HC Deb 11 February 1976 vol 905 cc461-527

4.19 p.m.

Mr. Tom King (Bridgwater)

I beg to move, That the salary of the Secretary of State for Industry should be reduced by the sum of £1,000. I should begin by apologising for my hon. Friend the Member for Henley (Mr. Heseltine), who is at present drawing sick pay and is unfortunately unable to be with us for the debate.

I notice that on the Order Paper today the title of the motion has become State Investment in the Motor Industry". That is not actually the motion that we originally put down, although I well understand why, in the Business Statement by the Leader of the House, it was amended, and it has been yet further amended now. The title of the motion that we submitted was The Failure of the Government to observe their Guidelines in respect of State Investment in the Motor Industry. It may have been possible for hon. Members to deduce that from the shortened version, and one understands the embarrassment of the Government and their desire to present a more abbreviated version.

We censure the Secretary of State and the Government for their vast incompetence over the handling of this whole matter. Their incompetence is shown in their delay, in the whole handling of their industrial strategy, particularly towards the motor industry, and in their utter failure to practise what they have preached in this direction.

I deal first with the question of delay. It may be interesting for hon. Members to recall that the Chancellor of the Exchequer said this: I hope in the next few weeks another area of uncertainty will also be removed as the Government defines its industrial strategy more precisely, setting out the criteria which will govern its aid to industry, describing its priorities for economic growth, and clarifying the rôle of Planning Agreements and the National Enterprise Board. The Chancellor said that on 6th June of last year and he said that he would do those things within the next few weeks.

What have we had? We have had the definition of industrial strategy, but we did not get it in "the next few weeks". We had to wait until 5th November for the Chequers meeting before we got it.

We were also promised within the next few weeks from 6th June the criteria for governing aid to industry. Through the efforts of my hon. Friend the Member for Blaby (Mr. Lawson), we at last extracted those criteria last month—mid-January.

What about the clarification of the rôle of the National Enterprise Board which was supposed to be given within the next few weeks from 6th June? That is still not available. Yet the Minister of State said that it would be coming very soon. He has been saying that endlessly, month after month. In view of the present disputes about the relationship of the National Enterprise Board and Rolls-Royce, we can guess why the Government are still unable to produce this.

That is our indictment about the delay. The Chancellor recognised in June the need for these documents to be available early, and yet two of them have only just arrived and one is still not available.

Then we censure the Government for their failure to practise what they preach. Let us see what they are now preaching. In November they gave us their White Paper "An Approach to Industrial Strategy". This document includes some very important statements—for example: Any major increases in productivity will require not only more investment better directed, but also improvements in working methods, including the reduction of overmanning and restrictive practices, and by transfer of workers into expanding sectors with a promising future. That is the Government's belief in their industrial strategy. They set out their philosophy of backing winners. They categorise such industries as follows: industries which…are intrinsically likely to be successful; industries which…have the potential for success if the appropriate action is taken; and industries…whose performance is most important to the rest of industry. The Government deal also with the question of how they would handle individual companies where rescue operations are needed. They say: In deciding whether individual companies merit support the Government will have regard to the criteria in NEDC 75/67 including the need to ensure that the company concerned is likely to be viable in the longer term. That reference to NEDC 75/67 may come as a surprise to hon. Members who saw only the White Paper "An Approach to Industrial Strategy". If hon. Members went to the Library on the day of the Chequers meeting and actually got the first copies that were issued, which were in Roneo'd form, they would find that sentence included. Strangely enough, that sentence had disappeared in the White Paper. But NEDC 75/67 set out the criteria for investment under the Industry Act and the Government were very embarrassed at that stage at the suggestion that those criteria and the action that subsequently followed at Chrysler were related in any way. That document states the criteria for assistance very clearly: By and large, profitability and return on capital, measured in financial terms, remain the best prima facie indicator of an industry's or company's efficiency in using resources and in giving consumer satisfaction… It goes on to talk about viability and it says this: An assessment of viability is a matter of facts, figures and commercial judgment, in which wider economic and social factors have no part to play. This is the Government's own document which was issued in November. It goes on to talk about one or two possible exceptional cases and it says: It should be exceptional for a firm to be regarded as potentially viable in the ordinary sense if forecasts based on reasonable assumptions do not show profits and positive cash flow within three years. It goes on in paragraph 19 to say: if we are to break through the balance of payments contraints and thus achieve more freedom for manoeuvre for the management of the economy, more and not less emphasis will be required on competitiveness in home and export markets. Failure to achieve this would in the end be the enemy of job security. The document goes on in paragraph 27 to talk about the merits of a receivership or a liquidation. It says: A receivership or a liquidation does not necessarily involve the complete cessation of a company's activities…The resources of manpower, premises and equipment of involvent businesses are in many cases taken up in whole or in part by other enterprises expanding or starting up. Those are the Government's own words in the document. They say: This, rather than the propping up of failed enterprises, is and should remain the principal contribution of the Industry Act It goes on to say: In exceptional cases…there must be a strong presumption that it must be possible to reconstruct the enterprise on a viable basis. These are the preachings of the Government making clear their strategy and making clear also, in yet another document which they have produced—the White Paper entitled "The British Motor Vehicle Industry"—the Government's approach to the car industry. The most important point is in paragraph 19. The first item is: encouraging the fundamental changes in attitude throughout the industry required for the necessary improvements in productivity, quality continuity of production and industrial relations. That is what the Government believe. We accept their papers. We think that they contain the beginnings of a commonsense policy a great deal of which we could support. It is against that background that we look to see how the Government handle individual situations, because I know that nobody in the House is impressed merely by words or statements. They judge people by actions, and we are entitled to judge the Government accordingly.

In the case of British Leyland every observer—whether it be the Select Committee, the CPRS, the Prime Minister, or the Secretary of State—has said that what is needed above anything is a total change of attitude in the relationship between management and men within those plants, that we must get across to people within the whole organisation that they are not guaranteed jobs for life regardless of effort or commitment, but that there must be a real understanding of the responsibility that everybody in the organisation carries for the success of its activities.

The Prime Minister underlined this very clearly. In his original statement on 24th April last year he emphasised the importance of this and emphasised that there was no question of further funds being available to British Leyland unless objectives were achieved. He promised that there would be very close monitoring. He promised a full rôle for Government and the National Enterprise Board in observing and monitoring the plans of the British Leyland board.

Mr. Hamish Watt (Banff)

Would not the hon. Gentleman agree that what is needed most of all is a shift in emphasis away from the production of motor cars, where there is vast over-capacity, to commercial vehicles, where there is vast under-production?

Mr. King

The first priority is to make efficiently and competitively whatever one is making at present and where one has markets at present. This is the first and overriding objective. At present, I do not think it is a choice between one and the other. I am sure that all hon. Members would like to see both succeed. At this stage we must ensure that what we are doing is done competitively in world terms and is done effectively.

The Prime Minister made clear the importance of monitoring and said that there was no question of more funds being available unless targets were achieved. The Select Committee said in its Report: We do not believe that withholding the next tranche of money for British Leyland is a practical possibility. The threat of sanction which cannot be used is no threat. A phrase used in the Government's latest comments on the motor industry is that time is fast running out, but what sense of urgency do we find in the Government's approach to the problem? In British Leyland is there the total change of attitude which everyone has recognised is necessary? It has been pointed out that in the six months following the Government's action there were more strikes at British Leyland than in the previous six months.

