British Leyland: Output and Investment (Hansard, 7 June 1984)

§ Lord Orr-Ewing
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
My Lords, for Austin Rover, which is the volume car division of BL, average output per man-year was 12.1 cars in 1983 compared with six in 1979. Over that period, capital expenditure by BL on tangible assets, mainly plant and machinery and special tools and jigs, amounted to £1,221 million, and additional equity subscribed by Government amounted to £1,430 million. Separate figures for Austin Rover are not available.

§ Lord Orr-Ewing
My Lords, will my noble friend not agree that these figures are very encouraging for all those concerned in the British Leyland enterprise? They show that the vast investment that the taxpayer and the Government have put in is paying off in increased productivity not least because there are now much better industrial relations and better co-operation on the production line. Will this continue so that British Leyland can regather some of the market both here and overseas? If my noble friend has figures for overseas sales, can he give these to the House?

§ Lord Cockfield
My Lords, I agree entirely with my noble friend. We must all take satisfaction in the progress that has been made by British Leyland which is a tribute to the workforce and to the management and which also reflects substantial capital investment. The company—British Leyland as a whole—last year exported £917 million worth of vehicles. Over 94,000 766 Austin Rover motor cars were sold in Europe. More than 15,000 Jaguar motor cars were sold in the United States; nearly 4,000 were sold in Western Germany. I am sure that we all wish the company well and hope that these figures will be improved upon in the coming year.

§ Lord Taylor of Gryfe
My Lords, in view of the fact that substantial progress has been made while the company is largely under public ownership, is there any good reason to disrupt that progress by changing ownership and going through a privatisation process?

§ Lord Cockfield
My Lords, the progress has been made in anticipation of privatisation and will, we hope, continue at an accelerated rate when that happens.

§ Lord Gisborough
My Lords, my noble friend has given the output figure of 12.1 cars per man-year. Can he give an example of how Japanese figures compare and say whether the BL figure is good on a world scale or whether there is still room for improvement?

§ Lord Cockfield
My Lords, I cannot quote figures offhand for productivity in Japan. The figure is substantially higher than that in the United Kingdom. It is important to bear in mind, however, that the Japanese motor car industry buys-in a much higher proportion of its total components than does the manufacturing industry in the United Kingdom.

§ Lord Stoddart of Swindon
My Lords, bearing in mind the enormous success story that has just been related to us by the noble Lord the Minister, and also bearing in mind that public enterprise and public capital rescued British Leyland and the British car industry from bankruptcy under private enterprise, is it not an absurdity and is it not cheating the taxpayers of this country to suggest that all this has been done merely to return to private enterprise?

§ Lord Cockfield
My Lords, the noble Lord will be the last to expect me to agree with the views that he has expressed. Although we must all take satisfacton in the progress that British Leyland is now making, it has been a story of very great difficulty over a large number of years. The British taxpayer has now invested over £2,000 million in this company in all, and it is only just now, for the first time, coming into profit.

§ Lord Harmar-Nicholls
My Lords, does my noble friend accept that it is a fair description of cheating the elector if the Government carry out what they put in their manifesto and for which they got their majority?

§ Lord Cockfield
My Lords, I agree entirely with my noble friend that the privatisation of important parts of British Leyland was included in our manifesto.

§ Lord Hatch of Lusby
My Lords, although this Question refers to cars it refers also to British Leyland. I wonder whether the noble Lord the Minister would care to repeat to the British Leyland workers in Bathgate and in Leeds what he has just said. Could he tell us—I will understand if he has not got the figures—what is now the waiting time for the Land 767 Rover, which is such an important export to countries of the third world?

§ Lord Cockfield
My Lords, the noble Lord will appreciate that the vehicles manufactured at Bathgate are lorries, whereas the Question relates to passenger cars. But so far as Bathgate is concerned, a Statement was made on 22nd May by by right honourable friend the Secretary of State for Trade and Industry. I repeated it in your Lordships' House, and at this stage I do not think there is anything I can usefully add to that Statement. In regard to the waiting period for the delivery of Land Rovers, particularly to the third world, I do not immediately have that information, which of course does not arise in any way out of the Question on the Order Paper. But the noble Lord will himself be well aware of the fact that great difficulties have arisen because of the problem of payment by many of these third world countries.

§ Lord Maude of Stratford-upon-Avon
My Lords, would my noble friend agree that the past troubles of British Leyland stem primarily from the folly of the Labour Government in creating a disparate and entirely uneconomic conglomerate out of various sections of the British motor industry?

§ Lord Cockfield
My Lords, I agree entirely with my noble friend's analysis. I was carefully refraining from going back over these historical matters, which reflect very badly upon the party opposite.

