HL Deb 31 July 1975 vol 363 cc1195-205

4.11 p.m.

Lord SHEPHERD

My Lords, with permission, I will now repeat a Statement that has just been made by my right honourable friend the Secretary of State for Industry about the motor-cycle industry:

"In July 1973 the previous Administration was instrumental in the creation of Norton Villiers Triumph, which absorbed the motor-cycle activities of the earlier BSA company.

"£4.87 million assistance was provided under Section 8 of the Industry Act 1972.

"Subsequently NVT decided to close their Meriden factory.

"My predecessor announced in July 1974 that the Government would be prepared to make available £4.95 million towards the formation of a co-operative at Meriden subject to certain conditions, including the necessary agreements being negotiated with NVT for the purchase of assets and marketing.

"Last March the House of Commons approved export credit guarantees on a long-term basis for NVT under Section 8 of the Industry Act for £8 million, to which an additional facility would be available of £4 million from ECGD under their normal commercial arrangements.

"In addition a special guarantee facility of £6 million was authorised for the Meriden output.

"However, NVT's sales abroad have fallen dramatically.

"The export guarantee provided against their long-term needs has in the course of the past three months almost been used up.

"Substantial stocks of unsold motorcycles have accumulated.

"In these circumstances, the Export Credit Guarantee Department concluded that it would not be justified in guaranteeing further finance to increase stocks which are unlikely to be sold for some time.

"This situation has nothing whatsoever to do with the setting up of the Meriden Co-operative, which has not yet entered the North American export market.

"Even after this guarantee had been withdrawn nearly £24 million of public money has been spent or committed to the motor-cycle industry in the past two years.

"To enable the Government to form a view of the long-term prospects for the industry, my predecessor commissioned a study by the Boston Consulting Group.

"I have now received their report and have considered its conclusions, together with representatives of management and workforce in the industry.

"I have decided that, apart from commercially confidential material, the full report should be published"—

copies are now available in our Printed Paper Office.

"The Consultants were not asked to make a specific recommendation but to evaluate possible development strategies.

"The Consultants characterised the history of the industry during the 1960s as one of a progressive loss of market share, a failure to introduce competitive new models and a concentration on the largest motor-cycles through a managerial pre-occupation with short-term profits.

"In the event this policy turned out to be mistaken and contributed to the financial difficulties of BSA.

"The main market for our motorcycles is now in North America.

"Total sales there increased at a rate of 15 per cent. a year from 1968 to 1974, but our share fell dramatically during that period.

"After full consideration of possible future courses, the Consultants identified three which appeared to hold the best prospect.

"One was for a much smaller industry.

"The second was for an industry employing about the same workforce as at present.

"The third was an intermediate strategy.

"Additional Government funds required range from a minimum of £15 million for the first strategy to £50 million and more if the workforce directly employed on motor-cycles were maintained at its present size of about 3,000—without provision for contingencies.

"All three courses called for the rapid development of new models, the installation of new equipment, and concentration of production in at most two factories.

"All would involve high risks, and at best employment on making motorcycles would be no higher than at present—if everything worked out right.

"Even if everything did go right and all the risks could be surmounted, the Consultants' report indicates that the industry would have cash flow deficits which would not be recovered at the very best until the late 1980s.

"In addition to the options identified by the Consultants, the Government has weighed very carefully other proposals and possibilities for a further investment in the industry, enabling it to recapture markets from which it has successively withdrawn.

"In view of the importance of the subject, I have consulted the Industrial Development Advisory Board as recently enlarged.

"In their opinion, none of the strategies identified by the Consultants offered an adequate prospect of viability.

"The Board looked for an alternative option but were unable to recommend one.

"One of the factors that the Government had to take into account when considering the large scale of support that would be required under the options identified by the Consultants was the many other calls on Government money in other spheres of economic and social policy, and the need to ensure that our limited resources are used to the best advantage."