Next week will mark the first anniversary of Lord Ryder's appointment as chairman of the organising committee of the National Enterprise Board. The Prime Minister told Parliament in April that it would be the responsibility of the Board to monitor British Leyland, but the only thing we have seen is unilateral action by the British Leyland board, which has had to stop further capital investment because losses have risen so steeply, made even worse by stoppages.

My hon. Friend the Member for Mid-Oxon (Mr. Hurd) asked the Minister of State recently what was happening about targets and attempts to monitor British Leyland. He asked the Minister to define the first of the targets of achievement and the date by which it would have to be met. The Minister told him: The first of those targets will have to be met by the middle of this year, when there will have to be a review point for the next injection of finance. We shall have to get much nearer that period before we decide how matters are progressing. What are the Government's targets and objectives? The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked: Have not the Government heard of management by objectives?" [Official Report, 26th January 1976; Vol. 903, c. 8–9.] Would it not be helpful for the work force and management to be told at least a week before targets have to be met what the objectives are?

We are not talking about 25p in the piggy bank. The next tranche is £100 million, to be put into the company in June this year, and yet we have no idea what targets the Government and the National Enterprise Board require British Leyland to reach by that time. Surely, when looking for a change of attitude and a real commitment, the sensible and obvious thing to do is to tell people what the targets are and to give them an honest chance to achieve them.

Mr. John Page (Harrow, West)

Will it be necessary for British Leyland to state exactly to what use the money will be put, or can it be used for capital investment and wages?

Mr. King

I cannot answer that question. Perhaps my hon. Friend will raise the matter with the Secretary of State. At present there is no plan and no understanding of what is happening. There is still a row between the Secretary of State's Department and Lord Ryder over the acquisition of shares. I am not aware that the shares have yet been transferred. There is continuing uncertainty against the background of the Government saying that time is fast running out, the background of dithering and messing about and the row between Lord Ryder and the Department on the price to be paid for the shares. Lord Ryder is nearly celebrating his first anniversary in office, but so little has been done.

There is now the argument with Rolls-Royce which indicates yet further how little preparation has been done to establish what the rôle of the National Enterprise Board will be. There is considerable uncertainty about the situation. The arguments have been rehearsed today in the Press about the position of the Board and Rolls-Royce. There are difficulties and complications. We understand that in the past Sir Kenneth Keith had access to the Prime Minister as well as to the Secretary of State, and that Lord Ryder previously had access direct to the Prime Minister. But what is his present position? Does he have access to the Prime Minister? Is he therefore yet another person who can go behind the back of the Secretary of State to negotiate his own agreements? It would be helpful to the House to know what the position is.

I turn from the Government's total failure to implement their strategy in respect of British Leyland to the even more serious situation of Chrysler. It is relevant to the debate, because it was a post-strategy decision. The investment was made after the Chequers announcement on Government criteria. There have been Government statements about the prime need of a real prospect of viability. It is sad that nobody in the Government, with the possible but unlikely exception of the Secretary of State, actually believes that Chrysler can be viable.

Paragraph 24 of the White Paper on the motor industry stated: The Government have already taken measures to enable British Leyland to re-establish itself on a viable and competitive basis. In the case of Chrysler UK the Government have undertaken to support a re-organised and more concentrated operation. For Chrysler there is no mention of viability in the future. The Government cannot bring themselves to suggest in the White Paper that it should be viable. When asked about his confidence in the future of Chrysler the Chancellor of the Exchequer said on 22nd December: I am not going to express any confidence, only determination.

Mr. Robin Maxwell-Hyslop (Tiverton)

Does not my hon. Friend think that the phrase "a more concentrated operation" is a somewhat bizarre description of moving manufacture of the Avenger 240 miles away from the place where its engines are made?

Mr. King

We must have sympathy for whoever had the job of drafting that sentence. But I understand what my hon. Friend says.

The Government's overall strategy puts viability high in the list, yet the Industrial Development Advisory Board sees no prospects of commercial success. The Government's requirement is that there should be viability within three years, but their scheme for Chrysler provides for losses over four years. The only person who dares to suggest that the business might continue is the Secretary of State. He said on 16th December: We have the basis for a continuing operation into the 1980s".—[Official Report, 16th December 1975; Vol. 902, c. 1168.] What is his basis for saying that?

The Secretary of State wrote to my hon. Friend the Member for Henley saying that no studies had been done beyond 1979. He can therefore base his belief that there will be a continuing operation into the 1980s only on a personal hunch or imagination because he has admitted that no studies have been made beyond 1979 and it is expected that further losses will have to be covered by the Government.

The Secretary of State for Industry (Mr. Eric G. Varley)

The hon. Gentleman is referring to correspondence I had with the hon. Member for Henley (Mr. Heseltine) about model development and future prospects for Chrysler. Although that correspondence was published, there was a great deal of information which I could not give the hon. Member for Henley because of commercial confidence and the rest. I invited the hon. Gentleman to take the matter up directly with Chrysler, and the managing director of Chrysler United Kingdom said that he was prepared to do so. That offer has not been taken up by the hon. Member for Henley. The Opposition, if they are seriously concerned, should take that offer up rather than repeat these charges, because they know that I cannot reveal the commercial confidences given to my Department.

Mr. King

I am interested in what the right hon. Gentleman has said. He will understand that my hon. Friend the Member for Henley and I are somewhat heavily involved in the passage of one of the Secretary of State's more contentious Bills at the moment. We intend to follow that matter up, but it still has nothing to do with the point I am making. The right hon. Gentleman has referred to model development costs, which we understand, but his letter does not say that the matter to which I referred is confidential. It says: No projections have been made beyond 979 How can he have confidence into the 1980s if he has not done any projections about what is to happen in the 1980s, and the only projection done so far affects years in which he expects losses to be made?

This situation reveals the total nonsense that has been made of the Government's strategy. The overriding requirement both at British Leyland and at Chrysler is for a change of attitude. Yet, for example, we have the situation at Linwood, where the whole production has been stopped by one dispute. When one takes into account the tax implication, the money involved was not worth more than a packet of fags a week to each of those involved. That dispute could have been resolved without it, but, instead, the whole of the production was stopped. I am not taking sides, but that situation is indicative. Both sides had an interest in resolving it, and it is a tragedy that all work was stopped. It is possible to have disputes without actually stopping the whole of production. There are ways in which these things can be negotiated.

That dispute arose over the moving of 50 people four miles down the road——

Mr. Norman Buchan (Renfrewshire, West)

Half a mile.

Mr. King

—half a mile down the road—so what confidence does that give the House over the moving of a total assembly line 240 miles? What must stick in the Secretary of State's throat is that he was persuaded to agree to this course on the ground that it would save votes for Labour in Scotland. Now that he has seen the results of the East Kil-bride by-election, he must feel that he has been misled on that score as well.

