§ Miss Julie Kirkbride (Bromsgrove)
First, I should like to say how grateful I am to the House authorities and to Mr. Deputy Speaker for having selected the debate on the future of Rover, which will have an hour and a half of hon. Members' time. It is a matter of significant public interest, especially to the midlands area. As hon. Members will know, the announcement that the European Commission was to launch an inquiry into the Government grant of June 1999 was not made until 22 December, the day on which the House rose for the Christmas recess. Today is therefore the first time that hon. Members have debated this vital subject, which reflects on the economic vitality of the midlands region. We are grateful to have the Minister present. We would like several questions answered about the role of the Government in the awarding of the grant and in subsequent events.
My interest in the Longbridge plant, one of the Rover plants, derives from the fact that it is in my constituency—as well as in that of the hon. Member for Birmingham, Northfield (Mr. Burden). The majority of the plant is in the hon. Gentleman's constituency, although, with the prospect of a future planning application, that may not be the case in future. However, that is a matter for another day; today we are discussing the situation at Longbridge.
Longbridge employs around 9,000 people, which is considerably down on the employment figure of around 14,000 of more than 18 months ago, when the Government came to power. The plant has been reduced from what it once was, the biggest employer of the Rover group; Solihull employs about 10,000 people and Cowley about 4,000. Its economic importance to the midlands region is hard to overestimate. The accepted multiplier criterion is that for every one directly employed job there are between three and four others in service and support industry suppliers and so on. The commonly accepted figure is that any threat to Longbridge would have a wider employment impact on the west midlands region of about 40,000 jobs. The prosperity of my constituents and those of many hon. Members is dependent on the reinvestment in the Longbridge works going ahead. That is what we are all here for—to be reassured of that and to establish how the present situation arose, which is one of our principal concerns.
We must face the fact that Longbridge is an old plant; I believe that it will shortly celebrate its 100th anniversary. It has been around for along time, providing prosperity and jobs, and is an old plant for modern production purposes. We must bear it in mind that the need for reinvestment at the Longbridge site is predicated on the fact that productivity needs to rise. Great strides have already been made, and it is a credit to the work force and the management that signifcant improvements have been made, with productivity rising from about 30 workers a car to about 50 for the new Rover 25 and Rover 45. However, productivity must rise if Rover is to have a secure and long-term future in the United Kingdom. That is one of the reasons why BMW wants to make a major investment in the Lonbridge factory.
70WH Another important factor has been the good faith of BMW since it took over Rover Group Ltd. some years ago. As hon. Members know, Rover has had a variety of owners, and it is a source of contention in the midlands which were the better ones. We should credit BMW for investing in the Rover group when it took over the company. At the time, it was widely speculated that BMW was interested only in Land Rover and having a four-wheel-drive product in their vehicle range, and that it might not show the same commitment to the Rover car itself. It is hard to pin that accusation on BMW. It has put massive investment into the Solihull and Cowley plants.
My difficulty, as the hon. Member for Bromsgrove, is that Longbridge has come last and has been rather a Cinderella, and we are now waiting for the investment that Longbridge so sorely needs. In fairness, BMW is committing itself to a £1.7 billion reinvestment programme at the plant, which is the largest single inward investment programme for the UK so far. We are obviously grateful that it is showing its commitment to an old plant. It was extremely welcome news when the BMW board made it clear that it wanted to proceed with that.
As hon. Members know, part of that bid was the offer from the British Government of £151 million-worth of aid, to which I shall return later. I emphasise the commitment that BMW has made. The new retro Mini, akin to the new Volkswagen Beetle, is about to be built at Longbridge. We are waiting to discover how it will look. It should be unveiled in October, and people should be able to buy it next year. Its production has already been committed to Longbridge, which is very welcome, and we are delighted.
§ Mr. Michael J. Foster (Worcester)
As someone who used to work in the car industry in a former life, I greatly value that opportunity to debate this important matter. Does the hon. Lady agree that hon. Members have a duty and a responsiblity in arguing for a strong Rover at Longbridge to do so outside the House as well as inside, by their own actions?
§ Miss Kirkbride
The hon. Gentleman seems to be recommending motherhood and apple pie. Of course we all want to support the Longbridge factory and the Rover works, both inside and outside the House, although I may have missed his point.
§ Mr. Peter Snape (West Bromwich, East)
I am not sure whether I am missing the point, but, bearing in mind what the hon. Lady just said in reply to my hon. Friend the Member for Worcester (Mr. Foster), does she drive a Rover, and, if not, what car does she drive?
§ Miss Kirkbride
I drive a BMW, owned by the Rover group. I am sure that it would be of great interest for us all to declare our car interests.
§ Miss Kirkbride
Thank you, Mr. Deputy Speaker. I was about to discuss the important and welcome investment in the Rover group that BMW has made.
The Rover 75 has been a success. Following the intervention of the hon. Member for Worcester, I should like to put it on record that, although there has been much speculation that the Rover 75 has not been as successful as it might have been, in fact it was the third top-selling saloon in its class in the second half of last year, outselling the Alfa Romeo 156, the Audi A6, the Jaguar S-type, the Mercedes C-class and other models. It was also voted import car of the year in Japan, beating, among other marques, Mercedes. The Rover 75 has been a success and is welcome. Land Rover speaks for itself, and is a hugely successful model. The Rover 25 and the Rover 45, which replace the Rover 200 and the Rover 400, have also been well received and, although they have been upgraded to make them more attractive, we are keen for a Rover 30 to be built at Longbridge, which, if we could stick to the original timetable as we still hope to do, would be introduced in 2003.
What, then, is the problem? Why is Rover not simply an untold success story? The problem has partly been the rising value of the pound. The pound has risen in value since BMW announced its £1.7 billion investment programme for Longbridge plant in 1997–98, when the exchange rate to the deutschmark stood at DM2.75. I rang the Library today, and discovered that the pound is valued against the notional area covered by the deutschmark in the euro zone at DM3.22. That is a massive rise in the value of sterling against the deutschmark. In short, it raises the price of the reinvestment at Longbridge for BMW, the German owners of the Rover group, by 15 per cent., which is worrying. The high pound has also encouraged—
§ Mr. Ken Purchase (Wolverhampton, North-East)
Can we assume from the hon. Lady's remarks on the strength of the pound that she agrees with Professor Sämann, the chairman of the Rover group, who said:Membership of the European Union has been a major factor in encouraging BMW Group's investments in the UK and therefore safeguards Rover's future.— The next step, full UK membership of the EURO, would consolidate this investment."?May we take it that she agrees with those sentiments?
