HC Deb 16 March 2000 vol 346 cc570-614
Mr. Deputy Speaker (Sir Alan Haselhurst)

Madam Speaker has selected the amendment standing in the name of the Prime Minister.

4.13 pm
Mrs. Angela Browning (Tiverton and Honiton)

I beg to move,

That this House calls upon the Government to report to the House the terms under which they brokered a rescue package for BMW/Rover in June 1999; further calls upon the Secretary of State for Trade and Industry to confirm that the application for Regional Selective Assistance will be sanctioned as a matter of urgency and that he will respond to the Competition Commission Report on Car Pricing as a priority; regrets that the future of Rover has been undermined by recent announcements by BMW; and urges the Government to clarify its future strategy in respect of Rover. The Opposition decided, in light of the developments this week on the future of Rover, that it was important that the House had an opportunity to debate the issue and to seek answers from the Secretary of State. The House will know that in 1994, when BMW purchased Rover, it was a profit-making company. It was remarked at the time by BMW that the United Kingdom was a good place to manufacture and produce motor cars.

Today's announcement, and the run-up to it, has meant that there is now a significant question mark hanging over the future of Rover and particular concern about the Longbridge factory and the many tens of thousands of people who work for Rover itself, for subsidiary companies and for those that supply Rover. The whole House recognises the importance of that company and that sector to the midlands in particular and to the whole economy of this country.

Last June, the Secretary of State for Trade and Industry stepped off a plane, held a photocall and press conference, and announced a new deal that he had brokered with BMW for the future of Rover at Longbridge. We were not favoured with a statement in the House on the subject. Indeed, the Government have not brought the subject of Rover to the Floor of the House since the Secretary of State held his press conference. It was left to my hon. Friend the Member for Bromsgrove (Miss Kirkbride) to raise the matter in an Adjournment debate in Westminster Hall in January.

To set the scene of the Secretary of State's announcement last June—to which we gave our public support—I remind the House of what he said at the time. The matter involved the first such application for state aid that he had dealt with since becoming Secretary of State—as the press reported—and he said:

I was not prepared to deal with this in the traditional way by simply making a substantial payment to BMW. Instead, I wanted the Longbridge agreement to be one which heralded a new approach to Government assistance to industry, which reflected a long-term commitment and not a quick fix. That is why I sought guarantees on productivity targets, raising skills and substantial investment from the company itself. Guarantees have been given in all these key areas. The Secretary of State said that because new ground was being broken, the negotiations were complex and detailed, but they are now a matter of public record. The details include the £2 billion of investment put in by BMW and the £129 million of regional selective assistance and the local grants, which amounted to some £152 million of public money and which the Secretary of State put on the table in the deal that he brokered with BMW in June.

Had we had the opportunity to question the Secretary of State at the time, we would have asked many questions. Indeed, together with colleagues in this House and in the other place—and other Members of Parliament, including Labour Members—I have tabled a series of questions in the months that have followed to seek clarification of the nature of the deal that the Secretary of State brokered.

Mr. Barry Sheerman (Huddersfield)

I have been looking at the questions tabled in the past few months and I cannot find the hon. Lady's name or those of her colleagues on questions mentioning Rover or BMW. Can she give us chapter and verse, or should we conclude that hers is a very late enthusiasm?

Mrs. Browning

I am about to read those questions out, including correspondence that I have exchanged with the Secretary of State on the subject. As the hon. Gentleman will know, it was the Conservatives who initiated the only debate that has been held, in which I made a substantive contribution from the Front Bench. I have yet to see a Secretary of State from any Department contributing to any debate in Westminster Hall, but that is not the approach that we take. If a debate is important, and Rover is important, I do not delegate the matter to a junior—I put my views and those of my party on the record. The hon. Gentleman should go on a PDVN course and learn to access information a little more accurately. However, I shall not be diverted by such trivial interventions, because this is a serious issue.

Many jobs are at stake in an important sector of the economy, and we demand information and answers from the Secretary of State about his own role in the deal that he brokered, what has happened since and why—just eight months later—the deal has not lasted a year, let alone the century that the Prime Minister claimed it would.

Mr. John Redwood (Wokingham)

Will my hon. Friend confirm that it was the Secretary of State's attempt to gerrymander the regional aid map that delayed and prevented any agreement coming from Brussels for the important aid package to help investment? Would she confirm that the Secretary of State thought he could waive the rules, only to discover that the EU had strong rules that it did not like having ignored? Is not that why, when it comes to shares in the Secretary of State, it is all sellers and no buyers?

Mrs. Browning

My right hon. Friend makes a pertinent point about where to draw the line on the map of delay. It is a matter of grave concern that the £152 million—a key component of the deal—has been delayed. Even today, there has been no assurance that the money will be on the table.

I remind the Secretary of State of the words of the Minister for Small Business and E-Commerce, who answered the debate in Westminster Hall:

I am in no doubt that without the offer of support, BMW would have taken its investment elsewhere. It needed to go ahead with the investment for strategic reasons, but it did not need to come to the UK. The prime consideration for BMW was the impact of the additional investment on the company's overall financial position.— [ Official Report, Westminster Hall, 26 January 2000; Vol. 343, c. 89WH.] When the Secretary of State announced the £152 million, there had been some brief contact between the Department and the EU's Competition Commissioner, Mr. van Miert, and his officials. However, it soon became apparent that the Secretary of State had not done his homework. He had not taken the trouble to make sure that what he was putting on the table in the negotiations would be in compliance with EU regulations. That is why, after many months of difficulty and uncertainty for Rover, that money has not been forthcoming.

Within a week of the Secretary of State's announcement, Mr. van Miert told my office that he was not inclined to think that the money would be approved automatically. He thought that it would take time and investigation before he would be convinced that the Secretary of State's bid for the money complied with EU regulations.

Mr. Richard Burden (Birmingham, Northfield)

With the group of Labour MEPs representing the west midlands, I met Commissioner Monti, who is responsible for the EU's competition policy. I do not know whether the hon. Lady has met him. We asked him whether the British Government had not answered any questions, and he said that there were no questions that had not been answered.

Articles in the Official Journal of the European Communities have made it clear that the problem with the deal was not the delays that it suffered, but the alleged haste with which it was put together. How does that fit with the right hon. Lady's argument? Does she—

Mr. Deputy Speaker

Order. That is a long intervention, and I know that the hon. Gentleman is seeking to catch my eye.

Mrs. Browning

It is not the pace of the deal that matters, but whether it will hold together. Surely the Secretary of State should have done his preparation and homework, given the importance of the £152 million in the negotiation that he brokered with BMW.

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

I am grateful to the hon. Lady for giving way on what is an important point. She seems to imply that I should have received European Commission approval before I put the deal to BMW. Will she give me just one example from the Conservative Government's period in office when a regional selective assistance deal was agreed between the European Commission and the Government before the deal was struck with the company involved?

Mrs. Browning

No, and the reason is that the Secretary of State raised expectations on what was a false prospectus. Given how he described his role in brokering the deal, he should have been much more sure of his ground in terms of compliance. The important thing was not that the deal had been made, but his ability to deliver a watertight guarantee that he would get the money, which was a contingent element in the BMW deal. If the company has reneged on its part of the deal today, it must be because of deep disappointment that what the Secretary of State announced last June has not been delivered.

Miss Julie Kirkbride (Bromsgrove)

I attended the debate in Westminster Hall at the end of January, as did my hon. Friend. Not only did the Secretary of State not check the rules before he announced his bid, but does she recall that the Minister for Small Business and E-Commerce could not tell hon. Members who attended the debate when she or her officials had last spoken to the Commission about the bid's progress?

Mrs. Browning

My hon. Friend is right. There seems to have been general complacency with regard to the matter over the summer months. I tabled some questions to the Secretary of State, as I wanted to know the details and conditions of the package that he had negotiated. He had put £152 million of public money on the table, but we wanted to know what he had got in return. We received the answer that the conditions of the aid package were "commercially confidential". It is therefore a question of whether the Secretary of State secured a good deal, or whether BMW have reneged on that deal. The relevant information has not been made available.

Mr. Byers

The hon. Lady says that I answered her questions by saying that the details were commercially confidential. Will she give one example of details of regional selective assistance being made available to the House under the previous Government?

Mrs. Browning

The Secretary of State must be used to batches of questions from me by now, but he failed to answer one in the batch about the BMW deal. He told me on 28 June that he would write to me with the answer, but he has failed to do so. In August, I was so worried at the lack of information about the deal that I wrote to the right hon. Gentleman and reminded him that he had not written to me as he had promised a month earlier.

That is indicative of the Secretary of State's laissez-faire attitude. He had his photocall and announced the good news, and then the matter was put in the pending tray. That is where Rover sat for most of last summer. When he eventually wrote to me on 2 September, he said:

You may be assured that I and my officials will be maintaining close contact with DGD4, and we will be seeking every opportunity to press for an early and successful outcome to the case. That was nearly six months ago, and the money is still not forthcoming.

Mr. Jim Cunningham (Coventry, South)

Will the hon. Lady give way?

Mrs. Browning

I will give way just once more, as this is a short debate. Many hon. Members of all parties have a local constituency interest in the matter, which is why I shall give way to the hon. Gentleman. I shall make some progress after his intervention.

Mr. Cunningham

The hon. Member for Christchurch (Mr. Chope) is, like me, a member of the Select Committee on Trade and Industry. Has the hon. Lady not consulted him? We were in Europe three weeks ago, and were told by officials that there was no problem with the aid package.

Mrs. Browning

If there is really no problem, the Secretary of State should announce today that it has been secured. According to the announcement made today, a company called Alchemy is to take responsibility for Rover. That company must know whether the money is still on the table. I hope that the Secretary of State will tell the House.

If the money is still on the table, what will it be used for? In the past, Ministers have indicated that £150 million of public money was to help the development of the R30 car. I have studied the BMW press statement and it is not clear that the R30 will be developed by Alchemy. Indeed, there is very little reference to it at all. If that is what the money was targeted on, clearly there is a question mark over whether the Commission will release that money if, for example, the R30 will not be developed in this country after all.

Mr. Byers

If the grant to BMW is so important in terms of its decision today, can the hon. Lady confirm that BMW's announcement and the comprehensive press release that followed it do not mention the grant as one of the reasons for this decision?

Mrs. Browning

I can only quote the Minister for Small Business and E-Commerce, who said at the end of January how important that grant was. [Interruption.]

Mr. Deputy Speaker

I am sorry to interrupt the hon. Lady, but I think that the House will gain more respect outside if this debate is conducted without sedentary barracking.

Mrs. Browning

The Secretary of State and the Minister for Small Business and E-Commerce have assured not only the House but the country that the deal they brokered and the £152 million on the table were going to secure the future of Rover. That was endorsed by the Prime Minister. Before the Secretary of State intervenes on me again and asks me questions, let me say that we are looking not for questions from the right hon. Gentleman, but for answers that we could rightfully have expected eight months ago when he made his first announcement.

The Government have carried out a go-slow policy with regard to the expedition of the grant. Furthermore, in the ensuing months, Government intervention has had an impact on all manufacturers, including car manufacturers and Rover in particular. Since 1994, when BMW stated that this was a good country in which to build motor cars, taxation on business has increased and it faces an additional £10 billion of regulatory costs. [Interruption.] We have seen the Secretary of State heading the "Rip Off Britain" campaign, which has stifled the retail sales of cars for more months than the car industry deserves.

The Secretary of State will recall that several months ago, during Trade and Industry questions, I urged him to make his views known on the Competition Commission report on car sales before the W registration mark came in, because retail sales are down by 12 per cent. this March compared with last year.

Mr. Sheerman

As they are in France and Germany.

Mrs. Browning

The market has been affected by a Government soundbite in which the Secretary of State and his friends in the Cabinet thought that they could be the consumer's friend by persuading everybody that they were being ripped off. There may be a case for examining car pricing and the way in which cars are retailed in this country. I have no quarrel with that, as I have said before. However, it is totally indefensible for the Secretary of State, or any Minister, to set up an inquiry, pre-empt the outcome before the analysis has been made and then, as they have done with the retail and supermarket sectors, damage, for the sake of a quick-fix soundbite, an industry that is already under pressure because of the Government's running of the economy. [Interruption.]

Mr. Deputy Speaker

Order. The hon. Member for Huddersfield (Mr. Sheerman) is a senior and respected Member of this House. He should conduct himself accordingly.

Mrs. Browning

In December, Rover announced that 2,500 jobs were to go. I believe that it was as a result of that that my hon. Friend the Member for Bromsgrove initiated her debate.

The Government deny the House the opportunity to ask pertinent questions on matters of great importance to an industry such as this and to the overall good of the United Kingdom economy. I believe that this Secretary of State, in particular, would do well to recognise that it is his duty to share information with the House. It is no good coming eight months later and saying, "Nothing to do with me, guv" when, in front of the television cameras, he took credit for what he thought at the time was a bit of good news, only to sidle off into the shadows when the news is not so good. Were it not for the fact that the Conservative party changed the subject of the Opposition day debate this afternoon, I suspect that he would be giving out yet another press release to deal with this, rather than standing at the Dispatch Box, telling the House what he believes the future of Rover will be and answering many of our questions.

BMW has said this afternoon that it will retain Land Rover, but has the right hon. Gentleman any concerns that it might be doing so simply to sell it on to another third-party purchaser? Is it his understanding that Alchemy intends to develop any further models under the Rover brand, or does he believe that when the existing models have been exhausted, it will revert to the MG brand, and the name Rover will disappear from British cars altogether? Will BMW retain the development of the R30 and, if so, where will it be developed? Will it be in this country or in Germany?

The Secretary of State presides over a Department that is in an absolute shambles. What we see today adds to the belief that nobody on the Treasury Bench understands business, let alone is capable of brokering a deal on behalf of business. The Secretary of State must make up his mind. Will he be a Secretary of State who, as he claimed on television only a couple of weeks ago, does not believe that the Government should pick winners or losers? With regard to his competition policy, will he intervene or not?

