HL Deb 03 April 2000 vol 611 cc1112-23

4.39 p.m.

Lord McIntosh of Haringey

My Lords, with the leave of the House, I shall now repeat, in the form of a Statement, the Answer to a Private Notice Question given by my right honourable friend Mr Stephen Byers, the Secretary of State for Trade and Industry in another place. The Answer is as follows:

"There are thousands of individuals and their families who have been affected by the decision taken by BMW in relation to Rover. Whole communities will also have to deal with the consequences. It is these individuals, their families and communities, that are the focus of our efforts.

"On 16th March, BMW's Supervisory Board announced that it had entered into an agreement with Alchemy Partners to negotiate for the disposal of Rover cars within six weeks. The following day it announced that the heads of agreements had been reached with Ford for the sale of Land Rover at Solihull. On the same day I established a task force involving all the partners in the areas most affected by BMW's decision to advise me on how we can support those affected.

"This task force is led by Alex Stevenson, who himself has personal experience as a former Rover director. The Longbridge Task Force has three objectives: first, to assess the impact of any reduction in activity at Longbridge on the people, businesses and communities of the region; secondly, to advise on the public and private resources that are already avail able to help to deal with these consequences, and, thirdly, to draw up proposals for action by local partners and by central government.

"The task force is working hard on an interim report to be submitted in the next three weeks. I have asked the task force to take a wide remit, looking at what measures it will best use to regenerate the area and replace economic activities lost at Rover. I have committed —129 million to support the recommendations of the task force. It is looking at everything, including the implications to the supply chain and what we can do to support it; at training; and at infrastructure, including transport links. The task force has already issued a questionnaire to 5,000 companies, including 450 direct suppliers of Rover, to quantify the scale of impact on the supply chain. It will feed its recommendations in to me.

"At this stage, I am not ruling anything out. I shall await the report. I can, however, say that I will do everything I can to encourage job creation and economic activity in the area, not only stepping up my department's action on attracting new inward investment to the area, but also by supporting the development and growth of homegrown companies.

"My right honourable friend the Secretary of State for Education and Employment has taken action to help those affected by any redundancies at Longbridge. The Employment Service has established a unit to offer help and assistance. A job shop is in place at Longbridge to help those workers affected by any job losses. Anyone made redundant at Longbridge will qualify for fast-tracking of benefit claims, early access to training, and employment service programmes such as New Deals, and job finder services.

"The task force, with the job shop, has launched a freephone advice hotline supported by BT to advise supply chain companies with difficulties and to pool information on vacancies presently available in the car industry. The local training and enterprise council is also looking at specific training to meet the needs of those affected.

"On 23rd March, I met with BMW. We agreed that we now need to look forward and plan ahead for the future. During our discussions BMW agreed to minimise the losses of jobs as the result of its decision. I explained to BMW that we felt it was important that it should co-operate with the task force; BMW responded positively to this proposal.

"Over the next few weeks our objective is to manage the changes that will flow from BMW's decisions in a way which minimises the number of jobs to be lost, whether directly or indirectly, in the supply chain or dealership network. We will also need to put in place a programme of economic regeneration and job creation.

"When I met workers on the assembly line at Longbridge the day after BMW's decision, their anger and shock was clear, but so was their commitment and strength of character. The West Midlands has overcome some difficult times in the past. I am confident that it will do so again. On behalf of the Government, I can say that we will do all we can to ensure that together we can meet the challenges that lie ahead".

My Lords, that concludes the Answer.

4.44 p.m.

Baroness Miller of Hendon

My Lords, I thank the Minister for repeating as a Statement the Answer previously given in the other place. I speak as one who, when I became a Member of your Lordships' House, bought a Rover as I felt that it was appropriate that I should own a British car, to find only a few weeks later that Rover had become part of BMW. Now we find that a reputable British marque is—not to put too fine a point on it—being discarded, with the tragic results of losses of jobs for thousands working at Rover, as well as for those working in the component industries.