§ Miss Kirkbride
Sadly, I do not have that quote in front of me. However, Professor Sämann goes on to say that although BMW, as I fully recognise, would like the UK to join the euro, it does not want us to do so at the present exchange rate. If the hon. Gentleman finished the quote, he would find that the UK's joining the euro at the present exchange rate is not on BMW's agenda. Moreover, if he were serving his constituents, he would also recognise that manufacturing industry has been put on his back—
§ Mrs. Angela Browning (Tiverton and Honiton)
Is my hon. Friend aware that it was recently reported that Toyota had written to the Secretary of State for Trade and Industry, asking him to make representations to the Bank of England's Monetary Policy Committee about the strong pound? When I tabled a question to the Secretary of State, asking him whether he had done so, I received the rather ambiguous reply—which I assume meant yes; perhaps we shall hear an 72WH explanation later—that it is common for Secretaries of State to make representations to that committee about the strength of the pound. Perhaps I should table another question, on behalf of Rover.
§ Miss Kirkbride
My hon. Friend makes a good point. The Government cannot recognise the difference between a strong pound, which is, on the whole, welcome—the German economy was very successful with a strong currency for many years, until unification created more recent problems—and an overvalued pound. Those of us who represent the midlands would do well to recognise the huge damage caused to the manufacturing sector, much of which is based in our area, by the strength of the pound.
§ Mr. Snape
Perhaps the hon. Lady could explain the impact of the strong pound on manufacturing industry in the west midlands by providing statistics, rather than relying on the editorial columns of the newspaper for which she writes a weekly column, The Birmingham Post, which has been undermining the regional economy for many years.
§ Miss Kirkbride
I think that I would be called to order if I sought to defend The Birmingham Post, which is an excellent newspaper that merely seeks to tell the truth about the activities of our Labour Government. I would be happy to point out one of the problems—
§ Miss Kirkbride
I would like to cite my own statistics rather than those that the hon. Gentleman wants to foist on me. As he knows, BMW recently announced that, because of the high pound and the problems of the exchange rate, it would reduce the outsourcing of its supplies for Rover in the United Kingdom from 89 per cent. to 50 per cent. during the next five years. That is in part due to the strength of the overvalued pound, which causes huge problems for BMW because spare parts are traded in the international economy and it will therefore go for the cheapest sources. If the hon. Gentleman does not understand that, he does not understand economics.
§ Dr. Lynne Jones (Birmingham, Selly Oak)
I have some sympathy with the hon. Lady's concerns about the high value of the pound, and I would like the Government to try to reduce it to a more sustainable level so that we can ultimately join the euro.
My hon. Friend the Member for West Bromwich, East (Mr. Snape) asked for statistics. Yesterday, The Birmingham Post printed an article headed "Car production races to 27-year high", which showed that there had been an 11.5 per cent. increase in car exports between 1998 and 1999. Also, the report by the West Midlands group of chambers of commerce suggests that manufacturing prospects are optimistic and that, through investment and action to increase productivity, our manufacturing industry is coping with the high pound. I would like the hon. Lady to acknowledge that that is a tribute to the Government's encouragement of such investment.
73WH There is a problem with the pound, and I would like something to be done—
§ Mr. Deputy Speaker
Order. I must remind hon. Members that the debates are short and interventions ought to reflect that brevity.
§ Miss Kirkbride
The hon. Member for Birmingham, Selly Oak (Dr. Jones) makes a point that we can all recognise: that a strong pound has a beneficial effect on productivity. That is bearing fruit, but an overvalued pound creates problems. Our balance of trade figures have deteriorated significantly under the Government. It seem reasonable to conclude that the overvalued pound is one of the reasons for that and for the job losses in the manufacturing sector during the past few years. I am sure that the West Midlands CBI and other trade organisations would confirm that.
The Minister must respond to the problem of the overvalued pound, about which I am sure that the Department of Trade and Industry receives many representations. We also want to question her more closely on the award of the grant to BMW for the Rover group, which was announced in June by the Secretary of State for Trade and Industry.
As the Member of Parliament for the area that includes Longbridge, I warmly welcomed the Government's announcement that they were to award £151 million of Government aid to BMW for its investments at the plant. However, in awarding that grant, Ministers should have met the European Union's criteria, because they had to satisfy the European Commission that they had acted properly within those rules. Ministers had to be sure that, without the benefit of state aid to ensure that the jobs remained in the United Kingdom, BMW would have seriously considered relocating the Longbridge plant outside the European Union. Her Majesty's Government had to establish that that was firmly the case before they awarded the grant.
When the welcome award was announced, we all reasonably assumed that the representations, discussions and considerations had been made and that there should be no problem. The fact that the award was immediately followed by speculation that the Commission would launch an inquiry, as I am sad to say that it did in December, raises severe questions about the competence of Ministers' handling of the bid and whether they sought proper reassurances and followed proper guidelines. They would have been fully aware of the European Union's rules.
§ Mr. Robin Corbett (Birmingham, Erdington)
If the hon. Lady is suggesting that there was no contact between the Department and the Commission when the talks were held with BMW, I can assure her that that is not the case. It is routine for the Commission to take a second look at all such grants after the event.
§ Miss Kirkbride
I would not necessarily dispute what the hon. Gentleman said, but it is not routine for the Commission to launch an inquiry. Of course it considers whether the rules have been complied with, but it does 74WH not necessarily launch an inquiry. The hon. Gentleman has missed the point. The inquiry raises a question as to whether Ministers properly complied with the rules when awarding the grant.
§ Mrs. Browning
In response to the press conference of 23 June at which the announcement was made, the Competition Commission said two days later:So far the Directorate-General of Competition (DG IV) has had only one meeting with the UK authorities on May 11th last. Since then, apart from some technical queries, there have been no further contacts.Does my hon. Friend agree that it is extraordinary that such an announcement should have been made at a UK press conference when there had been only one rather tenuous meeting at which the Competition Commissioner was not even informed of the announcement?
§ Miss Kirkbride
My hon. Friend puts a strong case based on that further evidence. It seems that Ministers jumped the gun when making an announcement that was extremely sensitive and important to the economy of the midlands. It was up to Ministers to establish that they had followed the rules, to reassure the Commission that they had done so and to persuade it that the award should not be subject to an inquiry. Clearly, that has not happened.