The Secretary of State seems all over the place, as is his Department. He is all over the place when it comes to competition policy and when it comes to saving British industry, in which he believes he can intervene successfully. He is all over the place in bringing legislation before the House. The Utilities Bill is a shambles and the Committee considering the Postal Services Bill has been suspended because the Government have not marshalled their amendments. This is all indicative of a Government who could not even run a whelk stall.

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

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

welcomes the actions of the Government that support the car industry, including delivering stable inflation and low interest rates, boosting support for supply chain activities and acting on the Foresight Vehicle Programme; welcomes the Government support for the Longbridge plant given through the offer of Regional Selective Assistance; understands that the major losses that BMW have suffered on Rover have put great pressure on BMW with respect to Rover; and congratulates the Government for playing its role in working closely with the company and the workforce to try to ensure there is a future for Rover. This has been a very important day for Rover and for the Government's relationships with major multinational companies such as BMW. I want to report to the House on the decisions that the supervisory board of BMW has taken today, and I want to explain the circumstances surrounding our offer of grant aid in June of last year.

First, it is important to inform the House of the decisions that have been taken by the BMW supervisory board today. I also want to share with the House some additional information that I have received from Professor Milberg, the chairman of BMW, following the supervisory board meeting that was held earlier today.

The supervisory board has decided that production of the new Mini, which originally was to be based at the Longbridge site, will go ahead but will be developed at the Cowley plant in Oxford. The new Mini will be launched, as originally planned, in the early summer of 2001. Production of the Rover 75 will continue at the Cowley plant in Oxford, but it will be produced on behalf of Alchemy Partners, the new company to which BMW has decided to dispose the Rover and MG brands. Sales and distribution of the car will also be handled by Alchemy Partners.

The body pressing facility at Swindon will be retained as part of BMW. The Hams Hall engine facility in Birmingham, which is a very important project, will be completed and will enter operation as planned, as part of BMW.

Today's major announcement affects the future of the Longbridge plant in Birmingham. BMW's decision to dispose of the Rover and MG brands to Alchemy Partners will have clear implications for Longbridge. I have spoken today with Jon Moulton, one of the new owner's principal directors. I pointed out the importance of Longbridge and the belief of many people that it has a viable long-term future as a car production facility. I stressed the importance of Longbridge and the way in which the work force have responded over some months to changed circumstances by improving productivity and raising skills. I stressed the plant's strategic importance for Birmingham and the west midlands as a whole.

Mr. John M. Taylor (Solihull)

I thank the Secretary of State for recognising the great importance of Longbridge, but he has not yet mentioned the destiny of Land Rover, which is in my constituency. Will the Secretary of State comment on rumours currently circulating that it will be sold to Ford Motor Company?

Mr. Byers

I shall when I come to the discussions that I had with Professor Milberg after the supervisory board meeting. He specifically addressed Land Rover's position, and I hope to answer the hon. Gentleman's point a little later.

On Longbridge, Mr. Moulton said that he wanted to retain car production, and that Alchemy Partners was not in the business of asset stripping. He said that the company intended to develop the MG brand at Longbridge. Clearly, however, many questions remain to be answered for the people who work at Longbridge and for the whole west midlands. I shall meet Mr. Moulton later today to discuss further Alchemy's detailed intentions. I shall stress both the important part that Longbridge can play and that car production should be retained. I hope that Alchemy Partners will recognise its responsibility as the new owners of Longbridge to a work force who have been flexible, who have improved productivity and who believe, as the Government and I do, that Longbridge has a viable long-term future.

Mr. Redwood

Does the Secretary of State agree that his mishandling of the whole regional aid map discussions with Brussels has left him powerless to intervene and caused endless delay? Does that not show that the warranty he offered to Rover workers was time-expired on the day that he gave it? He must have known that he had filed an illegal map and that there would be endless delay. When will he sit down with the Commission to reach agreement?

Mr. Byers

The right hon. Gentleman tries to divert us to an issue not related to BMW's announcement today. I spoke to Professor Milberg yesterday, asking whether, given the difficulties faced by BMW—a loss of £740 million this year on top of the loss in 1998 of £550 million—our grant of £152 million over five years would make a great difference. He said that in the context of the difficult decisions that BMW had to take today, the grant was not an issue. Opposition Members may want to make an issue of that, but it is a red herring. [Interruption.] I shall come on to grant aid shortly.

The right hon. Gentleman likes to say that he understands business. He should realise that losses of £1.3 billion over two years are far more significant than a grant of £152 million over five years.

Mr. Redwood

At the time the Secretary of State tried to negotiate grant aid, he and his colleagues thought that it was important; so did BMW, and so did the people of the west midlands. We knew that we could lose the whole transaction because of the delays created by the Secretary of State. Is he saying that he will not bother to sort out his row with Brussels, and that if a future owner of any part of our motor industry wants aid he will not care less and none will be available?

Mr. Byers

The right hon. Gentleman cannot resist talking about rows with Brussels. They are the entire raison d'etre of his political life. [HON. MEMBERS: "Answer seriously."] It was not a serious question.

The issues surrounding the grant did not affect the decision taken today by the BMW supervisory board. The House is concerned with the consequences of that decision. We have had discussions today with Alchemy, and during my discussion with the new owner this evening I will ask whether the grant is significant as far as it is concerned. The situation is clear. The grant related to a deal struck with BMW for investment at Longbridge. If that investment does not go ahead, the grant will go by default.

Mr. John Butterfill (Bournemouth, West)

When the Secretary of State met the director from Alchemy earlier, did he ask how Alchemy imagines it may be able to cope with losses of the scale that have been sustained by Rover? If he did not, will he discuss that point with the director later?

Mr. Byers

I spoke to Jon Moulton earlier, and will meet him later. I shall wish to raise that point with Mr. Moulton. We do not want the new owner to give false hopes to those who work at Longbridge if it will be unable to develop a viable car production facility there.

The hon. Member for Solihull (Mr. Taylor) made an important point about the direct effects on his constituents. Land Rover has been a highly successful car production facility in Solihull, and BMW is seeking an alternative owner. Land Rover will be a desirable car production facility, and other car manufacturers will be interested in acquiring it. Professor Milberg did not mention any particular company when I spoke with him about an hour and a half ago, and there is some speculation about who the new owner might be. We shall discuss this whole matter with a number of manufacturers over the coming hours and days. That will clearly include any particular interest in Land Rover.

Mr. John M. Taylor

I am grateful to the Secretary of State, but he has given me a certain sense of deja vu. When I first came to the House, I was involved in stopping the sale of Land Rover to General Motors. I shall have to look out my papers, as we seem to be in the same position all over again.

Mr. Byers

I hope that, whatever happens, people will realise that Land Rover is an excellent facility, manufacturing a product that is profitable and desirable. As Secretary of State, I intend to make that case.

The events that occurred at the supervisory board today are a great disappointment to the Government. We had an understanding—an agreement—with BMW, to which the work force had signed up. It was that there would be changes in working practices, that productivity would be improved, and that investment would be made—especially in the Longbridge facility. BMW accepted that, until 2002, a loss would be incurred by the Rover group in the UK, but that it could live with that. The company intended to break even by 2002.

Today's decision by BMW goes against the understanding that was reached last year.

Mr. Michael Jack (Fylde)

Towards the end of last year, in some of the more authoritative parts of the British automotive press, stories were circulating that BMW had lost interest in Rover and had been in discussions with Volkswagen about carving up the various plants. Was the Secretary of State aware of those reports? If he was advised of them by his officials, what action did he take to check them out with BMW to find out whether the company was already preparing an exit strategy?

Mr. Byers

My Department and I have close links with BMW and have been in dialogue with the company about many issues. Over the past few days, it has become clear that a small number of BMW's directors have adopted a new business strategy—that was revealed today.

The business strategy towards which BMW was working was the one that was agreed during last year: to retain Rover—in its totality—in the UK, and to invest in areas such as Longbridge in the future. As a result of the escalating losses incurred by BMW, which today declared losses of about £140 million last year, the company felt that in order to protect its total viability, radical decisions had to be taken. We are seeing the effect of those today.

Several hon. Members


Mr. Byers

I cannot give way because I need to make some progress. The hon. Member for Tiverton and Honiton (Mrs. Browning) raised some important issues about grant aid that I want to address. It will take me a little time to do so and I want to enable many hon. Members to take part in the debate.

Since 1994, BMW has made a significant investment in Rover. At Solihull, new lines have been developed for Land Rover's Freelander and Discovery models. BMW has put £400 million into a new line at Cowley, incorporating state-of-the-art technology and new working practices. That has enabled the introduction of the Rover 75. The new engine facility at Hams Hall has received an investment of £400 million to produce engines for Rover and BMW.

Changes have been introduced, and a large investment has been made by BMW. However, even with that investment, the losses incurred by BMW have escalated year after year. Over the past two years, they amounted to £1.3 billion. BMW informed me that it was the scale of those losses that led to today's decision.

Mr. Tony Baldry (Banbury)


Dr. Vincent Cable (Twickenham)


Mr. Byers

I want to make some more points.

The Government are disappointed that BMW has decided to adopt a different business strategy to the one that was agreed with us last year. We regret that.

Specific points were made about grant aid applications.

Mr. Tom King (Bridgwater)

The Secretary of State pointed out that BMW found it necessary to change its strategy. Given the scale of the losses, any board would consider doing that. On what assumptions about exchange rates was the original strategy based? Does the Secretary of State know about that?

Mr. Byers

The right hon. Gentleman will have to raise that issue with BMW. The company makes decisions based on its own estimates.

Dr. Cable

Will the Secretary of State confirm that the exchange rate assumption used by BMW—not only for its private affairs, but as the basis for the Government grant application—was DM2.40? Was the DTI aware of that detail when the application was approved?

Mr. Byers

It would be better for BMW to confirm figures that may be regarded as commercially confidential. [Interruption.] It is an important point. Opposition Members will be aware that when regional selective assistance applications are made, and the Government and companies enter into deals, that is confidential. I should be happy to reveal the information if BMW gave me approval. However, I shall not put at risk the relationship between the Government and those companies which approach us, in confidence, for RSA by disclosing that information to the House. That would be wrong; I do not intend to do it.

I want to move on to the important points on grant aid—the subject of most of the comments made by the hon. Member for Tiverton and Honiton. She raised a number of important issues about the way in which we have dealt with grant aid to BMW. I want to address them each specifically, and I shall compare how a grant application from Rover-BMW was dealt with under her Government, when she was a Minister, with how we have dealt with this particular application about which she has been so critical.

Mr. Bernard Jenkin (North Essex)

What is the right hon. Gentleman going to do?

Mr. Byers

I know that the hon. Gentleman does not like to face the facts, but, on this occasion, he will have to, because I am going to go through them.

The hon. Member for Tiverton and Honiton would not answer my intervention about the number of occasions on which the Conservative Government had disclosed commercially confidential information. On no occasion was commercially confidential information revealed—not once. On how many occasions were discussions held with the European Commission before an offer was made to a company, and on how many occasions were the principles agreed in advance with the European Commission? Not on one occasion—that is the reality of the situation.

Today's serious announcement from BMW about the future made no reference to the grant aid being made available. No reference was made because for BMW it is not the big issue.

Let us consider two grant applications: the £152 million on which the hon. Lady has concentrated and the regional selective application for £22.5 million for the Hams Hall engine facility, which was also for Rover-BMW and was dealt with under the previous Conservative Government. On the £152 million grant that we intended to make available to Longbridge, the deal was struck with BMW on 23 June last year. We notified the European Commission on 20 August, which was just under two months later.

The application for Hams Hall was far smaller.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

Will the Secretary of State give way?

Mr. Byers

I will give way in a second, but I want to go through the facts.

The application for Hams Hall was a lot smaller—£22.5 million. The deal was struck by the Conservative Government on 15 November 1996, but it was notified by this Labour Government because the Conservatives did nothing about it while they were in office. It was not until 7 May 1997 that notification was given to the European Commission, and it was not until 22 January 1998 that approval was finally given. There were 14 months between the deal being struck and the grant being approved.

On Longbridge, the deal was made on 23 June 1998; on 20 August, notification was given to Europe; and Commissioner Monti agreed on 20 December that a decision would be taken within six months. Within a year, we would have learned the outcome—a year compared to the 14 months for the application for Hams Hall. We were moving far more quickly on the grant aid for Longbridge than had ever happened before.

Mr. John Bercow (Buckingham)

The Secretary of State is certainly putting a brave face on his own crass ineptitude in this matter. Is he seeking to play down the significance of the grant aid package because he recognises what was stated in The Economist this week by an unnamed official? It reports that, when the Secretary of State spoke in Brussels on 7 March this year, the response from Mr. Monti was, as the unnamed official said, a polite two fingers.

Mr. Byers

I know that the hon. Gentleman has a remarkable memory, but I think that he will find that the 7 March reference was to a conversation that the Prime Minister was supposed to have had with the Commission. He did not speak to Commissioner Monti about this particular issue. I think that the hon. Gentleman will find that that is the case.

Commissioner Monti has agreed to put this application on a fast track, and that is exactly what he is doing. We have maintained a close relationship with BMW over this period and we have put suitable pressure on the European Commission. As a result, it is dealing with this application far more quickly than it has dealt with similar applications. That is the position.

Mr. Gibb

Will the right hon. Gentleman confirm again that the formal notification to the Commission took place in August, and not in December, because the Commission and all the press coverage indicate that the Commission received formal notification of the state aid in December?

Mr. Byers

That is wrong. The Commission was formally notified in August. On 22 December, the Commission decided to launch an investigation into whether the grant should be made available. Between August and December, we were providing the Commission with information, and in the light of that it decided that an investigation was needed. That is the policy that Commissioner Monti has adopted with every grant aid application for cars that has landed on his desk.

Mr. Geoffrey Robinson (Coventry, North-West)

I support my right hon. Friend in rebutting the Opposition's attempts to turn the matter into a party political issue. There is no question—[Interruption.]

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Gentleman. He has been given the opportunity to intervene, and he should be heard.

