§ Mr. John Redwood (Wokingham)(by private notice): To ask the Secretary of State for Trade and Industry if he will make a statement on the crisis at Rover and on what action the Government propose to take.
§ Secretary of State for Trade and Industry (Mr. Peter Mandelson)I have been taking and will continue to take a close personal interest in the developments at Rover, and I have travelled twice to the west midlands, for different reasons, already this week. I have been in touch with the company on a number of occasions in recent weeks. I met union officials on Monday evening, and have a further meeting with the chairman of BMW, Berndt Pischetsrieder, and the chairman of Rover, Walter Hasselkus, tomorrow morning.
The company is in the process of a wide-ranging review of Rover's car operations in the United Kingdom. No decisions have yet been made, but clearly they need to establish a commercially viable basis of production. The company has indicated that it needs a £150 million cost reduction every year for the next three years. That is a tall order, and must inevitably include an examination of company employment practices as well as investment in new plant and technology.
Rover's investment plans are designed to deliver the right models to the market which are attractive to customers and affordable for them to buy. On the basis of those plans, the new R75 is under production at Cowley, and there is an assured future for Longbridge with the production of the new R30 model, but, critically, it depends on the right cost structures being put in place at the plant.
Rover has a long way to go to match the best world standards of productivity and competitiveness. BMW has indicated that Rover's overall current productivity levels are only two thirds of those of its German counterparts. The company and its work force need to focus very clearly on the changes required to bring about the raised performance it needs in order to be commercially successful.
The company has already come a very long way in introducing the necessary productivity changes that it needs. The investment by BMW amounting to between £500 million and £600 million per annum has gone a long way to address the previous shortfall of investment in the company, but more needs to be done.
I am told by the company that, one way or another, a solution to its current difficulties has to be found by the end of November. Without question, everyone will have to share in the burden of finding that solution—shareholders, management, work force and suppliers.
My Department and I will continue to work closely with BMW and Rover as their review develops. There is a role for the Government in ensuring that all the parties are brought together and properly focused on the issues. However, ultimately it is for the company to rise to the challenge and ensure that Rover continues to thrive in the global market place.
There has been comment that this is just another instance of the car industry in the UK in decline. That is far from the case. In addition to Rover's new R75, 1282 launched this week, Vauxhall has just started a third shift to produce the new Astra at Ellesmere Port, and Ford has invested £400 million in its new Jaguar S-type car, also launched this week. Other announcements this year include a £500 million investment by Honda to produce a third model at Swindon, creating 1,000 new jobs, and on Monday the Deputy Prime Minister opened a £200 million engine plant expansion by Toyota at Derby.
British automotive production is delivering excellent vehicles at competitive prices to some very tough markets. That continuing success deserves full acknowledgement and encouragement by all hon. Members.
§ Mr. RedwoodI thank the right hon. Gentleman for that statement. It was as patronising as it was complacent. Of course Rover needs to produce affordable models. Why, then, have the Government that he represents done everything in their power in the past 18 months to make it dearer to make cars in Britain, rather than making it cheaper? Why does he dare to deliver a speech like an undertaker denying all knowledge of the reasons for the death, when his Government's policies have been throttling British industry over the past 18 months? When will the Government wake up to the terrible damage that they are doing to manufacturing industry? The Trade Secretary needs to sharpen up his act rather than calling on others to do so.
I hope that the Secretary of State notices that Rover is not alone in finding conditions in the United Kingdom hostile to manufacturing. Day by day, and week by week, we are witnessing a tidal wave of redundancies and closures across our industry. For the past year, the Opposition have consistently warned that Labour's policies would trigger a manufacturing collapse.
Every time that interest rates were put up, more factories were bound to close. Every time that the Government's actions pushed up the value of the pound, more jobs were bound to go. Every measure that they took to make it dearer to employ people meant that more projects were bound to go elsewhere. Every time that they increased business taxes, companies were left with less cash for new plant, products and jobs.
It has taken only 18 months to squander a golden economic legacy—18 months of heavy taxes by stealth; 18 months of high sterling; 18 months of high interest rates; 18 months of many new costs and regulations for anyone who dares to employ someone. On the "Today" programme this morning, we heard the Secretary of State blaming the employees. He washed his hands of all responsibility. He is the Secretary of State for industry, so why does he not behave like it? The unions and the Opposition were offered no right of reply on the programme to the view that it was all the employees' fault, and that Rover was somehow a unique problem.