It is clear that many members of the Cabinet realise the utter folly of this situation. Hon. Members who watched Monday's television programme will know that such is the dislike of many members of the Cabinet for the strategy that they have been singing like canaries ever since to the Press. It is impossible that a programme like that could have been put together without a considerable number of direct leaks by members of the Government, and it has not escaped the notice of the House that Secretaries of State and other Ministers are prepared to sing like canaries to the Press but are not so keen on singing at all to a Select Committee of this House, where it would be more appropriate.

We believe that the new strategy is right, but if it is to carry any conviction it must be applied in difficult as well as easy cases. We believe that the Secretary of State knows the answers on this matter. He knows the danger and the damage that will be done. He knows the threat to jobs posed by failing to face the situation. Anyone who has read the CPRS report, whose figures have been underlined and quoted again by the Government, knows that if the British motor car industry does not get this change of attitude and become competitive with overseas industries, the threat is that 275,000 jobs will be lost by 1985. That is the scale of the problem and underlines the crucial importance of showing that the industrial strategy is working.

The Chancellor of the Exchequer has drawn attention to the success of his accelerated investment scheme, and we pay tribute to it. He claims a multiplier effect of 6 to 1—that is, for every £1 million of public investment there is a follow-up of private invesetment of six times that amount. That means that the money spent on Chrysler could, if it had been used in other ways, have produced about £1,000 million of additional investment for the country.

The Secretary of State has said: To improve our industrial performance available resources should go to those industries which have the soundest performance, or the best prospects. This must be the first principle of Government aid…". It is for his betrayal of that first principle, which he himself enunciated at the conference on 30th October, that we censure him today.

Mr. Deputy Speaker (Mr. Oscar Murton)

Before I call the Secretary of State for Industry, I remind the House that the debate is to be interrupted at Seven o'clock for opposed Private Business.

4.45 p.m.

The Secretary of State for Industry (Mr. Eric G. Varley)

This is a very much truncated debate and I shall try to follow the hon. Member for Bridgwater (Mr. King) in being as brief as possible. I am sorry that the hon. Member for Henley (Mr. Heseltine) cannot be with us, and I hope that he makes a quick recovery from his illness.

The hon. Member for Bridgwater has characteristically asked a lot of questions. He himself answered one which had puzzled me. Those of my hon. Friends who were present in the House for business questions last Thursday will remember the cheers from the Opposition when my right hon. Friend the Leader of the House announced that today there would be a debate on the Government's guidelines on State investment in the motor industry. But when I looked at the motion on the Order Paper today, I wondered where the guidelines had gone. Now, the motion simply refers to State investment in the motor industry. The hon. Gentleman suggested that the Government are incompetent, but the Opposition are not even competent enough to get down on the Order Paper the motion which they wanted. It is up to the Opposition to decide what motions they put down on a Supply Day.

The fact is that when it comes to discussing State aid for the motor industry under the Industry Act 1972—and that is what we are talking about; that is where a good deal of the assistance for British Leyland will come from and the aid for Chrysler—the Opposition have too much of a past to live down.

When, two weeks ago, for example, the House discussed the extension of the financial limit under Section 8 of the Act, the Opposition sought to make great play by quoting from the guidelines for Section 8 which we recently published. Those guidelines were not extracted from us— they were volunteered. The criteria for assistance under Section 8 had been discussed within the framework of the National Economic Development Council. In any case, they were practically public on the basis of the discussions we had there.

But we could never have had a debate on such guidelines between 1972 and 1974, because the Conservative Government never published any guidelines for Section 8. It was very much more open-ended than now. When it was going through the House Mr. Christopher Chataway, then Minister for Industrial Development, turned down an amendment to insert a proviso in Clause 8, as it was, by which aid would have been forthcoming only where there is…evidence for believing that there is a reasonable prospect of the industry to be assisted achieving viability within five years".—[Official Report, Standing Committee H, 13th July 1972; c. 713.]

Mr. Nigel Lawson (Blaby)

I am sure that the right hon. Gentleman has no intention of misleading the House, but it is not right for him to say that these criteria, which are the heart of the new industrial strategy, were volunteered by the Government. There was a reference in the NEDC document which was expunged in the White Paper. When I asked the NEDC to give me the document, it said that it was highly confidential and could not be revealed. Only when I put down a Written Question was the information vouchsafed. I am grateful to the right hon. Gentleman for having given the information to the House in the end, but it was a difficult and lengthy process, and far short of being volunteered.

Mr. Varley

I do not quibble about this matter because it is not worth it. After the NEDC meeting guidelines were mentioned at a Press briefing. If the Government had wanted to hide the criteria they could have done so, but we saw no reason why the House should not have that information. When the Industry Bill was going through the House in 1972, the then Government—and Mr. Christopher Chataway in particular—decided that there should be no published criteria. The Conservatives were far more restrictive on these matters than we have been.

Mr. Tom King


Mr. Varley

I shall give way to the hon. Gentleman, but this is the last time I shall give way. I know that many of my hon. Friends wish to take part in this debate.

Mr. Tom King

I wish to deal with the point raised by my hon. Friend the Member for Blaby (Mr. Lawson) which the Secretary of State has not answered. Why did the Government delete or expunge from the printed White Paper the sentence I quoted earlier regarding criteria?

Mr. Varley

I am at a loss to understand the point the hon. Gentleman is making. We could have followed the precedent set by the Conservative Government and decided that there should be no published criteria. But we volunteered them, and it is as well that we did because everybody in the House is entitled to know.

When we examine the criteria adopted by the present Government, it is as well to trace a little of the history of the matter when Governments have considered giving assistance. I should like to quote a passage from Hansard in 1972 dealing with criteria for assistance: …there are the difficult and sometimes controversial cases where important concerns suffer a severe financial setback… In carrying out such an assessment, regard has to be paid to the whole range of relevant economic factors. Future profitability is one, but others cannot be ignored…the employment the industry provides in relation to the future of a particular area is also very important. This must be taken into account and care taken to examine whether it makes sense to allow a sudden collapse or whether it may not be preferable to aim for a slower run-down while alternative employment opportunities are provided. A viable enterprise at a lower level of operations is frequently a possible solution, too. Other factors may also be relevant, but I wish to emphasise the need for a thorough examination of all the factors so that a proper assessment of economic prospects and potential viability over the long term is made in each such case. I do not conceal the fact that, inevitably, these assessments are very often made against great pressure of urgency, and to pretend that risks do not have to be taken would be foolish, but they may be justified to achieve the wider purposes of policy.—[Official Report, 22nd May 1972: Vol. 837. c. 1020–21.] That is a very good explanation of the criteria and is the most fulsome and unconditional justification of Government aid that could be applied to the Chrysler situation. Those words came from the right hon. Member for Knutsford (Mr. Davies), the former Secretary for Trade and Industry, in moving the Second Reading of the Industry Bill 1972 and explaining how Clause 8—now Section 8—should be used.

