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British Leyland Motor Corporation

Volume 889: debated on Monday 24 March 1975

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Just over three months ago the Government announced their decision to set up the Ryder Committee to look into the affairs of British Leyland and to make recommendations on its future. Since that time the committee has been meeting, and it has recently been reported that it will shortly be in a position to present its report to the Government. The Government will then presumably, within the next month or so, reach their decision on the report. It seems an appropriate time, therefore, for this debate so that we may have an opportunity to express our views on the action which the Government should take on the basis of that report.

I wish, first, to make a preliminary point which I put not so much to the Government as in relation to public opinion and the public attitude to British Leyland. Although British Leyland came to the Government to ask, first, for assistance in the form of a guarantee of its loans and, second, for consideration at least of the possibility of Government assistance for its future investment plans, it would be a mistake to gain the im- pression from the Press and other sources that British Leyland is a failing company which is at present on the point of collapse. That is very far from the truth.

In fact, given the serious difficulties facing the motor industry today not only in this country but throughout the world. British Leyland has survived this difficult period much better than almost any other motor company not only in Britain but anywhere in the world. For instance, the profit situation of British Leyland is much better than that of many other companies. It made a profit before tax in its last financial year. Even after tax it would have made a profit but for substantial losses which resulted from the writing-off of its operations in Australia.

British Leyland continued to expand its exports last year at a very difficult time. It has only recently had to face the problems of a certain amount of short-time working and, in a few cases, redundancies. This must be compared with the situation of many other firms all over the world which have had to go on to extensive short-time working or make large-scale lay-offs. A number of United States firms have made redundant or laid off hundreds of thousands of workers.

The company's profit situation should be compared with very heavy losses which have been made by many firms, for example the £90 million loss reported by Volkswagon in Germany. British Leyland currently has the three top selling models in Britain. Last year all motor firms suffered from a fall in production, but British Leyland's was less than that of any other British firm and was less than the reduction in the sales of imported cars in Britain last year.

The position, therefore, is nothing like as bad as some reports have tended to suggest. The reason why the firm has had to come to the Government is on the one hand an indication that, unlike some other firms, it has sufficient confidence in its future to wish to undertake a large investment programme. On the other hand, because the Government have rightly imposed a policy of rigorous credit control, it is not possible for British Leyland to acquire the funds it requires from the banks or the market as it might do in other circumstances. It has therefore had no option but to come to the Government for assistance.

I think we are justified in assuming that the Ryder Committee report will recommend that there should be substantial Government assistance for British Leyland. In that case, what action should the Government take on that recommendation? There is one point which has been the subject of considerable publicity which I should like to clear up. Certain ill-informed people have suggested that one possible course of action would be the closure of whole factories, particularly Cowley.

Anyone with any real knowledge of the affairs of British Leyland would not have made that suggestion. The Cowley plant is the most modern and best equipped of any of British Leyland's factories in Britain. The company has invested more than £50 million over the last three or four years in it, and that is the lion's share of British Leyland investment in Britain. The result is that British Leyland management regards Cowley as its most modern and efficient factory at present and I am glad to say that the management has made clear that it has no intention of closing down Cowley or making substantial cuts there. That would be a totally self-defeating action because British Leyland is a highly integrated company and there are many other operations in other parts of the country which would be seriously affected if a whole plant like Cowley were closed.

There is a further factor. I believe that some people have suggested such an action because there is still a widespread impression that labour relations are particularly bad at Cowley. I admit that at certain times in the past there has been a poor industrial relations situation at the plant, but over the last 10 months that situation has not merely been very much better than at any time in the recent past but has been better than in almost any other part of British Leyland.

Therefore, if criticism were to be made on that score, it would be not of operations at Cowley but of operations at Longbridge, Coventry or in some other part of the country. This again is a fact that should be clearly taken into account, not merely by the Ryder Committee, as I hope it will be in its report, which it is now in the process of making, but by the Government when they decide what action to take on the basis of that report.

Even leaving aside the extreme and totally misguided suggestions such as that, what other action might the Government take? Another suggestion fairly widely made, and also, I believe, mistaken, is that it would be rational for the Government to break up the very large organisation that was put together by the merger of BMC and Leyland six or seven years ago and seek to establish two or three separate units, representing perhaps the volume car market, the Austin-Morris division, the special car market and commercial vehicle production.

I think that that, too, would be a mistake, and I know that British Leyland management believes that it would be a mistake, because production within the total British Leyland Corporation has now become so integrated that a division of that kind would be difficult to achieve. There is a great deal of common production and there are common components. For example, the body plant at Cowley produces bodies for Rover cars and other models that are not themselves part of the volume car production. There are many other examples of closely integrated production where difficulties would be created by such a division.