We naturally welcome the creation of a task force to review the consequences of the sale of Rover, but would it not have been more effective if such contingency work could have been set in hand last December when the threat to Longbridge first became clear to the DTI? Or do the Government claim that Ministers were never aware that there were problems at Longbridge—something that would be quite extraordinary on their part? If they were aware, will the Minister tell the House when Ministers first concluded that Rover/BMW as a whole might be in some difficulties?

If, as the DTI claims, Dr Milberg said last December that difficulties only surrounded investment in the R30 car, did the DTI step up its efforts at that point to secure the grant which might have saved this part of the project? If so, when, and how?

I understand that, several weeks ago, the German magazine Der Spiegel carried an article that BMW itself was in difficulty, solely because of Rover, and that it was contemplating ditching it. If that is the case, can the Minister say whether we employ a commercial attaché in Germany? Would not part of his duties be to inform the Government in this country of those matters? Would not the most sensible course now be to allow the Permanent Secretary at the DTI to publish the minutes of the discussions, including notes of telephone calls between Ministers and BMW, in order to clarify this matter? We could then dispose of all these claims and counter-claims.

The future of many thousands of jobs is now at stake. That, as the Statement quite rightly says, must be the matter that is uppermost in all our minds. There has been much blaming of BMW, but does the Minister agree that jobs in British industry will not be saved by vilifying foreign investors, given that inward investment is hard enough at this time because of the weakness of the euro?

Can the Minister tell the House what is being done to secure an alternative buyer to Alchemy for the Rover plant? Can he also tell us the latest state of play as regards the sale of Land Rover to Ford? Finally, will he undertake to come to the House and to allow a debate in government time when the report of the task force that he has just announced is received?

4.47 p.m.

Lord Razzall

My Lords, like the noble Baroness I, too, should like to thank the Minister for repeating this Answer as a Statement. I believe that this is the first time that Government Ministers have made a Statement on developments at Rover. For that reason, I shall be grateful if he will use this opportunity to answer one or two questions covering wider areas than those set out in the Statement.

First, will the Minister confirm the Government's opposition to the expressions of xenophobia, and in particular the anti-German feelings, with which this debate has been conducted in certain sectors of the press? Will he further confirm that the Government have no part in that view and that a country that is obviously so dependent on foreign investment must condemn views of that kind whenever they are expressed and by whomever they are expressed?

Can the Minister also take this opportunity to agree with me that the approach taken by the Tory Opposition to the issue, which has been demonstrated by the words of the noble Baroness this afternoon, does no service to the employees of Rover, in particular those at Longbridge? A kind of, "Who said what to whom and when?" amateur detective story approach tends to mask the seriousness of the issues that are at stake here. One does not have to be a "Brain of Britain" or even a winner on "Who Wants To Be A Millionaire?" to realise that a company that has been losing over £1 billion—as BMW was losing on its UK investment in Rover—must at all times consider the future of that investment?

Furthermore, it is also apparent to anybody who has been involved in these issues that until a final decision is taken by the management of a particular company, it will always say that no decision has been taken. Indeed, perhaps the Minister will confirm that as late as the end of February the top management of BMW was saying at the Geneva Motor Show that it had absolutely no intention whatsoever of closing down Rover or withdrawing its investment from that company. So will the Minister please confirm that the line which is being taken by the Tory Opposition is an irrelevance to the real issue?

Also, will the Minister confirm that the real problem, as the Labour Party and the Government will not say and the Tories cannot say, regarding what has happened at Rover, is that our currency has for far too long been significantly overvalued against the continental currencies? Honda has said it this week; Ford has said it this week, as have representatives of the CBI. It will not come as a surprise to your Lordships' House that we from these Benches would regard the only significant solution to such a problem recurring—indeed, had the appropriate steps been taken earlier perhaps this could have been avoided—is entry into the euro at the appropriate exchange rate. Will the Government now accept that the only way of preventing catastrophes of this nature is for them now to give a clear route map to entry into the single currency, and not something of the micro proportions which the Treasury is now putting in place? Can they give a clear announcement of a clear plan, which will obviously include the whole process of entry into the single currency, including how the currency will be managed "down" during that period?