How can the Rover employees compete when the Government have made it so difficult for business in Britain? Why should they accept criticism of their work from the right hon. Member for Hartlepool (Mr. Mandelson), when he insults them with his remarks and fails at his job? Perhaps he should try getting his hands dirty in the right way, for a change. All we get from the Government are idiotic soundbites. We are promised a stable and competitive exchange rate. Which will they try first? We have had neither so far. They tell us that they are building for the long term. When will the 1283 demolition in the short term stop? Will the Secretary of State shoulder some of the responsibility? Does he understand that Ford is going on to a four-day week? Textile, engineering and high-tech companies are closing down or laying off people? Does he know or care that a job is being lost every 10 minutes under this Government? Will he take some action with his colleagues to delay the damage that they are doing to British business? Will they delay some of the costs that they are heaping on British business? Will they control the social security budget and address the black hole in their finances which is worrying the Bank of England and keeping interest rates too high? Will they return to the much lower level of business taxation that the Conservative Government left them—once they have managed to control their massive increase in welfare spending?
Outside the House, they will call the right hon. Member for Hartlepool "Mr. Mandelson, the Minister for Manufacturing Collapse". If he does not do something soon, he will become "the Minister for Manufacturing Slump". He and his colleagues have made it too dear to make things in Britain. They must act now to help save some jobs at Rover, and at all the companies which today are considering the same type of action. This is a recession made in Downing street. The Government must awaken soon before much more is lost.
§ Mr. MandelsonUnless I blinked, the right hon. Gentleman did not mention Longbridge once. It is absolutely clear why he tabled the private notice question: he is determined to continue competing in ridiculous hyperbole with the leader of his party. To hear him carrying on in such a way, anyone would think that the Tory party leadership contest was still going on.
In his lectures about manufacturing and manufacturing jobs, the right hon. Gentleman seems to have forgotten that, under his Government, the number of manufacturing jobs fell from 7 million to 4 million. One million manufacturing jobs alone were lost in the recession that his party created in the early 1990s. He seems to have overlooked the fact that, since this Government came to office, more jobs have been created than have been lost. Indeed, since we were elected, 400,000 new jobs have been created as a result of our policies and the success of British business.
It is clear that the right hon. Gentleman is interested only in trying to manufacture a crisis out of a rather complicated company reconstruction, which has been undertaken by Rover with immense difficulty. Everyone agrees that Rover has to undertake the reconstruction in order to make the company and the plant at Longbridge competitive and profitable. Success and reconstruction will come only from increases in productivity, which everyone except the right hon. Gentleman recognises needs to be made.
§ Dr. Lynne Jones (Birmingham, Selly Oak)When I asked the previous Prime Minister a question about the future of Rover, he said that it was not a matter for him. I hope that that will not be this Government's attitude. We all knew—BMW knew when it took over Rover—that a problem of differential productivity needed to be addressed. That has obviously been exacerbated by the strength of the pound, which was not anticipated.
The key to dealing with the issue must be investment, which has been made in other plants but not yet in Longbridge at the necessary level. Will my right hon.
1284 Friend do all he can to secure that investment? Does he agree that, with such investment, Rover at Longbridge faces a bright future? Does he also agree that, in securing the investment, it would be helpful if there were a promise that the pound will be more competitive in the long term?
§ Mr. MandelsonI am grateful to my hon. Friend for her support for the action that the Government have already taken. I am sure that she acknowledges that, at the end of the day, the company's future rests in its hands. As I have said, there is much that the Government can do in bringing together all parties to ensure that all the key issues involved are properly addressed. We are certainly doing that.
In all my discussions with management, the work force and trade union representatives at the company, I have been impressed by their sense of realism as well as their shared commitment to resolving the difficulties that the company is experiencing. Such resolution will be achieved only if there is continued commitment and if all members of the work force, the management and the executives of the company act in partnership in order that changes are made.
I am confident that, given the discussions that I have had, those changes will be made, that investment at Longbridge will be secured, and that Rover will be able to sort out its future and continue successful production on the basis of a commercially successful, viable, profitable future.
§ Mr. David Chidgey (Eastleigh)I fully support and welcome the efforts that the management and work force of Rover at Longbridge are making to turn the company around. It is easy to blame poor productivity or poor management alone for the crisis that manufacturing industry, especially the car industry, faces, but we must recognise that those problems have been with us for decades, and it will not be possible to turn them round at a stroke.
