HL Deb 22 May 1984 vol 452 cc153-60

3.43 p.m.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, with permission, I will repeat a Statement on the British Leyland 1984 corporate plan made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:

"I am making available in the Library of the House and in the Vote Office a report by BL on its recent performance and details of the 1984 corporate plan. The published results of BL show that, in 1983, the company achieved its objective of breaking even at the trading level for the first time since 1978. Productivity and quality standards within the company have continued to improve markedly. The House will, I am sure, wish to congratulate the company on these achievements, and on the range of new models successfully launched over the past year, including the larger Sherpa vans, the Land Rover One-Ten, the Maestro, and—most recently—the Montego. The corporate plan, which the Government have now approved, sets out the basis on which the company's solid progress towards viability and its return to the private sector will be maintained.

"A particular problem for BL in this year's plan has been Leyland Trucks, which faces an exceptionally depressed market at home and, particularly, overseas, showing little signs of major improvement in the medium term, and severe overcapacity throughout Europe. The Government have endorsed the board's plan to continue the Leyland Trucks business, but accept the need for radical action to reduce costs and adjust to the medium-term prospects for the market. The company has informed its workforce at its Bathgate plant today of the phased closure of that plant over the next two years. Leyland Bus, too, has suffered from a depressed market at home and will also have to reduce its capacity to a level more consistent with market prospects. The company has today informed its workforce at the Charles H. Roe plant in Leeds of the closure of that plant later this year.

"The Government, like the company, greatly regret these measures, which are however necessary to establish a viable prospect for the remainder of the commercial vehicles business and the employment in it.

"It has been the long established objective of the BL Board to return its businesses to the private sector. The House will be aware of the sustained improvement in recent years in the performance of Jaguar Cars. As a result of this improvement, the BL Board is now able to propose as a first step, subject to the approval of the shareholders of BL plc, that Jaguar Cars should be returned to the private sector later this year. It is the board's intention to proceed by means of a public offer for sale of Jaguar. The Government warmly welcome these plans and I look forward to keeping the House informed of progress in the coming weeks."

That completes the Statement.

3.47 p.m.

Lord Stoddart of Swindon

My Lords, I should like to thank the Minister for repeating the Statement made in another place by his right honourable friend, and I should like also to convey the congratulations of the Opposition to British Leyland on the success it has made in rebuilding a British car industry since it was nationalised by a Labour Government. I think in 1976. Had it not been for that act of a Labour Government it is doubtful whether the Minister would have been repeating the Statement in the House this afternoon, because there would have been no BL of which to speak.

Is the noble Lord aware that in our opinion it is quite reprehensible that the Statement on the corporate plan and the success of 1983 should be lumped together with the announcement of the closure of the Bathgate plant and the Charles H. Roe plant at Leeds? That this should be done just before a parliamentary recess is indicative of the Government's attempt to duck the justified criticism of these disastrous closures. Does he not realise that the closure of Bathgate in particular means the elimination of the motor industry in Scotland and will prove to be a disaster for Scotland, which already is devastated by mass unemployment under this Government?

What is more, is he aware that as far as Bathgate and truck exports and imports are concerned, between 1978 and 1983 exports fell by 33 per cent. while imports rose by 109 per cent? It is this unchecked disaster—unchecked by the Government, that is—that has caused the closure at Bathgate. Further, does the noble Lord not agree that the falling sales which have now led to these closures are a direct result and consequence of the Government's own policy of high interest rates and over-valued exchange rates? In relation to buses, does he not realise that the Government's cuts in expenditure in local government, especially the transport supplementary grant, have had a most detrimental effect on this particular industry?

I want also to remind the noble Lord that in February the Government announced the Nissan development. Is the noble Lord aware that the announcement today of the closures at Bathgate and Leeds mean that there will be five times as many jobs lost in the motor industry in the United Kingdom than will be created by the first phase of the Nissan development? The Government are shelling out £100 million to this Japanese company at the same time as they refuse to give support to keep these long-established industries in Bathgate and Leeds going in the interests of the British motor industry, and indeed in the interests of the economy itself?

While it is pleasing that British Leyland as a whole showed a profit for 1983, can the noble Lord the Minister say how much of that profit came from Jaguar itself? Furthermore, can he say, when Jaguar is privatised, whether it will be able to stand on its own against such giants as BMW and Mercedes? Or will Jaguar collapse and again have to be rescued by the taxpayer?