My Lords, that concludes the Statement.

Lord ABERDARE

Does it, my Lords? I have another two pages.

Lord SHEPHERD

My Lords, I am in difficulties. This is all I have. If the noble Lord will give me a copy—this is what is known as co-operation. I do apologise. The Statement continues:

"I want to make clear that we have given full weight to the skill and enthusiasm of the workforce and the employment situation in the Midlands.

"My right honourable friend the Secretary of State for Employment will be asking the Manpower Services Commission to do everything they can to help those workers affected to find new jobs.

"We have not taken our decision lightly, and if we had felt that any more favourable decision was a practical proposition we would of course have chosen it.

"The management of NVT have pressed me for an urgent decision about the provision of further funds.

"In the light of our most thorough consideration of all possibilities the Government have concluded that this request for funds must be refused."

My Lords, I hope that that is the end of the Statement.

4.20 p.m.

Lord ABERDARE

My Lords, we are grateful to the noble Lord who, with our assistance, has been able to repeat that Statement, although I am afraid he got the last two pages the wrong way round. We will overlook that. However, it is a lamentable Statement. Much of it depends on the report of the Boston Consulting Group and the various alternatives that were put forward by that Group, and naturally we shall have to study that report. On the face of it, in the present circumstances reluctantly I do not quarrel with the final decision to refuse further funds to Norton Villiers Triumph. I say that in view of the need to curb Government expenditure and the evidently high risks involved in the three alternatives put forward by the Boston Consulting Group. However, it is quite clear that the affair has been very badly mishandled by the Government. On this occasion, happily, they have accepted the advice of the Industrial Development Advisory Board—and all praise to the Secretary of State for having done so.

If only his predecessor had accepted the advice of the Industrial Development Advisory Board on the subject of the closure of the Meriden factory, a great deal of public money would have been saved. The Statement reveals the folly of the Government in backing the Meriden Co-operative against the advice both of Norton Villiers Triumph itself and of their own Industrial Development Advisory Board. Surely the money that has been wasted at Meriden could well have enabled Norton Villiers Triumph to reorganise itself on a two-factory basis, to have saved the company as a whole and to have made progress in the future as part of a much smaller industry—one of the three proposals put forward by the Boston Consulting Group. It is a tragic example of the folly of Governments in general attempting to interfere with economic facts for political purposes, and I hope that this Government have now learned their lesson.

4.23 p.m.

Lord ROCHESTER

My Lords, we on these Benches would also like to thank the noble Lord the Leader of the House for having repeated this Statement. I am glad that the Statement to which I am responding seems to be more or less the Statement which the noble Lord read. Certainly we, like the noble Lord, Lord Aberdare, and his colleagues do not think much, to put it mildly, of the way in which this matter was handled in the past. However, we think that the decision which Her Majesty's Government have now reached is the right one. On the face of it at least, it seems to us that further investment in Norton Villiers Triumph would be unprofitable and further employment unproductive. We realise that the effect of this decision will be that even more people in the country as a whole will be out of work. However, we are glad to note from the Statement that consideration is being given to other employment which those who will be thrown out of work may undertake, for which they could receive training. We accept that any such retraining would involve additional Government expenditure at a time when we as a nation can ill afford it. Perhaps I could put in interrogative form what we on these Benches feel about that. In doing so I am not trying to make a Party point. Is the noble Lord aware that in advocating additional expenditure of the kind to which I have referred, we consider also that the Government should think very seriously about how they can effect economies in other directions, particularly by forgoing further nationalisation schemes such as those concerning the aircraft and shipbuilding and ship repairing industries?

4.25 p.m.