The hon. Member for Bridgwater has all the brass neck in the world to have the nerve to get up in this House and criticise us for providing aid under an Act whose authors explained so candidly the purpose for which they intended it. He knows better than most, since he was the Parliamentary Private Secretary to the then Minister, Mr. Christopher Chataway, who took the Bill through the House. It is about time that Tory Opposition Members stopped their carping and nagging and made up their minds whether they want to give the British motor industry a chance. If they had their way there would be only two volume car producers in this country and imports would be flooding in. Heaven knows, unemployment is high enough, but if Tory Opposition votes had been successful in this House in the last two years there would be hundreds of thousands more on the dole—in Oxford, Birmingham and Coventry. I emphasise "Coventry" and I hope that the point will be noted in that part of the country as well as elsewhere.

It is easy to play a completely negative role. There is plenty to criticise within the motor car industry and a good deal to put right. We see insufficient investment, inadequacies in management and difficult labour relations. We have put all the facts before the British people and to those who work in the motor industry. Indeed, information has been made available to an unprecedented extent. Therefore, I do not wish to go into sterile arguments about criteria for British industry.

We set up the Ryder team and published its report. We asked the CPRS to examine the industry in depth, and we published that report as well. The Tory Party complained bitterly that the publication of the CPRS report had been delayed. But the Conservatives did not publish any CPRS report, delayed or otherwise. I have published two such reports in the last two years.

So we are not afraid to face the harsh facts about the motor car industry. But there are other facts, too. They are facts in which the hon. Member for Bridgwater is not interested this afternoon or which he brushes aside. I refer to facts about the achievements of the British motor car industry and to facts vindicating the House's approval of the Government's decision to invest Government money in the industry. If the Tories had had their way, there would be no British Leyland today. They would have split it up and let most of it go under. Yet British Leyland has made great progress. There have been important organisational changes, they have taken place relatively smoothly and quickly, and a new board of directors has been appointed. As the House knows, these developments were marred by the tragic death last month of Sir Ronald Edwards. At present Sir Robert Clark is able to stand in as chairman until we can appoint a successor.

The scheme for the financial reconstruction of the company became effective on 11th August last year. Following that arrangement, in early October the equity base was enlarged by £200 million, increasing the size of the Government shareholding to 95 per cent.

The company has also been pressing ahead with discussions with those who work in British Leyland about the proposals for industrial democracy and measures to improve performance. The main task must be to rebuild British Leyland and to return it to viability. That task is still before us. It is a formidable task and we have a long way to go. But there are hopeful signs.

Although the new arrangements for participation by the workers in the company's planning inevitably will take time to set up, it has now made an encouraging start with a joint declaration on the need for increased sales, productivity and production. We have hopes that this new machinery can make an important contribution to the smoother running of production in full co-operation with all concerned and that it will bring about a reduction in industrial disputes and an increase in productivity. It is true to say that morale and performance are improving.

Let me give the House some facts that should be given if we want to support the British motor car industry.

Last month British Leyland regained its position as the largest supplier of cars to the United Kingdom with a 29 per cent. share of the market. Of course, there are variations from month to month. In September of last year it reached the record level of 39 per cent. This was followed by a period of several months during which sales reflected the depleted level of stocks. The stock of new cars is being built up to a much more acceptable level. On the truck and bus side of the business, British Leyland's share of the domestic market rose in 1975 to 30 per cent. compared with 27 per cent. in the previous year. This was achieved against a difficult background of recession and falling demand. During 1974–75 the truck and bus division made a profit of £27 million.

It is British Leyland's export performance which is most encouraging. In the financial year to the end of September 1975 the value of British Leyland's direct exports reached £589 million. In this period the truck side of the business managed to increase exports from £80 million to £142 million—an increase of over 75 per cent. More than half the output of the truck and bus division is exported. For example, Leyland National in Cumbria has an order for 450 buses from Venezuela, with good prospects of securing further orders.

Sales of cars to the American market, which everyone knows is a demanding market, have been particularly encouraging. Figures available for the year just ended show that sales were up by 30 per cent., by volume, on sales in 1974. I repeat, if Tory Members had had their way, if their votes had been carried, much of this would not have happened. Not only would we have lost hundreds of thousands of jobs, but we would have lost hundreds of millions of pounds on the balance of trade and the balance of payments.

The Government are determined not to let British Leyland go under, obviously. We want to see an improvement in performance. We want to see British Leyland thrive and prosper and fit sensibly into a market that also contains a role for Chrysler United Kingdom and allows maximum scope for Ford and Vauxhall. In 1965 the share of the United Kingdom market held by British manufacturers was about 95 per cent. It is now nearer 65 per cent. All of our firms can improve their competitiveness and their market position.

The action we have taken to assist Chrysler United Kingdom need not diminish the ability of British Leyland, Ford or Vauxhall to compete with those overseas firms which have taken so much of our domestic market over the past decade. The CPRS report stated quite clearly that productivity, quality, reliability and continuity of production need to be enormously improved. What we have lost through poor performance in the past can be regained by better performance in future.

The objectives of our assistance to Chrysler are to give the company the chance to return to profitability and to compete more effectively in the home and overseas markets. No one can be certain that the company will achieve viability within three years. No one could give that categoric guarantee. The previous Conservative Government could not give that guarantee in respect of the assistance it gave to industry through the 1972 Act. If the Opposition do not regard our criteria as a satisfactory basis for aid in 1976, the evidence I have quoted proves that they regarded it as more than satisfactory in 1972—at the time of the "Chataway undertaking". When the Opposition were in Government and had responsibility for the motor industry they did not indulge in the sniping that goes on now. They now like sniping from the sidelines.

The company forecasts small profits from 1977 onwards. Even if viability is not regained within three years, the Government consider that because of the powerful social, industrial and balance of payments arguments a longer time scale would be justified. This fits in fully not only with the criteria put forward by the right hon. Member for Knutsford when he held office but with the criteria we have recently published. We should not entirely dismiss the words of Mr. Riccardo when he wrote, and I put this in a letter to the hon. Member for Henley: The conclusion we have reached provides renewed opportunity for the viability of Chrysler UK. Chrysler Corporation is backing this assessment with its own resources.

Mr. Tom King

We do not want to ignore what Mr. Riccardo has to say, but the Government have a substantial stake of public money in this company. The right hon. Gentleman has said that it might not be possible to achieve viability in three years and we ought, therefore, to be prepared to consider a longer time scale. As I understand it he has not considered a longer time scale. He has no idea whether the company will ever return to viability.

Mr. Varley

From the discussion which Chrysler United Kingdom had with the Government before agreement was reached we believe that, given an improvement in performance and harmonious industrial relations, small profits can be achieved in 1977, 1978 and 1979. Of course, there were contingencies made for losses in all those years. I cannot be certain about the future viability of this company any more than the right hon. Member for Knutsford could have had confidence about the assistance he was giving to industry. The Chrysler Corporation will not only share in the losses that Chrysler United Kingdom may incur over the next four years; it is also providing new funds and important guarantees to the Government.

The hon. Member for Bridgwater predictably raised the question of the Linwood strike. While I would like to say something about it, it is best not to do so at this stage so that I may finish my speech. I suspect that my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) will want to say something about that.

There are other ways in which the Government have shown that they intend to work closely with both sides of industry. We want to establish a viable, substantial, internationally competitive and unsubsidised motor car industry in the 1980s. We have said that it is necessary for there to be a fundamental change of attitude throughout the industry. We have to assist with the necessary reorganisation and rationalisation to ensure that the Governments' policies and the industry's plans are understood and provide as far as possible a stable economic environment for domestic sales of motor vehicles.