Is the noble Lord aware—I am sure that he must be—that Jaguar sells largely to a single market—the United States? Indeed, in 1983 of a total production of 29,200 cars, 15,815 were sold to the United States. Will the noble Lord accept that a collapse of the United States car market for this particular type of car would also mean the collapse of Jaguar? I would be most obliged if the noble Lord could answer some of those questions.

Lord Diamond

My Lords, I too, should like to offer my thanks to the noble Lord the Chancellor of the Duchy for being good enough to repeat the Statement which was made in another place and which, surprisingly enough, was capable of being repeated here after a very short time, which gives one the impression that far fewer questions were asked in the other place than I propose to ask in this House.

The Statement covers a variety of pieces of information all of which are very relevant to the consideration that your Lordships' House normally gives to these matters? First. I should like to share in the congratualtions offered to the company on the success that they have achieved in a variety of fields which, to me, only shows that companies—whether they are in the public sector or in the private sector—are amenable to good management. There is no point in carrying on the argument about the principle of transferring companies from the public sector to the private sector and the reverse.

But does not the Minister think that the Government have a special responsibility here of demonstrating that it is not damaging to the body corporate to have one of its most useful limbs removed and expect the rest of the body to function just as well as it did before? Is it right therefore to remove Jaguar—which has apparently producd by far the greatest part of the profit which has been earned by the company—at a stage when the company is obviously in the great difficulties to which this Statement refers? If the transfer of Jaguar to the private sector is to go ahead, is the noble Lord able to assure us that the arrangements which already exist for consultation between managed and managers within that plant. Will be continued or improved—but at least continued—in the private sector?

So far as Leyland Trucks are concerned, the Statement makes clear that the fall in world trade of trucks may well necessitate some cutting back. What I therefore have to ask the Government is whether on this occasion they will be good enough to give special consideration to the re-employment or, if necessary, the re-training of those who will become unemployed at the Bathgate plant? The last time I asked this question was in relation to British Aerospace and they obviously had given the matter no consideration. Having dealt with trucks, I now turn to buses, which are a very different matter. I note with care that there is no reference in the Statement to the depressed market abroad. as was the case with trucks. As regards buses, the Statement refers to the depressed market at home. The origin of the depression in the market at home has already' been made clear. But so far as one knows this is not paralleled by a depression in world trade in buses. Indeed, it must be within the experience of every one of your Lordships when going abroad to be surprised by the increasing number of buses which serve travellers of all kinds all over the Continent of Europe and elsewhere.

It is inconceivable therefore to me—but I would be grateful for the figures if the noble Lord has them—that there is a marked depression in the world trade of buses. I should have thought that the response that the Government ought to give with regard to that factory—and I am referring to the Leeds factory which manufactures buses—is to have another go. to be enterprising and to apply the same good management as that which has achieved good results in other parts of British Lev land. IF closure has to go ahead at the Leeds plant. then I hope again that the same point about alternative employment for those who may become redundant has already received or will receive the special consideration of the Government.

3.58 p.m.

Lord Cockfield

My Lords. I am grateful both to the noble Lord. Lord Stoddart of Swindon, and to the noble Lord, Lord Diamond, for the congratulations that they offer to British Leyland. The progress that has been made in the past few years is a matter of great satisfaction to all of us, to the management and to the workforce. It is something in which we all ought to take a measure of satisfaction.

I cannot accept of course the criticism of the noble Lord. Lord Stoddart, about the Statement itself. Incidentally. the documents to which my right honourable friend referred—the documents which were being placed in the Library of the House of another place—will also be available in the Printed Paper Office. and they will contain a great deal of additional background information.

The corporate plan covers a very wide canvas indeed and it entailed the Government taking a large number of related decisions on important matters. We felt that the right course. when that consideration was completed, was for my right honourable friend to make a Statement which covered the whole of the field. This is the earliest date at which that Statement could have been made, and it is—with respect to the noble Lord—quite a long time between now and the Summer Recess. We shall be away at Whitsun for a relatively short period of time. I shall remain in my office throughout most of that period and I am sure that the noble Lord, Lord Stoddart, will also be devoting himself to his parliamentary duties during that period.

None of us of course in any way underestimates the tragedy which always occurs when a plant of this kind closes down. when a venture of which high hopes have been held comes to an end, and when unemployment is created. There is nothing between any of us on that particular point.

