BMW and Rover (Hansard, 28 February 1994)

§ Viscount Goschen
My Lords, the assurances about the future of Rover given by the chairman of BMW are set out in a letter to my right honourable friend the President of the Board of Trade. Copies were placed in the Libraries of both Houses on 31st January.

§ Lord Jay
My Lords, I thank the noble Viscount for that modest response. In view of the great importance of the firms concerned to this country's balance of payments, defence resources and employment, are the Government going to stand aside completely and wash their hands of the whole issue?

§ Viscount Goschen
My Lords, it is a commercial matter and it is not for the Government to intervene. The important factor is that Rover will be able to build on its recent success and will continue to produce high quality cars in this country, thereby providing real jobs and opportunities.

§ Lord Stoddart of Swindon
My Lords, have we not come to a pretty pass in this country when Honda Limited is more concerned about the retention of a British car industry than Her Majesty's Government?

§ Viscount Goschen
My Lords, I repeat that the important facts are that Rover will continue to build on its recent success and will produce high quality cars and that that will create jobs in this country.

§ Lord Murray of Epping Forest
My Lords, the noble Viscount referred to assurances. Are they cast-iron assurances as regards the maintenance of capacity and research and development by Rover, which is a major British engineering asset? Is there any danger that Rover and the automobile industry may become increasingly dependent on German-based BMW research and development?

§ Viscount Goschen
My Lords, there are strong commercial reasons for BMW to stick to the assurances that it has given. The £ 800 million paid is a substantial 808 financial investment in the company, which BMW hopes to increase over time. It represents an extremely serious commitment.

§ Lord Shepherd
My Lords, did BMW pay £ 800 million for Rover? The Sunday Times yesterday, I believe, said that there is some £ 270 million cash within Rover, which of course became available to BMW. What was the net figure that BMW paid for Rover?

§ Viscount Goschen
My Lords, the agreement reached on the sale price of Rover is a matter for British Aerospace and its shareholders.

§ Baroness Fisher of Rednal
My Lords, did the assurances cover the many hundreds of factories and establishments in the West Midlands which at present supply parts and accessories to Rover? Will those firms still have the satisfaction of supplying to Rover?

§ Viscount Goschen
My Lords, in his letter to my right honourable friend, the chairman of BMW stated that BMW is committed to continuing Rover's excellent relationship with its suppliers and does not intend to combine the purchasing functions of the two companies.

§ Lord Peston
My Lords, when the deal is finalised, Rover in this country will be a branch of BMW, which is a German company. As I understand it, Germany has signed the Social Chapter of the Maastricht Treaty. Will the employees of Rover now be protected by the Social Chapter? They may not have been before.

§ Viscount Goschen
My Lords, the point is that employees working in this country are governed by the laws of this country.

§ Lord Jay
My Lords, are the Government really content that a decision of this national importance should be taken by a private board of directors, with a part-time chairman, after a few days' notice, with no consultation whatever with the tens of thousands of employees involved?

§ Viscount Goschen
My Lords, I repeat the Government's position; namely, that this is a commercial matter. But with regard to the employees, BMW has agreed to the new employment deal announced in April 1992 called Rover's "New Deal". The key principles of that deal were that no employee would be laid off and that employees who wished to work for Rover would be able to stay.

§ Lord Peston
My Lords, is it the Government's view that BMW would treat its British workers in its Rover plant in a way inferior to its German workers in the plants in Germany?

§ Viscount Goschen
My Lords, no. We do not believe that BMW would treat its workers in England in an inferior way.

§ Lord Stallard
My Lords, what assessment have the Government made of the recent Honda announcement that it will now pull out? What effect will that have on the employees and sub-contractors involved?

§ Viscount Goschen
My Lords, the unwinding of the cross shareholding is not in itself the end of the relationship. Several technical agreements exist between the two companies which are currently profitable for Honda. Any disengagement would take some time and would be costly.

§ Lord Cledwyn of Penrhos
My Lords, may I ask a question which many people are putting to me? Can the noble Viscount say whether the policies of Rover in future will be made in Munich and not in this country?

§ Viscount Goschen
My Lords, the commercial policies of a commercial company are a matter for that company.

§ Lord Cledwyn of Penrhos
My Lords, with the greatest respect to the noble Viscount, that is a totally inadequate reply. He should be in a position to answer such a fundamental question about the making of policy. Is it the case that policies will be made in Germany and not in this country?

§ Viscount Goschen
My Lords, the policies of a commercial company will be made by the board of that company.

§ Lord Brabazon of Tara
My Lords, is it not the case that, when the policies of the Rover Group— formerly British Leyland— were made in Whitehall, in this country and by the party opposite when in government it used to cost the taxpayer millions of pounds a year? However, now it is in the private sector it does not cost us anything.

§ Viscount Goschen
My Lords, I endorse my noble friend's view that Rover has been a very great success in recent years.

§ Lord Tordoff
My Lords, I should like to take the question posed by the noble Lord, Lord Peston, a little further. If the Government are so certain that equality of terms will apply to BMW and Rover, can the noble Viscount use his good influence to ensure that my pension is brought up to the same level as that of my former Dutch associates in a multinational company?

§ Viscount Goschen
My Lords, the Question on the Order Paper relates to BMW's future plans for Rover rather than historic events which led up to the takeover, or indeed the noble Lord's pension.

§ Lord Sefton of Garston
My Lords, can the noble Viscount give the House an assurance that the Government will approach British Aerospace to ensure that there will be no more sell-offs of its undertaking to foreign buyers, as was forecast in a Question tabled in this House over two-and-a-half years ago?

§ Viscount Goschen
My Lords, as I have stated, commercial decisions for British Aerospace will be a matter for the board of that company.

§ Viscount Montgomery of Alamein
My Lords, does my noble friend agree that what will really ensure the success of the Rover car company in the future will be increased sales of motor cars? That will be the greatest benefit to employees.

§ Viscount Goschen
Indeed, my Lords, the ultimate employment level will depend upon the success of the company. The association with BMW will provide Rover with access to an investment on a scale unprecedented in its recent history. It will offer an expanded dealer network in areas where Rover has so far been unable to penetrate.