I have been giving a good deal of thought as to how we can achieve this objective. As a start I have approached the major motor vehicle assemblers and leading trade unionists with a view to setting up a group to tackle these urgent problems. I am pleased to announce that Mr. Beckett of Ford, Mr. Price of Vauxhall, Mr. Hunt of Chrysler and Mr. Park of British Leyland, and Mr. Jack Jones and Mr. Hugh Scanlon, representing the principal trade unions concerned, have agreed to take part in this group, and the first meeting will be held shortly under my chairmanship.

The group will consider initially the implementation of the White Paper on the motor industry and how work on the motor industry can be tied in with more general work between Government, management and unions on the Government's approach to industrial strategy. It will also consider other information, like the Report by the Trade and Industry Sub-Committee of this House, as it becomes available. I hope the group will tie in with the tripartite machinery we have set up for other industries as part of our industrial strategy. It is absolutely essential that we should give very high priority to this work in recognition of the special position of the motor industry in our economy.

This will be a short debate, but I hope I have approached the problems of the industry realistically and demonstrated that the Government approach the problem in practical, sensible terms.

Fortunately for the motor industry and the nation, the Opposition have no influence at all on this key sector of British industry. If their votes had been carried on several occasions in the last two years, the industry would now be in a state of disintegration. While they move their motions of censure, the British motor car industry, with the support of the majority in this House, is getting on with its job.

5.12 p.m.

Mr. Hal Miller (Bromsgrove and Redditch)

The sympathy I felt for the Secretary of State at the beginning of the debate evaporated rapidly. I have never heard such a petty, politicking, pettifogging attempt to go back over the past. The right hon. Gentleman based most of his remarks on what was happening in 1972. The industry needs a clear lead for the future and the Secretary of State spared us only half a page at the end of his speech. The reason why the industry did not need any help in 1972 was that we had a Tory Government. The Sec- retary of State's attempt to criticise my hon. Friend the Member for Bridgwater (Mr. King) fell flat on its face.

We are trying to consider the strategy that should be adopted by the Government towards the motor industry on a rather longer-term basis than was possible in the discussion on the Chrysler situation before Christmas, which was more of a tactical and short-term nature.

We have now had time to study in detail the CPRS Report and we also have the benefit of the Government's answers to the invaluable Report of our Trade and Industry Sub-Committee, whose chairman we are pleased to see here today.

The Government's policy and industrial strategy towards the motor industry has to be considered in the context of their industrial strategy as a whole. There is no particular reason to single out the motor industry, except, perhaps, its size and importance. Any differences are of degree and not of kind. But the industry is of signal importance to the West Midlands and employment prospects there.

I had hoped that the Secretary of State would amplify the Government's commitment in their White Paper on the way ahead for the motor industry, and would say what they intend to do. We have had a belated working party, which certain distinguished gentlemen have been pleased to accept invitations to join, but what is being done to carry out the Government's stated policy in the White Paper?

The White Paper sets out four objectives—first, the encouragement of fundamental changes in attitude that are necessary to improve productivity; secondly, assisting rationalisation of plant and reduction of capacity; thirdly, the development of closer relations between the Government and both sides of industry to ensure that policies are understood; and, fourthly, the creation of a stable economic environment.

The first lead we are looking for from the Government is the encouragement of the fundamental changes in attitude which all reports agree are necessary and which the Government themselves have accepted. The difficulty is that as recently as last night the Government forced through a Bill based on entrenched attitudes which are no longer applicable in industry. The Government have not given a clear lead to the country in this respect.

This lack of leadership is depressing and unsettling, and creates uncertainty, which mitigates against both investment and the achievement of improved industrial relations. Uncertainty among the work force in the industry is one of the main factors contributing to its very unsatisfactory output and efficiency. It is very understandable when people are laid on and off, apparently at the whim of management, without, perhaps, realising the effect that the Government have had on those plants. We look to the Government for a clearer lead on the change in attitudes that is needed.

The Government have said that they are committed to a high-wage, high-output economy, but that has a hollow ring for the man on the shop floor when he considers the Government's pay policy, the heavy increase in taxation—an extra £335 out of everybody's pocket—and the continuing decline in output. This decline started in about 1972. In one of our major factories, the same work force and the same supply of components is achieving only half the output of 1972. This is what the Government should be addressing themselves to, but I found a total lack of any appreciation of this problem in the Secretary of State's speech.

The Government's second criterion was to assist the rationalisation of plants and the reduction of capacity. It is on this basis that we have been trying to assess the Government's investment of our money in British Leyland and Chrysler. We have no evidence of any rationalisation or any reduction of capacity. How it can be claimed that moving the Avenger production line to Linwood is a measure of rationalisation is impossible to conceive.

We are still looking to the Government for some statement of rationalisation and reduction of capacity. The CPRS Report pointed out that the effect of costs on our cars, the number of models and the volume of production leads to considerable margins in favour of imported cars.

We have now reached the ludicrous position in which, if the Government were to proceed with the recently flown kite of the abolition of vehicle excise duty and increased petrol tax, thus creating a demand for small cars, the country that invented the Mini would be unable to supply that demand.

At the other end of the scale the CPRS Report comments that the effect of imports is largely felt on executive cars—the one area of specialist cars in which we have considerable advantages. But we have failed to capitalise on those advantages. The Government have done nothing to assist the rationalisation of plants and the reduction of capacity.

The third objective is closer relations, to ensure that fiscal, industrial and other policies are understood and meshed in. It is uncertainty about Government policies which has led to so much difficulty and lack of understanding. The contradictions in Government policies are damaging, and detract from the fourth objective of a stable economic environment.

I have referred to the possible abolition of vehicle excise duty. Another proposal has been put forward that for tax purposes company cars should be treated on a different basis. I well understand the rationale of the proposal, but its proponents have not understood the effect that it would have on the motor industry, especially in terms of the demand for fleet cars, which is so important to our two main manufacturers. It is necessary to be aware of the effect of proposals before floating them. Lack of understanding contributes to the uncertainty. I understand that the Secretary of State may already have received representations from the industry on that aspect.

Again, there is the classic example of the bus grant, which suddenly created an artificial demand for buses that our bus industry was unable to meet. What we are looking for this afternoon is not a repetition by the Secretary of State of a paragraph in the White Paper; we are looking to him to put flesh on it and muscle behind it. We look to him to show the determination and drive that the Government accuse the industry of lacking, and an intention to remedy the deficiencies.

Apart from the lead for which we look to the Government, we are also looking to the Government to see that British Leyland and Chrysler put their promises into practice. It is disturbing to find that the capital investment programme in British Leyland has already had to be stopped because the money had gone into consumption. The first tranche of the money voted by the House—for which I voted—has not been devoted to the purposes for which it was voted. What are the Government doing about that?

We have not heard about that this afternoon, just as we have not heard what are to be the guidelines for the National Enterprise Board. At a Press conference with Lord Ryder the Prime Ministers said that they would be presented to Parliament for discussion. We were told that the bench marks in British Leyland would be made known to the House and that an opportunity would be afforded for a debate on the progress made towards achieving them before the next tranche of public funds was voted. I should welcome a restatement of that commitment in unequivocal terms.

