British Leyland (Hansard, 3 February 1986)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, with the leave of your Lordships, this might be a convenient time for me to repeat in form of a Statement the answer to a Private Notice Question on British Leyland being given in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"With the approval of the British Leyland board, discussions are in progress between British Leyland and General Motors with the aim of creating an international competitive United Kingdom commercial vehicle industry and improving the long-term prospects for the constituent BL companies. These talks cover Leyland Trucks. Land-Rover, Freight Rover and certain related overseas operations. Discussions are at an advanced state but a number of important issues remain to be settled. Separate discussions are taking place with the Laird Group, who own Metro Cammell Weyman, about the future of Leyland Bus.
"As to the other British Leyland businesses, it remains the policy of Her Majesty's Government to return them to private ownership as soon as practicable. Talks with other car manufacturers on a variety of potential business ventures are in 907 progress. Some of these are wide ranging but are at an exploratory stage, and it is too early to tell whether these will lead to any potential equity stake, acquisition or merger."
My Lords, that concludes the Statement.

Lord Bruce of Donington
My Lords, we are grateful to the noble Lord for having repeated, in the form of a Statement, an answer to a Private Notice Question in another place. The fact that it was issued in reply to a Private Notice Question means, of course, that we on this side have not had the advantage of seeing the answer in advance. It would seem that the forecasts so adequately outlined in the Financial Times of 31st January have been realised in the event. It appears that conversations are in progress between the board—with the Government's knowledge—and an American company, General Motors, and that it is quite possible, although we do not know yet whether this will eventuate, that an offer will be made to acquire from British Leyland certain parts of its existing business, described by the noble Lord.
We on this side of the House view with some misgiving this latest turn of events whereby it is, at any rate, highly possible—some may even say probable—that a very substantial part of the British truck and bus industry may be acquired by a multinational company with headquarters in the United States. Perhaps, after the recent and continuing Sikorsky deal in connection with Westland, we should not be altogether surprised. Her Majesty's Government are, of course, entirely neutral in these matters so long as the American company is seen to win in the end.
We on this side view any prospect of the sale of this particular component part of BL with the greatest dismay. We do not understand quite why the Government, apparently—I say "apparently," because the noble Lord will correct me if I am wrong—view it with such a general sympathy. It was only in October last year that the then Trade and Industry Secretary—they change quite frequently in that department, so it appears—was expressing his dissatisfaction with General Motors' performance in this country relating to the production of domestically produced vehicles, and was also expressing some dismay at the fact that, contrary to its original expectation, the most that Vauxhall, which is GM controlled, could do was to ensure that up to 46 per cent. of the components of its Vauxhall cars were being made in this country.
We hope sincerely that when the Government come to consider this matter they will not adopt the so-called hands off neutrality (which, of course, is nothing of the kind) apparently adopted in the case of Westland, and that they will consider the national interest very carefully before approving any kind of decision on the lines that at any rate appear probable from the noble Lord's Statement. They will, of course, refer, as the Financial Times does, to the massive over-capacity of the British motor industry. But the same applies to other industries. How can there be anything but general over-capacity when there are 14 million unemployed in Europe in the course of a deflation led by the United Kingdom that has deflated demand throughout Europe?
908 We hope that these matters will be taken into account. What we fear, and we are bound to express our fears, is that this is the beginning of getting rid of some of British Leyland's loss-making assets at the moment prior to privatisation itself and that it is an endeavour to clear the decks.
On the basis of what little information the noble Lord has been able to give us today these are matters upon which I venture to speculate. It may be that my speculations are wrong. It may be that the Government will study the national interest. We on this side of the House sincerely trust that after the sordid events of the past month or so the Government will do so.

§ Baroness Seear
My Lords, we on these Benches wish to thank the Minister for making a Statement in reply to the Private Notice Question in another place. But I am bound to say that the Statement is so brief that it gives us no information at all as to the reasons for the action that the Government are attempting to take. Could the Minister not enlighten us as to what has led to the decision to make, or to negotiate, this sale to General Motors? We can scarcely discuss this matter as it stands because we have no data on which to discuss it. Can the Minister also tell us how far these negotiations have gone; whether any alternatives were considered—a management buy out for example; or whether the staff have been consulted about the proposal to sell this part of British Leyland to General Motors?
The Minister in his Statement refers to further negotiations with other manufacturers. Are we to be told who these other manufacturers are? Are they other British manufacturers? Are they other American manufacturers, or are the Government—and perhaps this might be a wise move to take—thinking about a possible liaison (if they are to sell to other people) with companies inside the European Community? There remains a case for the development of an industry of this scale in relation to our partners inside Europe. But on the basis of what we have been told we are not in a position to know what is going on or to make any useful comment except as pure speculation.

§ Lord Lucas of Chilworth
My Lords, I am grateful to the noble Lord, Lord Bruce of Donington, and the noble Baroness, Lady Seear, for their receipt of the Statement which I have just repeated.
Perhaps I may answer the few questions which have been put to me. First, I have to say to the noble Lord, Lord Bruce of Donington, that I am surprised that he should view with dismay the efforts being made by the Government with British Leyland to secure a viable United Kingdom truck industry against a European background of over-capacity and falling sales. That is what we are trying to do in this case.
I answer the noble Baroness in the same way. Of course, the negotiations are in progress rather than at an end, and it will be necessary, with any proposals brought by the board of British Leyland together with General Motors to the Government, for the Government certainly to take into account the national interest, not least the continuance of a manufacturing presence in this country.
909 I should, however, correct the noble Lord, Lord Bruce of Donington, when he referred to the undertakings which the board of General Motors gave to my right honourable friend Mr. Brittan when he was Secretary of State for Trade and Industry in so far as local content is concerned. At the time the conversation took place certainly the local content of Vauxhall cars was about 46 per cent. The company gave an undertaking that this would rise in 1986 to 60 per cent. There has already been an increase of 2 percentage points.
The noble Baroness referred to the alternatives. British Leyland had been discussing with a number of companies various collaborative arrangements, the best known of course being that with Honda. They continue to discuss with other car manufacturers the possibility of other collaborative arrangements.
So far as discussions with our European partners are concerned there is a continuing dialogue between United Kingdom based manufacturers and European manufacturers to see whether there is a basis for collaboration.
The noble Baroness asked specifically whether the staff of British Leyland have been consulted. So far as I am aware, no, since the discussions are very confidential. I cannot say at this stage where they might lead; and it would be imprudent I think for the commercial decisions of each of those two boards to discuss their proposition before they have come to any kind of mutual conclusion.