Skip to main content

Peugeot (Coventry)

Volume 450: debated on Wednesday 18 October 2006

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

I thank you, Mr. Speaker, for granting this Adjournment debate, which is not only appreciated by Labour Members but, I am sure, by the workers at Peugeot.

This is the second Adjournment debate that we have had on this matter, as there are really two issues. There is the general issue of manufacturing in the west midlands, and I am sure that some of my colleagues know exactly what I am talking about. Not too long ago, there was the Rover issue. More locally, the Standard motor car company has been an issue over the years. Then we had problems with Jaguar about 18 months ago.

Some months ago, we heard the announcement that Peugeot would close its plant next summer. Last week, however, it was announced that the plant will close in January. If we look at that company’s record, we see that it has played ducks and drakes with the labour force and, to a certain extent, one could argue, with the Government at times. Over the past two years, I know that Ministers have had great difficulty in getting answers from the company about its long-term plans in relation to the Coventry plant in particular.

There is therefore nothing new about the way in which the company does it business, but I thought that it was brutal, callous and, to say the least, totally insensitive to announce that the workers at Peugeot will lose their jobs just after Christmas. Someone—not me, but a former Prime Minister—once said that that was one of the unacceptable faces of capitalism, which sums the position up adequately.

I want to raise one or two issues. First, publicity has suggested that Peugeot originally bought the site for £1. Were any inducements or sweeteners used on that occasion? The Minister might not be able to answer that tonight, but I would be grateful if she looked into it. Secondly, what amount of grants, not just nationally but on a European level, have been paid to the company over the years? What conditions were attached to the grants? Those are important points.

The reason the company has given for its recent announcement is that a quarter of the labour force have left. By that logic, three quarters remain who want to keep their jobs. We also know that it is a profitable company, so it is a strange logic.

Another aspect of the company’s argument that has changed—again, one cannot rely on anything it says—is that it had proposals for eastern Europe. We have now found out that it has cut back on those proposals. It has also announced redundancies in France and Spain. The evidence suggests that the company has been secretive over the past three or four years and, at worst, that it has played ducks and drakes with the labour force, not only in this country but in Europe.

I want to thank my right hon. Friend the Minister for visiting Coventry some weeks ago. She discussed with us how we could start to replace some of the industries that we are losing, certainly in the Coventry area. I am sure that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) will agree that the meeting was useful. She banged heads together and got some movement on the new medical technological park that will be located at Ansty.

We want to thank the Minister for something else. We made representations to her about employment, which, as I am sure she knows, is a complex issue, certainly in Coventry. We were very concerned about Jaguar, and about what would happen if assisted area status was withdrawn. The Whitley site employs 3,000 or 4,000 people, and there are proposals for further developments. We raised the issue of the Peugeot site itself, and also the way in which Rolls-Royce might be affected. I am pleased to say that we secured some positive movement, which many people, especially the trade unions, will appreciate.

What is also appreciated is that, when the story broke, the Chancellor of the Exchequer offered us a quick meeting, along with the unions. The unions’ problem at the time was that they could not persuade representatives of the company to sit down and talk about alternative proposals. As a result of the Chancellor’s intervention we got talks going, although they did not work out in the way that we wanted.

We have had major debates about the west midlands economy. There have been indications that Ministers are considering a new industrial strategy for the west midlands. As I said earlier, they are enthusiastic about the new medical and technological park. While on the one hand we are losing jobs, on the other there are some positive signs. Nevertheless, we see it as our job to put pressure on Ministers to ensure that manufacturing jobs start to be replaced. According to various reports, there is a drift to the service industries in the west midlands. We want to see a halt to that, and more of a balance.

There are pockets of social deprivation in some parts of the west midlands. Not everything is rosy. Some good things are happening, but training and skills are needed to end that social deprivation. I know that the Government are investing in those. The west midlands is famous for research and development. The Chancellor has made extra money available, but we must keep up the momentum. The more research and development money we can put into the universities of the west midlands, the better.

I am sure the Minister knows that we have taken a great interest in RAF Cosford. Welsh Members have been lobbying hard, but we think we have much more to offer in the west midlands. We have a number of first-class universities, and a good many skills. We want to retain those skills at Cosford and we also know that the creation of a further 2,000 or 3,000 manufacturing jobs is a possibility. All in all there are some positive signs, but we must not be complacent. We must continue to push as hard as we can.

