Campbell's Soups

HC Deb 04 March 1996 vol 273 cc123-32

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

10.17 pm

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

Since last October, I have been running a determined campaign seeking the reversal of the decision by Campbell's Soups of the United States of America to close the Homepride plant in my constituency. In an Adjournment debate in November, I set out the background to that decision, while expressing the anger of the people of Maryport over the loss of one of the town's foremost employers. Campbell's Soups, having paid £58.6 million for the plant at the beginning of August last year, promptly announced its closure 11 weeks later.

The decision was an outrage. It has never been justified commercially, and has been repeatedly questioned during a number of television programmes and articles in the national press—notably the Daily Telegraph, The Guardian, The Independent, the Financial Times, the Daily Mirror, the regional media, and "Newsnight".

Since the announcement, I have lobbied the Prime Minister, raised innumerable questions on the Floor of the House, used every available parliamentary procedural peg to put the case for my constituents, attended Campbell's annual general meeting in Camden, New Jersey, to lobby shareholders, and visited the King's Lynn Campbell's Soups plant to which production is being transferred, with a personal appeal to the work force for their support.

During the campaign, I have written to 2,300 newspaper editors in every part of the kingdom seeking publication of a letter appealing for a national boycott of Campbell's Soups products; written to more than 300 major supermarket groups and chains promoting the boycott; approached thousands of organisations throughout the country, either directly or by way of correspondence, drawing attention to the plight of my constituents; and secured the support of 340 Members of Parliament on a motion asking for the company to reverse its decision.

On the international stage, I have, in conjunction with British trade unions, sought the support of trade unions throughout the western world and liaised with Tony Cunningham, Member of the European Parliament for Cumbria, in promoting the boycott throughout the Community.

However, all that effort has been to no avail. The company, which is 58 per cent. owned by a single family and its successors in the United States, prefers to thwart the views of the majority in the House of Commons—as expressed in the early-day motion—by insisting upon pursuing its original decision. The motion received the 13th largest number of signatures of the 30,000 similar motions tabled in the past 56 years in the House of Commons.

The facts are that Campbell's Soups, through its wholly owned, unaccountable British operations, has proved completely insensitive to the very reasonable and commercially sound pleas that it has received from various parts of the world. To cap it all, the Homepride work force have been driven into a financial settlement with the company under the pressure of changes in entitlement to unemployment benefit, while the redundancy package has been tailored in such a way as to ensure loyalty until the final day of operations. The work force have been effectively silenced. In my view, it is the worst closure decision in the constituency in the past 16 years—it is an outrage from start to finish.

My response, with the boycott campaign of Campbell's Soups and Fray Bentos products, has clearly been successful, considering the thousands of letters and approaches that I have had from all over the country. Recent attempts to provoke discussion among Campbell's Soups King's Lynn work force—the beneficiaries of the Maryport closure—have failed. It knows that King's Lynn does not need the Homepride lines. It knows also that offers of employment to Maryport workers ring hollow when the same jobs are being offered to King's Lynn workers.

The reality is that only half a dozen people are transferring from Maryport—mostly from management—and statistics produced by Coutts to identify employment opportunities in the Maryport area are nonsense. Coutts' statistics are the laughing stock of west Cumbria. Its well-meaning operation has simply succeeded in reducing the availability of job opportunities for the existing unemployed. Campbell's has not created a single job.

The King's Lynn work force, without union recognition, has been particularly unresponsive, and is kept on a tight rein by Campbell's management. Perhaps that accounts for the lack of national publicity surrounding the five scalding incidents and one fatal accident at the King's Lynn site, which were revealed in a parliamentary answer to me last week. The King's Lynn work force should be asking why Campbell's Soups promotes union recognition in America and not in the United Kingdom.

Mr. Henry Bellingham (North-West Norfolk)

Will the hon. Gentleman give way?

Mr. Campbell-Savours

No, I am sorry, but I wish to complete my remarks. I shall certainly give way if I have time, or the hon. Gentleman can intervene on the Minister.