There are many manufacturers of components that are assembled at Cowley. If the Cowley division were in some way to be removed from British Leyland, those manufacturers would find themselves in great difficulties. There are substantial arguments for maintaining something like the present total production of British Leyland, although there may well be a case for reorganisation of particular parts of the production.

There are other actions on a lesser scale that might be taken. I should like to make one or two suggestions for the Government to take into account when they consider the Ryder Report. I am extremely pleased—I know that this view is shared by many of my hon. Friends—that throughout this operation my right hon. Friend the Secretary of State for Industry has attached great importance to the maximum possible consultation with the work force of British Leyland in whatever decisions are finally taken. I know that that has been very much appreciated by the workers at Cowley and that there has been considerable activity in presenting opinions, and I hope that they will be carefully considered by the Government. I should like to comment on that policy and to express the hope that in the interval between the receipt of the Ryder Report and their decision on it the Government will continue and intensify these consultations with those who work on the shop floor within British Leyland.

I very much hope that in their consideration of the report the Government will not be exclusively governed by purely economic considerations. It is obviously important that British Leyland should be made efficient, viable and profitable, and nobody disputes that, but we are considering one of the most important industries in the country, certainly the only large British firm remaining within that industry, and I hope that social considerations will be weighed in any decision.

I take the example of my constituency. Motor manufacturing is the only major industry in Oxford. There are other parts of the country and even other areas where British Leyland operates where that is not true. I hope that there will not be any large-scale reductions anywhere, but if they were in other parts of the country there would be alternative parts of the engineering industry where those who lost their jobs would be able to find alternative employment. That is not the case in Oxford. It is the only major industry. If we are to have a large-scale reduction, although I do not believe that it is likely or necessary, there will be unemployment in the Oxford area. I hope that that will be carefully borne in mind when the Government reach their decision on the Ryder Committee's report.

I hope that the Government fully appreciate that the motor industry is perhaps our most important single export industry. Last year the industry had an export surplus of £1,000 million, and British Leyland had a substantial and growing share in that. Already this year that proportion has increased. I believe that the surplus earned by the industry is increasing by 25 per cent. or 30 per cent. We are, therefore, talking about a major industry. It is important that when the Government reach their decision on British Leyland they should bear in mind the importance of the industry and of British Leyland in particular, not merely to those who work within it but to the country, in the sub- stantial exports it wins for us. I hope that they will give the most favourable possible consideration to generous financial assistance to the company and taking a corresponding share in its ownership.

1.6 a.m.

I am grateful to the hon. Member for Oxford (Mr. Luard) and to the Minister for allowing me to intervene briefly in the debate.

I endorse several of the points the hon. Gentleman made. The large number of my constituents who work at Cowley are not afraid of Sir Don Ryder but they are rather afraid of politicians. They are afraid that this may become a political rather than an industrial decision. They fear that in the political balance the influence of the Midlands will outweigh the influence of Oxfordshire and Oxford.

Can the Minister ensure that after he receives Sir Don Ryder's report there will be no undue delay before the Government announce their plans? The need for consultation is clear. It would be damaging if there were in the motor industry the kind of delays that are still dragging on in the steel industry.

Will the Minister recognise that the work force at Cowley, and probably throughout British Leyland, recognises the need for radical change? There has been a considerable change in attitude, even in the short time that I have been listening to members of the work force. It would be a great mistake to invest large sums of taxpayers' money in present management and trade union practices, and in present manning levels, but it is not necessary because there is now a recognition of the need to change.

If the Government decide to give help which will achieve change and help to bring about a healthy and profitable company, the ending of this story might still be a happy one.

1.8 a.m.

I congratulate my hon. Friend the Member for Oxford (Mr. Luard) on a lucid, well-balanced and carefully-argued speech, delivered without a note, on the Government reaction that he would like to see to the Ryder Report.

The subject of the debate is of great importance. I am glad that it has offered the opportunity to clear the air about some of the specific anxieties that have been generated about the future of British Leyland.

The House is well aware that the Government have appointed a team led by Sir Don Ryder to look into all aspects of the company's present situation and future prospects. The Government have not yet taken any decision about the company's request for support for its longterm investment programme. Clearly, no decisions will be taken until the report has been received and its recommendations have been carefully considered.

I hope that the delay will not be great, but the important thing is to make sure that we reach the right conclusions. I hope my hon. Friend will understand that this means that it is not possible for me to reply tonight by lifting a corner of the veil. I am not in a position to do so. At this point no member of the Government knows what the contents of the report will be. It should be equally obvious that therefore I cannot issue specific guarantees about the future. To do so would make nonsense of the whole intention behind the Government's decision to set up a highly-qualified and independent team.

Having said what I cannot do, I think that I can usefully clarify some points about the Government's broad intentions. There can be no doubt that they have not been fully understood in all quarters.