However, the economic pressures have been such that there is no alternative. There has been a very big fall in the world market for trucks. The market in the United Kingdom has also fallen substantially. In 1979 the United Kingdom market was 80,000 trucks; in 1983 that United Kingdom market fell to 50,000 trucks. There has been a fall in Leyland Trucks' share of that market. It has fallen from 17.3 per cent. to 15 per cent. But the biggest element in the fall has not been import penetration at all; it has been the fall in the total market, for which I have given figures.

Coupled with this, Leyland Trucks were always export-orientated and the tragedy is that the particular markets to which their efforts were mainly directed are markets which themselves have been devastated by various factors. Their two biggest markets were Nigeria, where exports have fallen from a figure of 2,600 to 300 trucks in 1983, and the Middle East, where there had been sales, again, of 2,600, which have now fallen to 400. These are factors which are totally outside the control of Leyland Trucks.

As a result, last year for example Leyland Trucks' exports amounted to 3,000 vehicles as against exports of' 9,100 in 1979. As a result, the company has gross over-capacity. Perhaps I may illustrate that by one example. The capacity at the Leyland works in Lancashire alone amounts to some 24,000 vehicles, while the total output of Leyland Trucks last year amounted to only 10,900 vehicles. The measure of concentration of production which is now being undertaken is the necessary price for the survival of Leyland Trucks—it must be able to survive on a viable and economic basis.

I now turn to Jaguar. It is true—and indeed a matter of some congratulation—that in the past few years Jaguar has proved to be a very profitable company. Figures for its profitability given in paragraph 8 on page 3 of the document which will be available in the Printed Paper Office, show that in 1983 the operating profits of Jaguar amounted to £55 million compared with £15 million in 1982. These figures are in documents.

Having two quite different kinds of operation carried out in the same company—namely, a volume car business and a very specialised car business, such as Jaguar—has not been an entirely happy arrangement, and both the Board of BL as well as the Government believe that Jaguar's future success lies in it being an independent company. Mr. Ray Horrocks, who is the chief executive of the car division of British Ley land, will be a non-executive director of Jaguar, so that link will be maintained. It will be open to Jaguar and British Leyland to make whatever commercially correct arrangements they consider appropriate for any research and development which could be carried out between the two companies. Therefore there will be a link there.

The noble Lord, Lord Diamond, raised a specific point about consultations between managers and the workforce. One of the most important points about Jaguar has been the very close identification between the workforce and the management. Indeed, this has been one of the factors which has led to its great success. We are confident that that will continue to be the case and it is the intention of the Board of British Leyland that there should be special facilities for the workforce to acquire shares in the publicly-quoted company.

Finally, there is the question of the closure at Charles H. Roe in Leeds. The position is that the United Kingdom bus market has declined very substantially. This is because of the spread of private car ownership, and Leyland Bus is left in the position where it has excess capacity. It has other works at Workington and at Lowestoft. and the manufacture currently being carried on in Leeds will he transferred to those two plants.

Lord Boyd-Carpenter

My Lords, is my noble friend aware of the fact that to many of us the basis of this Statement is enormously encouraging, particularly for the realism which it shows on the part of both the management of British Leyland and of Her Majesty's Government? Is my noble friend aware that many people will support the commercial approach shown by this Statement of concentrating effort and production where there is a market and cutting back where there is not, and so acting as any privately-owned company would have to act in a similar situation? Is he also aware that in these developments—particularly the well-earned success of that magnificent car the new Jaguar—many of us see a real chance that we may get hack to the position of some 20 years ago when the motor industry was one of our major and most successful exporting activities?

Lord Cockfield

My Lords, I am most grateful to my noble friend for what he has said. The price of survival is the capacity to adjust to change, and this is what is being done here. But as my noble friend also touched on this aspect, may I reply to two further points. First, Jaguar will be in competition with BMW and Mercedes over part of the range, and they show a great capacity to meet that competition. The performance of Jaguar in markets like the United States and Western Germany gives one every confidence for the future because they have put up an extremely good performance in both of those markets.

Additionally, the full services of the Manpower Services Commission will be available to help the people who become redundant in the two plants. At Bathgate in particular the management of Leyland Trucks is taking special measures in the enterprise field, where there is a body called BASE—the Bathgate Area Support for Enterprise group—which the Leyland management supports, and it will be strengthening its support. It will also be bringing in a firm of consultants to see what opportunities there are for setting up additional industries or activities in the areas

Lord Lloyd of Kilgerran

My Lords, can the noble Lord the Minister, either now or later, give any figures or indication as to the effect of these rearrangements which he has adumbrated on the research and development activities of British Leyland?