Mr. Robinson

I am grateful, Mr. Deputy Speaker. There is no question but that the Government, and my right hon. Friend himself, have given the maximum support to a normal application for aid under the EU treaty. That is not an issue. The issue today for a major part of British industry and for those who can put this matter ahead of party political matters is surely that BMW has reneged on its undertaking to the Government and the British motor manufacturing industry and all its workers. It may be beyond the point of recall, but it still has to be stated that BMW came in, cherry picked what it wanted and walked out when things got too expensive. Although my right hon. Friend tried very hard, does not this hold the lesson for all of us that, even in a global economy, ownership is terribly important?

Mr. Byers

I am sure that my hon. Friend is correct. There is a real sense of disappointment at BMW's decision.

Serious issues have been raised about grant aid being dealt with slowly. A comparable case concerned Volkswagen's application for aid. It notified the Commission last July, a month before we notified the Commission about Longbridge. The Commission opened proceedings last November, as opposed to December for Longbridge. We have already had notification in the Official Journal of the EC of the Longbridge proceedings being started, whereas the Commission has not, as yet, even notified the Official Journal about the Volkswagen case. That clearly demonstrates that the Commission is dealing quickly with the Longbridge application.

On grant aid, the position is that commercial confidentiality has applied to every application for regional selective assistance under this Government and the previous Government. In no case has approval been given by the European Commission before a deal was struck with the company concerned. Longbridge is being dealt with under a fast-track procedure because of the pressure that the Government have put on the European Commission. That is the reality.

It is worth comparing that with the record of the Conservatives when Rover was privatised. Under the previous Administration, illegal aid was paid to Rover on privatisation, and it had to be repaid with interest. The Conservative Government had to repay a total of £84 million because they had got their aid procedures wrong. It was as simple as that. That is the Conservatives' record on securing European approval for aid.

Mr. John Butterfill (Bournemouth, West)

Will the right hon. Gentleman give way?

Mr. Byers

No, I will not. I have given way plenty of times. Members with a constituency interest want to take part in the debate—

Mr. Butterfill


Mr. Deputy Speaker

Order. The Secretary of State has made it clear that he is not giving way.

Mr. Byers

I have given way on many issues to Conservative Members.

Mr. Butterfill

On a point of order, Mr. Deputy Speaker. I had to run out of the Chamber to get some important information about Alchemy—

Mr. Deputy Speaker

Order. The hon. Gentleman is an experienced Member of the House. He knows, even from those few words, that that is not a point of order for the Chair; it is a point of debate.

Mr. Byers

I am grateful, Mr. Deputy Speaker.

BMW has been content with the way in which we dealt with the state aid application. That was not mentioned once in the statement with regard to the reasons behind the decision that has been taken today. The matter is a red herring, which has been introduced by the Conservative party.

Mr. Butterfill


Mr. Byers

I am not giving way. I want to make progress. There are important issues still to be addressed.

It would be wrong for people to think that because of the difficulties being experienced by BMW, the car industry in the United Kingdom is facing similar problems. Since the Government took office, more than £2.4 billion of new investment has been made in the UK car industry, creating 8,750 new jobs.

Earlier this month, Audi announced a £45 million investment in its engineering subsidiary, Cosworth Technology, to expand its sites at Northampton, Wellingborough and Worcester, doubling its work force as a result.

Increasing capital expenditure is going into the industry—£128 million since April last year. That capital expenditure has brought 1,700 new jobs and safeguarded 4,700 jobs, many of them in the west midlands.

Today's announcement by BMW is regrettable. It is a great disappointment. It creates uncertainty for workers at Rover, their suppliers and their families. We must ensure that those people have opportunities and are given some hope for the future.

Miss Kirkbride


Mr. Byers

That is why, later tonight, I am meeting Alchemy Partners, the new owners of the Longbridge site. We need to find out from Alchemy what its proposals are with respect to Longbridge. We will be asking difficult questions, to which Alchemy will need to give answers.

Miss Kirkbride


Mr. Byers

Today, our thoughts must be with the workers at Longbridge, their families and their community. In Government, we face many difficult questions, but we must never lose sight of the fact that those are human questions, the answers to which will affect individuals, their families and their communities.

Miss Kirkbride


Mr. Byers

The Government will discharge their responsibilities to the people of Longbridge and the west midlands. We will do so, even though the Conservative party will criticise us and introduce diversions.

Miss Kirkbride

Will the Secretary of State give way?

Mr. Byers

We recognise that the interests of the workers of Longbridge and the west midlands will be served by the Government. We will not return to the days when tens of thousands of manufacturing jobs in the west midlands were lost because of the Conservative Government's policy. We will continue to campaign for Longbridge. We believe that it has a viable long-term future. We will not be diverted by the Opposition, and we will discharge our responsibilities.

5.8 pm

Dr. Vincent Cable (Twickenham)

I start by echoing the Secretary of State's closing words. All our hearts should go out to the thousands of men and women, many of whom have highly specialised skills, who must be in a state of high anxiety. That is probably common ground among all of us.

I sincerely hope that those workers will be well looked after by their new employer, Alchemy. I hope that they fare a little better than the outstandingly able secretary who works in my constituency office. Until a year ago, she worked in an operation that was subject to an Alchemy buy-out. She was made redundant and now works for me. That may be an unfortunate personal example.

Mr. Butterfill

I am grateful to the hon. Gentleman. Is he aware—and is the Secretary of State aware, before he meets Alchemy tonight—that Alchemy's investment preferences, as stated in its entry in the "British Venture Capital Association Handbook", is a maximum investment of £50 million? Its average current investment size is £15 million. Its total funds invested to date at cost are £304 million, and the total funds that it manages or advises are £255 million. In the light of that, one must ask how Alchemy will manage an operation of the size of Longbridge.

Dr. Cable

I am sure that the hon. Gentleman is asking the right question. It is clear that there is no experience of volume car making. The enterprise for which my secretary worked was a German brewery. The synergy between that and the car industry is not immediately obvious.

The motion is rather innocuous. I doubt whether any of us is opposed to clarifying the future. The Opposition are probably attacking the wrong Minister for the wrong reasons. I read the comments of the Conservative spokesman, the hon. Member for Tiverton and Honiton (Mrs. Browning), in the press this morning. She said that today there would be cross-party demand to guarantee the future of Longbridge. I think that the hon. Lady knows—[Interruption.] She wants to clarify the matter.

Mrs. Browning

I do not know where the hon. Gentleman read that, but they are certainly not words that I said yesterday.

Dr. Cable

I am delighted to hear that. Perhaps the Financial Times should take down the hon. Lady's comments rather more carefully in future.

I shall move on. There is a crucial area of policy and it is not that the Government are responsible for guaranteeing the future of Longbridge. No Minister can do that. We are discussing a competitive industry and a company that is in a difficult set of circumstances. However, the Government can guarantee macro-economic stability, and that is what they should be doing. The Labour amendment accepts that implicitly. It begins by saying that the Government have created low inflation and low interest rates. The first point is certainly true. The second is true only if we disregard what is happening in the euro zone, where interest rates are 2 per cent. lower than in the UK. That is rather important in this context because Rover is competing with European car manufacturers, which have the benefit of these conditions.

The real problem is the exchange rate, which neither the Conservative spokesman nor the Secretary of State mentioned. It is a serious issue that cuts across party boundaries. The hon. Member for Ochil (Mr. O'Neill) is not in his place, but only yesterday the Select Committee on Trade and Industry, which he chairs, produced a devastating report about the impact that an appreciating exchange rate is having on manufacturing industry. That includes not only the car industry, but Harland and Wolf, which was in trouble earlier this week, the coal industry, the steel industry and agriculture. All those sectors have been affected in precisely the same way.

Mr. Ian Bruce (South Dorset)

I am sure that the hon. Gentleman agrees that the problem is not an appreciating pound but a depreciating euro. It is clearly the job of the European central bank and our partners to do something about that.

Dr. Cable

That is entirely incorrect. I received a fax today from the Organisation for Economic Co-operation and Development, which has calculated what it calls, in economic jargon, the real effective exchange rate. That is, Britain's exchange rate against the exchange rates of the rest of the world, and not only the euro, allowing for changes in inflation. Since the low point in 1996, the pound has appreciated against allcomers. It has not done so against the dollar, but it has risen against currencies in general by more than 30 per cent. Since the Government came into office, it has appreciated by 15 per cent. That matters enormously in the context of the debate. BMW has argued that, for every pfennig by which the pound appreciates against the German currency and against the euro zone, it has been losing £8 million.

Mr. Geoffrey Robinson

Why is it that BMW, through the 1960s, the 1970s and the 1980s, lived with an appreciating deutschmark? The answer is that it increased productivity and quality. Why could it not have done that in the UK? It is a simple question.

Dr. Cable

The answer to the hon. Gentleman's question, which is a perfectly fair one, is that BMW has inherited a plant that, because of its low productivity and history, is exceptionally dependent on price competitiveness. Commodity production depends on price competitiveness. BMW says openly that one of the major sources of its losses is the exchange rate.

Mr. Robinson

BMW lived with that for three decades, from the 1960s to the 1980s. Indeed, it built up a company that was a glittering success, with productivity and quality to match it. All we asked is that it did that at Rover. It failed to do so because it did not put in the necessary effort.

Dr. Cable

I think that the right hon. Gentleman is failing entirely to grasp that the conditions in the car industry now are wholly different from those that applied in the 1960s, when there was rapid growth and a need for new investment in the industry. The crucial feature of the European car industry in which BMW and, on this side of the channel, Rover are having to compete is excess capacity. Price competitiveness is severe and losses are sustained because of the exchange rate. BMW has said that it is losing £200 million or £300 million because of the exchange rate. It is passing some of that back to its suppliers, many of whom have been forced to move on to euro contracts so that small manufacturers around the west midlands have absorbed the losses. That has been a key factor in BMW's decisions.

As I said in an earlier intervention, much of the optimism about proposed investments at Longbridge and in the Rover group was based on a wholly unreal assumption about the exchange rate. At some point, BMW would have to decide that conditions had changed and that it would have to respond to that.

Mr. Tony Baldry (Banbury)

Is not the hon. Gentleman concerned by the Government's complete inability to realise that the exchange rate and the strength of the pound constitute a problem? Not only the car industry, but all United Kingdom manufacturing industry and farming are haemorrhaging. If the Government talked to dairy farmers as often as they talked to the automotive industry, they would receive the same message.

Dr. Cable

The hon. Gentleman is right, but the problem also applies to the Conservative party. The Leader of the Opposition is travelling around the marketplaces of England and talking about poor, unfortunate Europeans who are suffering from a weak currency, apparently unaware that most of their manufacturers are laughing their way to the bank. That is a problem for both sides of the House. However, it is important to tackle that complex difficulty.

Macro-economic management, trying to achieve stable inflation and a lower exchange rate, is not easy. It is linked to our entry strategy for the euro. Until we get the policy right, not only the car industry, but many other traded-goods industries in agriculture and manufacturing will suffer the same torment. That is the main point, and why I say that the wrong Minister has been targeted.

Dr. Lynne Jones (Birmingham, Selly Oak)

Some Labour Members accept that the strength of sterling is a problem. However, it is mainly a problem in relation to the weakness of the euro. Will the hon. Gentleman explain his perception of the cause of the strength of sterling and how he would reduce it?

Dr. Cable

Statistics suggest that the difficulty is not only caused by the euro, although it constitutes a large part of the problem. We are considering a European market, and the euro-sterling exchange rate matters in that context. The hon. Lady asked what we could do about that. I had already begun to develop the argument—[Interruption.] The Liberal Democrats, perhaps uniquely, because we have a commitment to entering the euro zone, believe—

Mr. Geoffrey Robinson


Dr. Cable

Let me finish the answer to the previous question. We have a commitment to the euro zone and we believe that it is the Government's responsibility to define a competitive exchange rate for the British economy at an early stage. They should do that by building on evidence from the International Monetary Fund and other organisations in recent months, and beginning to work towards their objective as quickly as possible through the Bank of England.

Mr. Robinson

If we accepted the hon. Gentleman's prescription for our problem—it is unique for a Labour Government to have an exchange rate that is too high—and we entered the euro and reduced our interest rates and our pound accordingly, the consequences for inflation would be catastrophic. Surely the hon. Gentleman appreciates that.

Dr. Cable

The Government missed the boat two years ago and our discussion is slightly academic. [Interruption.] The hon. Gentleman knows perfectly well that the consequences for inflation of a realistic exchange rate will have to be paced through monetary policy. The Government could and should do many other things to tackle inflation, for example, acting through the property market—stamp duty and property taxation—to deal with the inflated asset market. That supplementary policy should be adopted.

The hon. Member for Coventry, North-West (Mr. Robinson) seems to be totally blind to the fact that there is a real problem. I am not pretending for a minute that there is a simple solution, but there is a solution—or a complex of solutions—that would put the economy on a more stable basis in relation to its external exchange rate. However, simply pretending that the problem does not exist is myopic in the extreme and very damaging. He may think that that is a joke, but a large number of his constituents and many British manufacturers think that the Government have severely neglected their undertakings.

The Chancellor has told the House on many occasions that having a stable and competitive exchange rate is a Government commitment. It is not remotely competitive. If it is not competitive, why have they committed themselves to that policy objective? If they have no idea of how to realise it, why promulgate it as an aim?

Mr. Robinson

What would the hon. Gentleman do?

Dr. Cable

I have already explained to the hon. Gentleman what I would do about that.

Mr. Michael Howard (Folkestone and Hythe)

The hon. Gentleman is making an extremely interesting point, but does he recognise that the inescapable inference is that early entry to the euro, which is the policy advocated by his party and which would inevitably build in permanently the disadvantage that we are suffering from the present exchange rate, would be a disaster for this country?

Dr. Cable

The early exchange rate with the euro would have been based on the average of the two years previous to 1997, which would have been relatively competitive. We now have a problem. We have to navigate our way back to that point, but it will be some years before the British exchange rate reaches a level at which we can once again contemplate entry. That is the challenge that we have to face. Labour Members who pretend that that is not an issue and Conservatives who believe that we can have a floating exchange rate against the euro zone indefinitely are dodging a fundamental issue of national importance.