§ Lord Kaldor
My Lords, would the noble Lord agree that the reason why British Leyland came into public ownership in the first place was because it went "bust" under private ownership and the Government had to step in to bail it out?

§ Lord Cockfield
My Lords, circumstances do exist in which a Government have to bail out an industry in the way the noble Lord has mentioned. Nevertheless, this is not the right way of dealing with industrial problems of this sort. The experience of British Leyland ought to have taught everybody how totally unsatisfactory is that kind of procedure, and many years of great effort and thousands of millions of pounds have had to be invested to put the matter right.

§ Lord Nugent of Guildford
My Lords, is my noble friend aware that the figures he has given us this afternoon, showing that the long-suffering taxpayer has provided some £2,600 million of new capital expenditure in order to get British Leyland off the ground, so to speak, make it plain that it is going to be greatly in the interests of the taxpayer to sell this company to the public, if the public is willing to buy it, so that in the future it will be private capital which will be provided, and not the taxpayers' money?

§ Lord Cockfield
My Lords, I agree entirely with the point made by my noble friend. But the really important issue is that experience shows that companies of this sort can be managed much more effectively and profitably in the private sector than in the public sector.

§ Lord Cledwyn of Penrhos
My Lords, is it not the case that at the end of the day it was a Labour Government which saved the only wholly British motor car firm?

§ Lord Cockfield
My Lords, the point is that at the beginning of the day it was a Labour Government which created the difficulties which later had to be resolved.

§ Lord Mackie of Benshie
My Lords, for the record, would the Minister care to put right the statement of his noble friend and his corroboration thereof, in that in fact the unwieldy conglomerate was created under private enterprise? I well remember the statement made by the managing director of BMC when they took over Rover. He said the advantages of scale would overcome everyone else. Would the Minister not agree that that was a correct statement?

§ Lord Cockfield
My Lords, we can spend a great deal of time going back over the history of this. The person who provided the impetus for these great amalgamations, which ultimately led to the sort of troubles we are talking about, is somebody who is now a Member of your Lordships' House.

§ Lord Kaldor
My Lords, would the Minister agree—

Noble Lords
Order!

§ Lord Diamond
My Lords, the Minister has endorsed the point so wisely made by his noble friend—I am talking about the noble Lord, Lord Orr-Ewing, who asked the Question—drawing our attention to the connection between investment and increased productivity. I should like to ask him whether he regards this as a good example of Government investment, wisely directed, creating additional productivity and therefore additional employment.

§ Lord Cockfield
My Lords, it is always right and, indeed, necessary that investment should be directed wisely, and clearly that is true in the public sector as well as in the private sector.

§ Lord Mowbray and Stourton
My Lords, is my noble friend aware that many parts of British Leyland, such as Aveling Barford, welcome being hived off and sold to private enterprise?

§ Lord Cockfield
My Lords, it has been the announced policy of the board of British Leyland that the various parts of the organisation should be privatised when the opportunity arises, and experience shows that this is supported by the management of the units concerned.

§ Lord Molloy
My Lords, would the noble Lord not agree—

§ Lord Kaldor
My Lords—

Noble Lords
Lord Molloy!

§ Lord Molloy
My Lords, would your Lordships not agree that there was bound to come a time when I would win? Would the noble Lord not agree that, if the last answer that he gave had been included in the first answer that he gave to his noble friend, then all the acerbity that has arisen would not have arisen? The noble Lord has made no contribution whatever to either the management or the workforce of British Leyland by his inane and banal statement that the whole idea of this action was to get more money to provide an excuse not to resuscitate a great industry, but to pay off political friends. Is the noble Lord further aware that, when we hear talk of the long-suffering taxpayer being relieved, there has been no evidence yet over the past three years of the lower form of taxpayer having any relief? The relief has only been for the better off.

§ Lord Cockfield
My Lords, I do not think that any of the comments made on either side of the House deserve the kind of epithet that the noble Lord is endeavouring to apply to them. The noble Lord began by asking, "Would I not agree?" I should have thought that, after all these years, he at least would have realised that I never agree with anything that he says.

§ Lord Stoddart of Swindon
My Lords, the noble Lord criticised my noble friend for taking British Leyland into public ownership. But is he aware that in the House of Commons 150 of his honourable friends voted against taking British Leyland into public ownership, in which case it would have gone bust and we would have had no British car industry at all?

§ Lord Cockfield
My Lords, it does not necessarily follow that if an industry goes—as the noble Lord describes it—"bust", we are left with nothing, because a great deal then depends upon whether the industry can be restarted. British Leyland faced a situation of very, very great difficulty in 1979 and 1980. We took at that time very difficult decisions which experience has shown were in fact the right decisions. I hope that the noble Lord will pay tribute to the wisdom of the Government in following the policy that they have followed.