Does the Secretary of State accept that the Government must bear some responsibility for the fact that we are losing 300 jobs a day in manufacturing? One of the reasons for that is the Government's policy for sterling, which has created the highest value of sterling for at least 15 years, and is making life extremely tough, if not impossible, for our manufacturing industry. Does he agree with this week's forecasts that, unless the Government make some commitment—as I think he has already said they should—on entry into the single European currency, we face the loss not only of 300 jobs a day in manufacturing industry, but of at least 300,000 jobs next year?
§ Mr. MandelsonI may or may not share the hon. Gentleman's view on economic and monetary union, but I do not think that the Rover company will find its salvation or the solution to its problems in Britain's immediate, early or later entry into the single currency—with, of course, the full-hearted consent of the British people.
I hope that the hon. Gentleman will not join other Opposition Members in talking down the British economy and talking ourselves into recession, which is enormously damaging to the confidence of those in business, who are struggling all the time, successfully, to increase productivity and maintain Britain's share of world markets.
1285 I stress to the hon. Gentleman the fact that the job news is not all bad. Indeed, there is more good news than bad news on jobs. Recently there have been tremendously important job gains. For example, Oracle is opening a new plant that will create 2,000 new jobs in Solihull; Syntel is creating 2,000 new jobs in Belfast; Microsoft, in a joint venture with Computacenter, is creating 900 jobs in London and the south-east over the next three years; IBM, in a joint venture with Cable and Wireless, is creating 400 jobs nationwide. I could go on and on.
There is an enormous amount of good news—and that news will continue to flow so long as the Government maintain our commitment to economic stability, which gives companies the confidence and the ability to predict and plan for the future. That is what they need, and that is what they will continue to get from the Government's policies.
§ Jacqui Smith (Redditch)Does my right hon. Friend agree that an important element of the competitiveness of a business is the supply network that it can build up around it? Many businesses in my constituency have played a vital role in supplying Rover, and they and their work forces have been willing to adapt to the demands that have been made. In his meetings with Rover and BMW executives, will my right hon. Friend stress the importance of that west midlands supply network, and remind them that it will not be easy to rebuild it in other parts of this country or Europe?
§ Mr. MandelsonMy hon. Friend makes a good point. I know how well aware Rover and BMW are of the importance of that excellent supply chain, which also stretches beyond the west midlands. I am pleased that so much work is going on in the Society of Motor Manufacturers and Traders. I was in Birmingham this morning addressing its conference, and its members are doing an enormous amount to improve their networks, their business links and their mutual dependency.
Business is learning from business; they are learning how, throughout the supply chain as a whole, they can serve each other. You are right, Madam Speaker, to say that there is an excellent supply base and skill base in the west midlands. I am confident that those will not be dispersed as a result of premature decisions taken by BMW or Rover.
§ Mr. William Cash (Stone)The Secretary of State says that the decision lies with company management. Does he accept that there are serious questions to be asked—in relation not only to Rover, but to a whole range of British industries—concerning decisions taken by the European Commission and/or by the German Government, which are leading to the increased uncompetitiveness of British industry?
Does the Secretary of State accept that there ought to be proper investigations at the proper level in Europe and in the DTI of the real reasons why, over and over again, Britain gets the rough end of the argument? Why, for example, are massive subsidies paid in other countries—such as to Air France and in Germany? Why are cheap loans made at no interest from the lender banks, putting 1286 Britain at a competitive disadvantage? Will he do the right thing and have a quiet and careful examination of the matter in the British interest?
§ Mr. MandelsonI do not share the hon. Gentleman's paranoia about Britain always being at the rough end of the European stick. However, he makes a reasonable point—which I acknowledge—that we must be vigilant at all times about any proposal or measure emanating from Brussels that threatens Europe's economic competitiveness. I am vigilant about that—I take it very seriously— indeed. One cannot return from a week in the United States—as I have done—having seen the vibrancy of that economy and the lack of barriers to investment, production, innovation and flexibility in that country without having some concern about Europe's record.
However, in the past 15 months, the Labour Government have done a darn sight more—and a darn sight more successfully—to prise open and liberalise European markets to the advantage of British firms. We will continue to challenge every measure proposed by the European Commission which we believe to be inconsistent with Europe's paramount need to maintain its competitiveness in the world economy.
