HL Deb 11 February 1981 vol 417 cc214-20

3.48 p.m.

The Minister of State, Scottish Office (The Earl of Mansfield)

My Lord, with the leave of the House, I shall repeat a Statement being made in another place to a Private Notice Question on the closure of the Talbot factory at Linwood. It reads as follows:

" I very much regret the loss of jobs to West Central Scotland which will follow the closure of Linwood announced by the Talbot Motor Company earlier today. My right honourable friends the Secretary of State for Scotland and the Secretary of State for Industry, and I have been in close touch with the top management of PSA/Citroen and Talbot about future manufacturing operations in the United Kingdom, particularly at Linwood, for some time. We have explained in detail the Government assistance available for new investment projects in Assisted Areas, both through Regional Development Grants and selective financial assistance under Section 7 of the Industry Act, and expressed the strong hope that PSA would maintain manufacturing in the United Kingdom to the full extent envisaged in the Declaration of Intent, to which the company subscribed in 1978. Despite a significant improvement in labour relations and productivity since PSA took over at Linwood, it was the company's decision, against the background of very severe market competition, serious financial losses in 1979 and 1980 and the high investment costs of introducing new models, that it could not maintain production at the plant.

" It emerges clearly from the Company's statement today that its productive capacity in the United Kingdom considerably exceeds its present and prospective market share and that concentration of its facilities, rather than expansion, was the only realistic course open to it.

" Apart from the 4,800 jobs which will be lost at Linwood itself, there will be consequences for suppliers. Linwood has however been operating at a low level of production for many months and the local sourcing of components is limited.

" I am considering urgently, in advance of the shut-down by the end of this year, what measures we can realistically take to generate new employment in the area. My right honourable friend and I shall for this purpose be seeking urgent discussions with the local authorities concerned, the SDA, the STUC and the CBI ".

My Lords, that concludes the Statement.

Lord Ross of Marnock

My Lords, I think we are grateful to the noble Earl for his making this Statement. He probably will agree with me that the gravity of the Statement for West-Central Scotland and the Glasgow-Paisley area in particular is no less heavy because it has been trailed over recent weeks. It means that, in an area where there is already 14 per cent. unemployment, the 4,800, plus probably another 1,200 in supply jobs, industry and services making it about 6,000 will drag this up probably to about 20 to 25 per cent. unemployment, and that is serious indeed, particularly in this area.

Is the Minister aware that it is disappointing to read the language of this Statement? "I have been in close touch". "We have explained". "We have expressed the strong hope". Will he not remember that this is not just an ordinary closure? That the Government were involved in very serious negotiations with Chrysler in 1975–76? That obligations were accepted by the company? That these obligations were carried on and further accepted by Peugeot in 1978-that is, two years ago? There is nothing in their statement, or in what the Government say they have done, that gives us any great confidence that we can rely on what they now say in relation to concentration and carrying on in Coventry and Stoke.

Can the noble Earl tell us what face-to-face negotiations there have been between the Government and Peugeot? Have there been any at all? Have Ministers been involved? I understand the difficulty of the Secretary of State being in Brussels when this kind of thing is going on, but it will not be good enough just to have these words given to the people of Scotland, that we "have been in close touch"; that "we have explained", and that "we expressed the strong hope". Pledges were given and they should be kept. Can the noble Earl tell us how they can justify using the reduction in the size of the UK market to pull out at the same time as the Japanese are coming in? It shows a confidence on the one side that is not shared by another company.

I am sure in view of what has been said that they will also go on to explain that there has been a big fall in exports caused by the high level of sterling. So this comes down to Government policy; and there is nothing in the Talbot statement, or in the Government Statement, that gives us any room for satisfaction. Can the noble Earl tell us just exactly what he hopes to do? He will remember that there is an enterprise zone just a few miles away on the other side of the Clyde at Clydebank, and in the last ten months or so I do not think there has been a single job provided there. So let us not deceive the House or the people of Scotland. We are not the kind of people who are easily softsoaped anyway.

Lord Mackie of Benshie

My Lords, I think that the Statement just repeated by the Minister is unbelievably apt to the debate that we are now having. I am glad to see that the company do not maintain that it is labour relations or productivity that has caused them to close down the plant. It is an important point and one that the Minister should stress, because a tremendous amount of work will now have to be done to replace this appalling loss of jobs, and, worse than the appalling loss of jobs, the loss of an industry which had been lost to Scotland for some years, and which at the time was greeted as bringing Scotland at least back into the automobile age. I hope that the Minister will be able to give us now some more specific news of what he is going to do.