To answer the boycott, Campbell's has employed the services of Barclay Stratten for advice. I believe that it has been poorly advised—indeed, journalists have described it as incompetent. It would have been better if the company had used its own Member of Parliament, the hon. Member for North-West Norfolk. He would certainly have corrected its wildly inaccurate interpretation of events, and particularly its suggestion that I was annoyed by his intervention. I can only advise Campbell's to review the Barclay Stratten account.

What of the future? I have argued repeatedly that Campbell's Soups purchased Homepride only for its brand name. The reality is that the Homepride brand name and the "Fred" advertising logo have opened the door to immense further potential in national distribution. Dalgety recognised that potential, which is why it decided to invest more than £9 million in Maryport in 1994.

Dalgety's former finance director, Mr. Peter Byers, who was responsible for Homepride operations and who now works for Campbell's Soups, recognised the potential for cook-in sauces. I suspect that he was the key to the Campbell's Soups decision. His role in the whole affair raises a number of questions. He, drawing on his time at Homepride, must have known that the Homepride label would open the door to increased market share.

The die is cast, and we must now look to the future. I now understand, and the House should know, that there have been early discussions in west Cumbria about a proposal to establish a new company, to be called Marypride. That company could manufacture processed food products. The idea is in its infancy. The Marypride brand name knocks on an open door. From the point of view of the local community in Maryport, it would capitalise on pride that the townspeople have in their community. What they have built in the past could be re-created in the future. I wish to say no more on that matter at this stage.

The House should also consider the lessons that can be learnt from the takeover of Homepride, and there are many. Campbell's Soups' acquisition arose only in conditions of binding confidentiality on bidders at the time of the Dalgety sale.

The question we need to ask is whether it is in the public interest for a predator in the market, hiding behind a wall of such confidentiality, to be able to acquire a target company without any element of accountability. Under current arrangements, the whole area is unregulated, and it is not my purpose to advocate onerous regulatory requirements that undermine enterprise and impede the operations of the market. Nevertheless, takeover arrangements in those limited conditions require some greater transparency to balance the interests of employees with those of shareholders and corporate decision takers.

In the Homepride case, at least six organisations submitted bids during the Dalgety auction. Most of the bids came from companies or consortia that intended to keep the Homepride plant open. In the case of at least one bid, I am confident that—if that company had won—not only would Homepride have been secure, but it would have grown into a substantial food manufacturing company over the years, and would have employed many hundreds of people. The problem was that the accepted bid came from a company whose intentions were closure. It all happened behind closed doors. The Mustoe agenda was realised in conditions of total confidentiality. No one knew of the impending holocaust.

I ask a simple question: is it in the public interest for bids to be transacted in such secrecy? Could corporate takeovers survive greater transparency? What would have happened if, at the time of bidding for Homepride, each bidder—having cleared the preliminary hurdles—had been required immediately prior to bids closing to indicate publicly their interest in Homepride?

The interested parties—the local authorities, the regional Department of Trade and Industry, the training and enterprise council, the local development agencies, the Member of Parliament and, most of all, the work force—would have known which companies were bidding, and, after the close of bids, whom to approach about the prospects for the company. Every bidder would have received an approach as to their intentions. They might have remained silent, but we can be sure that a number of bidders would have been prepared to give assurances as to the future. Dalgety, subject to public pressure, would at least have taken those assurances into account.

One could easily devise a regulatory framework for such a proposal. All that it would require is a bid notification procedure. That single regulatory change would allow decisions on the acceptability of bids to be influenced by issues other than price, as is the case today on environmental matters. Transparency would open the door to an element of accountability.

In the Homepride case, if such a procedure had been in operation, Campbell's Soups would probably never have succeeded and, even if it had survived the bidding stage, public pressure would have forced a withdrawal prior to or even during exchange of contracts. Its motives would have been flushed out far earlier, and Dalgety would have been obliged to sell to a more sensitive predator. Alternatively, Dalgety itself, conscious of its public image, might have sought some form of undertaking about Maryport's future, if only to avoid a public row.

