§ 3.41 p.m.
§ Lord Lucas of Chilworth
My Lords, it may now be for the convenience of the House if I repeat a Statement now being made in another place by my right honourable friend the Secretary of State for Trade and Industry on British Leyland. The Statement is as follows:
§ "As I informed the House on 19th February, an invitation was extended to interested parties to declare by 4th March a firm intention to make a bid for one or more of the Land Rover, Freight Rover, Leyland Trucks and related businesses.
§ "I can now report to the House that appropriate declarations have been made to British Leyland's bankers by Shroder Ventures on behalf of some institutions and certain members of British Leyland management in respect of Land Rover, Range Rover and Freight Rover; by Lonrho in respect of Land Rover and Range Rover; and by Aveling Barford in respect of Land Rover only. General Motors have also confirmed their intention to make a bid for Land Rover, Range Rover, Freight Rover and Leyland Trucks.
§ "The Laird Group and Aveling Barford are each in discussion with British Leyland regarding the acquisition of Leyland Bus for which proposals on behalf of certain members of the management are also expected. Discussions in relation to Leyland Bus are taking place over a slightly different timescale from those concerning other Land Rover-Leyland businesses. I shall make a further Statement to the House on these in due course.
§ "The British Leyland Board are giving careful consideration to all the proposals received on or before 4th March and I hope to have their recommendations shortly. The board and the Government remain anxious to end the present uncertainty surrounding these businesses as soon as possible in the interests of the companies, management and workforce and their dealers and suppliers.
§ "I should also like to take the opportunity to inform the House of a forthcoming change in the chairmanship of British Leyland. Sir Austin Bide's appointment as chairman of British Leyland was extended in late 1984 on the basis that he would continue as chairman until a convenient moment for his retirement was reached. Sir Austin has kindly agreed to remain as chairman until decisions have been made on the future of the main Land Rover-Leyland businesses. This will represent the start of a new phase in the development of British Leyland and, on my nomination, the British Leyland Board propose to invite Mr. Graham Day, at present chairman of British Shipbuilders, to join the board and to become full-time chairman of British Leyland at a date to be determined. I should like to express the Government's thanks, and to add my own warmest personal tribute, to Sir Austin under whose leadership British Leyland has achieved notable progress.189
§ "I am appointing Mr. Phillip Hares, CBE, the present deputy chief executive and board member for finance of the corporation, to succeed Mr. Graham Day as chairman of British Shipbuilders." My Lords, that concludes the Statement.
§ 3.45 p.m.
Lord Bruce of Donington
My Lords, we thank the noble Lord for repeating the Statement made in another place. We note with interest his tribute to the notable progress that British Leyland has made over the past years. The Statement he has made indicates precisely the degree of shambles into which the Government have now got the whole motor industry. On the basis of the Statement it is clear that every option presupposes a breakdown in the integrated BL system.
Is the noble Lord further aware that his listing of the various parties which have now put in their applications, when it is reduced to plain terms, amounts to a charade? The Government initiated conversations with General Motors some 18 months ago, in August 1984. The remaining bodies which have had an opportunity to bid have had exactly 20 days. There are complaints that they have not received all the co-operation to which they thought they were entitled, and certainly nothing like the comprehensive information that has been in the possession of GM for some time.
Will the noble Lord further note that, in view of the fact that GM are the only ones to incorporate Leyland Trucks within their offer (the remaining applicants have not included Leyland Trucks) the Government are already committed to GM because GM have so far—if we believe the statements that have been made—always insisted that their proposed acquisition of Land Rover must have Leyland Trucks with it, or vice versa? Is the noble Lord aware of that?
Could the noble Lord give some indication as to when these matters are to be brought to completion, if they are to be brought to completion at all? In view of the statments made by the Government over the last fortnight, will the noble Lord now give a Government undertaking that there will be no further conversations between the Government and Ford on any aspect of a proposed acquisition of Austin Rover during the lifetime of this Parliament? He ought to be able to give that undertaking on the basis of the statements made so far.
Is the noble Lord further aware that the easiest way of getting rid of the uncertainty which he professes to desire to avoid, or to minimise as far as possible, is to end the whole idea of disposing of BL, or any part of it, away from the public sector? Is he aware that the people of this country are now coming to think that the Government will do anything to raise money—to sell the family silver—in order to raise cash for the Chancellor? Is the noble Lord aware that what is required of the Government—as emphasised perhaps obliquely by the right honourable gentleman the Member for Bexley last night—is that they should start behaving like a British Government and encourage British industry, rather than to disintegrate it, which they propose to do at the present time?