§ Madam SpeakerOrder. I have been able to call only a few hon. Members to put questions. I would ask that questions now be brisk, and if the Secretary of State would oblige me with brief answers, it would be extremely helpful to our debate later today.
§ Mr. Richard Burden (Birmingham, Northfield)Does my right hon. Friend agree that the criticisms from the shadow Secretary of State, the right hon. Member for Wokingham (Mr. Redwood), do not carry much credibility? The Conservative Government sold off Rover at a knock-down price, laced it with sweeteners which proved to be illegal, and did so behind the backs of the employees of Rover Group.
Does my right hon. Friend agree that we want to work towards the fulfilment of plans for renovations at Longbridge—plans which have already received planning approval—and towards a full-model range, starting with the new Mini and building up to a new medium-range model? I welcome what he has said about assisting the discussions between management and unions to achieve those ends. Will he pay tribute to the work that has been done by employees at Longbridge in improving productivity there? They are confident that they can improve productivity still further there and at other plants in the future.
§ Mr. MandelsonI can do all those things, Madam Speaker. I pay tribute to my hon. Friend, who has been extremely active and conscientious in the past few weeks in making sure that the Government have been properly focused on what we can do to support the efforts of all at Rover, and particularly at Longbridge.
My hon. Friend is absolutely right—the previous Government sold off Rover without lifting a finger to help to put in place the conditions for Rover's future success. They will for ever be indicted for that. Following my discussions with management and union officials at 1287 Longbridge, I acknowledge the strong determination there to find a solution to all the problems that the company faces. Judging by their success so far in raising productivity, I am confident that that is what they will do.
§ Mr. Jonathan Sayeed (Mid-Bedfordshire)I have a brief question which, I hope, will receive an accurate answer. How much will the working time directive cost Rover on a year-by-year basis?
§ Mr. MandelsonA sound and straightforward technical question of that sort will get a perfectly sound, straightforward, technical answer from me if it is possible for me to provide it when the hon. Gentleman gives me notice of the question.
§ Mr. Andrew Miller (Ellesmere Port and Neston)My right hon. Friend mentioned the success in Ellesmere Port that Vauxhall has just announced. He will have noticed from files that he inherited how complex was the process of securing the agreement that took Ellesmere Port and Luton into the long-term future. Does he agree that that was done through a partnership between the work force and management and, indeed, Government both central and local? Are there not lessons that can be learned about the problems facing us at Longbridge?
§ Mr. MandelsonMy hon. Friend is absolutely right, but not merely about Vauxhall at Ellesmere Port. Look at the success story of Jaguar following Ford's investment in that company, its strength now and the tremendous attractiveness of the new model, the S-type, which was launched this week. What were people saying about Jaguar not so long ago? They were writing it off, but people helped and came together—the work force and the Government, and the management contributed, too. If we can do similarly in relation to Rover and help to create as much success in that company as we did following Ford's purchase of Jaguar, we will be doing extremely well.
§ Mr. Nicholas Winterton (Macclesfield)I am sure that the Secretary of State is aware of my total commitment to manufacturing, whatever Government are in power. Does he accept that manufacturing is in severe difficulty—some believe, in recession? Is he confident that his announcement this afternoon will give the necessary reassurance to Rover management at Longbridge and to the work force, who have done an extremely good job in recent years?
Perhaps the right hon. Gentleman should have a word with the Chancellor of the Exchequer, as the Treasury appears to be anti-car and anti-road. So many of the extra taxes imposed by this Government have been imposed on the motorist, and there is now talk of a higher excise duty for the larger capacity car as from next year. Is that the way to encourage a healthy market for the car industry in this country? I do not believe so. Will he have a word with the Treasury?
§ Mr. MandelsonI hope that the hon. Gentleman will agree that I have shown as strong a commitment to the future of the car industry today as I acknowledge he has to British manufacturing. I share his concern, and look forward to engaging with him and other Conservative Members who share that commitment to manufacturing. I do not know how many Conservative Members there 1288 will be. It might be a dialogue between the two of us, but, hopefully, as he continues to champion British manufacturing, he may eventually gain some recruits on his own side.