Lord SHEPHERD

My Lords, I agree in one respect with the noble Lord, Lord Aberdare. It is a sad Statement. It is indeed sad that this country, which was once the leading manufacturer of motorcycles in the world, should have seen its market eroded not only in this country but throughout the world, and that it should have been progressively eroded over the past 10 to 20 years. The market reached such a sorry state that the predecessor of this Government went to the rescue of this company. Before the noble Lord talks about Government mismanagement, I suggest to him that he should read the report; then he will sec where the mismanagement lies. It is indeed regrettable that as a consequence of this decision Britain—once the leader of the market—will not have an industry. However, the responsibility for that does not lie on this Government but on those who were responsible for that industry.

In regard to Meriden, the noble Lord will see from the report that since it became a co-operative its workforce has been reduced to half and that it is now producing more motor-cycles than it did under the previous ownership. This is a consequence of a co-operative effort for which the men who work there should take great credit. All I hope is that that co-operative will be able to survive.

I listened to the remarks of the noble Lord, Lord Rochester. Certainly economies have got to be made, and because of our limited resources we must be careful about granting assistance to those industries which need it, and in what way. Without criticising the Secretary of State or the officials who work under him, I share the view that decisions of this nature are often better taken by men from industry with deep knowledge of all the circumstances that surround a decision. For that reason I, and I believe many noble Lords on the other side of the House, deeply regret that the previous Administration abolished the Industrial Reorganisation Corporation. That is one of the reasons why I have begged the Opposition, whatever their feelings may be about the Industry Bill, to get the Bill through the House before the Summer Recess and to forgo a few more days of the Recess so that the National Enterprise Board can be created. This will be made up of men of experience of industry who, during the short period that is available, will be there to make these decisions and to advise the Government. However my pleas to the noble Lords opposite have been rejected. Let the burden of that responsibility fall upon them.

It is a sad Statement. I shall be happy to debate this matter with the noble Lord, Lord Aberdare, once be has fully read the report. I suspect that when he has done so his statement will be different from that which he has just made.

Lord LEATHERLAND

My Lords, can my noble friend tell us what will happen to the three factories—that is to say, to the two Norton Villiers Triumph factories at Birmingham and Wolverhampton and the co-operative at Meriden? Will the decision rest with Norton Villiers Triumph and have the board yet come to a decision?

Lord SHEPHERD

My Lords, the board have not yet come to a decision so far as the two Norton Villiers Triumph factories are concerned. It will be for the board of the co-operative at Meriden to decide their own future.

Lord BYERS

My Lords, may I ask the noble Lord whether the Government are satisfied that the same or similar costly decisions are not now being made in the field of energy?

Lord SHEPHERD

My Lords, I am prepared to debate that question another day. Let us deal with one problem at a time.

Lord HAILSHAM of SAINT MARYLEBONE

My Lords, that is all very well. The noble Lord has asked us to read the report, and that is a very fair request. I was just getting through the Court Line Report which was rejected in its principal finding today. There have been not only Meriden and Court Line but Beagles and Upper Clyde Shipbuilders. When are the Government, if they are not going to be absolutely Bourbon-like in their inability to learn or in their inability to forget, going to hoist in the fact that we cannot afford Mr. Benn?

Lord SHEPHERD

My Lords, may I suggest to the noble and learned Lord, Lord Hailsham of Saint Marylebone, that we could not afford that Rolls-Royce should go to bankruptcy, as it was allowed to do. If there is any failing on the part of this Government, it is that they are seeking to keep good industries and companies in being which may not have had such a good prospect during these difficult times. If we err at all, we err on the right side.

Lord HAILSHAM of SAINT MARYLEBONE

My Lords, is it not a fact that Rolls-Royce was totally different, as was the Mersey Harbour Board? We dealt with it on commercial lines. Unfortunately, it was the shareholders who suffered, but the workers have retained their jobs. What has happened in all the cases that I mentioned is that either members of the public as in the Court Line case, or the workers as in Meriden, or the workers as in Upper Clyde Shipbuilders, all of which are Mr. Benn's way of dealing with the problem. have been led up the garden path and have lost their jobs as a result of being given over-optimistic statements, and great sums of money were wasted by Mr. Benn?

