HL Deb 02 December 1986 vol 482 cc718-24

3.41 p.m.

Lord Beaverbrook

My Lords, with the leave of the House, I should like to repeat a Statement made by my right honourable friend in another place. The Statement is as follows:

"With permission, Mr. Speaker, I should like to make a Statement on developments within certain Rover Group businesses.

"On 24th July I informed the House that agreement in principle had been reached on the sale of Leyland Bus and of a majority holding in Unipart, and I can report in both cases that detailed negotiations are proceeding satisfactorily. In reply to Questions on 5th November I also announced the disposal of majority interests in Jaguar-Rover-Australia and in Istel. The situation on Land-Rover remains as I stated last April, that Land-Rover will be retained in the Rover Group for a possible flotation or trade sale at a later date.

"The Chairman of Rover Group has also been reviewing the options for Leyland Trucks. This review has been taking place against the backdrop of continuing depressed demand, particularly in overseas markets, and severe overcapacity in Europe. Our objective is to achieve a secure future for the production of Leyland Trucks. But it must be recognised that any option for the company—whether related to collaboration, merger, sale or indeed continuation under present ownership—will involve restructuring.

"Talks are progressing with two companies. The first is DAF. Honourable Members will be aware that in October a limited but important collaboration on the marketing of Roadrunner trucks and Sherpa vans was announced. DAF and Rover Group are now in talks about the benefits that could arise from much more fundamental collaboration in the truck and van businesses.

"The second is Paccar, the parent company of Foden, who are considering the basis on which they might wish to make a bid for Leyland Trucks.

"Both sets of talks are at an early stage and, for the reasons I have already outlined, Mr. Day has my full support in pursuing them; I thought it right to inform the House at this early stage and I shall of course keep the House in touch with developments. I am sure Honourable Members will understand and accept that it would be prejudicial to the interests of those employed in these operations and in their suppliers for me to make any futher detailed comment on the discussions at this stage.

"Mr. Day's review of the plans for all Rover Group operating companies including Austin Rover will form the basis of the 1987 Corporate Plan now under preparation. After I have received it and given it careful consideration, I will announce the Government's response. In respect of Austin Rover, I should however like to take this opportunity to emphasise that I expect Mr. Day's plan to set out a positive course for the continuation of the company as a major producer and leading exporter of cars made in Britain. I stress that the Government's aim is to secure the best possible future for Austin Rover, its suppliers and the motor industry generally in this country".

My Lords, that concludes the Statement.

Lord Williams of Elvel

My Lords, we are most grateful to the noble Lord, Lord Beaverbrook, for repeating the Statement made in another place. We are also glad that the Government have seen fit to take us a little more into their confidence this time round than they did in the confusion that took place somewhat earlier this year when successive Statements were made basically contradicting each other.

I have several questions to ask of the noble Lord, and I hope that he will bear with me. The first two are general. After the fall in the exchange rate that has taken place, would it not be true to say that there are great opportunities even at times of depressed demand for selling our trucks overseas, and particularly into Europe? Is it not to this that the noble Lord, Lord Young of Graffham, was referring the other evening when he said that there are great opportunities for our manufactured exports?

Secondly, does the expression "restructuring", which the noble Lord used in the Statement, mean capital restructuring or is it a polite way of saying further redundancies? Perhaps the noble Lord could clarify that point. My third question relates to the specific proposal to collaborate with DAF. If this is to be a collaboration between equals, is the noble Lord aware that we shall give this a guarded welcome? We agree with the proposal that there should be, a limited but important collaboration on the marketing". We would go further and say that more detailed collaboration with DAF could be successful and sensible. The only proviso that I would make is that Volvo, which has close relationships with DAF, should at least undertake to make sure that the interests of the United Kingdom are protected in any such arrangement.