Whatever the hon. Gentleman says about pessimism among some people in manufacturing, he should not talk down British manufacturing. He does not mean to do so, but let us acknowledge that manufacturing output is up, and manufacturing jobs are being created. With the additional investment and productivity boosts that we have seen in other sectors being transferred and translated to the automotive sector, success in that sector, including Rover, will be similar to that in other parts of United Kingdom manufacturing, and it will be a continuing success.
I can assure the hon. Gentleman that I am absolutely focused on the needs of UK manufacturing. Those needs, as well as the needs of the service industries, will be the focus and target of the competitiveness White Paper and the measures that I will propose when I publish it in early December.
§ Mr. Dale Campbell-Savours (Workington)If, as was said, levels of productivity at Longbridge were two thirds of those in Germany, that is a stark statistic—it makes exchange rate problems pale into insignificance. Has that statistic been independently produced, and do the trade unions at Longbridge accept it?
§ Mr. MandelsonMy hon. Friend makes a good point about Conservative point scoring on the value of sterling. Everyone at Rover, in all parts of the company, acknowledges that the dominant factor is the competitiveness that flows from the cost structure and levels of productivity. The trade union leadership in the company and at the plant, with whom I had a realistic exchange on Monday evening, also accepts that.
There will obviously have to be some difficult discussions with the work force, but there is no question of people rushing to conclusions and driving through quick-fix, superficial changes; we are talking about root-and-branch reorganisation. I remain confident that, given the commitment shown by everyone in the company, we shall see such a jump in productivity and improvement in competitiveness.
§ Dr. Evan Harris (Oxford, West and Abingdon)Rover's announcement will send a shiver down the spines of those people in my constituency and in the constituency of the Minister for Employment, Welfare to Work and Equal Opportunities, the right hon. Member for Oxford, East (Mr. Smith), who work at the Oxford Rover plant—after the job losses of the 1980s, they are thinking, "Not again."
Does the Secretary of State accept that there is a suspicion that this manufacturing mess was made in Millbank for Murdoch when tax increases were ruled out for this Parliament, which has left a one-club strategy of interest rates? Has not the problem been caused by the fact that the delay and dither of the previous Government has been replaced by "wait and see until News International gives the go ahead on EMU"? The right hon. Gentleman cannot claim credit for the creation of jobs in manufacturing unless he accepts the blame for the loss of jobs.
§ Mr. MandelsonI am sure that the hon. Gentleman will forgive me if I do not respond to his stream of clichés. 1289 He would do better to congratulate the Cowley plant and Rover, which has successfully launched the R75 model this week. Moreover, Rover's expansion of production at Cowley will result in the creation of 800 new jobs in the new year, which is a cause for celebration.
§ Mr. Geraint Davies (Croydon, Central)Does my right hon. Friend agree that global economic conditions and prospects are significantly worse than they were over the 18 years of the previous Government—who none the less caused two recessions—and that the level of sterling, in an uncertain world, is a measure of confidence in the British economy, where the number of jobs is increasing? The key to success must be to refocus on stability and productivity, and I look forward to seeing that re-emphasised in the forthcoming White Paper on competitiveness.
§ Mr. MandelsonMy hon. Friend will certainly not be disappointed. Everyone, with the exception of the Opposition, acknowledges that the British economy, which was operating at the peak of the business cycle, had inevitably to slow down—that analysis is shared by all. No one could have predicted the crisis in the world financial system that began in Asia and spread like a contagion to the rest of the world. Our task is to ensure that, against the background of world instability, we keep our eyes firmly focused on long-term stability in the British economy. Our policies are designed to achieve that, and I am confident that they will.
§ Sir David Madel (South-West Bedfordshire)To secure substantial improvements in productivity at the Vauxhall plants at Luton and Ellesmere Port, the trade unions agreed to big changes in work practices and patterns. Have the trade unions at Longbridge agreed in principle to make such changes?
§ Mr. MandelsonIt is too early to describe conclusions or changes that people are signing up to or entering into, but, on the basis of my discussion with the union officials on Monday night, I can say that they are facing the situation with considerable realism. Everyone has to do that if everyone is to share the burden that will be involved in finding a solution to Rover's current difficulties. I think that they acknowledge that costs have to be reduced in the company and I believe that they accept that that will involve considerable restructuring and reorganising in the company's employment arrangements. I think that they will face that with great fortitude and they deserve our support and help in doing so. They will certainly get that from the Government.
§ Madam SpeakerOrder. We shall move on now.