I said that the Labour Government will not say that this is the real background to the Longbridge tragedy. Does the Minister accept that the Tories cannot say it, because of course they regard the euro debate as the issue that will win them next election? Finally, will the Minister go so far as to say that when the Leader of the Opposition travels around the country on the back of a lorry, whipping up opposition to the euro, he is playing with the livelihood of the workers of Longbridge?

4.51 p.m.

Lord McIntosh of Haringey

My Lords, having listened to the debate in another place on this PNQ, perhaps I may say that I am grateful to noble Lords opposite at the very least for the reduction in decibels on this occasion and in this House.

The noble Baroness, Lady Miller, says that the Rover marque, of which she is a loyal adherent, or has become a loyal adherent since coming to this House, has been discarded. However, the R75 is still being made in Cowley and other Rovers are still being made in this country. I have to say that BMW is a significant player in the British motor industry, and its continued contribution to that industry should not be undervalued.

The noble Baroness repeats the canard that in December we were told that there was a threat to Longbridge. She clearly did not listen to my right honourable friend when he quoted Professor Milberg precisely. He said: I never said that the BMW group would have to reconsider investment at Longbridge". Indeed, as the noble Lord, Lord Razzall, has reminded us, Professor Milberg said at the Geneva Motor Show on the 28th February that they were—and I quote: serious and steadfast in our commitment to Rover at Longbridge". So the suggestion that is being made—that we were aware of a threat to Longbridge which was positively being denied by BMW and that we should disbelieve it—is not particularly plausible. Indeed, I agree with the noble Lord Lord Razzall, that there is not much to be gained from this sort of amateur detective work on what has happened in the past.

Nevertheless, the Secretary of State has made it clear that, subject to commercial confidentiality, which in very large part depends on how much BMW is willing for him to say, he will make available to the Trade and Industry Select Committee all the documents that he can, not just when he meets the committee on Wednesday, but before then. Our commitment to open government in this respect is unimpaired.

The noble Baroness asked whether we should not have stepped up our efforts to secure the grant from the European Commission. Yes, it has been a problem that when you t se the Article 88(2) procedure it takes a long time to get the grants. That is because the European Commission is now open: it seeks to make its thinking known to allow for possible objections. However, we are assured by BMW that this was not a significant issue in its decision.

The noble Baroness also asked whether we would stop vilifying foreign investors. We never started. The noble Lord, Lord Razzall, is quite right: we have always rejected any suggestion that we should indulge in the kind of xenophobia which regrettably has been seen in some of the tabloid press in recent weeks in this country. It is not in our interests, in the automobile industry or anywhere else, to attack those who invest in this country. It is in our interests to see that such investment is well justified and that other people are encouraged to come and invest in this country as a result.

The noble Baroness asked whether there was any alternative to Alchemy. We do not intend to undermine Alchemy at this time. That is the deal which is being discussed with BMW and we do not propose to intervene. Se far as Ford and Land Rover are concerned, I understand that a memorandum of understanding has been produced and I am not aware of any setback in the negotiations.

As to the issue raised by the noble Lord, Lord Razzall, about the overvaluation of the currency, we have always recognised that for manufacturing industry in general the strength of the pound in relation to the euro is a difficult problem. However, we simply cannot accept that using the magic wand of declaring entry into the euro straightaway would somehow resolve these problems so that the currency would go down and our interest rates would converge with those in euroland. It is a very nice thought and it would be lovely if it were true, but I do not think that any serious economist thinks that is the case.

Lord Razzall

My Lords, if I may intervene, I did not actually say that. I did not say that.

Lord McIntosh of Haringey

My Lords, the noble Lord suggested flat what has happened is due to our failure to do what his party has been arguing for over a long period, which is to make an immediate commitment to the euro, regardless of economic circumstances. Perhaps he has not said it on this occasion, but I can assure him that members of his party from the Benches from which he speaks have made that suggestion on many occasions in recent weeks; I have been required to answer them. I can assure him that that is their view, but I do not believe that there is any magic wand or any "quick fix" of that kind which is available.

