the regional jet business at Chadderton, which I know is important to his constituents. I cannot say anything about the job losses, which are always a matter of regret. He and I know that the market for the product has been weak of late. I hope that, as a result of the increased funds that will be available to it, British Aerospace will continue to improve its product, invest in production facilities and meet demand when that demand revives in the market.

Mr. Robin Corbett (Birmingham, Erdington)

Can the Minister explain to the House how it is that Germans think that it is worth while investing in Britain when apparently no one in Britain with money thinks that it is sensible to do the same thing? Were any other bids for Rover invited or received? Has the Minister—if he has not, will he—asked BMW to put in a formal document to Her Majesty's Government the undertakings that are now on the PA wire?

Mr. Sainsbury

As I hope that I have made clear to the House already, job security in any business does not rest in the hands of the Government. It does not even rest in the hands of a business, unless that business can succeed in the marketplace by investing, innovating and providing quality products that the customer wants. It is clear from the reaction of British Aerospace and BMW and their managements and work forces that the deal is perceived as increasing the opportunities for Rover to do just that.

Mr. Quentin Davies (Stamford and Spalding)

Is not £800 million of foreign private sector money just about the best compliment that could have been made about the turnaround in Rover's fortunes following the past few years? Is it not a fact that 15 years ago no automotive group in the world would have touched Rover, or British Leyland as it then was, with a bargepole? Do not we all know why that was? Is not today's news a fine tribute to the turnaround of so much of British manufacturing industry in the past decade?

Mr. Sainsbury

I agree with my hon. Friend. It is not only a tribute to the achievements of the management and work force of Rover; we can also regard it as a recognition of the achievements of privatisation and the introduction of rational, sensible and fair industrial relations laws.

Mr. Bruce George (Walsall, South)

As a Rover owner who will not buy any more used cars from the hon. Member for Luton, North (Mr. Carlisle), may I ask whether the Minister appreciates that it is not xenophobic of Labour Members to want to see the retention of an indigenous motor vehicle capability? Is not it bizarre that, while the Secretary of State for Defence has encouraged defence manufacturers to diversify out of the defence industry, British Aerospace is going in the opposite direction? Is it the goal of Conservative Members to see unsuccessful British companies going under and the successful ones becoming subsidiaries of foreign operations?

Mr. Sainsbury

I have to disagree with the hon. Gentleman about what constitutes an indigenous industry. For me it is one that operates in Britain, creating jobs and wealth here. The ownership of the company seems not even secondary but far down the line of importance. I wonder whether the ownership of Hilton International, Jacuzzi or even Jack Daniels—perhaps it is not well known that that is a British-owned brand name—makes a difference to the people who work for the companies that produce those commodities and the people who use them.

Mr. David Tredinnick (Bosworth)

My right hon. Friend's assurances that Rover will remain a separate enterprise are welcome, but does he not think that the escalating costs of German production and the fact that so many German companies are moving their production to Britain means that there is a distinct possibility that BMW will want to build BMWs at Rover plants in Britain?

Mr. Sainsbury

I cannot answer that. However, it is quite clear that BMW recognises the competitiveness of British component suppliers and thinks that there could be increased opportunities for them to supply parts for BMWs made in Germany. That is partly due to lower overheads and wage costs in the United Kingdom compared with those in Germany and is part of the benefit of our not having the social chapter.

Mr. Derek Fatchett (Leeds, Central)

Is it not clear that the guarantees and promises that the Minister gave in his statement have become less valuable as he has responded to questions? Will he tell us the force of the guarantees that have been given on investment in aerospace, research and development and job security? Judging from his words, is it not a fact that those guarantees are simply not bankable? Is it not perverse that Conservative Members should claim a success for their strategy when the nature of that success means selling Britain's last wholly owned car firm to the Germans and to our competitors?

Mr. Sainsbury

I fear that the hon. Gentleman's remarks again betray a lack of understanding about the nature of modern manufacturing industry. Even more than that, they betray his total lack of understanding about what happens in a marketplace in which consumers and customers determine a company's success. It is they—if anyone—who guarantee job opportunities for the company and its suppliers.

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