The inquiry adds to the uncertainty at the Longbridge plant. Having had the announcement from Her Majesty's Government in June that the money would be forthcoming, BMW at Rover was set to invest at the end of last year. The bricks and mortar of the factory's rebuilding should have been put in place in November and December, but that has not gone ahead because BMW is waiting to see what happens. That vital investment in the midlands is not being made because Ministers might have acted incompetently in not ensuring that the rules were properly complied with before they made the announcement.
§ Mr. Snape
The hon. Lady normally has outspoken anti-European views. She would surely have used her newspaper column to denounce Ministers as incompetent in the same way if, last year, they had said, "We would like to give the grant to Rover, but we shan't until we have had the fullest possible consultation with the European Community."
§ Miss Kirkbride
I think that the hon. Gentleman makes my point; clearly, Ministers jumped the gun and did not get the proper reassurances. It was up to the Government, not the BMW board, to make the case and establish that the rules had been followed. They should have examined Hungary and crossed all the bases, so that the Commission would have had no locus to launch the investigation. That was not done. An investigation started on 22 December and we now face uncertainty and the prospect of no investment in the plant until summer at the earliest and only then if the inquiry does not find against the Government on the award of the grant. That will lead to further uncertainty about what BMW will do.
That brings us up to date. Having announced the launch of the inquiry, we are now waiting to find out what happens. BMW told me this week that it was 75WH optimistic about gaining a preliminary verdict from the European Commission as early as this week. Where do we go from here? The Commission will establish its criteria and assess whether the rules have been complied with. The Government and BMW—as well as other European car manufacturers which also want their say—will then have a chance to make their observations on the findings. That process will take around four weeks, after which the Commission will take another four to six weeks to determine its findings. We are now talking about in excess of two, or perhaps even three, months before we receive a final answer about awarding the grant, which adds yet again to the uncertainty of the process.
I shall be grateful if the Minister would clarify whether the Commission has received all the relevant documentation from the Government to enable it to proceed with the preliminary inquiry. Is she satisfied that the Government acted hastily enough to forward the documents to the Commission to allow it to formulate its conclusions? Time is of the essence. When does the Minister believe that the Commission will reach a verdict, so that we can finally ascertain whether the rules for awarding the money were met?
I affirm the importance of that point. Hon. Members will know that BMW has its annual general meeting in April—approximately the same time that it will announce this year's financial results. We know from press speculation that losses at the Longbridge plant have increased considerably over those for last year. If losses approach the £1 billion figure, as suggested in the press—including The Birmingham Post, which is clearly well sourced—it will inevitably cause concern among board members. If the award of the grant is still indeterminate or even if a conclusion has been reached, it will be a moment of great decision for the future of the Longbridge plant. It would help the BMW board if it knew the status of the grant in time for the April meeting, which would clarify once and for all the investment project for the Longbridge group.
I pay tribute to all the workers at Longbridge, who have shown much flexibility and determination to ensure success by operating changes at the plant. I also pay tribute to BMW, which showed good faith in its willingness to invest in the Longbridge plant, which has existed for 100 years. People in the midlands are tremendously proud of the unique Britishness of the Rover car. We very much want operations to continue at Longbridge, but Ministers must now play their part to overcome the sad and unsettling affairs of the past few months.
§ Mr. Richard Burden (Birmingham, Northfield)
I congratulate the hon. Member for Bromsgrove (Miss Kirkbride) on securing a debate on the future of Rover. It is an important issue, as the hon. Lady has shown in her remarks. However, not everyone in the west midlands would congratulate her entirely on her approach. The biggest problem for the Rover group, and the Longbridge plant in particular, in the past two years has not always been what has happened there. The situation has been hyped up and it has had to contend with damaging speculation about what might be going on round the corner.
76WH Speculation affects confidence and sales. I would not dispute the hon. Lady's figures—that 50,000 jobs in the midlands depend on the success of the Longbridge plant. However, we must be careful to ensure that our actions in this place do not add to speculation and uncertainty, and I am not convinced that set-piece debates at this stage are helping to dampen them down.
The hon. Lady raised several questions about the Government's record and the story so far, which deserve an answer. She sought to attribute blame for delays in the granting of European Commission approval for the deal to the Department of Trade and Industry and to my right hon. Friend the Secretary of State who, she alleges, did not prepare the ground before agreeing the deal with BMW. It is a serious charge to assert that Governments do not prepare the ground before taking action that might have European implications. It is particularly serious regarding the Rover group because this is not the first time that European investigations have taken place.
The hon. Lady will know that the Rover group was sold by the Conservative Government to British Aerospace in 1988. In fact, the then Government were prepared to write off the entire debts of the Rover group to the tune of £800 million and then to sell it for £150 million. That deal was questioned in the late 1980s by the European Commission, which found that the Government's actions breached EU rules and demanded a recovery of £300 million-worth of the sweeteners given by the Government to British Aerospace. That whole saga of sweeteners and the Aerospace deal did nothing for the confidence in the Rover group and nothing for the future.
That series of events also led to a National Audit Office report. As we are debating the important role of Governments in these matters, it is worth quoting from that report of 1989. It concluded, after examining the deal:the fact remains that the Department's negotiating resulted in British Aerospace paying £150 million for a business which made a profit before interest and tax of £65 million in 1988 … and which also had surplus assets and other benefits worth at least £250 million, of which it has so far realised £126 million".
§ Mr. Tim Boswell (Daventry)
Despite the figures that the hon. Gentleman has just cited and the current difficulties of the Rover group, would he agree that the industrial performance of Rover in the decade after the sale was considerably better than in the period leading up to the sale, which shows that it was a positive move?
§ Mr. Burden
It is certainly true that Rover has progressed, but I would not conclude that the deal was an appropriate mechanism, especially without any tendering, renegotiation or offers to other firms. It was a case of writing off debts of £800 million and selling for £150 million—that is what the National Audit Office report was all about. Many of us believe that the Government could have secured a much better deal for the taxpayer, and it took the European Commission to remind them of it at the time.
I acknowledge that the hon. Member for Bromsgrove was not in the House then. It may even have been before she worked as a journalist for The Daily Telegraph. She was, however, in this place during the early part of last year, when negotiations over the current deal were going 77WH on. As I understand it, the hon. Lady's charge today is that the Government did not prepare the way or do enough, and needed to check up on what was happening. As she rightly said, she and I share that plant. It was therefore important that she and I, as local Members of Parliament, made sure that we knew what was going on.