Thank you very much for granting me this debate, Mr. Speaker. I hope that the Minister will respond to the points I have made, some of which are very serious. I am sure that it will help those affected in Coventry if she can provide some answers—although we cannot help them completely, because they will have a very bad Christmas: they are going to lose their jobs.

I echo the thanks of my hon. Friend the Member for Coventry, South (Mr. Cunningham)—whom we all congratulate—to you, Mr. Speaker, for your kindness in granting us this debate. The presence of a good-sized group of distinguished hon. Friends from the region shows that, although the issue has been around for a long time, it is still of intense and topical interest to us all. We look forward to hearing from my right hon. Friend the Minister shortly. We are also pleased to see our hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien), the Solicitor-General, who—apart from his ministerial responsibilities in the Cabinet—shares our local interest. As a Minister and as a Member of Parliament, he has always taken a particular interest in employment matters in the area.

My hon. Friend the Member for Coventry, South dealt with the issue very fully. He described the company’s behaviour as brutal, callous and insensitive, and I have to say that, unfortunately, that is how it is viewed by most employees at the plant—or, at least, those who are still there.

It is particularly apposite that the Minister is replying tonight, as she knows from her recent visits to Coventry some of the problems that we face, as well as some of the great opportunities that we are seeking to seize. In other words, we are not being negative about the matter, though there are important points about Peugeot to be made. As a city, an area and a region, we are seeking to forge ahead and it is appropriate to tell the Minister how well she has done in bringing a new impetus to the development of the Ansty site in Coventry.

I wish to raise two specific points that arise from my what my hon. Friend the Member for Coventry, South said. First, there is the matter of the £5 million that the company alleges it has put into the relief of hardship cause after its decision—a decision that came out of the blue and contradicted many previous undertakings. The availability of the £5 million became one of the great hopes of people involved. I am not sure that the Minister can answer this evening—what she says will be transmitted to the company in any event—but people need to know whether it is real money or whether it amounts just to the 20,000 man-hours claimed today to be at the disposal of employees by way of advice. If the latter, it is a scam and it is silly of the company to pretend in this way. It devalues its undertakings and, frankly, shows the company to be precisely what it is: insincere and unreal. It would have been far better not to have made the remark and not to have given the undertaking in the first place. We seek clarification on that point. It is not too late: the company could still make some contribution of real money, which would be appropriate in many deserving cases that could be identified.

My second point relates to the sudden announcement that the closure date is being brought forward from July next year to December this year. The unfortunate incidence of the timing has already been highlighted. It seems to me to reflect once again the insensitivity of the company. Many trade unions and employees have told me that they made plans to stay until July next year on the very clear understanding that they had a firm, legally binding commitment from the company to continue their employment up to that date. I do not know the details, have not seen any paperwork and do not know what undertakings—verbal or otherwise—were given. The unfortunate employees, however, now feel that they have been treated unjustifiably, unfairly and contrary to every undertaking that the company had given. I cannot comment further, but I put those two specific points to the Minister and look forward to her transmitting them. If she cannot answer tonight, I hope that in due course the company will hear and reply.

My last point is a more general one for the Minister to consider. In this age of global competition, a company can sometimes buy land or other assets in advantageous circumstances at a knock-down price—Longbridge is a good example in many ways—or it can be given grants or inducements to take on a particular set of circumstances, as my hon. Friend the Member for Coventry, South mentioned. Well meaning though a company may be, those circumstances represent a concession in kind of a very considerable magnitude. There must be a system of clawback and I believe that there is such a system in respect of regional grants. I do not think that they have ever been employed, but the Government must toughen their whole stance. In an increasingly mobile world, in terms of employment and capital, the Government must be prepared to face up to these companies, tell them what the terms are and insist that they be respected. It must not be a one-way street.

I congratulate the hon. Member for Coventry, South (Mr. Cunningham) on securing the debate and I thank both him and you, Mr. Speaker, for allowing me to contribute briefly to it. There is a broad measure of agreement on this. Points about Peugeot can be made on which I know MPs and councillors across the political spectrum feel very strongly. I hope that the Minister accepts that feeling on this matter is equally strong across the political spectrum.

The reason is, as hon. Members have already said, that this company has cut the ground from under the work force in Peugeot not once or twice, but three times. It has done so, first, by indicating that the successor model to the Peugeot 206 would not be built at the Ryton plant; secondly, by announcing that the closure of the plant would take place in July 2007; and thirdly, as has been said, by bringing that date forward to January of next year. The company has obligations to its work force that it must honour, and, as the Minister may know, 450 members of the work force still do not have a job or further training to go on to. I hope that she will be able to put what pressure she can on Peugeot to honour those obligations.