I personally have always thought the SDA an excellent body. Is the noble Earl going to give it more support? How is he going to try to replace this, and to use the undoubted new spirit which is in Clydebank and in the workers of this factory and who are willing to produce, in order to replace and expand employment? It is not good enough to say that he is going to "consider urgently". He must have some thoughts, and in view of the serious position, I hope he will give them to the House.

3.55 p.m.

The Earl of Mansfield

My Lords, I must thank both noble Lords for receiving this Statement. Of course nobody would pretend other than that this news has the gravest implications for West-Central Scotland. I think that both noble Lords have said that this has been the one car-making assembly line which has existed in Scotland up till now.

The noble Lord, Lord Ross, asked who has been involved. My right honourable friend, who is in Brussels fighting on behalf of Scottish fishermen today, has been involved for some weeks; my honourable friend the Parliamentary Under-Secretary, Mr. Fletcher, who is specifically responsible for industry in Scotland, has had a great many talks with the firm, and other departments of Government have also been involved. They have met Monsieur Parayre, who heads PSA, on several occasions; most recently last Monday. There have been frequent contacts with PSA and with Talbot UK at the highest level, and I mean the highest level at both company and Government level.

It is of course extraordinary, if one looks at it in isolation, that PSA should be, as it were, retrenching, whereas apparently another foreign firm wish to come in to make motor cars. I think the fact of the matter is that PSA have been making enormous losses for a long time in relation to a model which was out of date, and they have been considering actively whether, with Government assistance—which, I may say, has been on offer if the right proposal had been put forward —they could in fact redesign their assembly line and produce a front-wheel drive model which could capture a more satisfactory market share in Britain than they have previously enjoyed. In spite of the fact that every inducement under the Industry Act, and so on, was held out to them if this could be done, the company have concluded that there is no way in which they can make their operation at Linwood viable, the Government having in the last few years given them over £60 million in respect of their losses, and reluctantly they have been forced to this decision which they have made.

All the various ways in which the state can help an assisted area such as this are open, and I do not think I can go any further in what I say; that is to say, my right honourable friend and my honourable friend are having discussions with the various bodies that I have already set out to see how, as quickly as possible, the deplorable rate of unemployment can be ameliorated.

Lord Campbell of Croy

My Lords, while it must be accepted that the motor car industry is passing through a very difficult time at present, can my noble friend clarify for the benefit of the House whether, as is widely reported in the press, the French company are under any obligation, or were under any obligation until today, to retain the operations at Linwood as part of the agreement upon the money which they have received?

Is my noble friend aware that this is a very depressing announcement, particularly as it was my noble friend Lord Muirshiel who was largely responsible for moving motor car manufacture and establishing it in Scotland in the early 'sixties at Linwood and Bathgate? Is my noble friend further aware that what some of us would like to know is whether this decision is now entirely a matter for the French company, or whether it is something under which they still have obligations?

The Earl of Mansfield

My Lords, I think it right that I should remind the House of the particular paragraph in the Declaration of Intent which was made in 1978 under which the company undertook to continue and strengthen Chrysler's programme of modernisation and facilities and investment in order … to ensure that Chrysler UK grows and prospers as part of the PSA group and thus specifically to provide, to the extent consistent with prevailing economic conditions "— and I stress those words— continued employment at all Chrysler's UK facilities, including the principal plants at Ryton, Stoke, Luton, Dunstable and Linwood ". In view of the way in which the company have comported themselves since 1978 and the very real efforts they have made to make this plant viable and productive—which, I would add, have been considerably aided by the attitude and indeed performance of the workforce, which is much appreciated—I do not believe the Government, or anybody else for that matter, could possibly say that the company are in breach of that particular part, or indeed of any part, of the undertakings which formed the Declaration of Intent in 1978.

Lord Pargiter

My Lords, would the Minister agree that this case highlights the grave dangers that exist all the time in permitting British companies to go out of business or to be taken over by foreign companies who regard their operations here as only peripheral and who, whenever they run into trouble, close those places which are on the periphery?

The Earl of Mansfield

My Lords, I do not agree with the noble Lord. There are many cases where foreign firms have come in with new ideas and capital and have provided new and very much needed employment in Scotland. This is something where we could join in with, for instance, the citizens of Ireland who have done extremely well out of foreign investment in their country.

