Motor Industry: Investment (Hansard, 6 March 1989)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
My Lords, I have the following figures for investment in the motor industry for the years 1983 to 1987, expressed in 1985 prices. In 1983 investment was £546 million; in the following years it was £631 million, £659 million, £649 million, and in 1987, £563 million. Firm figures are not yet available for 1988 but are expected to exceed the 1987 level.

The Viscount of Oxfuird
My Lords, I am grateful to my noble friend the Secretary of State for that reply and especially for giving the House those figures. Can he possibly advise the House whether there is an increasing trend in imports? If that is so, can he say what proposals the Government have to redress the balance?

§ Lord Young of Graffham
My Lords, it is true that imports accounted for 56.4 per cent. of the market last year, compared with only 51.68 per cent. for 1987. The reason for that was the unparalleled prosperity and growth in demand. In fact, the manfacture of car production has risen, and last year it was at its highest level since 1977. With continuing investment in this country, we can see UK car manufacturing figures continue to rise. It is to be hoped that the increase will be sufficient to keep pace with demand.

§ Lord Hatch of Lusby
My Lords, regarding the figures which the noble Lord has given us, can he tell the House what percentage represents British investment and what percentage is foreign investment?

§ Lord Young of Graffham
No, my Lords. In my view that is an irrelevant matter because investment is investment. We are concerned about the amount of investment in British industry and the jobs and wealth creation which that actually creates. Whether that investment is provided by American, Japanese or British companies is not, in actual fact, relevant to that particular point.

§ Lord Rodney
My Lords, will my noble friend agree that the French are contravening the Community rules by forbidding the entry of Nissan cars into France? Further, can he say what Her Majesty's Government are doing to try to correct that situation?

§ Lord Young of Graffham
My Lords, Nissan is a Japanese-owned British car company in just the same way as Ford is not necessarily owned by British people, although the company has some British shareholders. There are very clear rules within the Community that apply to the EFTA countries. If 60 per cent. of value is either within EFTA or Europe there is free access to the market. The Commission has already ruled that if there is over 60 per cent. value—Nissan cars has over 70 per cent.today—there should be free access to the Community. That is allowed by all the Community countries, with the exception of France. I am asking the Commission, who are the relevant authorities, to ensure that France complies with Community rules.

§ Lord Stoddart of Swindon
My Lords, will the noble Lord agree that it would be most unfortunate if anything contained in the forthcoming Budget were to discourage the sale of cars and investment in the car industry? Can he give the House the assurance that he will do everything he can to ensure that his right honourable friend the Chancellor of the Exchequeur will do nothing in the Budget which would injure the car industry?

§ Lord Young of Graffham
My Lords, the noble Lord has been a Member of your Lordships' House for far too long—and indeed was a Member of another place for even longer—to know that that is a question which I cannot possibly answer.

§ Lord Williams of Elvel
My Lords, does the noble Lord accept that certainly investment is cross-frontier? Of course we acknowledge that there will be cross-frontier trade in the motor industry. However, will the noble Lord agree that the important thing is that we in the United Kingdom should maintain our fair share of that business, and that we should not run a continued deficit?

§ Lord Young of Graffham
My Lords, when it comes to investment from overseas countries as such, the United Kingdom has more than its fair share. That seems to me to be a position that we should strive to maintain. I believe that 94 Japanese companies have already decided that the United Kingdom provides the best environment in Europe in which to manufacture goods. That is a trend we should like to see continue.

The Viscount of Oxfuird
My Lords, is my noble friend the Secretary of State in a position as yet to give the House positive information as to the possibility of the Toyota company starting manufacturing in this country?

§ Lord Young of Graffham
My Lords, that is very much a commercial matter for the Toyota company. The company is continuing its investigations into different sites within the United Kingdom. I hope that the company will find a site which will be suitable for its purposes because it would be most welcome within these shores.

§ Lord Cledwyn of Penrhos
My Lords, in one of his answers the noble Lord mentioned the Ford Motor Company. Can he say whether he, or anyone in his department, has had discussions with Ford at Dagenham about the transfer of the manufacture of the Sierra car from the United Kingdom to Belgium? Can he also say what the implications of that transfer are in terms of employment, and other matters? Further, is not the Minister rather complacent about the decline in the manufacture of motor cars in this country by British-owned companies? Where we once led the world in the manufacture of cars, today we certainly do not lead the world. Indeed, we do not even lead Europe. Can he say something about that situation?

§ Lord Young of Graffham
My Lords, it is true that the Ford Motor Company has decided to move the assembly of one model from the United Kingdom to Belgium. However, at the same time the company decided to expand substantially the manufacture of engines within the Principality—something to which the noble Lord the Leader of the Opposition cannot object too strongly. It is a great pity that the number of British manufactured cars has fallen over the past two decades. That is largely because the cars which were produced were not attractive to the customers. That is a lesson which I believe we have learnt today. In 1984 and 1985 we were manufacturing 900,000 cars per year; last year the figure exceeded 1–2 million, and I believe that the number will continue to climb very substantially. Therefore we are on a rising trend, and it is important that we should keep it that way.

§ Lord Ezra
My Lords, as a corollary to stimulating investment in the motor industry, will the Minister use his best endeavours to ensure that we have an adequacy of roads on which to use those cars?

§ Lord Young of Graffham
My Lords, I shall certainly pass the remarks made by the noble Lord, Lord Ezra, to my right honourable friend the Secretary of State for Transport, and I may share them.

§ Lord Leatherland
My Lords, when about four years ago I bought a make of car which is well known in this country I found a small slip of paper on the back seat saying "Made in Spain". To what extent are British car manufacturers selling imported goods?

§ Lord Young of Graffham
My Lords, that is one of the ways in which the motor industry has changed over the past years and in which it is becoming internationalised. Many car companies, including Ford and others, manufacture different components in different parts of Europe and assemble them here. It is becoming increasingly difficult to say whether a car is British, French, Spanish or Italian. That is part of the changing way in which our world is developing.