I was interested to read in The Birmingham Post of 19 March 1999 a report about the negotiations that were taking place. At that stage, my right hon. Friend the Secretary of State had made an initial offer of £118 million to BMW in respect of the deal. The quote that the hon. Member for Bromsgrove gave from The Birmingham Post—I am quoting from the paper, so it must be right—was:I am disgusted. The Government knows that the prosperity of the Midlands depends on the future of Longbridge and to offer almost half the money requested by BMW is an insult to us. Stephen Byers should be on the telephone immediately putting this matter right.No words of caution there about checking that things were in line with European rules. The hon. Lady's point was simply that BMW had asked for a large amount of money, so the Government should go ahead and pay it. An interesting approach to economic policy—whether it represents the Conservative party's new economic policy I do not know.
§ Miss Kirkbride
I am grateful to the hon. Gentleman for allowing me to offer a riposte to his fatuous remarks. It is obvious that the Government upped their bid by a further 30 per cent. or more when they offered £151 million. I did not realise that the Opposition's role these days is to ensure that Ministers act competently at all times. I just assumed that the Government knew the rules and would abide by them. I realise now that that was a silly assumption and I am sorry.
§ Mr. Burden
The hon. Lady has her views on the responsibilities of a Member of Parliament to his constituents and I have my views of what those would have been at that time.
I will move on to what the deal was, what it is and where it goes from here. I have used harsh words about the hon. Lady but I agree with her about the contribution made by the people involved with the plant, especially its employees, and the partnership that they have shown with the company in reaching a ground-breaking deal on working practices, without which we would not be where we are today. All of us should pay tribute to that.
It is a pity—although no doubt it was an oversight rather than deliberate—that the hon. Lady did not pay tribute, as all of us should do, to the local partners who played such an important role in bringing that deal to a successful conclusion. I pay particular tribute to Birmingham city council for its efforts in bringing about an important local element of the deal, to the Birmingham TEC, the chamber of commerce and industry, and to Advantage West Midlands—the regional development agency—which between them were able to put together the package of £23 million that forms an integral part of the deal.
78WH In addition, some £129 million of regional selective assistance was agreed. It is important to put on record what the grant was all about. It was not a grant given because BMW asked those bodies for some money and they said, "Let's pay it." It was not a bail-out. It is important to emphasise that and it is unfortunate that the hon. Lady did not recognise it. It is a deal with clear productivity targets and it is phased over a period. It is about raising skills and about investment by the company itself. As the hon. Lady said, a sum in excess of £1 billion is being levered in through regional selective assistance and the local package. If we add BMW's contribution to the United Kingdom as a whole, there is investment of approximately £3 billion.
The European Commission has chosen to take the issue to a full investigation. I consider that unnecessary. Its decision was made in December and did not follow immediately the submission of the application by the Government and BMW—the Commission had had it for some time, and various questions were asked, and answered. I do not think that an investigation was necessary. When I and Labour MEPs for the West Midlands Simon Murphy, Neena Gill and Michael Cashman met Commissioner Monti in December, we asked him whether the Government had failed to provide information that the Commission had requested. I have to tell the hon. Member for Bromsgrove that Commissioner Monti did not come up with anything on that: he said only that there were still things that the Commission wished to look at. He said that the Government had not failed to provide anything that the Commission had requested of them.
Commissioner Monti decided to go ahead with the inquiry anyway. I do not know whether the hon. Lady has ever attempted to meet the Commissioner, but he made it clear when we met him that he did not see this matter as anything peculiar or as making an exception for Rover. He drew our attention—the hon. Lady, who also presumably takes an interest in the motor industry, will be aware of this—to the fact that inquiries into Fiat and Volkswagen have been launched over deals that involved assistance, although in many respects they were not exactly similar to the Rover deal. Therefore, there is nothing especially surprising about the Rover investigation.
Where I take issue with the Commission—and believe that there is a significant difference between the Rover deal and the Volkswagen and Fiat deals—is that in both the latter cases the money was paid up front, so the Commission's investigation took place afterwards. I do not question the Commission's right to investigate, or the Rover deal itself. What I do question, given that we in Britain have played exactly by the book and—as the hon. Lady said ought to happen—have sought approval before the money is paid, is its decision to investigate after questions have been asked and answered. In my view, that is unnecessary. However, the Commission has decided to go ahead with the investigation. The vital message to the Commission today is that we need a decision soon because that inquiry is about an investment programme to bring a new car to market within 18 months to two years. It is most important that the Commission gets on and makes its decision quickly.
As for the future, the company faces real challenges. A huge number of suppliers in the west midlands and elsewhere depend on Rover group. The hon. Member 79WH for Bromsgrove referred to some of their current difficulties. It is true that the pound is causing difficulties. The hon. Lady would do well to listen to the argument of my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) about what BMW says about that. If, in that context, she honestly believes that sterling should become a sort of hedge currency against a weak euro, and that that would improve the position of exporters in any way, she has a rather curious view of economics.
However, there are things that we can do about suppliers and the component industry. It is important for BMW to understand that it has a responsibility to maintain a healthy supply base in the UK.
§ Miss Kirkbride
For clarification, although we understand that Labour Members are keen to join the euro, it would help Opposition Members if we could establish the rate at which it would be acceptable for the pound to join. Is it DM3.22, as today, or the DM2.75 of 1997–98? [HON. MEMBERS: "That is a stupid question."] It is a relevant question. I regret that Labour Members do not understand its relevance to manufacturing industry.
§ Mr. Burden
If the hon. Lady has attended debates in the House, she will know that the Chancellor has set out clearly the criteria that will be important for joining the euro.
§ Mr. Deputy Speaker (Mr. John McWilliam)
Order. A great deal of heckling is going on this afternoon for some reason or another. I ask hon. Members to desist.
§ Mr. Burden
Where I take issue with the hon. Lady is with her view that there is an alternative, which is to say that we shall rule out entry, and that somehow that will bring down the level of the pound. That is absolute nonsense, but the hon. Lady had a point in what she said about the difficulties faced by the components industry. Practical things can be done to help. That is why I welcome, as I hope she does, the industry forum—a real partnership between the motor industry and the Government. She should welcome the accelerate programme, which is about improving skills and processes in the component industry, to help it meet the challenges ahead.