The noble Baroness asked whether it would be possible to find government time for a debate on this issue. That, as she knows, is a matter for the usual channels.

4.59 p.m.

Lord Islwyn

My Lords, first, will the Minister appreciate that I have no wish to vilify foreign investors, but what bothers me is the fact that 22 miles away from Longbridge, at Ryton outside Coventry, Peugeot, the French company, is making a huge success of its operation. What is more, it is drawing from roughly the same labour pool. Have the Government considered this issue from that point of view?

Secondly, I should like to ask the Minister whether any consideration has been given by the Government to taking the Rover concern into public ownership.

Lord McIntosh of Haringey

My Lords, in relation to my noble friend's first question, we are glad to recognise the success of Peugeot and its 206 line at Ryton. We are pleased that that particular foreign investment is going well. In response to my noble friend's second question, I saw the Socialist Worker-inspired posters at the demonstration—a marvellous, clearly well-supported and deeply-felt demonstration for which I have nothing but admiration. But when the Socialist Worker takes it into its head to demand re-nationalisation of Rover, does it carry with it the obligation on ordinary people in this country to buy Rover cars?

Lord Marsh

My Lords, is the Minister aware that when the Nissan project team arrived in this country some years ago, it took a conscious decision that if it decided to invest in the United Kingdom it would not do so on a site within travel-to-work distance of any British car company? Is the Minister aware therefore that the plant was staffed overwhelmingly by ex-miners and not ex-car workers? Does the Minister further accept that the productivity today of Nissan is some 300 per cent in excess of that of much of the British motor car industry? The idea that this is a question of the strength of sterling and entry into the single currency is grotesque. Does not the Minister accept that the real problem is massive over-capacity in the European car industry which successive governments in many countries have tried to meet with massive state subsidies and achieved nothing other than to prolong the agony?

Lord McIntosh of Haringey

My Lords, the noble Lord, Lord Marsh, appeared to be approaching his first question rather obliquely, but I suspect that he was saying that British car workers are no good and one could do better employing ex-miners.

Lord Marsh

My Lords, I was saying nothing of the sort. British workers and British managers made Nissan in the UK the success it is. I am simply saying that the problems of Longbridge go back a long way.

Lord McIntosh of Haringey

My Lords, I do not accept what the noble Lord is saying about the workers at Longbridge. Only to a very minor extent is productivity in the motor industry the reflection of militancy many years ago. Productivity in the motor industry is largely an issue of capital and management. Given the right management and the right capital, I am convinced that the workers at Longbridge are the equal of any in the world and that they continue to convince the world of that. I would not wish anything to be said from this Dispatch Box disparaging the workers at Longbridge.

In relation to the broader issue raised by the noble Lord of over-capacity in the car industry, that is the nature of capitalist production. When there is a threat of over-capacity we have to make better cars and sell them better. That is the solution not just for Rover and BMW, but for all car manufacturers.

Baroness O'Cathain

My Lords, I declare an interest as a former employee of the British Motor Corporation and also a minor pensioner of the Rover Group. The Minister opened with the statement that houses, people and whole communities will be affected. The grief that will arise from this situation is significant and I hope that your Lordships' House will not bat such words as "xenophobia" and so forth across the Chamber.

I want to ask the Minister two questions. I believe that sums of money were committed to the Rover plant at Longbridge, though they have not yet been paid over. In order to get something out of this wreck and as a lesson for the future, if government money is likely to be committed to a project, should not a working party be set up between the members of the company and people from the DTI? An ongoing investigation could therefore take place into what is happening in the plant. If some of our senior civil servants who are well skilled in getting to the bottom of these problems had been involved with people from BWM, perhaps the shock would not have been so severe and some action might have been taken.

Further, does the Minister have any firm views as to how the Government will help with the dealership network? That is in total disarray. People are talking about Alchemy buying the site and continuing some production, but the dealer network is in a serious condition and the ripples from Longbridge are spreading throughout the country.