It is arguable that these transparency arrangements could be taken a stage further. Some might argue that bidders should be identified, and that there should be a regulatory requirement on them to define their intentions for a given period—for example, nine or 12 months. That might take the form of a time-limited statement of intent—I call it an SOI—at the time of public notification of the bid. I recognise the complications that could arise under an SOI procedure, certainly in terms of disclosure of commercially confidential information to bidders by vendors. Nevertheless, having given the matter much thought over recent weeks, I do not regard the difficulties as insurmountable.

The professionals would have to adjust. We could set a threshold below which notification would not be required, so as to avoid unnecessary burdens being placed on smaller acquisitions. I suggest a threshold of £20 million in cash or equivalents.

Some argue that such proposals might damage the bidder's commercial credibility if he were to fail—markets do not like losers. Equally, an element of market and employee instability might be induced in the target's work force. We must weigh these considerations against the rights of employees to influence where they are going. I believe that the exercise is damage-limitation manageable if the time between bid notification and ink on contract is limited. I accept that problems could arise where a bid is issued for loss-making assets.

Corporate decisions are often difficult and unpopular. Very often, the inevitable consequence of rationalisation in a sector where losses are being incurred is job losses. Bid notification could prove difficult in these conditions, especially if we regulated for an additional SOI requirement. The answer to the difficulty may well lie in the way in which the vendor presents his own options to his work force. That would certainly sharpen the debate over rescue packages, but these are not uncharted waters for talented management.

My proposal needs much refining if it is to be included in legislation. It is little more than the embryo of an idea for further consideration at this stage, but I believe that it should be taken seriously.

I have tried to identify legal frameworks for notification proposals. My preliminary view is that disclosure provisions in the case of bankruptcy under rule 4.11 of the insolvency rules 1986, disclosure provisions for winding-up orders under section 130(1) of the Insolvency Act 1986, and disclosure provisions in the use of administration orders under rule 2.10 of the insolvency rules 1986 all point the way forward. In each instance, disclosure is required in the London Gazette, which is published in London, Edinburgh and Belfast.

I ask the Minister seriously to consider my proposal for what I intend to promote as the Campbell's Soups amendment. Let some good come out of this whole squalid affair.

10.32 pm

The Minister for Competition and Consumer Affairs (Mr. John M. Taylor)

I acknowledge straight away the concern of the hon. Member for Workington (Mr. Campbell-Savours) about the closure of the Maryport plant. I realise that it is a blow for his constituency. But the matter is for the commercial judgment of Campbell's. It would be wrong for the Government to intervene in such decisions. I say also in the margins of the debate that there is a fair amount of understanding between the hon. Gentleman and myself over this matter. If I do not in the time available cover all the points he raised, I shall certainly refer to the matter in a letter to him.

I fully understand the depth of the hon. Gentleman's concern for his constituents, but he must bear in mind the fact that Campbell's has been present in the United Kingdom since 1959. The company employs about 1,200 people here, and has shown its commitment to the UK by recently investing over £100 million. The Government would not want to threaten these jobs and investment.

I realise that closure must be very disappointing for Maryport, and in particular the 120 employees involved, but I understand that Campbell's has offered all employees jobs at one of its five other plants.

I know that the hon. Gentleman is aware that Maryport is within an assisted area and, as such, qualifies for regional selective assistance for investments that create or safeguard jobs. That means that the site of the Campbell's Soup plant qualifies for RSA. Proposals by companies wishing to invest in the facility would be considered for support against the criteria for RSA awards. Of course, it is not for Government to say what type of business might make use of the site.

A range of other services is also available through the local Cumbria training and enterprise council, through business links, and through Inward, the north-west development agency, which could assist in attracting new businesses to invest in the area of the Campbell's site. Those services include business advice counselling, diagnostic and consultancy services, exports advice, business enterprise services, and technical expertise as well as access to the personal business advisor network. I know, for example, that Cumbria TEC already offers practical help to individual employees of Homepride and will continue to do so beyond closure.