I have only one complaint about this Adjournment debate. Its title is erroneous. The Peugeot plant that we are discussing is not in Coventry, but in Warwickshire and in my constituency. I do not make that point purely for the sake of geographical accuracy. I accept that the hon. Gentlemen who have spoken and the other Members in the Chamber have a legitimate constituency interest in what is happening, but I raise the point because the Government and the Minister are also engaged in a review of assisted area status. Warwickshire is unlikely to receive assisted area status under the new regime, and that will present a particular problem when the 143-acre site that constitutes the Ryton factory ceases to be a Peugeot plant. At that point, it will need assisted area status more than ever. I hope that she will consider whether there are ways by which we can bring the benefits of such status to the Ryton site as and when it will need it.

I join others in congratulating my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this debate. He is a real battler for the workers in Coventry and he has always fought hard on the issues affecting Jaguar and Peugeot. I also congratulate him on that.

I congratulate other hon. Members from that area, two of whom are next to me on the Front Bench—my right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) and my hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien)—and both have worked hard on the issue, as have my hon. Friend the Member for Coventry, North-West (Mr. Robinson) and the hon. Member for Rugby and Kenilworth (Jeremy Wright) who have also taken part in the debate and pursue an interest in the subject.

I want to deal with the issues that have been raised and then say something about the general situation. My hon. Friend the Member for Coventry, South asked how the site was acquired, and I am assured by my officials that there was no incentive or sweetener from Government. What happens to the site now is therefore a matter for the company, but I hope that it will work closely with the regional development agency, Advantage West Midlands, local councils and with us to ensure that we bring good employment back to the area.

My hon. Friend also asked what grants Peugeot had received. He will know—I have told him before—that we offered £14.4 million to develop the new 207, but that project did not proceed. There was a grant about five years ago to support the introduction of an additional shift when demand for the 206 was at its peak and Peugeot has also participated in a number of research and development projects that have received grants from Government. However, it has not received grant funding directly provided to other partners in a joint project.

My hon. Friend the Member for Coventry, North-West—I have to get the names of these Coventry constituencies right—asked whether the £5 million was real money. We have discussed that point with Peugeot and the company has given us a firm assurance and commitment that the £5 million is real money and that it has gone into funding the resource centre. It has also said to us that it will allocate more money if that is required for the resource centre.

May we press my right hon. Friend—and if not her, the company—on what it means by £5 million for the resource centre? Is it for bricks and mortar, equipment or grants? What is it exactly? What, in addition to the 20,000 man hours of advice that it has distributed and that it has made great play of today, does that money represent?

I know that these issues have given rise to a lot of suspicion locally, and to reassure my hon. Friend and others I shall write to him, so that the company’s assurances are in black and white.

My hon. Friend the Member for Coventry, North-West also asked whether the Government recoup grants. As a former Minister, he will know that conditions always accompany such grants and that they have to be met. Usually, the criteria relate, for example, to the meeting of employment targets over a given period. If the targets are not met, we can then recoup the money.

The loss of Peugeot is a disaster for those affected, and I do not in any way wish to mitigate that. As the hon. Member for Rugby and Kenilworth said, there are 450 workers and their families for whom we must all work hard to try to secure alternative employment, or training that could lead to other jobs. But I also want to express optimism, because there are good things happening in the car industry and manufacturing in the west midlands. I deliberately chose the west midlands as the first area to visit on my tour of the regions because of my interest in, and commitment to, the manufacturing sector, and because manufacturing is so important to that region. It is the largest sector and employer in the west midlands and it still constitutes 23 per cent. of gross value added in the area. So it is important, and we need to build on it through investment in innovation and research and development, as my hon. Friend the Member for Coventry, South said, using all the levers that we have to ensure the continuation of a strong and modern manufacturing sector.

I am very grateful to the Minister for giving way and I accept that she is as keen as I am to bring back manufacturing jobs to the area, and preferably to the site in question. She will accept that all those involved want Ryton to be a productive site in terms of employment. But on the question of assisted area status, which I raised earlier, is there any way in which she can help those trying to market the site to make it more attractive as an employment opportunity?