I supported the motion originally, with some sympathy for the Secretary of State. At one stage he had the courage of his convictions and stood out against the shabby manoeuvrings which led to the Chrysler deal being patched up. But he consented to that deal, and this afternoon he reaffirmed his consent. No attempt has been made to substantiate the bald assertion made in paragraph 22 of the White Paper that the deal complies with the Government's strategy. The right hon. Gentleman remains a member of a Government who have effectively ruined the nation's industry by inflation and taxation policies; who have, by their taxation policy, taken away from the work force the ability, will and consent to work; who have reinforced wrong attitudes instead of correcting them; and who have created uncertainty instead of the stability that is necessary to progress.

Several Hon. Members


Mr. Deputy Speaker

I appeal to the House. Ten-minute speeches will be for the benefit of all.

5.26 p.m.

Mr. Norman Buchan (Renfrewshire, West)

I am probably the only representative from Scotland who is likely to speak in the debate, and I wish to comment later on certain remarks which have been made during the past two or three weeks about people in my constituency.

Many of my hon. Friends and I. while welcoming the rescue of Chrysler, did not push for that solution. We saw the right solution in public ownership as a means of holding the position with future amalgamation with British Leyland. As we spoke about this throughout the country, we did not realise a significant factor which lies at the heart of our industrial malaise.

As we were demanding public ownership of Chrysler, Mr. Riccardo, on behalf of Chrysler, offered the company to Britain. I can think of no greater illustration of the developing power of the multinational company. When the United Kingdom was seeking control and ownership, such was the power of the multinational throughout the world that it was willing to say "Take it". Such is the domination and power of the multinational that it still had sufficient power to be able to control and market the production of its empire elsewhere.

I draw to the House's attention the Fourteenth Report from the Expenditure Committee on the Motor Vehicle Industry, which states in paragraph 267: However, a company with operations all over the world will understandably concentrate on those places and methods which offer the greatest profit potential. In other words, the company was able to say "Take the company away from us because we have in Europe, Japan and America all that we require to penetrate the United Kingdom market".

The report goes on to say: If the multinational company is based outside the United Kingdom, the achievement of such aims may conflict with British national interests. That is the great problem.

The crisis facing the motor vehicle industry is only one aspect of the general crisis facing the Western world in dealing with this phenomenon. We have one weapon for dealing with the power of the multinationals, and that is the power of the State. The State can use its economic resources and trading controls to deal with widely-based empires. But in this case that power, even in a medium-size country such as Britain, was apparently inadequate.

We still have to use the power of the State within. We still think that our solution was right because in the long run, unless we can emerge from the crisis within Britain with a large publicly-owned vehicle sector, we cannot cope with the real problems with which we have to deal.

I want to look, therefore, at the solutions put forward by the very workers who have been so greatly maligned in the last two or three weeks. I believe that the most humane and the most intelligent approach to the whole question was that of the workers themselves when they accepted that there was over-capacity in the car industry. They might have gone on to draw attention to the inevitability of the creation of over-capacity when the profit motive is present. There has to be over-capacity in order to be able to take advantage of boom conditions. That illustrates the difference between those who run the industry and those who are concerned with planning. The shop stewards have said that the problem of over-capacity is related to the production of too many vehicles in the same range and based on the same narrow philosophy.

In their proposals for dealing with the Chrysler crisis, the shop stewards suggested that this over-capacity should be used for social purposes. They underlined the need to manufacture commercial and specialised vehicles, buses and coaches, Land Rovers, agricultural tractors, heavy vehicles and so on. The shop stewards also recognise the ecological and environmental aspects, and regard the private petrol-driven car as a socially irresponsible form of transport. They urge that attention should be concentrated on developing new products of a socially useful kind.

These suggestions have come from the very workers who over the last three weeks have been criticised irresponsibly, ignorantly and stupidly in the mass media and in this House. That irresponsible criticism has been made not only in a political and industrial context but also in cartoon form. I draw attention especially to a cartoon, published in the Daily Mail, which was a disgrace to British journalism. It referred to the workers in the Lindwood plant of Chrysler in my constituency, comparing them with mercenaries. The cartoon shows two men at the factory gate. One of them holds a bag, and written on it are the words "Angola Mercenary Re- cruitment". The man holding the bag is saying to the workers, It's men just like you we're after—ruthless and tough, with the killer instinct. So after you've killed this place off.…". [HON. MEMBERS: "Shameful."]

We ought to try to understand the real situation. That is why I objected to a comment made by the hon. Member for Bridgwater (Mr. King), who is a rather nice and kindly Tory and for whom I have a great deal of regard. But he, too, accepted as a basic assumption that in any dispute which leads to a stoppage it must be the workers who are at fault. It would seem that there are apparently two sides to every question in our nation, except where workers and management are concerned, and then, apparently, there is only one side. Yet this assumption is made in every case of this sort.

I draw the attention of the House to an obvious truism. When any argument or difference arises between management and workers, the management can say that x shall be done, because management has the power to control x and to do it. The workers cannot say that x shall be done. They can perhaps resist x, or suggest y, but if no agreement is reached the workers have no other weapon to use.

In the Linwood dispute the management was in the wrong, and demonstrably in the wrong. The report and the decisions made at ACAS show that management was in the wrong. Indeed, the very speed with which the agreement was reached demonstrated that management knew that it was in the wrong. Nevertheless, whenever the men are involved in disputes of this sort, it is said that they alone are in the wrong.

Both the speech made by the Secretary of State for Industry two weeks ago and the comments made by my right hon. Friend the Prime Minister a week ago urged the need for peace in the industry and the importance of not attributing blame. I only regret that in the cartoon and in the speeches made there was no attempt to attribute the blame to the right quarter.

Mr. Michael Grylls (Surrey, North-West)

My hon. Friend the Member for Bridgwater (Mr. King) was not taking sides but was simply referring to the dispute and saying that there were several different ways of resolving it without going on strike. My hon. Friend made that point very clearly when he said that he did not want to take sides in the matter or to blame one side or the other but that people should not immediately jump into a strike position when a dispute arose.

Mr. Buchan

Of course, I agree that jaw-jaw is better than war-war, but both sides are required to jaw. The workers' side was anxous to negotiate but the management side took the view that all the formal procedures had gone. That was what was happening.

Of course the workers do not want disputes. The convener, John Carty, whom we have all grown to respect, and the shop stewards at Linwood did not want a dispute. Is it suggested that my constituents in Linwood, with their families, want a dispute? For God's sake, let us have some sense in dealing with this issue. We want Chrysler to settle down. We want to make it a success.

Hon. Members ought to listen a little more to the workers' case, not only in these disputes but when the workers are giving their analysis of the car industry. They recognise the urgent need for Land Rovers, for example. Why can we not come to an agreement on the need for greater production of this type of vehicle in relation to the overseas aid programme? There is a great need for this work-horse type of vehicle.