If the components industry and Rover can meet those challenges, the future will look bright. Three new models were launched at the back end of 1999. As the hon. Member for Bromsgrove said, the Rover 75 has been receiving rave reviews and was last year's car of the year according to What Car? The constant speculation about the Rover group's future and issues concerning Commission involvement in car pricing have obviously affected sales. One would not expect otherwise. However, it is good to report that the Rover 75 was the third highest selling car in its class in the second half of last year. Longbridge is already being transformed with investment for the new Mini. Changes in plant have been made to enable it to come on stream at the end of the year.
80WH At Hams Hall in North Warwickshire, BMW is building a new engine plant and in between 18 months and two years there will be a new small to medium car. To enable that to happen, the investment must be unlocked. The European Commission needs to take a decision on the aid package, which I am confident is entirely within European rules, as quickly as possible. I hope that hon. Members will unite in conveying that message to the Commission because Rover is a strategically important industry not just for the midlands and the United Kingdom, but for the European Union. The challenge for the Commission is whether production should stay inside the European Union or should possibly move elsewhere. The facts will, I think, lead to the conclusion that the deal conforms with the rules.
My right hon. Friend the Secretary of State is committed to a bright future for Rover, as am I. Many of my hon. Friends who represent west midlands constituencies have come here today, including my hon. Friends the Members for Redditch (Jacqui Smith), and for Worcester (Mr. Foster). My hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) was here a little while ago, in addition to my hon. Friends the Members for Wolverhampton, North-East, for Coventry, South (Mr. Cunningham), for West Bromwich, East (Mr. Snape), for Newcastle-under-Lyme (Mrs. Golding), for Birmingham, Hall Green (Mr. McCabe), and for Wolverhampton, South-East (Mr. Turner) as well as my hon. and learned Friend the Member for Dudley, North (Mr. Cranston). My hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) has also been here and we have been joined by my hon. Friend the Member for Stourbridge (Ms Shipley). That shows the commitment of Labour Members of Parliament to the Rover group and the car industry in the west midlands. We are committed to making things work. It is up to the hon. Member for Bromsgrove and her hon. Friend the shadow Secretary of State to decide whether they are equally committed, or whether they want to use the debate to make political points.
§ Mr. Ken Purchase (Wolverhampton, North-East)
First, I congratulate the hon. Member for Bromsgrove (Miss Kirkbride) on securing the debate. It is an opportunity to rehearse some of the important arguments on which we need to unite in coming months if the future is to be as bright as we would like. However, despite a comprehensive account from my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) other matters need to be given prominence in the debate. The strength of the pound has been mentioned, although no conclusions were reached about how to tackle that problem. It is sensible to think about Rover in terms of what we can see needs to be done.
The considerable rise in car production has been mentioned. It is at a 27-year high. Regrettably, that rise is almost wholly confined to companies other than Rover, whose figures, although by no means disgraceful, have not been contributing in a measured way to the improvement. Why is that? There has been a great commitment to improved productivity at Rover and the new management has offered leadership, which had been absent for many years. Previously, there had been 81WH massive under-investment. I can call on my working experience at what is now the Rover group, but was previously British Leyland, in commenting on this matter. Machine tools and much of the kit for producing components for British Leyland were, frankly, dug up from the bottom of the North sea after the first world war. It was appalling equipment. Little or no work was being done on new machine tool technology. At that time, it seemed to be the lean-to car company. No one was prepared to do anything to improve it. Management was as poor as it could be. There was constant friction with the work force. No one emerges from that period with any honour. All the mergers that destroyed distinguished car marques in Britain came to nothing and made things worse.
BMW has brought leadership to Rover and the workers and management have responded well. However, the cost of component manufacture for Rover is much higher than for other major car companies in Britain. That accounts almost entirely for the poor performance. It is higher, first, because of lack of investment. That is serious. I do not know whether even now some of the suppliers are putting the sort of investment into their companies that they should be putting in.
Secondly, the value of the pound and being outside the euro, with no certainty yet of going in, have exacerbated the problem. The hon. Member for Bromsgrove asked whether we could go in at DM3.20. The answer to that must obviously lie in the British economy's performance in the coming two or three years. We have heard Mr. Duisenberg say that if Britain is to find its way into the euro it must do so on the basis of the pound's having been stable against the other currencies for at least two years. That rather rules out a massive devaluation to DM2.50 or DM2.60 as the hon. Lady suggested.
In two years, greater convergence between the currencies may happen. One of the Chancellor's aims is certainly that convergence should be a major test of whether to recommend a referendum on going into the euro. That decision must be made by the British people. Hiding behind a debate on Rover, as the hon. Member for Bromsgrove has done this morning, is not helpful in that regard. She obfuscates the issue by talking of Rover without dealing with the value of the pound. She makes no suggestions about how to bring down the value of the pound. The value of the euro reflects the value of the European economy much more accurately than the pound reflects the value of our economy. We inherited that state of affairs from the Conservative Government—a massively overvalued pound and an underperforming economy. There have been improvements in Rover and in the economy. That matter is crucial to the future of Rover and the car industry in Britain.
§ Mr. Purchase
No, because I have only a minute or two left.
The hon. Lady might not have liked my quotation from Professor Samann, but I could give her more quotations. The chairman of Fiat made a similar case 82WH and the chief executive of the Ford Motor Company made virtually the same case. We heard this from Nissan:Regarding the UK's entry into EMU, I believe that, the moment the conditions are in place for a successful entry, the Government should take the UK in.Foden Trucks—a famous name in British manufacturing—has similar sentiments. I think that the shadow Secretary of State referred to Toyota, which was clear on its position having met my right hon. Friend the Secretary of State. It said:If there is no change in the long term, then we will have to decide whether even our existing operations"—let alone expansion—should continue.The situation should be set against the improving performance at Rover due to new leadership and a more inspired approach to work. The work force's agreements, conceding many practices, might have been given more willingly previously had there been a better style and class of management.
We must consider the situation in the context of our position in Europe, on which there is no going back, and the need to make real efforts to ensure that the Chancellor's five principles on entry to the euro are met in the shortest possible period. The decision to enter should be taken by the British public following a proper and reasoned debate, the like of which we have not heard from the hon. Member for Bromsgrove.
§ Dr. Vincent Cable (Twickenham)
I am one of the few Members in the Chamber who does not represent a west midlands seat. If I did, I would be arguing as other hon. Members are for their constituents and for state support. I sympathise with their approach. However, I do not hold such a seat and so may enjoy the luxury of considering the subject in a wider context.