Dr. Evan Harris (Oxford, West and Abingdon)

Will my hon. Friend give way?

Dr. Cable

I am happy to debate this matter indefinitely and my hon. Friend wants to do so as well.

Dr. Harris

Will my hon. Friend accept from me that my constituents who work at the Oxford Cowley plant feel tremendous solidarity with, and concern for, the people who work at Longbridge? They will be anxious that the Conservative party wants to play politics with the exchange rate and that Ministers have refused to answer the point about the effect of the high exchange rate consequent on their policy of appeasing the tabloid press over the euro, rather than putting the interests of British manufacturing first.

Dr. Cable

That is an effective coda to this part of the debate and I shall leave it at that. May I move on to two areas that are specific responsibilities of the Department of Trade and Industry?

Mr. Peter Snape (West Bromwich, East)

Will the hon. Gentleman give way before he moves on?

Dr. Cable


Mr. Snape

Does the hon. Gentleman accept that, for 30 years until the mid-1990s, Britain's exchange rate—compared with those of virtually the rest of the world—continued to decline, yet this country's manufacturing industry also sadly continued to decline? He is long on problems, like most of his party. Has he any solutions?

Dr. Cable

The hon. Gentleman has totally missed the point about history. Of course the exchange rate declined, but British inflation was relatively high. The real exchange rate, which is what matters for competitiveness, was uncompetitive for much of that time, as he knows perfectly well.

Let me move on to the two issues that concern the DTI. One is the European Commission. The Government have argued that the apparent or prospective failure of the bid was not central to BMW's decision, but there are important issues here. This country has been remarkably conceited about European policy on state aids. There is a widespread belief, which has been echoed in interventions from around the Chamber, that our manufacturers observe the rules and the rest of the European Union does not. Over the years, Governments of both parties have clamoured for a state aids regime that is honest and tough, and a Commissioner who reflects those values. In this context, it is abundantly clear that Mr. Monti is both and he is exercising his toughness by casting a beady eye over the application.

I draw that point out again because in an Adjournment debate two months ago I was censured by a Minister for questioning the validity of the argument about the Hungarian migration. I was told that that was scaremongering and a dangerous line of argument that would imperil this crucial state aid application. We need to register clearly that whatever comes out of this, the European Commission has handled the episode entirely correctly and in the way that any British Government would expect of a commission concerned with stamping out damaging state aids.

The hon. Member for Tiverton and Honiton raised, in a partially correct way, the issue of DTI responsibility and the relationship with the Competition Commission inquiry into car prices. She was correct that there is a problem of joined-up government. The Government, for good reasons, embarked on an exercise to protect consumers. It is becoming clearer, as time passes and prices are more transparent, that car prices in Britain are significantly higher than in Europe, which is wrong, and that monopoly profit has been earned somewhere along the chain.

It may or may not be true that that depressed car sales last year. It is true that, when a competitive market for cars is introduced, a substantial profit margin will be taken from somewhere else. Some of that profit margin will be taken from many British companies that purchase company vehicles on the cheap, but a large part will be taken from the profit margins of the car industry, which has benefited from that regime.

I do not criticise the Government for embarking on that exercise. They were absolutely right to place emphasis on consumer protection. However, they should have been aware that the inquiry would significantly undermine the profit forecasts of many British manufacturers, including Rover.

Our primary concern should be for people in the west midlands, whose future is placed in peril by imminent decisions. I hope that we will quickly move on from the debate about who lost Longbridge to a more forward-looking debate about how we provide structural help to a region that has become overdependent—as Clydeside and the coal-mining areas did before—on an industry whose prospects in the current European economic environment are not good.

5.27 pm
Mr. Richard Burden (Birmingham, Northfield)

Yesterday in Prime Minister's questions, I said that the entire midlands area was holding its breath, waiting on the BMW board meeting that was to take place today. We now know the result. The responsibility for what looks like befalling Longbridge and other large parts of the Rover group is that of BMW. The day after the announcement in 1994 about BMW taking over Rover, I met its then chairman, Bernd Pischetsrieder. He assured me that BMW was in for the long haul, knew the investment requirements of Rover and would make the company a success. I believe that Bernd Pischetsrieder was being straight with me but I know also that, from that day on, every time there was speculation about the future of Rover and BMW not being in it for the long haul, BMW assured me personally, the Government and—most important of all—the people who worked for Rover and its suppliers that BMW was in for the long haul and had a long-term commitment to Rover and to Longbridge in particular.

We know that BMW faced difficulties, but in negotiations over two years, it struck me that there were three essential elements in Rover having a bright future—and BMW did not disagree. First, workers at Longbridge and the other Rover plants needed to change their working practices and adopt greater flexibility. The workers delivered ground-breaking agreements on working practices. They have done everything that BMW asked of them and more.

Secondly, the whole process had to receive the backing of government at all levels in the UK. That has been delivered as well. Local partners—from Birmingham city council to the chamber of commerce and the training and enterprise council—got behind Longbridge and put together a package negotiated with BMW to deliver their side of the bargain. Despite what has been said by Opposition Members, my right hon. Friend the Secretary of State has behaved impeccably and has shown commitment on behalf of the Government by delivering the f152 million package and showing faith in the Rover group and BMW.

The third element was BMW itself. It is true that, in the first years of its involvement, it made a major investment in the Rover Group: about £500 million a year. It is also true that BMW committed itself to a further £1.5 billion of investment at the Longbridge plant. That commitment, however, has not been honoured, and the responsibility lies with BMW and with BMW alone.

I do not think that we should allow any evasion, and I was disappointed that Conservative Members tried to shift the responsibility. Let me take up some of the issues that they raised. First, let me deal with the European Commission, and the reference to the grant.

It is regrettable that the European Commission takes such time over applications—I have a less sanguine view in that regard than the hon. Member for Twickenham (Dr. Cable)—although it must be said that it has taken less time over this application than over others. We should remember, however, that the European Commission agreed and announced in December that it would embark on a formal inquiry. At that stage, we wanted to know what time scales were involved. There was speculation; it could take up to 18 months. The Commission said that it would take up to six months. That was clearly regrettable, but there was no suggestion then, and there is no suggestion now, that it constituted a fundamental barrier to BMW's continuing its investment and standing by Longbridge. In implying something else, Conservative Members are being disingenuous, or else they have lost the plot in regard to what is going on with BMW and Longbridge.

The strength of sterling was also raised. Anyone who represents a manufacturing area—anyone who knows companies involved in exports, particularly to Europe— is aware of the difficulty that that is causing to our manufacturers, but it is no excuse for what BMW has done. The losses announced at the BMW board meeting were not a bolt from the blue; they had been predicted for months.

If BMW or anyone else argues that the strength of sterling was the make or break element for BMW, it should be remembered that BMW prides itself on being a pan-European company. That means that it produces in Germany as well as in the United Kingdom, and that it benefits from the weakness of the euro when importing its vehicles to the United Kingdom and when exporting them to the United States. Perhaps BMW could have been more aggressive and dynamic in exporting classic cars such as the Rover 75 to the United States: if it had done that earlier, the cars would have sold very well.

It grieves me to say this, because I have been supportive of BMW for years, but it has a responsibility for what has happened, and that needs to be recorded.

Mr. Geoffrey Robinson

Does my hon. Friend agree that production of cars in the United Kingdom is some 40 per cent. lower than it is in Germany? Does that not more than negate the exchange-rate argument?

Mr. Burden

My hon. Friend makes a good point.

I hoped that we would be able to secure a degree of cross-party agreement on the important issue of how we could get behind Longbridge and plan for the future, but if Conservative Members are going to criticise the way in which my right hon. Friend the Secretary of State has handled the grant application, or the way in which he has handled the matter overall, they will be sitting in some rather fragile glass houses. It was they who sold off the Rover Group to British Aerospace for a song. It was they who, when the company had an asset base worth in excess of £250 million, wrote off debts totalling £800 million. The company was declaring a pre-tax profit of £65 million, and how much did they sell it for? They sold it for £150 million. That was crass incompetence and against European rules; the previous Government were found out about that.

Mr. Butterfill

Were the previous Government trodden down in a rush by alternative buyers prepared to pay more?

Mr. Burden

The hon. Gentleman would perhaps do well to read—I hope that it is still in print because it is a classic document—the National Audit Office report entitled "Department of Trade and Industry sale of Rover Group plc to British Aerospace plc". One of the issues mentioned in the report is that the previous Government went straight to British Aerospace and did not look around for other potential partners.

The impact of today's decisions is real enough. As the Secretary of State said, the impact is not on a theoretical plant, or theoretical people, but on real people and real livelihoods in the west midlands and elsewhere. It has been estimated that, just in the midlands, about 50,000 jobs depend on the Longbridge plant. Birmingham city council estimates that, if Longbridge were to close, the total cost to the public purse would be about £317 million. If there were a major slimming down of Longbridge, the cost would be £178 million. Total jobs lost from a complete closure in the Birmingham area would be 19,370 and from a slimming down 10,850, so we are dealing with a very serious issue for the west midlands and for motor manufacturing in this country as a whole.

Today, we have heard the news that Alchemy Partners is in negotiations with BMW and that BMW has said that it wishes to dispose of the majority of Rover Cars to Alchemy. We do not know much about Alchemy at this stage, but we must say clearly that, if it ended up as an exercise in asset-stripping, that would not be acceptable to my constituents or to the west midlands as a whole.

Statements have been coming out of Alchemy today about its launch of the MG car company. It says that it wants to retain motor manufacturing at Longbridge and that it is committed to motor manufacturing in the west midlands. I am pleased that it is saying that, but, as the Secretary of State said, we must ask it some serious questions.

We have to examine exactly what model range Alchemy anticipates producing and how all that will be financed. We need to examine whether other partners are involved. Production and design of new models involve considerable financial firepower. If Alchemy is to take over Rover Cars, we have to be assured about what it will do with it and of its commitment.

I hope that my fears about Alchemy are unfounded. If it is committed to the west midlands and can bring the firepower to bear not just to save Longbridge, but to ensure that the commitment of the work force to the plant continues and that the potential of the plant is realised, no one will be happier than me. For that to happen, it will need a critical mass behind it. It has to explain how it will put that critical mass together.

There is a longer-term issue that goes well beyond Longbridge and the Rover Group. Throughout Europe and, indeed, elsewhere, there is over-capacity in the motor industry. We have known about that for some time. The consequences are beginning to be felt. We need a long-term strategy for the motor industry. We know of the devastation that was inflicted on coalfield communities as a result of the acts of industrial vandalism by the previous Government. There have been integrated strategies to regenerate those areas. We need similar—in fact, greater—creativity in our industrial areas.

We need to look 10 and 20 years hence, think about where the motor industry and manufacturing will be, and get ahead of the game in working with components' suppliers and manufacturers, so that we can decide the strategies necessary to make the best use of our great powers of innovation and great industrial base and to meet the challenges of the future.

Some examples are available, such as the British motor sport industry. Although that is a hobby-horse of mine, it is a relevant example. Everyone knows about motor sport, but not many people know about the multi-million pound motor sport industry. The industry is essentially composed of quite small firms, but they are clustered, bringing together communities of knowledge that, although highly competitive, are highly co-operative. The arrangement has been a success story not only for the industry, but for Britain.

I do not claim that the lessons of the motor sport industry can simply be picked up and dropped into mainstream motor manufacturing—they cannot—but some lessons can be learned from it. I hope—I am sure that it will happen—that my right hon. Friends and other Ministers will get together with partners in the regions, such as the regional development agencies and local authorities, to implement a strategy to ensure not only that Longbridge survives next year and the year after, but that British motor manufacturing lasts well into this century and beyond. It has the potential to do so.

Although it is no excuse for BMW to blame the exchange rate for its decision today—the responsibility for the decision is with BMW, and BMW alone—the exchange rate is an issue for manufacturing industry. I do not dispute the Bank of England's right to set interest rates. As far as I know, under their current policy, even Conservative Members do not dispute the Bank of England's right to set interest rates—[Interruption.]s They have done another U-turn. I cannot keep up with their policy shifts.

The Bank has a responsibility to consider the long-term health and stability of the British economy, but a healthy manufacturing base is both a short-term issue and a long-term issue. Although the Bank has the right to set interest rates, it perhaps needs to examine more closely its responsibility for ensuring the long-term health of manufacturing industry.

The lessons of the past 24 hours will be remembered in the west midlands for a long time to come. Now, however, is the time for us not only to lay the responsibility at BMW's door, but to move on—to work with Alchemy to ensure that it can deliver what it says it can deliver, and to ensure that we develop and implement the strategies that can revive our industrial areas and allow British motor manufacturing to achieve its potential.

5.43 pm
Sir Norman Fowler (Sutton Coldfield)

I should like to speak briefly, like the hon. Member for Birmingham, Northfield (Mr. Burden), and I shall come back to one or two of the points that he made.

The first thing to be said is that this is potentially a vast tragedy. The decisions now being taken are vastly important to the west midlands and to constituencies such as mine. Literally thousands of jobs are at stake, and I approach the debate in that spirit.

Although many newspapers lovingly remember "Red Robbo" and the days of industrial anarchy at Longbridge, those days are long over. They were 30 years ago. It is as absurd to judge Rover in that light as it would be to judge national newspapers on the basis of the old Spanish practices that used to go on there. In Rover, there has been a transformation of industrial relations. The vast majority of the work force are dedicated men and women. As someone who will not be standing at the next general election, I say that there are few better people in this country than those living and working in the midlands.

Over the years, one of the things that we have suffered from is the way in which some London-based commentators and, sometimes, politicians have written off Rover and the midlands. There has been all too little recognition of the recovery efforts that have been made and little recognition that, by 1994, the company was progressing well, particularly in its partnership with Honda. That partnership may well have offered the best chance of success. Honda was certainly deeply offended by the manner in which the partnership was broken up and the sale to BMW took place, but that is history.