In December, when the news first broke that British Leyland was talking to us about the possibility of long-term help, the Government made it immediately clear that their response would be a constructive one. It was the corporation's own view that the only short-term commercial solution to the company's problems was immediate substantial retrenchment. The company explained that this meant that the question of current market forces offered no option to the closure of plants and consequent redundancies among the company's employees and those of its suppliers. A commercial solution at that stage would also have involved an immediate and probably irreversible reduction in the export performance of the corporation which is, as my hon. Friend said, the country's largest net exporter. It was clear then that these courses of action would lead swiftly to irreparable damage being done to exports, production and employment—all of them important national objectives. If the Government had not responded quickly and sympathetically, market forces could have brought about some of the very circumstances that my hon. Friend has voiced his fears about tonight.

While I cannot anticipate the solution that will emerge, I can state again the Government's requirement for a solution that would maintain the company as a major producer, exporter and employer. Our aim has been stated by my right hon. Friend the Prime Minister as the highest possible level of production, exports and jobs on a secure and profitable basis.

We have also made it clear that we do not regard this aim as something that the Government alone can achieve. Everyone concerned must play his full part, and this will rightly also be a requirement if there is to be public participation in the company. The Government have said that there can be no question of accepting a situation where the taxpayer is required to foot the bill for continual and avoidable loss-making.

Although we are debating the problems of British Leyland, I think it is important to realise that these are to a large extent the problems of the car industry as a whole. The problems of British Leyland must, I think, be seen in this perspective. So far, a total of 25,000 British Leyland employees have been affected by short-time working this year. The highest figure in any one week has been 15,000. Since the beginning of this year the company has announced the need for 4,205 redundancies of which the great majority are to take effect on a voluntary basis. The problems elsewhere are in many cases more acute.

British Leyland is not only an important case but it is becoming widely regarded as something of a test case of the Government's approach to industry's problems. I think it is clear from what has already taken place that this approach will be to make deep appraisal of the situation and to tackle the underlying problems and not simply to go for short-term panaceas of one kind or another.

Looking at the future, of course, the planning agreements system will provide a means whereby the Government can keep in close touch with major companies, their plans and their problems on a systematic and continuous basis. I have every reason to believe that these procedures will prove relevant and acceptable to British Leyland, as they will to other major companies.

But discussion of British Leyland's problems should also be balanced by some reference to British Leyland's recent achievements. I am glad that my hon. Friend emphasised these. During the month of February British Leyland's share of the United Kingdom market rose to nearly 45 per cent. This figure has only been exceeded once before—in April 1971 —in the corporation's history. The Austin-Morris Division, about which much of the debate this evening has concentrated, achieved its highest share since January 1966. For the first time its three top selling models—the Mini, Marina and Allegro—filled the top three positions in the United Kingdom market, which is a remarkable record. During this month the share of the United Kingdom market attributed to imports fell to 28 per cent. I should also mention that the company will shortly be launching a new model, which will be made in Cowley,

I would also remind the House that despite the many problems that the United Kingdom motor industry has faced over the past year its achievements have been considerable. The industry's own statistics show it managed to earn a record £1,871 million in exports in 1974. This was more than twice the value of imports, which stood at £812 million. This is an achievement to which I am sure the House would want me to pay tribute. And it is an achievement in which all those who work at British Leyland have played a very important part.

Many of the points raised by my hon. Friend this evening have naturally focussed specifically on the position of those employed by British Leyland in the Oxford area. The point has been made that Sir Don Ryder has paid two visits to Cowley, where he has met both the trade unions and the company management. I am sure there can be no doubt that he has been made as aware of the views of those who work there and others also in the company on the importance of Cowley, as we have seen from what my hon. Friend has said tonight.

Nevertheless I am grateful to my hon. Friend for giving the House such a thorough account of so many aspects of British Leyland's activities at Cowley. I assure him that I was already well aware of many of the points he made. I might say that I have read the local Press very carefully in recent weeks and I am familiar with the points that the company's Cowley management has repeatedly made in public to press its view of the importance of Cowley in the wider British Leyland context. I know that it has stressed the interdependence of the Cowley plant and the rest of the company's operations. and the amount of new investment, which has been considerable, that has gone into the plant. The management says that during the last five years about £51 million has been spent in modernising the plant including £20 million on tooling and facilities for the Marina and £15 million for a new car which British Leyland is just about to launch, and which is being produced at Cowley. Last month the Marina was the country's second biggest selling car.

But I still feel that it would not be appropriate for me to offer comments on these facts and viewpoints about Cowley before the Government have had a full opportunity to give careful consideration to Sir Don Ryder's report and recommendations. It would certainly be wrong for me to offer comment before the Government have even received the report, though we expect to receive it shortly. I can, however, assure my hon. Friend and the hon. Member for Mid-Oxon (Mr. Hurd) that the points which have been made in this debate will be noted and taken into account by the Government in reaching their decisions.

Question put and agreed to.

Adjourned accordingly at eighteeen minutes past One o'clock.