My first question concerns what is happening in the motor industry. One hon. Member painted a rosy picture of rapid production growth, but we should consider the comments made by the Consumers Association at the weekend. It said that car industry statistics were a little like election results from the former Soviet Union—they were not terribly meaningful. There is an enormous distinction between production, shipment and sales figures.
The car industry's current problems are serious. The core problem, on which the hon. Members for Bromsgrove (Miss Kirkbride) and for Wolverhampton, North-East (Mr. Purchase) have touched, is the significance of exchange rate problems. No less a person than the chief finance officer of BMW is spelling out rather brutally the significance for the industry. He said a few days ago that BMWis considering a large cut in the proportion of UK manufacturers' parts for Rover cars while also invoicing existing UK suppliers in euros".The company is moving, because of the pressure of the exchange rate, to cut back much of the industry on which many hon. Members' constituencies depend. Suppliers are being forced to take risks on the exchange rate.
83WH I was surprised that the hon. Member for Bromsgrove mentioned the exchange rate. The word to describe that is chutzpah. It certainly was cheeky. Some of us have listened to the debates from an economic perspective. I have also understood the Conservative position to be that there is no such thing as an over-valued exchange rate. The exchange rate is what is set in the market, and exchange rate volatility is to be welcomed because that is what the market says. If the hon. Lady is now saying that the exchange rate is too high, how precisely is she proposing that it be stabilised? Those who argue for economic and monetary union membership have an answer—the trajectory may be tricky, but at least they can answer, "You fix the rate." How do you deal with the problem if you do not believe in fixing the rate?
§ Dr. Cable
I apologise, Mr. Deputy Speaker. I am sure that you have not.
The hon. Member for Wolverhampton, North-East approached the subject more coherently, but raised questions that went unanswered. The exchange rate is at its present level partly because the Government chose, early in Parliament, to duck the issue of seeking an early political mandate. Had they taken that opportunity, the market would have been given different signals and the exchange rate would almost certainly have been trading at a much lower rate.
However, that is history. For the future, we have Mr. Duisenberg's alarming pronouncement. He is taking the hard line that the British are acting from a weak bargaining position as late joiners who will take the conditions on offer. We are now being told that a two-year period will be enforced, meaning that we would be expected to enter in two years' time at the clearly over-valued current rate. In its report last week, the International Monetary Fund showed that a proper equilibrium rate would be DM2.80, which is way below the present level.
If we do not accept that view of the future, the timetable will have to be postponed, with effects on other parts of the car industry. Toyota and others are asking what future they have in the UK. There is much uncertainty. More than anything else, the debate highlights the huge uncertainty created as a spillover from our not having the EMU entry strategy clarified.
The second issue raised was the Commission inquiry into state aids. I fully sympathise with hon. Members wanting us to get the right result—I hope that we do, too. The Commission's questions about mobility, to use its jargon, are valid. It is questioning whether BMW really had an alternative of going to Hungary. When one studies BMW's published thinking, it is clear that it never seriously intended to do that. Its strategy all along was to be a volume car producer, not to build a branch plant in Hungary. In the long term, its deliberate and systematic involvement with Rover satisfied the strategy. If that was true, British state aid was not needed because its investment was going to proceed anyway. That is the nub of the Commission inquiry. I hope, now that Britain has made the decision, that the Commission finds in our favour. However, it is asking a valid question.
84WH My third point concerns the other Commission inquiry, which has not yet been mentioned, and which has major implications for Rover and the industry generally. It brings into focus a conflict between two Government objectives. It is clear from the Rover decision that the Government are concerned to help the car industry. However, they are also concerned about rip-off Britain, high British car prices and the current block exemption given for the marketing of cars.
From most of the inquiries, the difference between UK and continental car prices clearly benefits not only dealers and car fleet buyers, but the car manufacturing industry. The choice is painful: if we went for cheaper cars for British consumers, there would be a substantial knock-on effect and damage to the industry. I suspect that the authorities can do little about the situation—internet buying is proceeding so rapidly, with so much transhipment of goods, that the car industry's position is being undermined anyway.
The decision has already been made—the Government have committed the money. We hope that the expectations are realised and that productivity improves. However, because of what has happened to exchange rates and because of doubts surrounding the two Commission inquiries, we are led to ask serious questions about whether the continued recourse to large-scale state aid for the car industry is a good use of industrial policy.
§ Mrs. Angela Browning (Tiverton and Honiton)
I should begin by congratulating my hon. Friend the Member for Bromsgrove (Miss Kirkbride) on bringing the debate to the Chamber. One of our great concerns has been that, although the issue has been in the limelight since the announcement last June, there has been no formal representation by Government to the House. I listened carefully to other hon. Members, who clearly have a genuine constituency interest in the matter. They were mealy-mouthed in their support for my hon. Friend having secured the debate. Any of them could have brought the subject to the House during the past seven months.
The matter is important not only to the midlands but nationally. When the announcement was made, it would have been more appropriate for the Secretary of State to make a statement in the House in June because of the size and importance of the company. That would have allowed hon. Members to ask the many questions precipitated by the announcement. More questions have arisen subsequently.
I believe that one hon. Member, although I cannot remember who, said that he hoped that I would not be party political. Would I be? I draw it to the attention of the Chamber that the first I heard about the Secretary of State's announcement was from a press release dated 22 June, which says,Rover deal—Invitation to a photocall.As a result of the Secretary of State making his announcement in a photo call to the press at 9.30 am, the House was denied the opportunity to ask questions at the outset. I was unable to ask questions from the Dispatch Box, so I followed the route with which I am now becoming only too familiar, which is to table parliamentary questions. Tabling questions to the 85WH Secretary of State for Trade and Industry and extracting answers from him is becoming my life's work, so much so that I am tempted to patent it and sell it to Waddington's. However, we all recognise the importance of the announcement, which was welcomed throughout the House.
§ Mr. Burden
On a matter of accuracy, as the hon. Lady might be aware, the announcement was made by the Prime Minister during Prime Minister's Question Time in the House.
§ Mrs. Browning
Surely, a proper statement with the necessary time for questions would have been the most appropriate way for the Government to make an announcement. There have been opportunities for the odd oral question, but that is hardly the point. Clearly, when the announcement was made, it raised issues of concern about the Commission's role. We were reassured by the Secretary of State and the Department of Trade and Industry that all would be well, not least because of the concern about mobility which, as the hon. Member for Twickenham (Dr. Cable) rightly said, is at the heart of the matter and of the investigation that has since been carried out by the Commission. On 25 June, a spokesman for the Department of Trade and Industry said that the Department was confident that BMW would be able to demonstrate that the project was mobile. Unfortunately, despite those reassurances, the discussions that were held and the preparations that were made prior to the announcement clearly did not go into the sort of detail that might have avoided the extended delay that now exists.
