HC Deb 25 February 1999 vol 326 cc530-3
5. Mr. John Austin (Erith and Thamesmead)

What action he has taken to ensure continued production at Rover Longbridge. [71599]

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

I am in close contact with both Rover and BMW. I have also spoken personally to the new chairman of BMW, Dr. Milberg. I am pleased to tell the House that he has confirmed that BMW will proceed with the planned investment at Longbridge for the new Mini. I welcome that decision.

In addition, BMW is reviewing its medium car strategy. As part of that review, the Government will carefully consider any approach from BMW for assistance that will help to secure the long-term future of the plant, and will help Rover to achieve the world-class performance that it needs to achieve if it is to operate successfully in this competitive, global marketplace.

Mr. Austin

I welcome my right hon. Friend's support. Will he also commend the Rover work force at Longbridge for their positive contribution to ensuring continued production at the plant? Does he share my view that the ground-breaking partnership deal struck in December was struck between recognised trade unions and the board, and should be unaffected by any recent changes in the board? Does he also agree that the loss of 14,000 jobs at Rover Longbridge, and of up to 80,000 in the supply and service industries, would deal a devastating blow not just to the west midlands but to the British economy as a whole? Does he agree that, in a global market economy and given the inevitable rationalisation of the motor car industry, the victors will be countries that support domestic producers?

Mr. Byers

This is clearly a time of uncertainty for the 14,000 people who work at Longbridge, and for the many more people in the west midlands who depend on Rover Longbridge for their contracts. It will be a period of change. In the autumn, the work force voted for change, demonstrating their commitment. The Government want to ensure that those workers can be partners in change, not victims of change. We shall do all that we can to support them, and to help BMW to decide where the medium car is to be produced; but I must repeat that there is no question of the Government's bailing out an unsuccessful industry. We are prepared to give financial support to the improvement of skills at Longbridge so that productivity can increase, on condition that that support levers in substantial extra investment by BMW. We believe that partnership approach is the best way in which to secure the long-term future of Longbridge, and of Rover in the United Kingdom.

Miss Julie Kirkbride (Bromsgrove)

I welcome a great deal of what the Secretary of State has said. As he may know, the Longbridge plant is in my constituency as well as that of the hon. Member for Birmingham, Northfield (Mr. Burden), and I should be grateful if, when he intends to visit it again, he would do me the courtesy of telling me.

I associate myself with what was said by the hon. Member for Northfield, but also ask whether the Secretary of State will have the decency to accept that part of the problem at Longbridge has been caused by the Government's economic policy and the ruinously high exchange rate that operated during the early part of the Government's term of office, when Rover was unable to sell its cars abroad and was uncompetitive in the home market where it had traditionally sold them. Sadly, that will continue, because foreign car companies have bought forward sterling and will therefore be able to continue to undercut Rover in its home market.

In view of the Government's partial culpability in regard to the present crisis, may I urge the Secretary of State to encourage his right hon. Friend the Chancellor of the Exchequer to be generous? There is a perfectly reasonable precedent in the investment in Longbridge that took place under the last Conservative Government.

Mr. Byers

I can understand why Conservative Members try to score political points, but we should look at the facts. The hon. Lady referred specifically to exports and alleged that the car industry faces particular difficulties in that respect because of the rate of sterling. A fact: car exports from the United Kingdom last year were the highest ever. A fact: United Kingdom car industry production was the highest for 24 years. United Kingdom sales are the highest since 1989. That is the reality of the situation. Conservative Members do not like to have the facts drawn to their attention. Those are the facts and here is another one: 6,500 new jobs have been created in the car industry in the past year under this Government, after years of neglect by the Conservatives.

Dr. Lynne Jones (Birmingham, Selly Oak)

I am pleased that the hon. Member for Bromsgrove (Miss Kirkbride) associated herself with the remarks of my hon. Friend the Member for Birmingham, Northfield (Mr. Burden), but it is a pity that she did not dissociate herself from the calls of her former employer, The Daily Telegraph, to shut down the Rover operations at Longbridge. Despite the strength of the pound, which is a problem for Longbridge, Rover managed to increase its sales in Europe last year, largely due to the success of its higher range models. Such production is set to continue with the highly acclaimed Rover 75. Does my right hon. Friend agree that, if the investment in the small and medium car range goes ahead, the prospects for Rover capturing its share of that market—at home and abroad—are good?

Mr. Byers

I agree with my hon. Friend. I have no doubt that the prospects for Rover, particularly at Longbridge, will be good, provided that we can achieve an approach based on partnership and can work together. The Government are prepared to do their part—not through a bail-out, but through targeted assistance—and, provided that BMW can recognise the benefits that it will receive from Rover Longbridge and investment in that plant, I am sure that we can work together to provide employment for the 14,000 people who currently work there. Such an approach would provide opportunities throughout the west midlands and secure the future of Longbridge, so ensuring that we can maintain that plant as a vital part of the west midlands economy.

Mr. John Redwood (Wokingham)

In the middle 1990s, Rover was profitable, BMW was proud to acquire the Rover name and the factories, and BMW management thought that Britain was the best place in which to invest, anywhere in Europe, to build new cars. Under the Government, Rover is a loss-making venture and BMW is threatening to take its investment elsewhere; it is even contemplating not using the Rover badge for the medium car, but substituting a new BMW model.

I hope that the Secretary of State will accept that Conservative Members want a successful motor industry base in Britain. We were proud of the achievements by companies from all around the world which began to establish that base in the early and mid-1990s. Will he tell all those worried people who live anywhere near a Rover plant, and whose livelihoods depend on it, either directly or indirectly, the answers to some very simple questions? Do he and the Government believe that they can persuade BMW to use the new mid-range Rover saloon, the Rover 35, to replace the existing models, or does he think that we might lose out to a BMW model? Does he think that he can persuade BMW to manufacture that model in Longbridge or anywhere in the west midlands?

How many job losses does the Secretary of State think will result from the plans that BMW is beginning to develop? When does he expect to receive a proper application for grant from BMW? Will that grant application be for the Mini alone, or does he expect it to cover the medium-sized saloon? Will he want any conditions about such a saloon if the grant application relates only to the Mini in the first instance? What guarantees will he want about the number and location of jobs, if and when those grant negotiations get under way?

Mr. Byers

We have just witnessed the gross irresponsibility of opposition. There is no question of debating such detailed, commercially sensitive information on the Floor of the House. The right hon. Gentleman knows that, when he was a Minister at the Department of Trade and Industry, he would not have debated these issues openly at this particularly sensitive stage.

The reality is that yesterday Vauxhall decided to locate its research centre in the United Kingdom. Ten years ago, when the Conservative Government were in power, that company walked away from the UK. It would create great difficulties for securing the future of Longbridge if the Government were to adopt the Conservative party's policies on the single European currency. To rule out entry for 10 years would be seen by companies such as BMW as a condemnation of the future of industry in this country. The right hon. Gentleman would be aware of that if he thought about it. He should make the link, and should listen to the leaders of big business who are telling him and his party that they have got the policy wrong.

We are committed to our policy on the single currency, because we believe that it will secure the future for our people. We shall continue the negotiations at Rover Longbridge. They are progressing well, and I hope that in weeks rather than months they will achieve a successful conclusion.