Lord McIntosh of Haringey

My Lords, the noble Baroness, Lady O'Cathain, asked, first, about government money. It is true that a total of £152 million was to be made available to Longbridge, of which £129 was government money. The rest was to be raised locally. As the Statement says, that money is to be made available to the task force to deal not just with the social problems in the community, to which she rightly referred, but also any prospects there may be of reviving or continuing car manufacture at Longbridge. It cannot be assumed that it is available to Alchemy because that is now a separate deal.

The noble Baroness asked also whether a working party should be set up to bring together the company and the DTI. That is exactly what the task force is doing. Because BMW agreed to participate in the work of the task force, that company is now involved. Central and local government and agencies in the area are also involved. So the task force is doing what the noble Baroness asks us to do, and more.

Baroness O'Cathain

My Lords, my point was that it should have been done beforehand. Doing it now is rather like shutting the stable door.

Lord McIntosh of Haringey

My Lords, I indicated the extent to which, only one month ago, BMW was indicating its steadfast commitment to Rover production at Longbridge.

Lord Hoyle

My Lords, having seen the concern about their jobs of the 80,000 people in Birmingham on Saturday, I ask my noble friend whether he agrees that Alchemy, a venture capitalist with a short-term interest, is not the right company to be taking over at Longbridge. Can he say what the Government are doing to find someone more suitable to take over the factory and preserve jobs?

Lord McIntosh of Haringey

My Lords, my understanding was that the figure was 100,000 and not 80,000 people, and all credit to them. It was clearly a magnificent demonstration of solidarity. But it would not be appropriate for this Government to undermine the deal which is in negotiation between Rover and Alchemy, or to describe Alchemy in particularly pejorative terms. If it can be made to work and Alchemy intend to preserve jobs and car manufacture, that may be better than nothing. At the moment, that is what is on the table.

Lord Clark of Kempston

My Lords, is the Minister aware that the general public will welcome his statement that there is to be no nationalisation of Rover or any other car manufacturer, particularly in view of the taxpayers' experience with British Leyland? Secondly, the general public will be pleased to hear the Minister say that the introduction of the euro is irrelevant in relation to this problem. However, perhaps I can go back to December of last year when pointers were given to the Government. If action had been taken then, contingency plans could have been started in December rather than in March when the final decision was made. That is what is confusing the public. If BMW is not telling the truth, why cannot we do something about it?

Lord McIntosh of Haringey

My Lords, the noble Lord, Lord Clark, puts words into my mouth which I did not use. I said that nationalisation of Rover was not a possibility. However, that is not to say that public ownership in itself is always to be deplored. The second point that the noble Lord made is just plain wrong. I did not say that the euro was irrelevant; indeed, Professor Samann himself said that it would have been easier for BMW if we had already been in the euro. You cannot say that it is irrelevant. What I rejected was the rather "quick fix" proposed by the noble Lord, Lord Razzall. As to the pointers in December that the noble Lord, Lord Clark, refers to, I have already quoted the statement of Professor Milberg which gives the lie to what the noble Lord, Lord Clark, says. I have nothing further to say on that matter.

Lord Stoddart of Swindon

My Lords, does my noble friend agree that it is not xenophobia to criticise a foreign firm which failed properly to consult its workers about an action which was a calamity for them and their families and, indeed, the area in which they live? Will my noble friend confirm that the firm did not make proper use of the consultative council machinery which was available to it? I hope that my noble friend will agree that it is not xenophobia to criticise a firm for not doing what it properly should have done. Will be also confirm that it is not the appreciation of the pound against the euro which is at stake, but the depreciation of the euro against the pound? Perhaps he will ask the noble Lord, Lord Razzall, whether he would go into the euro now at the rate of 3.20 marks, because we would not be able to devalue and we would be left with the present exchange rate. Finally, will my noble friend say what is the total number of jobs that are at stake as a result of the action that BMW has t taken, both in the car industry itself and in associated industries?