My hon. Friend has outlined how important the matter is, not only to the 9,000 employees at Rover in Longbridge, but to the many businesses in the midlands and elsewhere that supply Rover. As part of my attempt to get answers from the Secretary of State, I asked him about that matter in a written question. From representations that I have received—not only from small suppliers, but from machine tool suppliers, for example—I know that there is concern that a lot of German equipment will now be used in the factory where, previously, UK suppliers had been involved. Among the questions that I asked the Secretary of State in June last year, I asked him to list the criteria under which Government investment in Rover was expected to meet best value. I also asked him what the impact was likely to be on suppliers. Again, I had to prod for an answer, and only when I prodded by way of a letter in August last year did I eventually receive a reply in writing from the Secretary of State, in September.
One of our concerns is the way in which the Government have handled the information. Perhaps, on this glorious day of 1,000 days, there is an opportunity for the Minister to recognise—
§ Mrs. Browning
I stand corrected if it is 1,001. On this glorious day, we are celebrating an excellent floor cleaner.
86WH The delay is causing uncertainty, adding to the speculation about the future, as the hon. Member for Birmingham, Northfield (Mr. Burden) said, not just for Rover, but for the many other companies who supply Rover. I quoted from Mr. Van Miert's response immediately after the announcement was made in June. We all understand the process, which is that announcements are made before any formal application to the Commission is submitted, but we must consider the time and sequence of events. The fact that the Secretary of State rushed to his photo call when he arrived on a plane from China, where he had received some bad publicity, suggests that the art of the spin doctor was at work. It would be risible, were it not for the fact that when spin doctors take precedence in the timing of such an announcement, the proper procedures are not followed and preparations are not properly made. The correspondence between me and Mr. Van Miert's office just a few days later showed clearly that the Commission would have expected and welcomed more detailed consultation with the Government before the announcement was made. I hope that the Minister will learn the lesson that, in matters of such importance when, some seven months later, so many British suppliers are faced with uncertainty, there is a proper place for scrutiny of such an announcement, and that is in the House following the correct representations to the Commission.
This debate is about the future, which, as we have heard, will not be known for another two or three months. Will the Minister update us all on her understanding of the timetable before us? We all accept that there will be a delay. Clearly, the Commission needs to make its inquiries. However, a timetable would add stability because it would enable people to plan. People find it most distressing if they do not know what the time scale is likely to be. If the Minister is unable to make that commitment today, perhaps she would agree to put the information in the House of Commons Library within the next few days. That information must be important to Rover and it will certainly be important to Rovers' suppliers, from whom I receive an increasing number of letters and who need to make long-term plans. If that information is not forthcoming, the uncertainty will continue.
§ Mr. Boswell
My hon. Friend has emphasised the importance of clarity in these matters. Could we not take a collective decision on behalf of the Chamber to press the Minister to ensure that the urgency that has been expressed today is communicated to the Commission? We really need to clear this up as soon as we can, in the interests of Rover and all its suppliers.
§ Mrs. Browning
My hon. Friend is right. We have no choice but to accept that there will be further delay, but if the delay could be timetabled realistically, it would take some of the sting out of the wait. As the hon. Member for Northfield said, BMW has made a commitment and is already building new factories. We should take hope and encouragement from that, but clearly any questions that remain unanswered, especially surrounding the £152 million that the Government have agreed in funding, should be underpinned by a detailed timetable.
87WH In conclusion, there has been much discussion about the high pound. I asked what representations the Secretary of State makes on behalf of key industries and manufacturers—I asked that question in respect of Toyota in particular—because the right hon. Gentleman may have made representations to the Bank of England Monetary Policy Committee on behalf of the car manufacturing industry in the UK. It would be nice to know—if the Minister is unable to reply today, I can table more questions to the Secretary of State because that has a regular slot in my diary—about the nature of those representations. I recall being chided by the Secretary of State for opposing the way in which the Government handed over control of our economy to the Monetary Policy Committee, but if Ministers make formal representations in what is supposed to be a hands-off Government operation, that information should be shared with the House and put on the record.
As for the single currency, to which many Labour Members referred—they are obviously devotees—there is a misunderstanding about who decides at what rate we should enter it. I advise all hon. Members to read, if they have not done so, article 1091(5) of the Treaty on European Union. It spells out that we, the United Kingdom, do not determine at what rate we join the single currency. Member states will decide that by unanimity. It makes sense that they would not set a rate that would severely disadvantage them or advantage us. We are not masters of our own destiny. The treaty makes that clear. In terms of what is and is not a good rate apropos the deutschmark, I remind hon. Members, because it was a stinging experience for those of us who were in government at the time, that we fell out of the exchange rate mechanism at about DM2.75.
§ The Minister for Small Business and E-Commerce (Ms Patricia Hewitt)
I readily congratulate the hon. Member for Bromsgrove (Miss Kirkbride) on securing the debate. This matter is of enormous importance, not only to those who work in the car industry in the west midlands, especially at Rover, but to the future of the car industry in the United Kingdom and the European Union. I am also grateful to you, Mr. Deputy Speaker, for enabling the debate to proceed by ruling that in this Chamber it is Wednesday even though in the main Chamber it is still Tuesday.
Both sides of the Chamber has voiced support for Rover and its work force and management, and for BMW's commitment to that company and those people. There were some well-informed speeches, in particular that of my hon. Friend the Member for Birmingham, Northfield (Mr. Burden), who has for months played an active part in helping to secure the future of the Longbridge plant. My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) also made an excellent speech. He referred to the troubled past of Rover, from which it is now emerging.
Rover is a great British brand, but there has been too much talking down of its prospects. I regret to say that even the hon. Lady has participated in that.
§ Mrs. Browning
I dispute that. The Minister did not read the press release that I issued on the day that the Secretary of State made his announcement, in which I stated:I am delighted about the Rover plant in Longbridge and that jobs have been saved.I made it clear, however, that there would be many questions. The headlines of the press release said: "Good News for Midlands, but there are important questions that need to be answered." I gave my total support.