My fourth question relates to Paccar. Is the noble Lord aware that Paccar is a US company; and I should like to ask what distinction can we make between the Paccar proposals and the ill-fated GM proposals that we were considering earlier this year? What protection would there be for Leyland Trucks, and what protection would there be for component manufacturers? If GM proceeds with its unfortunate plans to close down truck production and Ford does the same, what would be left of truck production in the United Kingdom or truck production under UK control? So far as I can see, there would be only a small company called ERF, which was a spin-off from Foden when it was taken over by Paccar.

My final question is a general one, but it is most important. Have the trade unions and the industry been consulted on these proposals? If they have not, why have they not been consulted, and can we have a guarantee from the Government that the trade unions will at an early stage be brought into consultations? It is vitally important, as I am sure the noble Lord and your Lordships will agree, to keep up the morale of the workforce in these difficult times, and the trade unions are representative of the workforce. I hope that the noble Lord will be able to give us that undertaking.

Lord Diamond

My Lords, we too on these Benches are most grateful to the noble Lord the Minister for repeating the Statement. We should like to add our appreciation of the fact that the Government have thought it proper to consult both Houses of Parliament at an early stage. I am sure that this will help forward the best possible outcome to these difficult and longstanding negotiations.

The questions that I have to ask are mainly covered by what has already been said by the noble Lord, Lord Williams of Elvel; but I think that I ought to make our position very clear. First, we welcome very much the very positive attitude taken by the Government at the end of the Statement, particularly in stressing that the Government's aim is to secure the best possible future for Austin Rover, its suppliers and the motor industry generally in this country. Can I take it from that that the Government accept as an economic principle that a domestic volume car production is essential for any healthy economy, as we believe?

Although my second question is similar to one that has been asked, perhaps I may ask it in a slightly different form. Has the workforce been consulted through whatever channel is appropriate, including the unions? It is absolutely essential in our view that this should be done, that their full co-operation should be sought throughout and that they should be told very fully at the earliest possible stage what this might mean to them individually and to their employment.

My third question is again about Paccar. The Statement says that Paccar is considering the basis on which it may wish to make a bid for Leyland Trucks. That is unclear. As has already been said, we want to know whether that means that Leyland Trucks will continue or that it is merely an offer to buy competing production and put it to bed.

My next question is about Land-Rover. The Government say that Land-Rover will be retained in the Rover Group for a possible flotation or trade sale at a later date. A possible flotation of what? Is it a possible flotation of Land-Rover by itself, which we would not welcome, or is it the possible flotation of the Rover Group, which would need to be looked at in the terms current at the prescribed time? We should naturally want to satisfy ourselves that such a flotation is in accordance with the Government's undertaking to secure the best possible future for Austin Rover, and is not to secure the best possible amount of cash as part of their policy of selling the nation's assets. Those are the questions in which we are mainly interested.

Lord Beaverbrook

My Lords, I am grateful to the noble Lords, Lord Williams of Elvel and Lord Diamond. I shall preface my remarks when answering their points by emphasising that the discussions with DAF and Paccar are at an early stage. The noble Lord, Lord Williams, asked whether the fall in the exchange rate would create new opportunities for the domestic motor industry. We have explored a great many avenues and we have concluded that doing nothing is not an option. We need to look at all possible means of securing a reliable, long-term future for the industry. Sale is one option, but it is not the only one.

The truck industry in one in which international links are increasingly seen as essential. Ford and Iveco and Volvo and GM are among the many examples. The exchange rate has an effect, but the effect may be less clear where there is international co-operation.

The noble Lord, Lord Williams, asked me to tell him what I meant by restructuring. At the moment, in the early stages of negotiations, restructuring has to be considered in the broadest sense. However, foreign ownership can be wholly consistent with an expanding manufacturing base. It is the competitiveness of industry, not its ownership, that is most important in determining what is good for Britain. Employment will have to be looked at. It will no doubt be looked at if and when more meaningful negotiations commence with Paccar and/or DAF.