§ Lord Diamond
My Lords, may I say on behalf of these Benches that we are grateful to the Government for making yet a further and important Statement on this matter, although they have by no means reached finality. It is a courtesy that we much appreciate. We on these Benches still have one or two anxieties. Our first anxiety is that the Government should give ample opportunity, whichever part of the undertakings they have in mind for privatisation, to management and workforce to join together in making whatever bids they are able to make within a reasonable time. Our anxiety is that the Government are not prepared to give them reasonable time and have not brought the workforce into consultation at all. They are not proposing to allow the workforce to participate in shareholding in the company, which I thought was accepted on all sides of the House to be a useful step forward. I say that because the Statement refers only to management. In relation to the Leyland Bus undertaking, for which it is said that the timescale is on a slightly different basis, it is not clear which members of the management and workforce are included. The Statement says:proposals on behalf of certain members of the managementonly. I hope that the Minister will clear up that anxiety.
That anxiety is based on a misconception by the Government that the uncertainty here is unique and damaging. The one thing that can be said about privatisation is that it is a very public procedure. Everybody knows all about it for months, on the Stock Exchange and elsewhere; customers, dealers, whoever is connected with the business knows all about it. They will know all about the privatisation of the water industry months, and possibly years, ahead of privatisation taking place. Is it not the case that the Government maintain that privatisation is in the interests of the nation and, in particular, in the interests of the companies concerned? If that is so, why do the company insist that it must be damaging for this news to get out? I thought its line would be that it is the best possible news, that it will improve the company, and improve the national interest; the sooner it is said the better for everybody concerned.
For those two reasons I find it very difficult to accept at its face value the company's statements about the need to remove anxieties by making a ridiculously short timescale in which management and workforce can get together, can inspect balance sheets, can discuss forward steps, interest backers and get the necessary finance, all in time to make a bid. Everything is happening within what I consider to be a ridiculously short period. It is because of that anxiety that one is driven to contemplate the alternative view, which has been so well expressed from the Front Bench just now, that the Government's main consideration is not to satisfy the best interests of the company and its employees, but to have regard to the slot which has arisen through the lack of progress on the British Airways privatisation. A slot has arisen in their budgeted receipts, and therefore they are trying to fill it up as fast as they can by selling off whatever assets they can put their hands to, an operation which has been so wisely described by both Opposition parties as selling off the family silver to pay for current 191 expenditure, to pay for the groceries. We wish to be reassured on those points.
The real final issue remains: Are the Government intending to find a purchaser or a partner? We have queried this matter every time and so far we have had no answer. It is an entirely different matter, and there would be total support for the Government coming from these Benches if they were anxious to find a partner with the markets, the know-how and all the necessary ingredients for a successful and improving business, which included a full measure of participation by management and workforce. I have no doubt that such a partnership would receive wide support in the country. It is an entirely different matter if the Government are seeking, for reasons which do not appear very clear, an immediate cash realisation.
§ Lord Lucas of Chilworth
My Lords, a number of points have been made by both noble Lords which I shall endeavour to answer. Let me say straightaway that the noble Lord, Lord Bruce of Donington, is wrong in his suggestion that there is a destruction of an integrated business, because the business of British Leyland is divided into four quite separate businesses, although they are subsidiaries of one holding company. Both noble Lords raised the matter of the timescale. The Government's intentions were well known as far back as 1983. There has been widespread reporting over many months about the interests of General Motors and others. To suggest that 20 days has been allowed, that is from 19th February until 4th March, is something of a travesty of the truth.
The Government are committed, as I hoped I have made clear on a number of occasions, only to the longterm viability of a United Kingdom-based commercial vehicle industry. It is important that we complete any change as quickly as possible because, as the noble Lord, Lord Diamond, recognises, there is an element of uncertainty. The uncertainty comes about because a number of people—the four that I have mentioned and the bus business—are interested in acquiring control of those businesses. It is in the interests of everybody concerned to know where this will end. That is where the uncertainty is, not in respect of the Government's intentions.
In response to both noble Lords may I say that there is no question of the Government—to quote somebody else—selling the family silver. There is no doubt whatsoever in the minds of the board of British Leyland as well as others that, in the very best interests of the company, its management and its workforce and the British-based commercial vehicle industry, parts of Leyland should be returned to the private sector as soon as possible.
It is wrong of the noble Lord, Lord Bruce of Donington, to suggest that we have not encouraged British industry. In this instance we have invested £2.3 billion of taxpayers' money, guaranteed a further £1.5 billion of British taxpayers' money, and it is now the turn of industry to invest its money, so relieving the British taxpayer of that burden and so that taxpayers' money can be spent in other areas for which the public are clamouring, and quite rightly and properly so.