When BMW took over Rover, I am sure that it wanted to develop the whole company. I do not subscribe to the theory that it was always interested just in taking Land Rover. BMW deserves credit for its management effort and the vast resources that it has invested. However, I find it strange that in such a professional organisation, some very strange steps have been taken in the past 12 months. No one doubted that the launch of the Rover 75 was vital to the success of the company. I cannot understand why the launch ceremony was accompanied by a public lecture on poor productivity in the company by the then chairman. That overshadowed the launch, which is exactly what should not have happened.

A climate of uncertainty has plagued Rover over the years. It does not need a marketing genius to work out that if there is uncertainty over the future of a company, it will have an effect on the sales and the products. That is what has happened.

The most amazing U-turn is now being executed. Only a few weeks ago, the new chairman of BMW was talking of his commitment to Rover and its development. I reiterate the point made by the hon. Member for Northfield—that the people of the west midlands took that commitment at face value. The Government amendment refers to the major losses that BMW has suffered and the great pressure put on the company. I agree that it has suffered heavy losses, but it always said that that would be the case. There is no surprise in that. The strategy was to move through that period and bring the company to profitability. The Government should not be too timid in pointing out that the strategy has altered out of all recognition.

However, I have some sympathy for BMW. It offered to invest £1.5 billion in modernising Longbridge. The Government offered another £150 million, doubtless after some negotiation. I am not sure that the Secretary of State can say that that £150 million was of no particular relevance and not a crucial amount. On 23 July, when announcing the agreement to provide £152 million of aid, he said: This is great news for Longbridge, the West Midlands and the country as a whole. The future is an exciting one and I look forward to Longbridge taking on its competitors, winning and becoming a world leader. We cannot renege on that important decision.

My concern relates to the process of examination. The hon. Member for Northfield made the point. There has been a nine-month delay and a six-month delay. The Secretary of State said on the radio this morning that six months is speedy—I think that I quote him correctly—by European Commission standards. He may well be right, but that prompts the question of whether it should be the case.

It is unacceptable that such an investigation at such a crucial moment should take so much time. I do not agree with the Secretary of State's contention that it was not a factor in the BMW decision simply because it was not mentioned in the press release. That is not my information. I fear and suspect that it had a disproportionate impact on the change of strategy in Munich. BMW saw a company sustaining losses of £700 million a year, but it was prepared to invest a further £1.5 billion. The company saw that £150 million was offered by the British Government, but that the Commission could not make up its mind in six months—or, to be frank, much longer. That does not seem a particularly sound process by which these matters are decided.

I do not take an extreme view on Europe, but the Government—and, perhaps, everyone—should take note that middle England is becoming more and more disillusioned with the bureaucracy, delay and regulation that seem to characterise the EU as it is presently constituted.

We can all seek to diagnose what has gone wrong, and acres of newsprint have been devoted to that this morning. However, the real issue is what now can be done. Part of Rover, self-evidently, has a future inside BMW. We are unclear about where Land Rover will go or what its parent will be, but we can foresee that it will have a good future, wherever that may be. We may want to come back to debate the details of that.

The press today has written off the prospects of the other part of Rover—the car-making part, which makes the Rover 75 and the other Rover vehicles and which now, we understand, includes MG. I suggest that that should not necessarily be written off, and that there could be a future—although there is a big pit to climb out of. However, it is not mission impossible, and I shall draw an analogy to prove it.

In the mid-1980s, the van business of Leyland was to be sold off to General Motors; one or two colleagues might remember our debates then. The DTI argued at the time that this was the only course open to be taken with the company, although the plan envisaged the closure of the Birmingham plant. One or two of us did not agree with that diagnosis and the sale did not take place. The company was given its management independence; the company survives, and it prospers.

I cannot say whether that will be the outcome on this occasion, but I plead not for more and more money from the Treasury, but for public support and media understanding for any efforts that are made to turn the car-making part into a viable business. That is what we want. We are good in this country at dismissing effort and writing obituaries. We need support for any efforts that are made to achieve recovery.

5.52 pm
Mr. Steve McCabe (Birmingham, Hall Green)

I take no pleasure in participating in this debate; this is a sad day for the west midlands. We have heard that if Longbridge closes or substantially cuts back, that would cost about 9,000 jobs, and the multiplier effect might result in a further 40,000 jobs being lost across the west midlands. Some 20,000 of those will be in Birmingham, many in my constituency. We could see unemployment in Birmingham rising to 15 per cent. if the worst scenario is played out. Over 2,000 companies in the west midlands in the automotive supply chain are vulnerable to a substantial shutdown at Longbridge, and it is estimated that they could lose about 30 per cent. of their business as a result.

It is true that Birmingham has been able to diversify following the earlier job shocks of the 1980s recessions, and that financial, professional and business services are rapidly emerging as Birmingham's main earners. None the less, Longbridge continues to play a vital role in the life and livelihoods of Birmingham people. I agree with the policy director of the Birmingham chamber of commerce, who said only yesterday that it could be a huge disaster for the region, particularly if it goes to a buyer from outside the automotive industry. Consequently, like many other hon. Members, I think that we need urgent information about Alchemy Partners. We have had some information from the hon. Member for Bournemouth, West (Mr. Butterfill), but that only added to my worries. We need to know what the company's plans are and whether another car company is waiting in the wings.

We also need to know whether Alchemy Partners intends to run Rover production at about 250,000 units, as suggested in today's Financial Times, which is about a quarter of present capacity. I notice that Jon Moulton is quoted as saying that he looks to exit as quickly as possible, within at least three years. That is hardly an encouraging signal for the workers at Longbridge. After all, he is the man who sacked 120,000 workers within days of taking over Parker Pens.

Mr. Ian Bruce

Is it not strange that BMW effectively gave 48 hours' notice of its intention to get rid of the plants? Does the hon. Gentleman think that BMW wants Rover cars to be in competition with it in the future, or does it simply want a fire sale to close Rover down as quickly as possible?

Mr. McCabe

None of BMW's recent announcements have been well timed or helpful. Since BMW's acquisition of Rover, there have been persistent rumours about BMW's real intentions, and it has specifically been suggested that it wanted to get its hands on the Land Rover four-wheel drive technology and the other profitable parts of the company. I wanted to believe that BMW was telling the truth when it denied those rumours and I initially interpreted its investment at Longbridge and the development of the new Mini assembly, as well as the promise of £1.7 billion of investment, as evidence that it was acting in good faith. However, it appears today that that trust was misplaced.

I do not deny that BMW has experienced problems at Longbridge. It is an old plant, as everybody acknowledges. However, the treatment of the people who work for Rover has been a disgrace. The workers have given all that they can. They accepted BMW's new and much less favourable working conditions, they have come to terms with huge job losses and they have put their faith in the promises and assurances of the BMW executives. However, the workers have been let down.

Unfortunately, the recent experience is not new. It is part of a much longer trend for which the Opposition have to take some of the responsibility. In 1988, when they were in Government, they sold Rover to British Aerospace for £150 million, in clear breach of EU rules. That was just the start of what has proved to be a succession of shoddy deals at the workers' expense, especially those at Longbridge. Although BAe was later forced to pay back a large part of the sweeteners that it received, it still made a profit of £400 million on a company that it had held on to for only five years.

In fact, as part of the initial giveaway by the Conservative Government, BAe was not allowed to relinquish control of Rover for five years on pain of incurring financial penalties. BAe waited five years and six months before selling Rover to BMW, and it is clear that BAe never had any commitment to Rover. The Conservative Government must have known that, even when they were going out of their way to flog the company on the cheap. [Interruption.] I am not quite sure what the hon. Member for South Dorset (Mr. Bruce) said, but the point is that Rover was flogged on the cheap in breach of European rules. As my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) said, if one reads the NAO report, the criticisms are clear. Indeed, the report from the Select Committee on Trade and Industry contains damning criticisms. There is no doubt about what was intended.

Mr. Ian Bruce

The hon. Gentleman did not hear what I said, which was that the Secretary of State has just given £500 million to British Aerospace, the company that the hon. Gentleman has been criticising. Is he saying the right hon. Gentleman has got that wrong as well?

Mr. McCabe

The problem with the hon. Gentleman's position is that my right hon. Friend made money available as part of a negotiated deal. I am talking about a deal on the cheap that was in breach of European rules, over which the previous Government were criticised by the National Audit Office and by a Select Committee of this House. The two sets of circumstances are pretty different.

The matter did not end with the fiasco of the sale to British Aerospace. When that company then decided to offload Rover to BMW, the right hon. Member for Henley (Mr. Heseltine), the then President of the Board of Trade, said that it was part of a strategy to help British industry win. Some strategy, some win: I do not think that people at Longbridge feel that they have won today.

There have been several comments about BMW's suggestion that the problems stem from the strength of the pound. Yet that ignores the facts—that BMW's sales in the UK benefit from the strong pound, that the company has already screwed down its UK suppliers to the tightest possible margins, and that it has even proposed paying them in euros. I therefore do not know how much weight should be placed on that argument.

The strength of the pound has contributed to Rover's problems, but UK car output last year reached its highest level for 27 years. That was largely due to increased export sales, with two out of three cars going to the overseas market. During the same period, Rover car sales fell by nearly 25 per cent. That must in part be due, as the right hon. Member for Sutton Coldfield (Sir N. Fowler) said, to the persistent sabotaging of the product by BMW's untimely speculations.

Sadly, BMW is pulling the plug at the very time when sales have stabilised and even begun to rise, especially in mainland Europe. It is difficult to understand the company's strategy.

The Opposition have tried to blame the Government for the recent turn of events. Perhaps they should reflect on the fact that the previous Conservative Government initiated the chain of events that have finally done for Rover. Moreover, while the Government were negotiating grant aid for BMW last year, the former shadow trade and industry spokesman, the right hon. Member for Wokingham (Mr. Redwood), who is no longer present, opposed the Government's offer of grant aid to Longbridge. He is on record as saying that he is opposed to large public investment to help regions hit by job losses. I think that the people in Longbridge know whom they would rather have to depend on in a crisis such as this.

I have some sympathy for BMW in one respect—I agree with the right hon. Member for Sutton Coldfield about this—and that is with regard to the actions of the European Commission in dealing with the grant inquiries. I do not accept that the European Commission's investigation was vital to BMW's announcement, but we are entitled to wonder what its true purpose was.

Commissioner Monti said originally that the Commission merely wanted to look at the proposals. It may be that BMW always intended to undertake the asset stripping in which it has now indulged, and that the company's earlier pronouncements were merely a blind. We shall probably never know, but the Commission's actions have not exactly helped matters.

I want to know what Commissioner Monti really meant when he talked about transparency. Was he simply ensuring that, having announced investigations into two very different grant proposals involving Volkswagen and Fiat, Britain's proposals also had to be investigated so as not to upset other member states? I think that it is reasonable to know what exactly was intended. As others have said, the Commission has not exactly endeared itself to the Longbridge work force by its actions.

We are left to deal with the legacy that BMW has bequeathed. We need to know urgently what Alchemy's real intentions are. We need to know exactly what BMW has agreed, and if we can trust its word this time. Above all, we must do all that we can to rescue the economy of the west midlands and the livelihood of its people, and to secure a strategy for long-term, modern automotive production in the west midlands, particularly in fields such as the telematics industry.

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. My understanding is that the wind-up speeches will begin at 20 minutes to the hour. It will therefore probably be possible to have two Back-Bench speeches on either side if hon. Members speak for less than 10 minutes apiece.

6.6 pm

Miss Julie Kirkbride (Bromsgrove)

I begin by paying tribute to my Front-Bench colleagues, who rightly changed the subject of today's Supply day debate so that we might discuss the serious events at Rover. I doubt whether Ministers would have been prepared to make a statement tonight. We are not used to Ministers being forthcoming about important information that affects our constituents. Therefore, I want to say how right I think it is that the Conservative party believed it appropriate to discuss today's extremely important announcement.

It is a shame that the Secretary of State has left the Chamber because, although I have a personal regard for the right hon. Gentleman, I thought it discourteous of him not to accept an intervention from someone whose constituency includes part of the Longbridge plant—the plant's location is shared between my constituency and that of the hon. Member for Birmingham, Northfield (Mr. Burden). I would not have expected such a discourtesy from the right hon. Gentleman.

Perhaps the Minister who is replying to the debate will pay due heed to what I wanted to ask the Secretary of State. I listened very carefully to BMW's announcement today and the right hon. Gentleman's interpretation of it. His remarks contained no guarantees about the level of employment that would continue at the Longbridge factory. There was not even a guarantee that the Longbridge factory would continue to produce cars. In fact, when the right hon. Gentleman said that he would be speaking to Alchemy this evening about the plant's prospects and future, he said that cars "should" continue to be produced there. I find that a worrying use of language.

I would be grateful if the Minister could shed any light on what guarantees there are for employment at the factory. As the hon. Member for Northfield and others have said, many people are facing the potential loss of their job at the factory. [Interruption.] I am not taking any interventions, because of the discourtesy shown to me and also because of the limit on time.

I want to talk about the 9,000 jobs that are at stake—we hope that they will not be lost—as well as the wider midlands perspective that takes in 50,000 jobs, and the suppliers that face the loss of their contracts. There is no doubt that, despite the barracking of Labour Members, this is a very sad day for the midlands. It is a sad day for my constituents and for many others who have had a rollercoaster ride over the future of the Longbridge factory ever since I became the local Member of Parliament in 1997, and before that. They must have spent the night worrying about today's announcement, and I feel sorry for them. Despite today's announcement, their worries will not have ceased, because we simply do not know what the future is, irrespective of what has been announced. We know some details, including, sadly, the fact that Longbridge will lose the exciting prospect of production of the Mini to Cowley.

Alchemy, and, one presumes, Longbridge, will continue to make the MG. That is exciting, and a piece of good news, but anyone who knows anything about car production knows that the MG is an exciting niche car, not a mass-produced one, which makes it unlikely that its production at Longbridge, or anywhere else, would employ the number of people currently employed at Longbridge.