Lord McIntosh of Haringey

My Lords, my noble friend protests too much about xenophobia. I have not used that word except in responding to the noble Lord, Lord Razzall, when I denied that we were xenophobic about the foreign car industry. We are disappointed about what has happened. The Secretary of State said in another place an hour or so ago that we were badly let down by the lack of consultation and the speed with which BMW came to its decision. That is not xenophobia. My noble friend asks me to ask questions of the Liberal Front Bench. I shall not ask questions of the noble Lord, Lord Razzall, any more than the noble Lord, Lord Razzall, will persuade me to ask questions of the Conservative Front Bench. I am not in that business; I am here to do my best to answer questions, not to ask them. My noble friend asked me about the definitive number of jobs that are likely to go. This process is by no means complete. Even if it were complete, I prefer to rely on the ongoing work of the task force to discover the scale of the problem as well as to make suggestions for solving it.

Lord Monro of Langholm

My Lords, the noble Baroness, Lady O'Cathain, made the good point that if there had been earlier liaison between civil servants and BMW the problem would have showed itself perhaps last year. The civil servants would surely have had to inform the Minister—in fact, the Minister did not know this—that there were 60,000, 70,000 or 80,000 Rovers parked around Britain which were not saleable. That surely must have been a red light to the Government to take earlier action than they did.

Lord McIntosh of Haringey

My Lords, of course civil servants have been in discussion with Rover and they have reported to Ministers the results of their discussions. Among the issues discussed has been the question of the application for European authorisation for funding for Longbridge. But in the face of the clear statements from BMW both in December and in January of its continued commitment, it is difficult to see how we could have said, "We think you are liars".

Lord Shore of Stepney

My Lords, I think my noble friend will agree that BMW is not blameless in this matter but there is here a fundamental problem of the misalignment of the pound with the European euro or European currencies. That situation exists and we cannot just ignore it. Whether it is because the euro is too low, as my noble friend Lord Stoddart suggested, or whether sterling is too high, is in a sense irrelevant. Certainly we cannot just join now at 2.20 marks. To do so would be ridiculous. We would bankrupt the whole of our manufacturing industry.

I put it to my noble friend in the form of a legitimate question that this clearly is not just a matter of BMW. We have Honda at Swindon—which I thought my noble friend would refer to—announcing lay-offs. Are we really to preside over the collapse of Dagenham as well? Something has to be done. If my noble friend agrees that there is a serious misalignment of currency, he must do something to operate through the Chancellor and the Bank of England on the exchange rate. Either he must sell forward and manipulate sterling, or he must give the Bank of England different terms of reference other than internal price stability.

When we think that since the Germans bought Rover in 1995 there has been the largest appreciation—30 per cent—of the pound, are we surprised that they are in great difficulties? They bought Rover when it was losing £150 million a year; last year it was losing £750 million a year. That is not because of lack of productivity in the workforce; they have improved productivity every year. However, not only are we losing our exports, but imports are undercutting demand for our own cars in Britain. Something has to be done.

Lord McIntosh of Haringey

My Lords, my noble friend makes particular reference to Honda and to Ford at Dagenham. He really must not believe the scare stories in the Sun about Honda at Swindon. Honda has not made an announcement of job losses at Swindon. It has said that, having produced something like 25,000 to 30,000 below its 150,000 capacity, it proposes to reduce production by another 4,000 or 5,000 vehicles a year as a short-term measure. That is a far cry from what some newspapers have reported. Dagenham is not European-owned. Eurosceptics have insisted, with some justification, that the pound is not as strong against the dollar as it is against the euro. It is no good my noble friend simply saying that something must be done. We had a sensible two-and-a-half hour debate on this subject last week which I recommend my noble friend should read. Otherwise, it is simply like the Duke of York visiting the Welsh valleys; that does not contribute to political debate.

Lord Shaw of Northstead

My Lords, will the Minister tell us what meetings have taken place between the dealerships and the Government?

Lord McIntosh of Haringey

My Lords, any detail which it is possible for the Secretary of State to give within the bounds of commercial confidentiality in advance of and at his meeting with the Trade and Industry Select Committee will be made public. However, it is not for me to do that now.