I remind the hon. Gentleman that west Cumbria has European objective 2 status, which gives the area access to funding for business support measures, and also for the cost of training and re-skilling activities.

Let me remind the House that the food industry is a very successful UK industry. The success of the industry in recent years can be demonstrated by the figures on exports: in 1988, UK exports of food and drink were worth some £5 billion. By 1994—six years later—they were worth some £9 billion.

The rest of Europe, and, indeed, the world, is finding out how good British food and drink really are. British bread is chic in Paris, and British lamb and Scottish salmon are particularly well regarded there. We are selling pizzas to Italy and ice cream to Spain. Such successes are a tribute to the industry, and also to the Government's determination to create and maintain an economic framework within which such enterprise can be rewarded.

Sales by the UK food and drink manufacturing industries in 1994 were worth more than £56 billion. With a work force of about 450,000, the sector accounted for one in nine jobs in manufacturing. The industry has continued to compete effectively in world markets, with 1994 exports of food, feed and drink valued at £9 billion.

The soups and sauces industry is no exception to this success story. In 1992, UK exports were worth some £13 million, with major markets established in Ireland, Germany and France. Not only that, but the UK consumer can choose from a vast array of delicious and imaginative soups and sauces on sale at the supermarket, grocer or corner shop. The competitive nature of the market means that companies are constantly looking for new product types and ideas to provide what the consumer wants.

The UK soup market has recently been characterised by rapid innovation and increased choice, not only in the variety of flavours on the market but by different product types, such as low-calorie, premium, chilled and fresh. Sales of soup are expected to continue to grow steadily in the near future. I have no doubt that Campbell's Soups will continue to play a significant role in this expanding and innovative market.

The hon. Gentleman referred to the role of merger control. As he knows, the Director General of Fair Trading has a duty to advise my right hon. Friend the President of the Board of Trade on qualifying mergers. The director general looked at this transaction, and concluded that it did not give rise to a qualifying merger.

The transaction met neither of the tests in the Fair Trading Act 1973. The assets being acquired were only £9 million, as I understand it, which is some way short of the £70 million test in the Act. Indeed, it is short of the hon. Gentleman's suggested £20 million. The market share test—that a 25 per cent. share should be created or increased—was not met, either. There was therefore no role for my right hon. Friend the President of the Board of Trade in the matter. He had no decision to make on the acquisition.

Let me remind the House that a merger can be blocked only if the Monopolies and Mergers Commission finds it to be against the public interest. Furthermore, since 1984, the policy of the Government has been to make decisions about whether mergers are referred to the MMC primarily on competition grounds. That policy will continue.

The hon. Gentleman called for greater transparency in such bidding procedures. I emphasise that the conduct of the sale of Homepride Sauces was a commercial matter for Dalgety; it would be wrong for Government to intervene in such matters. There are no plans to change existing legislation or policy governing mergers.

Mr. Campbell-Savours

Under this Government.

Mr. Taylor

I am speaking for this Government, as I think the hon. Gentleman knows.

There have been calls for the Fair Trading Act to be amended, so that smaller mergers can be considered by the competition authorities. As the House will know, in February 1994, the assets threshold for mergers was increased from £30 million to £70 million: that was agreed by Parliament as part of the Government's deregulation initiative. The change does not signal a weakening of competition policy; all larger mergers, and any small mergers that create or increase a 25 per cent. market share, will still be considered under the Fair Trading Act. The measure is clearly deregulatory, and has been welcomed by business generally.

Let me also make it clear that United Kingdom and foreign companies are treated alike under UK merger procedures. The Government feel that commercial considerations should generally determine ownership of businesses. UK companies themselves do very well overseas, and long may that continue.

There have been calls for predatory takeovers to be blocked. I understand that Dalgety put the Homepride business up for sale and decided to sell to Campbell's. That was a normal commercial transaction. As I said earlier, it would be wrong for the Government to intervene in commercial decisions: companies must be free to adjust to the competitive demands of the market.

The hon. Gentleman referred to the role of foreign companies in the UK economy. I remind him that the Government welcome foreign investors, and will continue to do so. Nowhere is the competitiveness of our economy better demonstrated than in our ability to attract inward investment.