If I understood the statement correctly, the R30—the smaller version of the Rover 75, which will continue on licence at Cowley—which would have succeeded the soon-to-be outdated Rovers 25 and 35, will not be sold to Alchemy along with the Rover name. BMW will produce it in some form somewhere else under a name we do not know. But that car is extremely important to the Rover range's place in the volume car market. The fact that the brand does not go with the sale worries me.

It is hard not to be gloomy. Indeed, my gloom is shared by the unions—an unlikely alliance, perhaps—and every midlands Member must be feeling the gloom at present. The Longbridge work force do not deserve it. They had a reputation in the 1970s and before for being somewhat difficult, but they are experienced and their willingness to accept changes in practices in the past few years has been exemplary. They have done all they can to show good faith in the production of cars at Longbridge and have tried to maintain their jobs by showing the flexibility required of a modern car production factory. After all that willingness to change and to accept the new world of car manufacturing, today's announcement is a kick in the teeth. Their good will has been resoundingly rejected by the BMW board, and we wait to see what Alchemy will bring.

I was extremely alarmed when my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) described Alchemy's investment profile. We all know what venture capitalists are. They go in and out on property speculations of different sorts.

Mr. Butterfill

indicated dissent.

Miss Kirkbride

Perhaps my words are a little over-anxious.

Mr. Peter Luff (Mid-Worcestershire)

Venture capitalists can be like that.

Miss Kirkbride

My hon. Friend the Member for Mid-Worcestershire (Mr. Luff) comes to my rescue. Venture capitalists can be like that.

Clearly, Alchemy's track record to date makes it hard to see how it can take on responsibility for Longbridge. Earlier this week, the plant was considering investment of £1.7 billion in new car production facilities for the smaller range of the Rover 75. It is hard to see how Alchemy can begin to harness the optimism that we had just a few days ago. The record is worrying and we must wait for more information.

I wanted to put those remarks on the record. We must consider the feelings and thoughts of the work force and their families. How will they pay their mortgages if things go pear-shaped at the plant?

Political flak has come at us from Labour Members, but it was outrageous for the hon. Member for Birmingham, Hall Green (Mr. McCabe) to claim that all the problems arose from decisions taken by the previous Conservative Government. His statement has no credibility. The problem is huge; many people have been involved. There are demand difficulties in the international car market; we realise that. Larger issues are at stake.

However, Labour Members, including the hon. Member for Northfield—who has left the Chamber—must accept that at least a scintilla of blame attaches to the Government. BMW has had to contend with the exchange rate during the past few years. Any Member who represents a midlands constituency, or has dealings with BMW, is only too aware that the company regards the exchange rate as one of its principal problems.

We also know that Rover is not the only company to suffer—although it seems to have taken the fall. There is a problem with the exchange rate, and there have been problems with the grant in aid and with the European investigation. Those matters have been raised by other hon. Members, so it would not be fair to go into them further.

Labour Members must grow up. They must realise that the situation is difficult, but that they have responsibility for their actions—it is not always the fault of somebody else. It would be nice to hear a little more reality in the subsequent contributions of Labour Members.

6.16 pm
Mr. Terry Davis (Birmingham, Hodge Hill)

Unlike the hon. Member for Bromsgrove (Miss Kirkbride), I not only represent people who work at Land Rover and Longbridge, but I drive a Rover car.

What was significant about the speech made by the hon. Member for Tiverton and Honiton (Mrs. Browning) was not her attempt to blame the Government for the crisis at Rover, but what she did not say. Only a few years ago, Conservative Members would have blamed all the troubles at the Rover group on the people who work there. It is significant that we have not heard that today. Indeed, the right hon. Member for Sutton Coldfield (Sir N. Fowler) paid tribute to the people who work for Rover. For the first time in my political life, I agree with him. He is right; the people who work at Rover have transformed industrial relations there. The present crisis at Rover cannot be blamed on those who produce the cars.

Fifteen years ago, the Rover group was making a profit. What has gone wrong? My hon. Friends are right to criticise the sale of Rover to British Aerospace at a giveaway price, and to draw attention to reports from the National Audit Office, the Select Committee on Trade and Industry and the Public Accounts Committee. However, those reports were produced several years ago.

It is true that British Aerospace treated the Rover group as a milk cow to get over its short-term cash-flow problem, but that was also some years ago. Then, British Aerospace sold the Rover group and split it up. Jaguar was sold to one company. The van company, mentioned by the right hon. Member for Sutton Coldfield, and Leyland Trucks were sold to DAF. We were told that was a good thing. The rest of the group was sold in a package to BMW. What happened then? DAF pulled the plug on the van factory and the truck factory. The van factory has been revived—thanks to all-party support and with help from the previous Tory Government during their dying days. That company is now a success, but when it was owned by DAF, the decisions taken in the boardroom were to protect jobs in the Netherlands at the expense of jobs in Birmingham. That was inevitable because ownership had been transferred abroad. The same thing is now happening at Longbridge.

My hon. Friends and Opposition Members are correct to point out that the exchange rate is part of the problem. It is not only in the motor industry that jobs are disappearing; there have been tremendous job losses at the Dunlop factory in Birmingham—attributed by the owners directly to the exchange rate, resulting in the transfer of much tyre production to Germany.

It is not as simple as that, however, because there is another problem. The exchange rate influences our exports, but it does not account for the slump in Rover's sales in this country. The big problem affecting the Rover group is sales and marketing. I wish my right hon. Friend the Secretary of State well at his discussions with representatives of Alchemy tonight, but the big question that he should put to the new owners of Long bridge is not how they will produce more cars, but how they will sell more of them. That is a management responsibility, and that is the question that should be put to the new managers who will take over the Longbridge factory.

6.20 pm
Mr. John Butterfill (Bournemouth, West)

I shall be very brief, but I want to clarify some of the remarks that I made about Alchemy in an intervention on the hon. Member for Twickenham (Dr. Cable).

Alchemy is certainly smaller than the company that one would expect to take over a plant such as Longbridge. The deal that it is doing for Longbridge dwarfs anything that it has taken on to date. However, I do not want it to be thought that I was in way criticising the company. It has a good reputation and has been involved in several successful investments. According to the British Venture Capital Association's handbook, it has invested in ESP, Goldsmiths plc, Instem plc, Paramount Hotels, Ushers of Trowbridge plc. The hon. Member for Twickenham referred, I think, to the final company in that list.

Alchemy specialises in rescues, turnarounds and management buy outs, so it is possible that it is in serious discussions with some of the senior management at Longbridge. However, it is equally true that it does not of itself possess the resources that would take a plant, such as Longbridge, forward for the future. When the Secretary of State meets John Moulton of Alchemy Partners this evening—I am sorry that the right hon. Gentleman is not here now—I hope that he will, as a priority, discuss exactly how Alchemy intends to obtain the long-term funds to secure the future of the company.

We all hope that the deal with Alchemy is successful and that it will give the workers at Longbridge the success that they deserve following all the changes in which they have participated in recent years. However, it is important that we receive a little more detail on how that will be achieved. There is hope, because one of the main sources of funding for Alchemy's existing investments is United States and middle east investors. Perhaps, the company has a secure source of long-term funding, but it is a priority for the Secretary of State to establish that fact this evening if possible.

6.23 pm
Mr. Geoffrey Robinson (Coventry, North-West)

Possibly, this has been a more significant debate than the Opposition anticipated when they tabled their motion. In seeking to gain party political advantage from it, they have unwittingly raised a major issue about British industry and British manufacturing industry in particular. They would do well to address that issue in opposition, and they will have plenty of time to do that.

The history of the motor industry and other manufacturing industries in this country is one of continual decline. Under successive Governments and successive managements, we have seen nothing but the United Kingdom losing out to European and international manufacturers in terms of market share, product development and all the things that go towards a successful manufacturing industry. It ill behoves the Opposition to try to gain party political advantage from the debate, because that is not what it is about. Arrangements were entered into with BMW in good faith.

Mrs. Browning

The hon. Gentleman talks about the arrangements that were entered into, but we do not know what deal the Government brokered. The Secretary of State said that these deals are subject to commercial confidentiality. How can we make a judgment when we do not know the details of the negotiations?

Mr. Robinson

The hon. Lady understands nothing. It was her Government who entered into the arrangements and allowed BMW to gazump the existing arrangements. It all started some five years ago, when the Government allowed BMW to gazump Honda, much to the disgust of the Japanese, and buy Rover. Her Government were absolutely responsible for the arrangements that governed that deal. If she did not know about that, it was up to her to find out about it.

I shall tell the hon. Lady what those arrangements were. BMW committed itself to reserving the marque of Rover and to reserving Rover as a manufacturing entity in the UK. BMW said that it would continue all the arrangements that were already in train between Rover and Honda. Those were the arrangements that the hon. Lady's Government entered into.

That deal came to my attention when I was at the Treasury, when out of the blue we heard that BMW wanted to close down Longbridge. BMW did not want to know about the arrangements. It does not care about workers in Longbridge; it is concerned about workers in Munich. The hon. Lady looks distressed, but we must understand the basic fact that despite all the so-called multinational and global investment and industry, each major national company looks after its own people first, and others afterwards.

In that sense, I do not blame the Germans for pulling the plug on Longbridge, which is what they are doing. BMW says that it has made losses, but I say to BMW, "You have had this company for five years. You said that you would make a success of it. I did not doubt your word." I did not doubt BMW's word because one could look at the company's glittering success in Munich. Now decisions about the British motor industry are being made in Munich by Frau Quandt and her family. On another date in the historical calendar the situation could have been quite different.

That situation is not the fault of this Government or this Secretary of State, or indeed any of his predecessors. If any fault is to be found, it is with the British failure in manufacturing industry. The hon. Lady, who in her great wisdom initiated the debate, does not want to consider that. She says that we did not do well enough with the aid application to the European Commission, but everybody knows that everything possible was done by this Government and previous Governments to get the necessary aid. Everybody knows also that European aid has not had the slightest influence on BMW's decision today to dump Rover.

BMW has dumped Rover because it does not suit interests any more. That is fine for BMW, but what about us? What about our employers and employees? [Interruption.] I beg the hon. Member for Tiverton and Honiton (Mrs. Browning) to listen for a moment. In the City and everywhere else one sees that global activities are taking place and global entities are being formed, but within those entities the national interest prevails. I beg hon. Members to think about that for a moment. Let us consider the City of London—the citadel of British power where our people prevail. We are increasingly being subsumed into other, bigger entities, which are seemingly global but in reality are nationally oriented.

Returning to the car industry, one sees the motorcycle industry and machine tool industry as subsidiary, but in all those industries this country is losing out and we are not as strong as we ought to be. Obviously, it is too late for BMW even to reconsider its decision. Why has BMW taken that decision? Because it is in its interests. The national interest there is predominant. Had it been a factory in southern Germany—in Munich—that was at stake, such a clear-cut, brutal decision would not have been taken.

Who should we blame for that? We can look back to five years ago. It is not as though the decision had to be taken overnight, or the facts were not already known. It is not as though there has not been a magnificent increase in productivity and quality of product. For one reason or another, BMW chose not to manufacture it in the UK.

Fair enough. That is BMW's decision, but is it good enough? Do we, a great nation in our own right, accept that decisions are taken irrespective of our Government's views on the matter, and irrespective of what that company in Germany said when it bought into and took control of our industry? Is all that unconditionally acceptable to us?

We have nothing to be ashamed of with regard to labour productivity. The costs of production in the UK are 30 to 40 per cent. less—I am pleased to see my right hon. Friend the Member for Chesterfield (Mr. Benn) listening to this—than they are in Germany, so what is the problem?

The hon. Member for Tiverton and Honiton smirks, and I find that offensive.

Mrs. Browning

I was not smirking.

Mr. Robinson

Indeed, she was. Our jobs, our people—[Interruption.] Now the hon. Lady laughs. That is even better. It becomes her well, but we care about British industry and the British motor industry. We care about what we still have of our manufacturing industry—while it lasts.

The issue transcends party politics. It does not offend any party political dogma, or rather, it should not. It is an issue that affects us all as citizens of the United Kingdom. Unless we realise that in the case of global industry, the globally competitive aspects pertain most of all with regard to the management of it, we shall lose out. If we are happy to lose out—to sit back and see it all happen, and imagine that we will be saved by the internet or some other marvellous new technology where the English language prevails—fine. However, I say to hon. Members that that will not do. This country, and any mature democracy such as ours, must have as its basis some major industries and activities under its own ownership and managerial control.

I am delighted that the Opposition initiated the debate tonight. It allows us to highlight matters that go beyond party political issues. The Opposition will regret having raised the issue this evening. We know the issues that really matter—[Interruption.] Yes, jobs—very much so. Who did nothing in that regard? We have done all we can to protect jobs.

I wish Alchemy well. We must give it every support. I am sure that the Government will do so, as we did for BMW, and I hope that Alchemy will respond more positively and constructively to the support that it gets from the Government than BMW has done.

6.34 pm
Mr. Tony Baldry (Banbury)

It was a little difficult to follow the comments of the hon. Member for Coventry, North-West (Mr. Robinson). Can the House agree that it is pointless for everyone to try to find someone to blame—the Germans, the family, and so on? For many of us, there are large numbers of jobs, families and households at stake—in Oxford, East, in Banbury and in the whole of Birmingham.

My hon. Friends on the Front Bench are to be congratulated on initiating the debate, without which hon. Members on both sides of the House would not have had the opportunity of speaking on this matter today. We all have a bad feeling in the pit of our stomach about what is happening. When the Secretary of State said in his closing comments that our thoughts were with the families at Longbridge, he was right, but it was a rather funereal peroration. Perhaps we can all move away from trying to find somebody to blame and, instead, think about what we can do to improve the situation for the future.

It seems that we all agree that the people at Longbridge have done their very best to deliver. Productivity is high and anything that has been asked of the company has come across. So where do we find the problems and what can we do to improve matters?