4.5 p.m.

Lord Glenkinglas

My Lords, at the risk of being the third ex-Secretary of State to say something about a firm with which we were all very deeply involved, may I ask whether my noble friend would consider—I do not expect an answer to this today—that while the Government are providing many hundreds, if not thousands, of millions of pounds for British Leyland, we should not consider some part of that money perhaps coming to Scotland where, with bad luck perhaps, Billy Rootes started the original factory and, with a little bit less than good luck, Citroen and Peugeot took it on? The workforce has done particularly well there and there is a very much better degree of co-operation between management and workforce than I think is true of any factory in the Birmingham-Coventry area. Will my noble friend bear that in mind in seeking to put more money behind the motor manufacturing industry in Britain?

The Earl of Mansfield

My Lords, I think we should keep apart the taxpayers' money which is being devoted to British Leyland and any rescue operation which might have been contemplated and implemented at Linwood. What I can tell my noble friend is that if a scheme had been and could have been produced, the Government were ready and willing to play their part with the taxpayers' money to help it on. That goes for any future scheme or ideas which may be put forward for assistance under the Industry Act; the money, as it were, can be made available if a scheme is produced and is viable.

Lord Shinwell

My Lords, did the Government expect this to happen? Had they no indication, no impression of any sort, that this was likely to happen? If they did, did they take any steps at all? May I ask the noble Earl a question which is worrying not only noble Lords on this side but, I am sure, noble Lords opposite: When is this going to stop? It is all very well the Government talking about having the matter in hand and considering this and that—and we would not question their sincerity—but is the Minister aware that that is not enough? We want to know for how long it is to go on. Are the Government anticipating an unemployment situation of, say, 5 million, or do they consider that at some stage it is likely to stop, that we can turn and begin to recover? Do they have any ideas at all about it and, if so, will they tell us about them?

The Earl of Mansfield

My Lords, the factory at Linwood, as I understand it, has never been profitable and therefore no doubt this has been in the minds of many people for about 17 years. It certainly occupied the last Government and it has occupied this Government in turn. There has been the payment of losses, as I said, amounting to £60 million incurred in the United Kingdom business of Chrysler, and there is an outstanding debt in relation to that of £28 million payable to the Government. Perhaps I can best answer the noble Lord in this way: Yes, there will continue to be closures unless and until British factories can produce the right goods at the right time at the right price for customers who are prepared to pay for them. There is, luckily, in Scotland, particularly in the new electronic industry, a growing realisation that that must happen if we are to remain a trading nation and be competitive, and I am glad to say that there are more and more factories in Scotland now producing goods which are exciting the attention of worldwide customers and I have no doubt they will succeed.

Lord Galpern

My Lords, may I ask the noble Earl whether, in view of the catastrophic situation which is about to occur on Clydeside, the Scottish Ministers are prepared to take any steps to try to influence by some economic advantages the Datsun company to consider establishing their company in the Linwood area?

The Earl of Mansfield

My Lords, the trouble is that Nissan have said they want 800 acres in a greenfield site. I do not know the acreage of Linwood, but I think it is about one-tenth, and it is certainly not green-field; but we shall certainly bear these points in mind.

Lord Ross of Marnock

My Lords, I wonder whether the noble Earl saw an article in the Economist this week in which they suggest many further developments along the lines of centralisation, and that is centralisation of production back to France? That must be causing very considerable concern elsewhere than at Linwood. Were the Government actually involved in the examination of all the options that Peugeot say were considered and then discarded for the present suggestion that they get rid of Linwood and concentrate, on a slimline probably, at Coventry and Ryton?

The Earl of Mansfield

My Lords, the Government have been privy to the thoughts and difficulties of PSA for some time. Various schemes were put up or various ideas were rehearsed to try to prevent closures at all. Unfortunately, in the particular circumstances which obtain at Linwood, it has not been possible to devise a scheme which would restore profitability or even viability to the operation at Linwood.

Lord Hankey

My Lords, to what degree is the closure of Linwood a function of the general recession? Is it, for instance, on all fours with the closure of BL production in Belgium and Spain?

The Earl of Mansfield

My Lords, I cannot answer that directly because I am not conversant with what has happened in those countries. The prime reasons for the difficulties at Linwood were out-of-date models, out-of-date machinery, a world recession with a reducing demand and a heavy pound.