Lord Cockfield

My Lords, I see no reason why these arrangements should in any way damage the research and development activities of British Leyland. What is being done is being done not only with the support but on the advice of British Leyland, and what is happening here is that the Government are accepting the views that British Leyland have put forward.

Lord Ross of Marnock

My Lords, it is ironic, is it not, that it falls to the present Minister to receive congratulations from a former Minister, that former Minister being a member of the Government which established Bathgate as a truck plant over 20 years ago? From Scotland's point of view it is just another addition to the dismal catalogue of disasters that we have had in the past five years. Will the noble Lord tell us how many people are being made redundant here? Is it of the order of 1,800, and then the knock-on unemployment following from that? Is it the case that unemployment in the Bathgate area will rise to probably over 40 per cent.? The noble Lord stated just a minute ago that the capacity for survival depended on the ability to adjust to change. Will the noble Lord tell me what these men have got to change to, because there is no new industry of that nature coming into Scotland?

Lord Cockfield

My Lords. I entirely appreciate the depth of feeling expressed by the noble Lord, Lord Ross of Marnock. I myself started by saying that whenever a high endeavour of this sort comes to an end it is a matter of great regret for all of us. But we have to face reality. The market has shrunk to an extent where the whole future of Leyland Trucks is in danger, and the measures which are being taken on the advice of the board of British Leyland are the right measures which are the only hope that exists for the survival of Leyland Trucks as a whole. So far as the redundancies are concerned, the number at Bathgate is, as the noble Lord says, approximately 1,800.

Lord Stoddart of Swindon

My Lords, I am most obliged to the noble Lord for answering some of the questions that I have put to him. But I must confess that I am puzzled by one or two of the answers, and perhaps he could further elaborate. First of all the noble Lord mentioned the export figures to Nigeria and the Middle East, and the drop there seems quite enormous. Were there any particular internal reasons in those countries, or was the fall in orders from those countries due to British policy of high interest rates and high exchange rates, and perhaps of giving too little assistance to under-developed countries?

Secondly. the noble Lord said that the reason for the fall-off in the number of buses ordered at home was due to the growth in private car traffic. Is that absolutely so? Is it not a fact that one of the reasons why orders have fallen off is that local authorities, oppressed by Government cuts in expenditure, have in fact not been renewing buses over the same period but over a rather longer period than they did before? Is not that the real reason for the fall-off in the market?

Finally, bearing in mind that Jaguar made an operating profit of £55 million. may I ask the noble Lord this: all things being equal next year, if Jaguar has by then been sold off will British Leyland be £55 million in deficit? If so, does it mean that the transfer of a profitable part of the British car industry to private enterprise will be financed by the British taxpayer to the tune of £55 million?

Lord Cockfield

My Lords, the noble Lord, Lord Stoddart, asked for the reasons for the fall in the exports to the two markets that I mentioned. In the case of Nigeria there are of course severe payments problems, of which the noble Lord will be aware. The Nigerian Government, understandably, has greatly restricted imports into that country. It will be a long time before Nigeria is in fact out of the financial problems that it faces. One cannot therefore look to a rapid revival of the market in that country.

In the case of the Middle East, of course as the noble Lord knows, there have been a number of severe dispruptions to business there, but there are also other factors affecting both these and other markets. There has been a big fall in the work demand for trucks which is associated in part with the much greater longevity of trucks. This is something that we cannot contract out of. We have in fact given our exports considerable help. and a great deal of credit for exports to Nigeria has been under Section 2—that is outside the normal commercial coverage of ECGD.

So far as Jaguar is concerned, the profits of British Leyland next year are not a matter for me to forecast in your Lordships' Chamber today. The objective of the board of British Leyland is to bring all of its units back into profitability. It is not that one should support the other but that all of them should be brought back into profitability. That is what their objective is. Their objective also is progressively to return the various parts of the business to the private sector. I am sure that we all wish them every success in rebuilding the profitability of the various components of the total business.

Lord Diamond

My Lords——

Baroness Trumpington

My Lords, I beg to move that the House do now again resolve itself into Committee upon the Bill.

Moved. That the House do now again resolve itself into Committee.-(Baroness Trumpington.)

4.17 p.m.

The Question having been put a first time..

The Deputy Speaker (The Earl of Listowel)

The Question is that the House do now again resolve itself into Committee on the Bill. As many as are of that opinion will say, "Content"?

Noble Lords


The Deputy Speaker

To the contrary. "Not-Content"?

I think the "Contents" have it.

Motion agreed to.