§ Mr. Andrew Bennettasked the Secretary of State for Industry if he will make a statement regarding the application by the Meriden Workers' Co-operative for Government assistance.
§ Mr. Leslie Huckfieldasked the Secretary of State for Industry if he will make a statement regarding the application by the Meriden Workers' Co-operative for Government assistance.
§ Mr. BennIn April of this year proposals were put to me for the formation of a workers' co-operative to take over the factory at Meriden owned by Norton Villiers Triumph Ltd. (NVT) and to reestablish motor cycle manufacture there with financial assistance from Government under Section 8 of the Industry Act 1972.
The proposal is that a company formed under the Companies Act, and under the ultimate control of its shop floor workers, should acquire from NVT the Meriden factory and the necessary plant and equipment to manufacture motor cycles there. The output of the factory would be sold to NVT on terms agreed between the two companies and NVT would market those machines through its existing distribution network. When fully established, the co-operative expects to employ about 880 people and to produce 24,000 machines a year.
After careful consideration of the proposals the Government have decided that assistance should be offered to the proposed co-operative under Section 8 of the Industry Act 1972, and subject to the satisfactory negotiation and conclusion of the appropriate agreements, including an agreement on the necessary terms of business between the co-operative and NVT, the following offer has been made to the representatives of the proposed co-operative.
Financial assistance will take the form of a grant of £0.75 million and a loan of £4.2 million for 15 years to be drawn down on proof of need and to be used by the co-operative for the purchase of freehold land and buildings, plant and machinery at Meriden, and for working capital. The loan will carry interest at the Government's concessionary rate, calculated on the balances of loan outstand-16W ing at any time and payable half yearly. Interest will not accrue, however, until one year after the date of each advance on account of the loan. Repayment will be at the rate of £420,000 per annum to be paid without deduction of tax half yearly, with the first repayment on 31st December 1979.
Among the conditions under which the assistance is to be provided the Government will have a first charge on the assets of the co-operative; and my prior consent will be required for substantial acquisitions and disposals; for making wage, salary or other payments in excess of £50 per week to any employee, director or official of the co-operative; for the declaration or payment of any dividends on the co-operative's shares; and for the taking up or making of loans. I will also have the right to appoint a director to the advisory board of the co-operative.
I have made it clear to the co-operative that this offer is the limit of the financial assistance the Government are prepared to make available. This offer has been accepted in principle by representatives of the co-operative.
The Industrial Development Advisory Board welcomed the proposal as a constructive one, meriting sympathy and encouragement, to deal with the deadlock at Meriden. In the opinion of the majority of the board, however, the proposition is not commercially viable. The Government appreciate this assessment, and recognise that, like all innovations, this new industrial organisation must inevitably face many problems and risks. In the view of the Government, however, these must be weighed against the positive national benefits which could result.
First, the world market for motor cycles is buoyant, and at present the United Kingdom share of that market is small. Production at Meriden will provide additional capacity in the country from which to attack this market. Most, if not all, of the machines to be produced by the co-operative will be for export, and this would yield some £10 million per annum in export earnings.
Secondly, under the present pattern of industrial organisation there has been a failure to recognise the interests of the labour force in running the business. This accounts for much of the friction between management and workers, and seriously 17W reduces the ability of industry to achieve full efficiency and productive capacity. The establishment of a co-operative in which the interests of workers and management are identified offers a new approach to industrial organisation, which could have benefits over a much wider field of industry.
Accordingly, the Government have concluded that, notwithstanding the risks involved, it is in the national interest that this innovation should be tried. The existence of the co-operative will in no way detract from the rationalisation of the motor cycle industry achieved by the formation of Norton Villiers Triumph, and its operations will not be to the detriment of activity at other motor cycle plants. But its success could begin a new chapter in the history of industrial organisation and relations in this country.