The noble Lord, Lord Williams, suggested that the existing collaboration arrangements with DAF had opened up new opportunities for Leyland. The benefits of the linkages with DAF under that arrangement are already evident. That is why the possibility of closer links with DAF is now being explored. On the noble Lord's point about Paccar of the United States, he suggested that that proposal could be damaging for Leyland and that the company could be absorbed so that Paccar could gain an extra share of the market. At this stage it is too early to say what arrangements could be made. Discussions are at an early stage. We must wait and see what develops during the current discussions.

The point about Leyland's employees is important. Employees who may be affected will of course have the opportunity to express their views about future plans for the company through the normal machinery. The noble Lord, Lord Diamond, claimed that it was fundamental to the general health of our economy that we should have a prosperous motor industry. Yes, the Government fully agree with that. The long-term aim of the Rover Group Board and the Government is to return the company to the private sector as a thriving business.

The Statement makes it clear that we expect positive plans from Mr. Day. The noble Lord also asked me about consultations with the work force. Those employees who may be affected have today been circularised with the Statement and an explanatory memorandum. They will be fully informed as far as possible. He also asked me about Land-Rover. The position of Land-Rover remains as set out in the Statement of 24th April made by my right honourable friend. It is to be retained in the Rover Group for the time being.

The Lord Bishop of Birmingham

My Lords, I should like to thank the Minister for his Statement. I should like to ask him one or two questions about Sherpa Vans, which he said might collaborate with DAF or Paccar. Sherpa vans are manufactured within my see. He said that he was concerned with what is good for this country. I hope that he will tell us that he is concerned with what is good for Birmingham and Solihull. He said Sherpa Vans may belong to another group, but he did not know where it would obtain its engines. Noble Lords may not be aware that its present site is contiguous with that of Land-Rover and that parts other than engines come from there. What will the people who work there think?

Can the noble Lord assure us that he is aware that Sherpa Vans has been and is doing well and has plans for expansion? Can the Minister tell the work force of Sherpa Vans what its future is likely to be if he does not know where its engines will come from if there is collaboration with DAF or Paccar? Finally, is he aware that his Statement will cause considerable anxiety in the West Midlands unless he can give precise answers to the precise questions that I have asked?

Lord Beaverbrook

My Lords, I am grateful to the right reverend Prelate. I am of course aware of the excellence of the Freight Rover Company. However, I prefaced my remarks by saying that discussions are at an early stage and that I cannot give any information about detailed arrangements for the future manufacture of Sherpa vans and other Freight Rover products. I should make it clear that Freight Rover is not included in discussions with Paccar. I believe that Freight Rover has a secure future. The benefits of linkages with DAF are already evident in the existing market collaboration. That is why the possibility of closer links with DAF is being explored.

Lord Sefton of Garston

My Lords, will the Minister persuade the Government urgently to seek an assurance about the future of the Leyland truck site? Will he undertake to present to this House the result of that as soon as possible?

4 p.m.

Lord Beaverbrook

My Lords, as I said, these are early stages in the discussions. I heard what the noble Lord said and no doubt if and when matters progress, in the normal procedure this House will be fully informed.

Lord Teviot

My Lords, will my noble friend please answer my question on Leyland Bus which has not so far been answered? Will he tell us what he thinks the future of this company will be, despite the current traumatic changes in the home market? I shall be pleased to hear all news that he can give us.

Lord Beaverbrook

My Lords, the Government are of course anxious that Leyland Bus will prosper as an individual company. We hope that in the plans for Leyland Bus it will prosper. Rover Group is continuing to negotiate the details of a sale with the management buy-out group.

Baroness Fisher of Rednal

My Lords, I come from the City of Birmingham, and my title, Baroness Fisher of Rednal, incorporates the large Leyland works at Longbridge. Following what the right reverend Prelate the Bishop of Birmingham said about the anxiety that will be caused in the West Midlands by the Statement that the Minister has given today, this must really be the death knell for the employees of that organisation, an organisation of workers who have accepted categorically from management that they have to become more efficient. They have taken unemployment; they have taken redundancy; they have slimmed down and now there is what is called an efficient workforce.