Lord SHEPHERD

My Lords, the noble and learned Lord excels himself, if that is the right phrase. There is no degree of truth in what he has said. This is a matter which I am very happy to debate with the noble and learned Lord because, when he reads this Statement, he will see what is at the heart of much of our industrial difficulty in this country.

Lord ALPORT

My Lords, may I ask the noble Lord the Leader of the House whether he realises that for some of us this is not an occasion for mutual Party political recrimination. We know the background very well, not only of this incident but of a number of others which have taken place, or will take place later on. What is now important in the interests of our country is to find some sort of unity, both in and out of Parliament, to enable us to put the whole of our resources of intellect, courage and material resource towards the rescuing of this country from what, if this goes on, will be a very undesirable future, whatever Party we belong to.

Lord SHEPHERD

My Lords, I heartily agree. It was not I who started the asperity in this debate, or that of yesterday.

Lord POPPLEWELL

My Lords, is my noble friend aware that the whole House will share his view of the motorcycle industry having to go out of existence? Is he further aware that it is not the fault of the Government that this has developed? The seeds of this trouble were sown by the failure of management in private enterprise days. The motorcycle market in this country is being swamped by Japanese and other foreign motorcycles. Although in the past we were the leading nation in the manufacture of motorcycles, under private enterprise we failed miserably to carry out market research, and so we lost the market. The Government are to be complimented in their effort to save something from the wreck that took place under private enterprise. It is very sad indeed that our efforts have not been more successful in this direction. Would my noble friend press the Secretary of State to continue efforts to try to secure once again for this country the motorcycle market which is now being saturated in the way I have indicated?

Lord SHEPHERD

My Lords, with regard to the latter suggestion of my noble friend Lord Popplewell, clearly this is a matter which the Government must look at, because it is not only a moment of sadness for the men who work in the industry, it must have a profound effect upon our balance of trade. Motorcycles are very much a coming means of transport. It is indeed a very great tragedy that over this period we should see the increase particularly of Japanese motorcycles which, over weeks and months, year after year, has pushed us so far back that we cannot even retain our own home market. It is a tragedy, but it is the direct consequence of the failure to invest, failure to design, failure to fight in markets where there is clearly a market for British knowledge and expertise, if we would only exercise it.

Lord BRUCE of DONINGTON

My Lords, since the noble and learned Lord, Lord Hailsham of Saint Marylebone, in the course of his exchanges with my noble friend the Leader of the House, referred to an alleged rejection of the Court Line inquiry findings, will my noble friend take steps through the usual channels to ensure that the House has facilities to discuss these reports so that the noble and learned Lord, Lord Hailsham, may expand on the allegations he has made?

Lord SHEPHERD

My Lords, certainly until the next Session there is not time to debate even matters of importance such as this. But this is something we ought to take into account when we have the Queen's Speech, because we will be debating economic measures and also, no doubt, on the Employment Bill we will be discussing ways and means by which workers can have a greater degree of consultation and information. I wonder whether there might not have been a different story at Norton Villiers Triumph if the amount of information had been available to the workforce. We might have had a different story then.

Lord BARNBY

My Lords, as a result of the generosity of the noble Lord the Leader of the House this matter seems to have developed into a wide debate on employment. The noble Lord emphasised the effect of imports on unemployment which will develop as a result of this decision. May I respectfully ask the noble Lord in that connection whether he will give consideration to appealing to the Government as a whole and to the Cabinet with regard to the textile industry, which had a report of its own just last week? A large number of workers are threatened if the inflow of foreign goods is permitted to continue.

Lord SHEPHERD

My Lords, one of the difficulties as Leader of the House is how and when one should seek to bring a discussion of this kind to an end. The noble Lord, Lord Barnby, in seeking to bring in the question of the textile industry, has given me a fairly good reason to suggest that we have gone rather far in our debate. There is other Business, and I think we should now move on to it.