I shall not give the noble Lord, Lord Bruce of Donington, any assurances whatsoever with regard to 192 the discussions that Her Majesty's Government are having, either on their own behalf or through companies in the public sector, with other parties—and so far as the term of this Government is concerned—neither now nor in the next term which we shall enjoy.
Our interest is the benefit to the company and the nation. There is no other reason for our engaging in this exercise. My right honourable friend will consider the advice he receives from the British Leyland Board as quickly as is commensurate with giving proper consideration to a matter as important as this.
§ 4 p.m.
§ Lord Somers
My Lords, the noble Lord says that the interests of industry and the nation are paramount, and his figures certainly sound very convincing; but I think that most of us will feel faintly uneasy until we can get a definite statement from the Government that Land Rover and Range Rover are not going to be sold to a foreign country thereby damaging British industry by depriving it, for one thing, of one of the most important of its exports. There is scarcely a part of the world where one will not find a Land Rover. It is indeed a product of which we have every reason to be proud. If we are going to increase British industry then surely that is one of the first things that we should keep hold of.
§ Lord Lucas of Chilworth
My Lords, perhaps I may first answer the noble Lord, Lord Somers. When I said that we have as one of the fundamental points in front of us the interests of the British-based motor industry and the nation, I meant exactly that. The point is that Land Rover and Range Rover have lost their predominance in world markets. The Japanese have encroached with about five different products. We have no United States representation of Land Rover and Range Rover at the present moment, and that is the fastest growing market for 4-by-4 vehicles. There is nothing wrong with the attraction of foreign investment to enhance our own capability in manufacturing, in technology and in the marketing of products made in this country.
I would not wish to give the noble Lord, Lord Somers, any feeling that we would do other than bear in mind the widest issues so far as the future of the company, its product and its workforce are concerned when giving consideration to the offers to acquire the parts of British Leyland to which I have referred in the Statement.
§ The Lord Bishop of Birmingham
My Lords, I apologise for my over-eagerness in rising to my feet, but this subject is very close to my see city of Birmingham in which there are very deep feelings indeed about this matter. I am grateful to the noble Lord for giving this Statement to the House, although I wish that I had its terms in front of me. I am grateful, too, for what he said about ending uncertainty; because there is grave anxiety in Birmingham and Solihull about this matter. I must point out that negotiations have been going on with General Motors for nine months and the so-called management buy-out has had to be organised within two or three weeks. 193 This hardly gives them time. In fact, I think it is a remarkable tribute to the way in which people have faith in the present management and in the ability of the firm to continue that they have raised sufficient funds not only for a buy-out but also in order to finance the new models which undoubtedly will be necessary.
Noble Lords may not realise, in the light of what was said on the other side of this House regarding participation, that 10 per cent. of the capital has been set aside in the management buy-out precisely for workers' participation. Also, the buy-out will see that there will still continue to be links with BL itself and with its agencies; and, as the noble Lord, Lord Diamond, mentioned, control will be in this country.
I am not sure whether noble Lords are aware of the great success of Freight Rover. Freight Rover must go with Land Rover and that is why I am so puzzled by one of the bids which, if I heard the noble Lord aright, seems to mention Land Rover only. That would mean the end of Freight Rover because they are inextricably mixed up together. Freight Rover, ever since it was put on its feet when Michael Edwardes was there, and with its workforce halved, has increased its production from 9,000 to 19,000 vehicles a year. That is a very remarkable performance indeed. This is a very adaptable truck, especially the Sherpa 300 which is used for Telecom and ambulance and police work.
But there is a deep feeling of unease. When I went down there last Friday—and I visited at the same time and on the same day as Mr. Kinnock, but in a somewhat quieter mode—I spoke to the workforce. There is deep apprehension that if General Motors gets hold of this, it will be closed and Bedford Vans will have the work instead. Indeed, one can understand how they feel. Not only is Freight Rover a success but it can generate enough money for new models. As for Land Rover, I would not wish to contradict what the noble Lord the Minister has said, but I think it is fair to say that it has hardly lost its predominance in the world markets. A new Japanese model of a lighter type has been produced which is more suitable in such built-up countries as the United States of America. Land Rover itself is sold in 100 countries and Range Rover in 80 countries.
§ The Earl of Swinton
My Lords, perhaps the right reverend Prelate is not quite accustomed to this House and to the fact that Statements are matters for short comments and questions to the Minister, and not matters on which to raise a debate. Perhaps he might very shortly put his question to the Minister.