I have two requests of the Minister for Competition and Consumer Affairs and the Secretary of State. First, I ask the Government to give an undertaking that if need be they will return to this matter in Government time in the not-too-distant future. It should not be only for the Opposition to initiate debates on the subject.

We know nothing about Alchemy, as my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said. I am sure that it is a perfectly respectable company, but it has no proven track record in such a large enterprise. I hope that the Secretary of State will give an undertaking that he will return to the House to debate these matters. He says that he wants to obtain a great deal of information about Alchemy, and I hope that, perhaps on Monday, he will make a statement so that we can be kept up to date with what is happening.

I agree with the hon. Member for Twickenham (Dr. Cable) and others that we must recognise the impact that the strength of the pound is having on manufacturing industry throughout the country, and not only in the west midlands. There have been a number of comments from BMW spokesmen. I will not go through them because they have been listed in The Independent and other newspapers recently. They have said that they have been watching the exchange rate on almost a daily basis. It seems that, as much as anything, the exchange rate and the strength of the pound caused BMW to abandon its £1 billion investment in Longbridge.

This is not an issue that we can duck. If the strength of the pound is damaging UK manufacturing capability and capacity, the Bank of England Monetary Policy Committee must take account of that when setting and determining interest rates.

Dr. Lynne Jones

What would the Conservatives do about the high value of the pound? If we want a loosening of monetary policy, it is hardly appropriate that the Tories should be calling for tax cuts and a loosening of fiscal policy as well.

Mr. Baldry

I hoped for better from the hon. Lady. To engage in point scoring in this debate is pointless. If the strength of the pound is damaging UK manufacturing industry, we are entitled to say to the Bank of England that, when determining its policy, it should not focus only on inflation rates but should have regard to what is happening to the core of our manufacturing base.

The hon. Member for Coventry, North-West (Mr. Robinson) talked about what is happening in terms of the UK—

Mr. Deputy Speaker

Order. The hon. Member for Meriden (Mrs. Spelman) should not be reading a newspaper in the Chamber.

Mrs. Caroline Spelman (Meriden)

I am sorry, Mr. Deputy Speaker.

Mr. Baldry

The hon. Member for Coventry, North-West talked about what was happening in terms of UK competitiveness and the UK manufacturing base moving overseas. Those matters should be of concern to every Member of this place and should not be used for the scoring of political points. We are talking of jobs that, once lost, will not return. I urge the Secretary of State and the Minister to accept that we must all consider, in the absence of the blame culture, how we can turn the situation round.

I am sure that there are macro-economic issues that require consideration. The Secretary of State told us frequently what had not influenced BMW in its decision. He said that it had not been influenced by a lack of grant. However, he did not tell us what had influenced the company in deciding to move away from Longbridge. I suspect that one factor was the exchange rate and the fact that it could see itself continuing to make substantial losses while the pound stayed as strong as it did. If this House continues to be totally myopic about that, we cannot be surprised if the UK manufacturing base continues to be eroded.

6.39 pm
Mr. Nick Gibb (Bognor Regis and Littlehampton)

We have had an important debate on an issue that is crucial to the British economy and vital to the jobs and prospects of 50,000 people. The Secretary of State has presided over a catalogue of incompetence. Incompetence characterised his handling of the Post Office network, the computerisation programme, and the level of the Post Office monopoly: is it £1 or 50p? He handled the Utilities Bill incompetently—it required 400 Government amendments, and the telecom and water sectors were removed from it halfway through Committee stage.

The Government's original approach to the Electronic Communications Bill was incompetent. There is confusion about competition policy and the Secretary of State made errors of judgment in his rip-off Britain campaign. I wonder how much damage that campaign has done to the sale of Rover cars in Britain and world wide? The Secretary of State now displays incompetence in his dealings with the European Commission on state aid to Rover.

The Government originally announced state aid with a flourish in March 1999 and the details were announced in June. As my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) said, between those two dates, only one meeting with the Commission took place. The Commission was not formally notified until August 1999; the EU began its inquiry four months after that. Why did the Secretary of State take so long—six months after the first announcement in March 1999—to make the formal application? We have to wait until June this year for a formal EU decision. That is too late. Industry has to work at a different pace from that to which the Secretary of State is accustomed. However, the writing is on the wall for the right hon. Gentleman. In the row between the Secretary of State and his junior Minister over the site for the Synchrotron research facility, the Prime Minister backed Lord Sainsbury rather than the Secretary of State—another incompetent judgment.

When he opened the debate, the Secretary of State simply read out the BMW press release and the results of hours of research into previous aid notifications by the Conservative Government. His dismissal of the delay in achieving EU approval of the grant is astonishing. He now claims that the grant is irrelevant. When Rover achieves new investment, the grant is crucial and the success is a triumph for the Government, but when Rover is in difficulty, the grant is irrelevant and the problems have nothing to do with the Government.

Mr. Ian Bruce

I have just returned from watching the Chief Secretary and his constituents in Oxford on television. They were celebrating BMW's actions, yet the mood on the Floor of the House is completely different. Do we know whether the £140 million will go to Oxford rather than being lost to BMW?

Mr. Gibb

I am grateful for that intervention. It is good news for Oxford. Perhaps the Secretary of State is more concerned about that than the difficulties at Longbridge.

Mr. Burden

Will the hon. Gentleman give way?

Mr. Gibb

I shall not give way because we are running out of time. The hon. Member for Twickenham (Dr. Cable) blamed the problem on the exchange rate; that is also BMW's view. He acknowledged that nothing could be done about the exchange rate, but he agreed with us about the damage that the rip-off Britain campaign causes.

The hon. Member for Birmingham, Northfield (Mr. Burden) denied that the exchange rate had any effect in view of successful exports of BMWs, even when the Deutschmark was strong.

In an informed and balanced speech, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) made the important point that a period of six months to investigate the £152 million grant by the Commission is unacceptable in this day and age.

The hon. Member for Birmingham, Hall Green (Mr. McCabe) pointed out that 2,000 companies could lose up to 30 per cent. of their business if Longbridge closes.

My hon. Friend the Member for Bromsgrove (Miss Kirkbride) rightly pointed out that, but for the Conservative Opposition, the Secretary of State would not even have made a statement. She raised the important concern about jobs at Longbridge, on which the Secretary of State was so coy.

A bigger issue is at stake. There has been incompetence, delay and dither, and the Secretary of State incompetently failed to examine the aid issue in detail. Had he done so, he would have worked out that the Commission would not accept that there was any realistic possibility of the Longbridge operation being transferred to Hungary. On the radio this morning, he also made the extraordinary statement, which he repeated in the debate, that—

Mr. Burden

Will the hon. Gentleman give way on that point?

Mr. Gibb

I will not. There is very little time left.

The Secretary of State said that the grant was irrelevant, despite boasting wildly about it when it was announced. For Conservative Members, the bigger issue is what has happened to the United Kingdom economy that has meant that, in the past month, we have faced the possible loss of Harland and Wolff shipyard and of one of our major indigenous car industries. What has happened since August 1996, when the chief executive of Siemens said: Our decision to build the new semi-conductor plant here in the UK is a recognition of the pro-business environment which exists? What has happened since October 1995, when the chairman of BMW said: Great Britain is currently the most attractive country among all European locations for producing cars? BMW does not think that now, so what has happened?

I can tell the House. There has been a new, damaging approach to manufacturing and to business since the Government came to power, the consequences of which we are beginning to see: £5 billion a year in extra regulatory costs on British business as a result of measures introduced by the Government; a proliferation of red tape, and new and more powerful interventionist regulations; £35 billion of extra taxes on business over this Parliament; more corporation tax; more stamp duty on business transactions; more duty on diesel; a new pension funds tax that puts up business' pension costs as well as its capital costs; the climate change levy; and IR35. All those measures are damaging to the British economy, to businesses that are trying to survive in a fiercely competitive world, to businesses large and small and to businesses that are trying to turn themselves around, as Rover was.

Damage cannot be undone by sending out an army of spin doctors to spread a different message or to manipulate media coverage. Government is about policy decisions and their effects on people's lives and prospects, not rhetoric or media handling. We need Ministers who concentrate their time and intellectual effort on getting those decisions right, rather than on worrying about the backdrop for the next press conference and the next photo opportunity. If Longbridge goes, the blame for the huge damage that will be done to the west midlands economy will lie with incompetent Ministers and an economic policy that is costly and damaging to British business.

6.48 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson)

This issue is vital. Thousands of people face an uncertain future and thousands of families in the midlands will be extremely concerned about today's announcements. To be fair, many Opposition Members acknowledged that this is a complex matter, but it is a shame that the official Opposition—instead of coming to the House in the proper spirit and seeking a mature debate—launched a shoddy personal attack on my right hon. Friend the Secretary of State, which missed entirely. They also used today's sombre news to try to score a few petty political points, but failed dismally in that objective. They have demeaned the issue before us.

The hon. Member for Tiverton and Honiton (Mrs. Browning) made a convoluted point about grant aid. We negotiated that aid quickly because there was the threat that BMW might move to Hungary, and then sought clearance. As my right hon. Friend the Secretary of State said, there is no other example of negotiating grant aid and regional selective assistance where the deal is not done first, before seeking approval. The proposal was referred by the European Commission to a full investigation; nothing unusual there. In fact, the Government recently supported that measure in relation to Volkswagen. We went through the normal process. The actual deal was commercially confidential, as are all such deals. Opposition Members know that full well.

Apart from a couple of other spurious points, that amounted to the total contribution by Opposition Members to this important debate. There is no telling whether we would have come to the House to initiate a debate but I give the Opposition one point out of 10 for initiating a debate on an important issue. It is a shame that members of the Opposition Front Bench did not contribute more constructively.

The hon. Member for Twickenham (Dr. Cable), in a thoughtful seminar on the single European currency, referred to the strength of sterling—not a point raised by the hon. Member for Tiverton and Honiton. I remind the House that the biggest rise in the value of the deutschmark against sterling was in the seven months leading up to the general election in May 1997. There were many interventions and contributions from this side of the House about the strength of sterling, which was cited also by the hon. Member for Twickenham in a balanced speech, but no one offered a solution. The remedy that he offered—joining the single European currency—was spurious, given current circumstances.

My hon. Friend the Member for Birmingham, Northfield (Mr. Burden) displayed as always his commitment to his constituents and community, together with his expertise. He rightly paid tribute to the work force. The hon. Member for Tiverton and Honiton did not refer once to the work force or the community in Longbridge and their concerns. It was left to my hon. Friend to do so. He pointed out that BMW has received help and assistance from government—particularly from my right hon. Friend the Secretary of State. He made the important point, in relation to the strength of sterling, that BMW is a pan-European operator.

I was extremely pleased that my hon. Friend mentioned the success of motor sport in this country. Any debate about taking forward the British automotive industry needs to emphasise its success stories. Motor sport is certainly among them and is a benchmark against which most automotive companies should measure themselves.

The right hon. Member for Sutton Coldfield (Sir N. Fowler) made from the Conservative Back Benches the eloquent speech that should have come from the Conservative Front Bench. He spoke of the media's obsession with the days of Red Robbo, flares, tank tops and T.Rex. He spoke of how much Longbridge has changed since those days but said there was a strange tendency among the media constantly to hark back to them. I do not agree with everything that he said—he was kind enough to send me a note saying that he could not be here for my reply—but he struck the right note and made an important contribution.

My hon. Friend the Member for Birmingham, Hall Green (Mr. McCabe) emphasised the vital role of Longbridge in the region and highlighted the uncertainty surrounding the move to new owners, to which I will refer in a moment. I completely understand the concerns of the hon. Member for Bromsgrove (Miss Kirkbride), as one of the two hon. Members with responsibility for Longbridge constituents. She asked whether there were guarantees about employment and the future. We are working on the basis of an announcement just made; discussions have yet to take place involving my right hon. Friend. I remind her that, during an Adjournment debate in January, she said: We should credit BMW for investing in the Rover group when it took over the company. At the time, it was widely speculated that BMW was interested only in Land Rover and having a four-wheel-drive product in their vehicle range, and that it might not show the same commitment to the Rover car itself. It is hard to pin that accusation on BMW.—[Official Report, Westminster Hall, 26 January 2000; Vol. 343, c. 70WH.] In terms of the way in which the situation develops—

Mr. Deputy Speaker

Order. Far too many conversations are taking place.

Mr. Johnson

It is impossible to read the future, but I assure the hon. Member for Bromsgrove that my right hon. Friend the Secretary of State will make the points about employment opportunities at the meeting that is to be held with Alchemy Partners this evening.

My right hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) made an important point about sales and marketing. Rover's sales slumped by 26 per cent. in 1999. That is to do with the way in which the product is marketed, to do with the sales, and to do with the whole management approach to promoting and selling these important products.

The hon. Member for Bournemouth, West (Mr. Butterfill) mentioned the long-term success of Longbridge, which is obviously relevant to the debate. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) demonstrated his long experience of the industry. The hon. Member for Banbury (Mr. Baldry) said that we should not have a culture of blame, and that it was entirely wrong to apportion blame in this instance. It is a shame that he did not mention that to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb).

BMW has not entirely removed itself from the picture. It will retain a manufacturing presence in Oxford, where the Cowley plant is producing the Rover 75, which is increasingly successful in the marketplace. It will also continue with plans for the new Mini. The forecasts for that new model are very optimistic, given that it builds on the heritage of the existing car. BMW has decided to continue with the engineering and design function in the United Kingdom, which constitutes a tremendous vote of confidence in the UK's engineering and design capability.

We will work constructively with the new owners to understand their future plans for the business, and to provide any support that may be justified and appropriate. The existing aid package cannot simply be transferred to new owners; any package will depend on the specific circumstances and plans of those new owners, and on whether they meet the proper conditions for support. I can, however, assure the House that we will do everything possible to ensure that Rover has a future in this country.

Rover is a name with which the British public strongly identifies. In the past, its fortunes and troubles have mirrored the economic and social issues of the day. It needs to get through the difficult times, not least because of the enormous effort and wholehearted co-operation of its work force over many years, but particularly since the BMW takeover in 1994.