The hon. Gentleman has got it wrong, because assisted area status is only one lever. One reason the area could not be considered for such status was the improvement in gross domestic product and the reduction in unemployment that it has enjoyed. However, and as I have said to the many Members who have expressed concern about the loss of assisted area status, in the round, such status provided about £200 million-worth of investment last year, and it provides eligibility for investment and state aid. Last year, the regional development agency spent some £2.2 billion to £2.3 billion. So this Government are choosing to invest a lot of resources—we go not for tax cuts, but for real investment in jobs and people. A lot of money is available and I hope that Advantage West Midlands, working with local MPs and with us, can put it to good use in the area and bring back that site.

One reason I visited the west midlands was to address the issues faced by another site—the old Marconi site, which has been mothballed for far too long. I wanted to ensure that we can work through the planning difficulties and those arising from the involvement of many different authorities, so that we can release the site and enable it to become productive and to provide jobs and manufacturing input.

I thank my right hon. Friend for giving way, for dealing with manufacturing issues in the west midlands, and for recognising how key manufacturing is to our vital industries and the huge knowledge base that we possess. In order to continue to develop the different types of manufacturing, will she form a task force involving all the regional partners, including the trade unions? Given that her Parliamentary Private Secretary, my hon. Friend the Member for Burnley (Kitty Ussher), is, like me, a member of Amicus, I am sure that my right hon. Friend will continue to work with the trade unions.

We will certainly make every effort that we can, working through the existing task force. During my time in the west midlands I visited my hon. Friend’s constituency and opened Morsons, which is a new specialist aerospace engineering consultancy that will provide 200 high-quality engineering jobs.

BMW will make the engine for the Mini at Hamms Hall, in the constituency of the Solicitor-General. That is 250 jobs. When I was up in the west midlands, I announced the opening of a new nanotechnology centre, which will also make an important contribution to the area.

I feel optimistic about manufacturing. We have to get the policies right, make sure that we improve our productivity, and invest in research, development and innovation. We have to build on the strengths of the west midlands, which is at the heart of manufacturing industry. I also feel optimistic about the automotive industry. It gets such an undeserved bad press. We are producing more cars in the UK today than at any time through the ’80s. One has to look back to the ’70s. Production is about £1.6 million. [Interruption.] Sorry, I meant 1.6 million cars, not pounds.

A couple of weeks ago, the Chancellor launched the new Mini, which will have a British-made engine. The new Nissan is not only made in Britain, but designed and developed here too. Sales of the new Civic are so strong that Honda has announced a major expansion in Swindon, which will create 700 jobs. There are 2,600 companies active in the automotive components sector. They contribute £4.8 billion added value and employ 132,000 people. I have just come back from a tour to Japan, Korea and China. I talked to people at the Japanese car companies and they see the UK as the place of choice in which to invest to create cars for the European market. Our job is to encourage them to continue to do that.

Of course, we regret the closure at Ryton and we wish that it had never happened. It is true that, as my hon. Friend the Member for Coventry, South said, Peugeot is cutting jobs across the whole of its business: 2,300 in the UK, but 7,200 in France and 400 in Madrid. It did bring forward the closure—it kept us closely involved—in part because more people were choosing to leave earlier and production became more difficult. We have to look forward and work to ensure that all those without a job find one.

I have already heard a lot of good stories involving people who have found alternative employment. Chris Parker, who is 48, has found alternative employment within PSA Peugeot Citroen. That is an internal redeployment. A number of people are now working at Cummins, for example. I know that it is 30 or 40 miles away, but it is a good company that provides good industrial jobs. Danny Evans, aged 31, who had been with Peugeot for seven years, has moved there. Peter Millington, aged 46, who had been with Peugeot for 16 years, has also moved there.

There are 6,000 vacancies notified to the resource centre. I looked through the list and the quality of those job opportunities is striking. The list includes vacancies at BMW, Unipart, Perkins, and Hutchinson Ports. There are more than 100 vacancies at other PSA operations in the Coventry area, including at a new headquarters building in the Stoke area. The list also includes some vacancies in Dagenham, which everybody is welcome to. The engine centre is expanding its work.

I congratulate hon. Members and I will work with them and other stakeholders in the area to ensure that we put in place strong, continuing modern manufacturing that is sustainable over the longer term. I do not in any way underestimate the impact—the damage—that closures of this nature have not just on the work force, but on the local economy. We have worked closely with Peugeot and with the local partnership, which I commend, through the resource centre so that we can provide a quick response to support those who are affected. We will continue to work with the partnership to help all workers who require assistance in finding employment and we will continue to work with Peugeot and others as they develop their remaining business activities in the UK.

The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at ten minutes to Eight o'clock.