§ The Lord Bishop of Birmingham
My Lords, I apologise to the House if I have used more time than I should. What I want to ask on behalf of the people of Birmingham is this. Can we be certain that due consideration will be given to the management buyout and that Birmingham, with redundancies in the area of 2,000 a month, will not be sacrificed to Leyland Trucks?
§ Lord Lucas of Chilworth
My Lords, I shall be delighted to answer the noble Lord, Lord Shepherd, in due course. I am grateful to the right reverend Prelate the Bishop of Birmingham, knowing, as I well do, of his deep and important interest in this area. I am sure that my noble friend the Deputy Chief Whip also recognises that. Let me say to him, as I said to him once before, that the Government's long-term interest is—and I use this phrase again—the long-term viability of a commercial vehicle industry based in this country and, with that, the long-term security of employment. I stress, "the long-term security of employment". But I have to say to the right reverend Prelate that he is not right when he suggests that Land Rover on its own has enjoyed a predominant world position in recent years. It is a fact that it is necessary to find further and very large investment in new models, productive capacity and the marketing network and that a private sector involvement is paramount. That, in its turn, will lead to the security in the long term of jobs within that important industry.
§ Lord Shepherd
My Lords, I would not wish to be critical of the right reverend Prelate in regard to the statement that he has made, but it is very clear that ministerial Statements are not a cause for debate. One of our great anxieties in this particular matter is that it is very difficult to deal with a subject of this kind without a debate. There are many questions and many explanations.
I wonder whether the noble Viscount the Leader of the House would consider that it would be very much in the interests of this House, and of the subject matter before us, if he could arrange for a short debate to be held? I think this is a subject which requires a debate, as opposed to the unsatisfactory way of seeking to deal with it by question and answer following the repeating of a Statement. Bearing in mind that we have now spent 29 minutes on this Statement, I doubt whether we very much further forward than we were at the beginning, and we are intervening in a major debate in the field of charities. Would the noble Viscount, without saying "yea" or "nay" today, give careful consideration to whether or not we should have a debate on this subject?
§ The Lord President of the Council (Viscount Whitelaw)
My Lords, I must apologise to the House for the fact that another meeting kept me away until the last moment. I heard from just outside the House what the right reverend Prelate was saying and I appreciate very much the anxieties that he was stressing on behalf of many people in the Birmingham area.
It is fair to say that the Statement made by my noble friend is very much of an interim character, and I think that fact would be appreciated by the House. Of course I will consider the suggestion made by the noble Lord, Lord Shepherd. I cannot give any guarantees because I do not yet myself know how the whole matter will develop; but I will certainly take great care 195 to make sure that the House is kept fully informed, and on a matter of such importance it is my job, through the usual channels, to see what can be done to help.
§ Lord Ezra
My Lords, the noble Viscount the Leader of the House has told us that this is an interim Statement. Nevertheless the moment of decision is approaching on this very important issue for British industry. As I understand it from the Statement which has been repeated to us, the board of British Leyland have to make recommendations to the Government. I should like to ask the noble Lord whether he would agree that among the various criteria which should be taken into account in reaching a decision there should be the following. First, as regards local content, as I understand it, the vehicles which are in question use up to 80 or 90 per cent. of British supplies. Would it be a condition that this degree of local content should be maintained?
Secondly, would the British name for these vehicles which have earned world renown, be retained? Thirdly, would an adequate level of investment in future years be provided? Fourthly, would research and development, which so frequently in connection with businesses taken over by other enterprises could be changed to other countries, be retained in this country? Fifthly, in support of my noble friend Lord Diamond, I suggest not only that there should be full safeguards for the employees, both the management and the workforce, but that there should be adequate provision for participation. I would be most obliged to the noble Lord if he could tell us whether these conditions would be met under whatever decision is reached.
§ Lord Lucas of Chilworth
My Lords, I am quite happy to assure the noble Lord, Lord Ezra, that the list of criteria he has just read out will be among those to which the board of British Leyland will be giving the most careful consideration.
§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that it is quite clear that, whatever decision is arrived at, it will be destructively criticised by the Opposition Benches? They have made that perfectly clear. Further, while it is right to take into account any feelings that have been expressed, is this a decision for the Government, with the special knowledge that only the Government can have? Is my noble friend aware that it would not be appreciated throughout the country if, in order to appease and to obtain what the Government thought was a political consensus, they did not make firm and proper decisions according to the facts as they know them, rather than decisions based upon emotion or sentiment which would not last very long?
§ 4.15 p.m.