The workers having done all that we now have this Statement almost saying, "Thank you very much. You have made yourself very efficient. The Government think you are now ripe to be picked and sold off". It is an unfortunate set of circumstances. This is after we fought hard against the sell-out to General Motors. The appointment of Mr. Day filled employees with dismay because they knew the successful job he had done for the Government previously and quite obviously thought that they were in line to be slaughtered as the shipbuilders were.

This afternoon we have to ask the Minister this question. What does he mean when he talks about the normal machinery of consultation with the employees? He said that he cannot give any assurances. We have to ask whether he can speak not in Government doublespeak but in language which the employees there will clearly understand.

In conclusion, is the Minister aware that unemployment in the West Midlands is now up to 20 per cent. of the workforce? If anything happens to these industries the spill-off will involve all the other firms making motor accessory parts. We do not want to see a further worsening of the situation when the whole area is trying so hard to pull itself up without government aid. What it does not want is a government dagger in its back.

Lord Beaverbrook

My Lords, in trying to answer the large number of points I should like to say that Mr. Day's job is to run the company commercially in the interest of all concerned. I am quite sure that uncertainty surrounding the company will be minimised if Rover Group is able to get on with these discussions confidentially and quickly.

As I have said several times previously, it is not yet clear where the outcome of these discussions with Daf and Paccar will end. All I can say is that those employees who may be affected will of course be consulted at the appropriate time as to what their prospects will be. We are anxious to see the establishment of a long-term solution to the problems of the industry. The noble Baroness may be aware that there is overcapacity of truck production in Europe of 40 per cent. Therefore it is not a problem that can easily be solved.

Lord Taylor of Blackburn

My Lords, I am sure that the Minister is doing his best to answer these questions. Those of us who live in the area—both in Birmingham and in Lancashire—are aware of the commercial difficulties, but we are trying to stress to the Minister and to the Government not just the commercial side but the compassionate side as well.

Lord Beaverbrook

My Lords, we are very much aware of that side. That is why the Statement is being made today, in order to give as much information as there is at this stage on the subject.

Lord Williams of Elvel

My Lords, will the noble Lord report to his right honourable friend the disquiet that many of your Lordships have expressed on receipt of this Statement? Will he also give us a very clear undertaking that the interests of the United Kingdom, of Birmingham and of Solihull will be taken into account and fully safeguarded in any deal, whether it be with Daf, Volvo or Paccar? I refer also to Lancashire. I am grateful to my noble friend Lord Taylor of Blackburn for bringing that in. Will the noble Lord also give us a clear undertaking from the Government that there will be full and proper consultation with the trade unions and employees involved—not just telling them at the last moment what is to happen but proper consultation? That means that they will be allowed to express a view and that that view will be clearly and seriously taken into account.

Lord Beaverbrook

My Lords, I shall convey the views of the House to my right honourable friend but I emphasise that it is in the interest of all employees of the company that a viable long-term future be secured.

Lord Diamond

My Lords, that is absolutely right, but I want to press the Minister further on the very unsatisfactory answer he gave me with regard to Paccar. I specifically asked a question which he can answer. It does not relate to how far the negotiations have reached. It does not relate to any of the details which he regards as sub judice in some form. It relates to the Government's intention.

Is it the Government's intention with regard to Paccar to enter into an arrangement which might result in that factory being closed down, or is it intended to result in that work being strengthened? It is a very simple question. The noble Lord will remember that when we last had a series of Statements on this matter we could not get an answer out of the Government as to whether their plans were for an amalgamation or for a sell-off. It is a similar situation today. Are they proposing to achieve a situation in which there is continued manufacturing in the Paccar plant or are they proposing to enter into negotiations which might result in that plant being closed down and the employees not having jobs?

Lord Beaverbrook

My Lords, the Government wish to see a solution in the best interests of the company, the employees and all concerned. The discussions are at a very early stage. The board of Austin Rover will put to the Government the alternatives for the Government to consider once the board has completed negotiations with the two interested parties. The Government at that stage will have to review the options. The Government want to see as much as anybody else—in fact probably more than anybody else—a successful truck manufacturing industry in this country.