I should like in conclusion to make one last parochial comment. The hon. Member for Banff (Mr. Watt) in his approach is fork-tongued like Geronimo and triple-tongued like Crazy Horse. He said that Coventry can go to the wall and that only Linwood should be saved, but when it came to a vote he voted for the deal. In the Select Committee he attacked the deal and suggested that it was done for votes in the West of Scotland, for political reasons. Why did the hon. Gentleman support the deal with his vote if he disagreed? Finally, he said that it was all wrong and that we should have used the money to grow trees.

Mr. Watt

Does not the hon. Member agree that, until this country starts to produce articles that can be sold, all the money that comes from the Government will be wasted?

Mr. Buchan

That is what I thought I had been saying for the last two weeks. I wish that the hon. Member would listen to the good advice of the workers given to him when he came to Linwood. The workers want to start producing the goods that the world requires and we can sell. That is the answer to the problem.

5.37 p.m.

Mr. Richard Wainwright (Colne Valley)

I am sure that many hon. Members apart from myself will be grateful to the hon. Member for Renfrewshire, West (Mr. Buchan) for drawing attention to the absolutely essential contribution of the majority of the workers at Linwood.

I am in no way qualified to follow the hon. Member on this subject. However, I may manage to ward off interruptions about the desert from which I rise on this side of the Gangway if I explain, in relation to some small part of the desert, that this is the very hour—hallowed, I believe, by Mr. Asquith—at which the weekly meeting of the Parliamentary Liberal Party is held.

On the television programme "We British" earlier this year, there appeared that formidable retired servant of the State, vastly experienced and highly distinguished—Dame Evelyn Sharp. This great authority said quite explicitly that she believed, as a result of all her experience, that the nation had lost its former great capacity for constitutional innovation and for keeping its institutions up to date. She was quite categoric about that. I happen to share that feeling—indeed, my party does—and I believe that it is nowhere more apparent than in the sphere of managing State assistance to industry—and particularly the motor vehicle industry, which is one of the very largest of our industries.

We are in a state of anarchy. This is admitted virtually on the first page of the document produced in December 1975 concerning the criteria for assistance. Paragraph 2 of that document begins by saying, quite truthfully, that the major extension of the public sector is now taking place. It goes on to say that this suggests that the time is ripe to take stock of the under-lying economic and social principles which are involved. That is rather like going out into the middle of the Atlantic and then suddenly saying "Good heavens, it is time we found out where we are heading, the route we are taking and the time when we expect to arrive." That typifies much of the White Paper on the motor industry, and, indeed, the need for the very existence of the Ryder Committee. We had what I regard as a quite shocking Report from that Committee—even judging by the bowdlerised version which is all that this House has been able to see.

Then we had the farce over Chrysler, whether we accept every jot and tittle of the Granada television version of events or not. Finally we had the production of the document on the criteria for State assistance. All these items are an indication of the anarchy in this sphere. The only point at which the constitution has come to the rescue in this matter has been the admirable Report of the Select Committee on Expenditure. However, the Committee will agree that it is not part of its job to manage the assistance, only to pass Parliament's judgment upon it, which it has very well attempted to do.

We then come to the question of responsibility. The Secretary of State was eloquent in this direction about the contribution of the former Conservative Government to these matters in introducing the 1972 Act without any attempt to set up a structure or adapt the constitution for the ladling out of lolly in the vast amounts which have been paid. They produced no guidelines when they magnetised the routes to Linwood in the first place. I understand that Scotland is littered with monuments to the electoral expediency of the Conservative Party—half-completed steelworks and half-completed motor car works, and I believe that quite a lot of the apparatus of the oil industry will be likely to follow in the same way. Each coffin cloth will be embroidered with the initials of some vote-catching Conservative politician who will publish his memoirs in the hope of persuading people that he is a statesman.

Even with its unfortunate inheritance of this vacuum, the Labour Party cannot escape its responsibility. It is paralysed in the dreadful tug between its loathing to do anything to help the private owners of industry with Government hand-outs and, on the other hand, its very proper concern about unemployment and, perhaps, its less proper concern to extend public influence in the industrial sphere. This terrible tug was literally painfully illustrated by the Secretary of State over the Chrysler situation. There I believe that his opposition to the scheme of the Chancellor of the Duchy of Lancaster was naturally motivated by the fear that in his own Chesterfield he would face the question posed in those rough Derbyshire accents, "Does Bridgwater come to you for the weekends for this Tory-Labour pact, or do you go to Bridgwater in order to implement this ' Operation Heselvar ' from which the country is suffering so much?"

We need a major constitutional device for administering these enormous sums of money. I believe that in some way it should take the form partly of the regular presentation of a budget of Government finance for industry with all the disciplines of the Budget involved. This should have the effect of bringing in all the relevant Departments in good time instead of our experiencing the sort of scenario which Granada Television viewers were fascinated to watch the other night through impersonation by distinguished members of the Press.

Secondly, it would compel the sponsoring Departments—those mysterious organisations which sometimes talk from Whitehall as though they were positively the godparents of different industries—to get off their backs and do a bit of sponsoring and monitoring instead of just occasionally administering pats on the back. The budget procedure would focus the attention of Parliament and at least create a public awareness of how the money was to be used. Above all, in a matter of industry where precision and a certain sharpness are essential, the exposure of an industrial budget to this House would drive out those wet and woolly terms which continually crop up in these documents, particularly the document of December 1975 which has featured so largely in the debate.

Even the CPRS study, more disciplined though it is, contains some of those terms. One example is the word "viability". I have worked in business in Yorkshire for nearly 30 years without that word ever being mentioned by a client. In Huddersfield we do not say "A fine chap that, his business is viable ". We say "A fine chap that. Even allowing for inflation he is getting a 20 per cent. return on the money he is putting in his business". I think that the term is wholly a medical one. The sickliest child, as long as it is breathing, is viable. The word fouls up a lot of our documents.

The CPRS study has begun to approach this matter. We need talk not about viability, as though mere survival had any virtue, but about comparative returns on capital employed. I pay tribute to chart 23 on page 77 of the study. It is a splendid chart showing the return on capital which ranges from Chrysler with 9.7 per cent. to Automotive Products, Birmid, Qualcast and the Chloride Group with over 13 per cent. That is not what one would want, but at least it is approaching something reasonable.

The presentation of a budget would give an opportunity for matters to be discussed in an orderly way without disclosing confidential commercial information and in a manner in which people from different parts of the country and different industries could make their contributions. We should no longer have child's guides to the assessment of companies such as we see on page 6 of the criteria of December 1975 which would just about do credit to an intermediate candidate for the Institute of Chartered Accountants, but certainly not at a higher level. On page 7, in paragraph 16 the document says, in referring to the assessments of business, that we have to consider the length of time required to give companies in difficulty a reasonable chance of achieving solvency. It is suggested that the State compounds the very serious offence of not merely allowing but assisting insolvent companies to trade in the hope that they will eventually achieve solvency? All that kind of persiflage which people get away with at the moment because it is not properly debated would be blown away if we had a series of proper budget debates.