§ Lord Lucas of Chilworth
My Lords, if my noble friend will forgive me, I am not quite sure whether I could agree entirely with his first comments, although I have some sympathy with him. Let me again repeat that it is the British Leyland board, together with the Government, who have the consideration to make and we will make our decision against the background which I have now, I think, given on five separate 196 occasions over the last five weeks. We are concerned with the long-term interest of a British-based motor industry and its viability and the long-term employment prospects for all those who are currently employed and those who potentially will be employed in this very important motor vehicle industry.
§ Baroness Fisher of Rednal
My Lords, may I ask the noble Lord to consider in addition the employee participation which has taken place in the British Leyland organisation since the last reorganisation? If he looks at the output record and at the days lost through strikes, he will see there is no cause for criticism against the employees themselves making their input into the prosperity of the British Leyland organisation. When the noble Lord speaks about "the public are clamouring" for a decision—the noble Lord demurs, but I wrote it down and with all due respect I put "the public are clamouring". If I am wrong, I apologise to the noble Lord; but the public in the West Midlands are clamouring for a decision which will obviously ensure that the employment prospects are still kept intact. That is most important, as the right reverend Prelate the Bishop of Birmingham has said. It is also important to recognise that the public are not only in London but in the West Midlands, where these firms are.
The other point I would ask the noble Lord to consider is this. The taxpayers have put money into British Leyland—one does not dispute that—but we should also recognise that they have put money into farm subsidies. That fact should not be isolated. We recognise that they have put money into this industry and now that investment is beginning to pay off. It is quite wrong for the British taxpayer, having invested his money, now that the money is beginning to bear fruit, to be faced with a selling off of the prospects to somebody who is coming in for a quick kill.
§ Lord Lucas of Chilworth
My Lords, on the noble Baroness's first point, I believe that I did answer her during our exchange at Question Time earlier this afternoon. I can only repeat that it is for British Leyland to assess all the points that the noble Baroness has made, together with many, many others, when they come to consider these four particular bids. But I do have to remind the noble Baroness that British Leyland Trucks have lost money over a number of years, and continue so to do. Leyland Buses have lost money over a number of years, and continue so to do. The Land Rover group have lost money up to this year—when I say "this year" I mean the 1985 financial year—when it is now anticipated they will turn in a modest profit. None of that is commensurate in any way whatsoever with a fair return on the capital that has been invested in those companies by the British taxpayer.
§ Viscount Trenchard
My Lords, would my noble friend care to consider that if the usual channels decide that we should have a debate on this matter he might have available some figures to show the degree to which foreign-owned multinational companies have increased employment in all areas, including research and development, compared with similar examples of British-owned companies? Certainly it is within my experience that this is not a set pattern one way or 197 another. Looking at the international motor industry at the moment, would my noble friend agree that there are strong arguments to suggest that the greatest security for employment and for research and development may well be in the huge multinational motor vehicle corporations?
§ Lord Lucas of Chilworth
My Lords, I am quite sure I could agree with my noble friend Lord Trenchard in the sense of what he is saying. This is a worldwide industry and it requires tremendous investment. The Government have never sought to suggest that overseas investment in this industry, as in others, is not welcome. There is no doubt that overseas investment in our industry has been to the great benefit of this country and those who work in the various industries.
§ Lady Saltoun of Abernethy
My Lords, we have now spent 38 minutes on this Statement. There is another Statement. I wonder whether we could perhaps move on to the next business.
§ Viscount Whitelaw
My Lords, in reply to the noble Lady, I was hoping that after the noble Lord, Lord Bruce of Donington, whose right to ask another queston I hope I recognised correctly, it would be possible to move on. Had not I interpreted some feelings in the House, I might have suggested earlier that we moved on. But I thought that the matter was of such vital importance, and there was such feeling in the House, that I should have been wrong to do so. I felt that was the feeling of the House. Perhaps after the noble Lord, Lord Bruce of Donington, has asked his question, the moment for bringing this matter to an end will have come.
Lord Bruce of Donington
My Lords, my question will be very short. The noble Lord, Lord Lucas, has said that whatever emphasis he may have given to the role of the BL management and board, it is the Government who will make the final decision. In view of that fact, and the importance of the decisions that are to be made, will the noble Lord give careful consideration to our having a full debate before the decision and any irrevocable steps are taken? Will he also bear in mind that, notwithstanding the preference of his noble friend Lord Harmar-Nicholls for a single party state, the Opposition will continue to exercise their constitutional function?
§ Viscount Whitelaw
My Lords, I note what the noble Lord has said. I think that it would be wrong for me to go any further than I did in answer to the noble Lord, Lord Shepherd, about the need to have the fullest discussion in the House. I cannot give a guarantee as to exactly when the debate might take place because I might be proved wrong. That is the last thing I would wish to do because I should have misled the House, and that I do not intend to do.