§ Ms Hewitt
I was referring to the hon. Member for Bromsgrove, not the hon. Member for Tiverton and Honiton (Mrs. Browning). Perhaps the hon. Lady has forgotten that the right hon. Member for Wokingham (Mr. Redwood), who was her predecessor in the shadow Cabinet post that she holds, opposed state aid. He said that he was not in favour of large public investment to help regions that are hit by job losses and refused to support our decision to give state aid, linked to productivity improvers, to Rover and BMW.
§ Mr. Snape
Does my hon. Friend agree that at least the right hon. Member for Wokingham has the virtue of consistency, unlike the hon. Member for Bromsgrove who, in her previous incarnation as a reporter on The Daily Telegraph, denounced state interference, as she would put it, in industry? As a Member of the House, she has often denounced state involvement in the private sector, except when it benefits her constituents.
§ Ms Hewitt
My hon. Friend puts his finger on the absolute confusion in the Opposition's economic policy.
It is worth reminding the Chamber of the real successes that Rover is achieving. In the past decade, it has been the third largest British exporter after British Aerospace and BP. The Rover 75 has won a number of awards, both at home and internationally, including the car of the year award from What Car? It was also voted world car 1999 by top automotive journalists. Land Rover is an enormous success story. Last year, it increased sale by another 16 per cent. to take it to a record level. The Range Rover was the best selling luxury car after Jaguar in Britain last year. Thanks to BMW's investment of more than £3 billion—there is much more to come—and the commitment of the Rover work force and management, the company's prospects are excellent. We need to understand the debate in that context.
The hon. Member for Bromsgrove and other hon. Members referred to European approval for state aid. There are no rules that require member states to inform the European Commission about proposed investments before they are announced publicly, but it is British Government practice to do that, which is what happened with Rover. Our offer of grant to Rover-BMW was conditional on the securing of European Union approval. That was known to BMW when the offer was made and it has been announced several times publicly.
89WH I am in no doubt that, without the offer of support, BMW would have taken its investment elsewhere. It needed to go ahead with the investment for strategic reasons, but it did not need to come to the UK. The prime consideration for BMW was the impact of the additional investment on the company's overall financial position at a time when Rover cars were incurring significant losses and when an alternative economically viable production site in Hungary was an option. I regret that the hon. Member for Twickenham (Dr. Cable) has cast doubt on that position. The substantial information that has been supplied to the European Commission since the aid was notified fully bears it out.
§ Mr. Burden
It is worth saying that the Hungary option was being seriously talked about a long time before the European Commission decided to examine the issue. On 11 March last year, The Independent quoted BMW's industrial relations director as describing the Hungary option as "a serious alternative" to Longbridge.
§ Ms Hewitt
I am grateful to my hon. Friend, who bears out the evidence that has been submitted to the European Commission.
In December, Commissioner Monti announced that he was opening a procedure on the Longbridge case because of his desire to introduce transparency into all such notification of aid by member states. Rover is not being singled out for special attention. The Commission has announced procedures in other recent cases involving Volkswagen and Fiat. It has said that it will apply the approach in all cases of state aid to the car industry.
We have given the European Commission a great deal of information—more than sufficient to support our case and I am hopeful of a successful conclusion to the review. However, when Conservative Members ask that we now stress to the Commission the need for an urgent decision on the matter, I have to ask where they have been for the past few months. We have consistently stressed to the Commissioner and his officials the need for an early decision on the application so that BMW can proceed with the investment and meet the timetable for the new car. I am pleased to say that Commissioner Monti has given my right hon. Friend the Secretary of State his assurance that the Commission will deal with the matter with due speed. There is no fixed timetable for that process. It is a matter for the Commission, not for the Government.
We shall continue to urge the need for an early decision and we will continue to keep closely in touch with Rover-BMW on the progress that is being made in our discussions with the European Union, just as we keep it in touch with the progress of the European Commission's review. By the time of the next board meeting it will be fully up to date with the status of the review.
90WH I am sure that all right hon. and hon. Members feel as I do—that the European Commission needs to streamline and speed up its decision making. I am pleased that the new president of the Commission, Romano Prodi, and the vice-president, Neil Kinnock—a former right hon. Member of the House—are driving forward a modernisation and reform programme to achieve precisely that. Indeed, the Commission has just launched a review of the motor vehicles framework that will include considering the process and the timetable. Its conclusions are expected by the summer.
§ Miss Kirkbride
Will the Minister say when her Department last spoke to Commissioner Monti about the Rover deal? As a consequence of that conversation, were her officials assured that the information needed by the Commission to form a view had been handed over by Her Majesty's Government?
§ Ms Hewitt
As I said, my right hon. Friend the Secretary of State has spoken recently to Commissioner Monti and we are satisfied that the European Commission has more than enough information upon which to base its decision.
My hon. Friend the Member for Northfield and others referred to the Rover supply chain and the uncertainty for many companies, especially those in the west midlands, who have supplied Rover for many years. We must all understand that for Rover to maintain and improve its future competitive position it must have a world-class supply base to match the world-class production facility that BMW will build at Longbridge with its proposed investment.
Throughout the world, not simply in the United Kingdom or the European Union, vehicle manufacturers have been rationalising their supply chain, reducing the number of suppliers that they deal with and trying to secure the economies of scale and technological innovation that can be offered by global suppliers, using the platform now available of intranet and electronic data exchange. Rover-BMW is no exception to that trend. It will certainly mean some difficult decisions, but I am confident that the British suppliers will be able to meet the challenge.
I stress that the rationalisation of the supply chain would take place in any case. The exchange rate issue is only one element of it. Vehicle manufacturing is an intensely competitive sector—that is true worldwide, but it is particularly true in the European market. It means that the car industry, and manufacturing generally, must keep ahead of the game and develop and adopt lean manufacturing techniques and electronic commerce. International comparisons on stock level are a key measure of the success of lean manufacturing and in that respect the United Kingdom's automotive component industry compares well with that of the United States and very favourably with the European industry. That is a testimony to the increasing competitiveness of our supply base.
The Government and the industry know that there is still more to do. That is why we support the industry's efforts to improve its competitiveness through the industry forum that was established by the Society of Motor Manufacturers and Traders, the trade association. That is a unique initiative which aims to 91WH develop and sustain world-leading competitiveness in the UK-based vehicle and components industry, by ensuring that suppliers develop and adopt world-class manufacturing improvement activity and training. Of course, Rover-BMW is closely and actively involved in those important initiatives.