Mr. Campbell-Savours

Does the Minister think that it would be much fairer if a work force knew when the enterprise for which they worked was being put on the market and bid for?

Mr. Taylor

The hon. Gentleman will not be surprised to learn that my knowledge of the company and the transaction is not as detailed as his. In fact, it would be rather surprising if, as Member of Parliament for Solihull, I knew as much about Maryport as he does. I shall reflect on what he has said, because good practice should always involve consultation; but I do not wish to stray into matters involving his constituency or a particular transaction.

I was talking about inward investment. More than 40 per cent. of all United States, Canadian and Japanese investment in the European Union, together with over 50 per cent. of Korean and over 57 per cent. of Taiwanese investment, has come to the United Kingdom. Our stock of inward investment is now £147 billion—up from £44.3 billion in 1985—and 99 of the "Fortune" top 100 companies have chosen to locate in the UK. Our record in attracting inward investment within the European Union is second to none.

The UK has a long history of welcoming overseas inward investment—over 100 years. We have made Britain the most attractive place in which to invest. The facts speak for themselves. Since 1979, my Department's Invest in Britain Bureau has registered more than 4,200 inward investment projects, with more than 700,000 associated jobs. In recent months, we have secured investments from Ford, Siemens, Nissan, Fujitsu and Chunghwa. That equals more than 11,200 jobs.

In the last financial year alone, we won some 454 inward investment projects, supporting some 91,000 jobs. Those jobs are in tomorrow's industries—highly skilled, bringing the best management standards, with exciting potential, down the supply chain of industry.

Mr. Bellingham

My hon. Friend will remember that the hon. Member for Workington (Mr. Campbell-Savours) said that there were recognised trade unions at all Campbell's plants throughout the country. Is he aware that the staff at the factory at King's Lynn have been given the opportunity on a number of occasions to have trade union representation, but have opted for an advisory committee? Indeed, they have had many recent opportunities to reverse that decision, but have decided not to.

Mr. Taylor

I am very interested to learn that. I was not, candidly speaking, aware of what my hon. Friend says. I am very glad that he has put it on the record, however.

Mr. Campbell-Savours

Perhaps I may tell the Minister that the King's Lynn work force is one of the lowest paid in the processed food industry in the whole of the UK.

Mr. Taylor

This evening might have been more interesting if we had had a debate between the hon. Member for Workington and my hon. Friend the Member for North-West Norfolk (Mr. Bellingham). I have a role to discharge, however, and limited time in which to do so.

Inward investors add significant strength to our industrial economy. Overseas-owned manufacturers provide a third of all manufacturing investment, nearly a fifth of manufacturing employment, over one fifth of manufacturing output, and about two fifths of UK-manufactured exports. The Government are determined to maintain this enviable record. We must be competitive to attract inward investment.

Britain has many attractions for the inward investor: a strong economy, a pro-business environment and the world language. We also have no foreign exchange controls or restrictions on sending profits abroad. Britain offers the best available combination of a skilled and flexible work force, low taxes, lower production costs and a mature system of law. These are all good reasons for the United Kingdom's success.

Mr. Michael Jopling (Westmorland and Lonsdale)

Does my hon. Friend understand that this whole matter has caused a great deal of unhappiness in Cumbria? I have asked Campbell's to look at the matter again, but have not heard from the company. Will the Minister do the same?

Mr. Taylor

With only seconds to go, all that I can tell my right hon. Friend is that I shall certainly reflect on what he says—the more so since the question comes from him. I shall take his request very seriously indeed.

The closure of the site in the hon. Gentleman's constituency is, I recognise, an unwelcome event. With the assistance of Government support, through regional selective assistance and other services on offer, I hope that another employer may be able to move into the plant, but let me emphasise again that the closure of the plant reflects Campbell's commercial decision, and it would be wrong for the Government to intervene.

Question put and agreed to.

Adjourned accordingly at thirteen minutes to Eleven o'clock.