In 1998, BMW-Rover undertook a wide-ranging review of Rover Group's activities. As part of that, BMW shared with Rover's employees its plans for the future, and explained that their success depended on the achievement of significant cost reductions and—importantly—new agreements on competitive working practices. It is to the credit of the Rover employees that they rose to the challenge, and consented to more flexible working practices and productivity agreements.

Let me tell the House what is about to happen. The Secretary of State will meet Alchemy Partners later this evening. We shall want to clarify BMW's intentions in relation to Land Rover. The Secretary of State will visit Rover sites in the west midlands tomorrow. A key issue in relation to Longbridge is whether transfer of ownership to Alchemy Partners is concerned, and what the plans for the business are. The Government will be anxious to work closely with new owners to maximise the chances of success for the Rover business, and to consider what support might be justified and appropriate. Rover wants to be part of the success story of the British car industry.

Mr. Patrick McLoughlin (West Derbyshire)

rose in his place and claimed to move, That the Question be now put.

Mr. Deputy Speaker

Order. I believe that the Minister has ended his speech anyway.

Question put, That the original words stand part of the Question:

The House divided: Ayes 149, Noes 275.

Division No. 116] [7 pm
Ainsworth, Peter (E Surrey) Bottomley, Rt Hon Mrs Virginia
Allan, Richard Brady, Graham
Amess, David Brake, Tom
Arbuthnot, Rt Hon James Brooke, Rt Hon Peter
Ashdown, Rt Hon Paddy Browning, Mrs Angela
Atkinson, David (Bour'mth E) Bruce, Ian (S Dorset)
Baker, Norman Bruce, Malcolm (Gordon)
Baldry, Tony Burns, Simon
Beith, Rt Hon A J Butterfill, John
Bercow, John Cable, Dr Vincent
Beresford, Sir Paul Campbell, Rt Hon Menzies (NE Fife)
Blunt, Crispin
Body, Sir Richard Chapman, Sir Sydney (Chipping Barnet)
Boswell, Tim
Bottomley, Peter (Worthing W) Chidgey, David
Chope, Christopher MacKay, Rt Hon Andrew
Clappison, James Maclean, Rt Hon David
Clarke, Rt Hon Kenneth (Rushcliffe) McLoughlin, Patrick
Madel, Sir David
Collins, Tim Major, Rt Hon John
Cormack, Sir Patrick Malins, Humfrey
Cotter, Brian Maples, John
Cran, James Maude, Rt Hon Francis
Curry, Rt Hon David Mawhinney, Rt Hon Sir Brian
Davey, Edward (Kingston) Moore, Michael
Davis, Rt Hon David (Haltemprice) Moss, Malcolm
Day, Stephen Nicholls, Patrick
Dorrell, Rt Hon Stephen Norman, Archie
Duncan, Alan O'Brien, Stephen (Eddisbury)
Duncan Smith, Iain Ottaway, Richard
Evans, Nigel Page, Richard
Faber, David Paice, James
Fabricant, Michael Pickles, Eric
Fallon, Michael Portillo, Rt Hon Michael
Feam, Ronnie Prior, David
Flight, Howard Redwood, Rt Hon John
Forth, Rt Hon Eric Robathan, Andrew
Foster, Don (Bath) Roe, Mrs Marion (Broxbourne)
Fox, Dr Liam Ruffley, David
Fraser, Christopher Russell, Bob (Colchester)
Gale, Roger St Aubyn, Nick
Gibb, Nick Sanders, Adrian
Gill, Christopher Shepherd, Richard
Gillan, Mrs Cheryl Simpson, Keith (Mid-Norfolk)
Gray, James Soames, Nicholas
Green, Damian Spelman, Mrs Caroline
Grieve, Dominic Steen, Anthony
Gummer, Rt Hon John Streeter, Gary
Hamilton, Rt Hon Sir Archie Stunell, Andrew
Hammond, Philip Swayne, Desmond
Hancock, Mike Syms, Robert
Harris, Dr Evan Tapsell, Sir Peter
Hawkins, Nick Taylor, Ian (Esher & Walton)
Hayes, John Taylor, John M (Solihull)
Heald, Oliver Taylor, Sir Teddy
Heathcoat—Amory, Rt Hon David Tonge, Dr Jenny
Hogg, Rt Hon Douglas Townend, John
Horam, John Tredinnick, David
Howard, Rt Hon Michael Trend, Michael
Howarth, Gerald (Aldershot) Tyrie, Andrew
Hunter, Andrew Viggers, Peter
Jackson, Robert (Wantage) Walter, Robert
Jenkin, Bernard Wardle, Charles
Key, Robert Waterson, Nigel
King, Rt Hon Tom (Bridgwater) Wells, Bowen
Kirkbride, Miss Julie Whittingdale, John
Laing, Mrs Eleanor Wigley, Rt Hon Dafydd
Lait, Mrs Jacqui Wilkinson, John
Lansley, Andrew Willetts, David
Letwin, Oliver Willis, Phil
Lewis, Dr Julian (New Forest E) Wilshire, David
Lidington, David Winterton, Mrs Ann (Congleton)
Lilley, Rt Hon Peter Winterton, Nicholas (Macclesfield)
Lloyd, Rt Hon Sir Peter (Fareham) Yeo, Tim
Loughton, Tim
Luff, Peter Tellers for the Ayes:
MacGregor, Rt Hon John Mr. John Randall and
McIntosh, Miss Anne Mr. Geoffrey Clifton-Brown.
Abbott, Ms Diane Banks, Tony
Ainger, Nick Barnes, Harry
Ainsworth, Robert (Cov'try NE) Battle, John
Alexander, Douglas Bayley, Hugh
Allen, Graham Beard, Nigel
Anderson, Donald (Swansea E) Beckett, Rt Hon Mrs Margaret
Anderson, Janet (Rossendale) Bell, Martin (Tatton)
Armstrong, Rt Hon Ms Hilary Bell, Stuart (Middlesbrough)
Ashton, Joe Benn, Hilary (Leeds C)
Atkins, Charlotte Benn, Rt Hon Tony (Chesterfield)
Austin, John Bennett, Andrew F
Benton, Joe Godman, Dr Norman A
Bermingham, Gerald Godsiff, Roger
Best, Harold Goggins, Paul
Betts, Clive Griffiths, Jane (Reading E)
Blair, Rt Hon Tony Griffiths, Win (Bridgend)
Blears, Ms Hazel Grocott, Bruce
Blunkett, Rt Hon David Grogan, John
Boateng, Rt Hon Paul Hain, Peter
Bradley, Keith (Withington) Hall, Mike (Weaver Vale)
Bradley, Peter (The Wrekin) Hall, Patrick (Bedford)
Brinton, Mrs Helen Hamilton, Fabian (Leeds NE)
Burden, Richard Hanson, David
Burgon, Colin Heal, Mrs Sylvia
Butler, Mrs Christine Healey, John
Byers, Rt Hon Stephen Hepburn, Stephen
Caborn, Rt Hon Richard Heppell, John
Campbell, Mrs Anne (C'bridge) Hill, Keith
Campbell, Ronnie (Blyth V) Hinchliffe, David
Cann, Jamie Hodge, Ms Margaret
Caplin, Ivor Hoey, Kate
Casale, Roger Hood, Jimmy
Cawsey, Ian Hoon, Rt Hon Geoffrey
Chapman, Ben (Wirral S) Hope, Phil
Clapham, Michael Hopkins, Kelvin
Clark, Dr Lynda (Edinburgh Pentlands) Howells, Dr Kim
Hughes, Ms Beverley (Stretford)
Clark, Paul (Gillingham) Hurst, Alan
Clarke, Charles (Norwich S) Hutton, John
Clelland, David Iddon, Dr Brian
Clwyd, Ann Illsley, Eric
Coaker, Vernon Jackson, Ms Glenda (Hampstead)
Coffey, Ms Ann Jackson, Helen (Hillsborough)
Cohen, Harry Jamieson, David
Coleman, Iain Jenkins, Brian
Colman, Tony Johnson, Alan (Hull W & Hessle)
Connarty, Michael Jones, Rt Hon Barry (Alyn)
Cook, Frank (Stockton N) Jones, Helen (Warrington N)
Cooper, Yvette Jones, Ms Jenny (Wolverh'ton SW)
Corbett, Robin
Corbyn, Jeremy Jones, Jon Owen (Cardiff C)
Corston, Jean Jones, Dr Lynne (Selly Oak)
Cousins, Jim Jowell, Rt Hon Ms Tessa
Cox, Tom Kaufman, Rt Hon Gerald
Cranston, Ross Keeble, Ms Sally
Crausby, David Keen, Alan (Feltham & Heston)
Cryer, Mrs Ann (Keighley) Keen, Ann (Brentford & Isleworth)
Cryer, John (Hornchurch) Kelly, Ms Ruth
Cummings, John Kennedy, Jane (Wavertree)
Cunningham, Jim (Cov'try S) Khabra, Piara S
Curtis-Thomas, Mrs Claire Kidney, David
Darvill, Keith Kilfoyle, Peter
Davey, Valerie (Bristol W) King, Ms Oona (Bethnal Green)
Davies, Rt Hon Denzil (Llanelli) Ladyman, Dr Stephen
Davies, Geraint (Croydon C) Laxton, Bob
Davis, Rt Hon Terry (B'ham Hodge H) Lepper, David
Leslie, Christopher
Dawson, Hilton Levitt, Tom
Denham, John Lewis, Ivan (Bury S)
Dunwoody, Mrs Gwyneth Linton, Martin
Eagle, Angela (Wallasey) Lloyd, Tony (Manchester C)
Eagle, Maria (L'pool Garston) Lock, David
Ellman, Mrs Louise McAvoy, Thomas
Ennis, Jeff McCabe, Steve
Etherington, Bill McCafferty, Ms Chris
Field, Rt Hon Frank McDonagh, Siobhain
Fisher, Mark McDonnell, John
Fitzpatrick, Jim McIsaac, Shona
Flint, Caroline Mackinlay, Andrew
Flynn, Paul McNamara, Kevin
Foster, Michael Jabez (Hastings) McNulty, Tony
Foster, Michael J (Worcester) Mactaggart, Fiona
Gapes, Mike McWalter, Tony
Gardiner, Barry McWilliam, John
George, Bruce (Walsall S) Mahon, Mrs Alice
Gibson, Dr Ian Marsden, Gordon (Blackpool S)
Gilroy, Mrs Linda Marsden, Paul (Shrewsbury)
Marshall, Jim (Leicester S) Simpson, Alan (Nottingham S)
Marshall-Andrews, Robert Singh, Marsha
Maxton, John Skinner, Dennis
Meacher, Rt Hon Michael Smith, Rt Hon Andrew (Oxford E)
Merron, Gillian Smith, Angela (Basildon)
Michie, Bill (Shef'ld Heeley) Smith, Rt Hon Chris (Islington S)
Milburn, Rt Hon Alan Smith, Jacqui (Redditch)
Miller, Andrew Smith, Llew (Blaenau Gwent)
Moffatt, Laura Snape, Peter
Moonie, Dr Lewis Soley, Clive
Moran, Ms Margaret Southworth, Ms Helen
Morley, Elliot Spellar, John
Morris, Rt Hon Sir John (Aberavon) Squire, Ms Rachel
Steinberg, Gerry
Mowlam, Rt Hon Marjorie Stevenson, George
Mullin, Chris Stewart, David (Inverness E)
Murphy, Rt Hon Paul (Torfaen) Stinchcombe, Paul
Naysmith, Dr Doug Stoate, Dr Howard
O'Brien, Bill (Normanton) Strang, Rt Hon Dr Gavin
O'Brien, Mike (N Warks) Straw, Rt Hon Jack
O'Hara, Eddie Stringer, Graham
Olner, Bill Stuart, Ms Gisela
Palmer, Dr Nick Sutcliffe, Gerry
Pearson, Ian Taylor, Rt Hon Mrs Ann (Dewsbury)
Pendry, Tom
Perham, Ms Linda Taylor, David (NW Leics)
Pickthall, Colin Thomas, Gareth R (Harrow W)
Pike, Peter L Timms, Stephen
Plaskitt, James Tipping, Paddy
Pond, Chris Todd, Mark
Pope, Greg Tounig, Don
Pound, Stephen Trickett, Jon
Prentice, Ms Bridget (Lewisham E) Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Purchase, Ken Turner, Neil (Wigan)
Quin, Rt Hon Ms Joyce Twigg, Stephen (Enfield)
Radice, Rt Hon Giles Tynan, Bill
Rammell, Bill Vis, Dr Rudi
Rapson, Syd Walley, Ms Joan
Raynsford, Nick Ward, Ms Claire
Reed, Andrew (Loughborough) Watts, David
Robinson, Geoffrey (Cov'try NW) Whitehead, Dr Alan
Roche, Mrs Barbara Williams, Rt Hon Alan (Swansea W)
Rogers, Allan
Rooker, Rt Hon Jeff Williams, Alan W (E Carmarthen)
Rooney, Terry Winterton, Ms Rosie (Doncaster C)
Rowlands, Ted Wood, Mike
Ruddock, Joan Woodward, Shaun
Ryan, Ms Joan Woolas, Phil
Salter, Martin Worthington, Tony
Sawford, Phil Wright, Dr Tony (Cannock)
Sedgemore, Brian Wyatt, Derek
Shaw, Jonathan
Sheerman, Barry Tellers for the Noes:
Shipley, Ms Debra Mr. Kevin Hughes and
Short, Rt Hon Clare Mr. Jim Dowd.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the actions of the Government that support the car industry, including delivering stable inflation and low interest rates, boosting support for supply chain activities and acting on the Foresight Vehicle Programme; welcomes the Government support for the Longbridge plant given through the offer of Regional Selective Assistance; understands that the major losses that BMW have suffered on Rover have put great pressure on BMW with respect to Rover; and congratulates the Government for playing its role in working closely with the company and the workforce to try to ensure there is a future for Rover.