For four years we have had a coalition gravy train for a large number of industries, some of which are of very dubious long-term value. Sometimes the train has a Tory driver and a Labour guard, and sometimes a Labour driver and one or two Tory guards. The vast cost of managing this coalition operation—or perhaps I should say coalition shambles—is met, first, by inflicting inflation on the people who can least bear it—and, incidentally, some of those who inflict the inflation are armed with pensions which ensure that they shall not suffer from it—or otherwise by a savage rate of tax on low incomes which now bears more heavily even than in war time. This is the price we are paying for failing to keep our constitutional devices abreast of what Government of both parties decide to do. More and more tickets on this gravy train are being negotiated for even as we debate.

The time has come to create an orderly, properly-structured and understandable system for this necessary Government intervention, so that we no longer quarrel about the necessity of the intervention, which some of us, or some of us in this party, have been admitting since 1929, but instead have orderly debates about where intervention is to take place. Because there is no sign of this from the Government, my colleagues and I will be reluctantly obliged to keep dubious company in the Lobby tonight.

5.51 p.m.

Mr. Brian Walden (Birmingham, Ladywood)

In the short time that I intend to speak, I do not want to follow the Opposition Front Bench in a discussion of whether the Government should bring more certainty into their pronouncements. I am dubious about the value of pronouncements anyway, whether certain or uncertain, and I do not want to talk about Leyland or about the Budget—only about Chrysler.

I do not recall an occasion when I have been more out of sympathy with the general view expressed about Chrysler. I not only think that the Government were right; I think that they acted promptly and wisely and in the best interests of this country, both in the short term and in the medium term. I go further. Far from the deal that the Government made with Chrysler being a negligent waste of taxpayers' money, I think that it has actually saved a considerable sum of taxpayers' money, and I intend to try to show why.

I want to confine myself to what seem to be the three major charges or suggestions made by the Opposition during the debates on Chrysler, one of which, since the hon. Members for Blaby (Mr. Lawson) and Bridgwater (Mr. King) are so worried about expunging, was wholly expunged from the speech of the latter today, although the hon. Member for Henley (Mr. Heseltine) made it one of his strongest points—I was sorry to see that even some of my hon. Friends in former debates thought that there was something in it—namely, the fatuous charge, which has never been withdrawn, that the British Government contributed—gave—£127 million to American shareholders.

That was the assertion that the hon. Member for Henley made, together with a good deal of unpleasant anti-Americanism. It was a straightforward charge of giving money, and it is utter and absolute bunkum. I am sorry that the hon. Gentleman is ill. I wish that he were here to hear me say this, but I am prepared to chat to him when he comes back and I hope that he reads what I say.

This is astonishing. The idea of taking a notional share value after a Government decision and then relating it back to what was the previous share value and claiming that in some obscure way the British taxpayer has contributed to American shareholders was nicely and precisely defined by the late Iain Macleod as the "hall-mark of financial illiteracy". That is the first point.

The second point is that it is not even true. It is wholly false and can be demonstrated to be false. It does not even make sense. To begin with, Chrysler share prices did not rise upon the announcement of this deal. Why should they? Chrysler United Kingdom has never contributed a penny of profit to the Chrysler Corporation. In the second place—[Interruption.] Hon. Members can, if they like, reply to all this. I shall be grateful to hear them explain later what the hon. Member for Henley was trying to allege. I am saying that it is false.

It is not true that the share price went up immediately because no money was ever contributed by Chrysler United Kingdom to the parent company.

Mr. Tom King

That is not the only consideration.

Mr. Walden

Moreover, on the arguments which the hon. Member for Bridg- water, who is interrupting me from a sedentary position, put today, it is the contention of the Opposition that it never will make any profit. What kind of lunatic would wish to put up the price on that assessment?

Mr. Tom King

There are many things that one can say about Chrysler, and I apologise if I did not cover all of them. There are two aspects of the subsidiary company which might affect the shares of the holding company. One is whether it contributes profits. The other is the size of the losses or the liability that it might represent. It was the great reduction of that potential liability which affected the Chrysler share price.

Mr. Walden

I do not for one second agree that it had anything to do with a great reduction in potential liability, which I do not believe has taken place. But I want to move on from this point. I offer the hon. Gentleman an agreement. Let him go to the bedside of the hon. Member for Henley with some friendly brokers and put his case. When they have done laughing at him, they will tell him what actually happened—namely, that it was a stream of good news from American plants, it was the winning of the European Car of the Year award—[Laughter.] Wait for it. Most significantly, undoubtedly the reason for nearly all of the gain is that Chrysler went up—this is undeniable: the hon. Member for Blaby has enough sense to know this—on the general rise of the biggest bull market in Wall Street for a very long time.

Mr. Lawson

The effect was disproportionate.

Mr. Walden

The charge is nonsense, and unpleasant nonsense, I might add. There is no truth in it whatsoever.

Then, when they have done with alleging that the Government are giving money to the American shareholders, the Opposition—at least, a large section of them; certainly the Front Bench, I take it—contend that Chrysler should have been allowed to collapse. Apparently, in some way which has never been defined, this would show not only great financial probity on the Government's part but a proper concern for taxpayers' money.

Well, would it? Let me give Opposition Members some figures. The loss of jobs in Chrysler, if it had been allowed to go under in the way suggested, taking in the ancillary jobs, could not have been less than 55,000.

Mr. Lawson


Mr. Walden

That is 25,000 from Chrysler alone and an ancillary figure of at least 30,000. That is my view, the Government's view and other people's view.

In view of what I shall be saying, however, one can lop a little off that and work it out to the figure that I shall give of what this would have cost. This would not have been unemployment shared at the rate of 100 each in every constituency in the country. It would have been concentrated and would have fallen cripplingly on Linwood. It would have made Linwood a ghost town.

Mr. Lawson


Mr. Walden

It is not rubbish. It is the plain truth. There is not enough alternative work there. It would have raised the unemployment rate in Coventry, which is already well above the national average to about one-sixth of the work force.

Most importantly of all, however, if one takes account of the additional unemployment benefit which would have had to be paid and the loss of income tax from men who would not have been paying it but who pay it now because they are in work, the cost of 55,000 unemployed men to public funds would have been £150 million for a year. That is about double the maximum amount that the Government can lose over four years, as I now want to try to show.

Nothing is more false, nothing shows more clearly the distortion and prejudice which has crept into this argument, than the assertion that by allowing Chrysler to collapse money would have been saved. Money would have been forgone——

Mr. Lawson

The hon. Gentleman is just Lever's poodle.

Mr. Walden

The hon. Gentleman is right. I have great sympathy indeed with the right hon. Gentleman whom he has just named.

I do not think that the hon. Gentleman can answer the arguments which have been made. I do not think he has any intention of trying, except on the non-sensical assumption, which is what the Opposition's case depends on, that the employment prospects in this country are so splendid that we can redeploy the 55,000 people in a comparatively short time in areas like Coventry and Linwood—[Interruption.] What did the hon. Gentleman say?

Mr. Lawson

We do, all the time.

Mr. Walden

We do? If the hon. Gentleman has any suggestions in that regard for the people in Linwood and Coventry who have lost their jobs, I suggest that he hurries at once to the local labour exchanges to tell them where those jobs are.

Mr. Lawson

Is not the hon. Gentleman aware that, on the official figures of the Department of Employment, about 400,000 people find new jobs every month?

Mr. Walden

Of course, 400,000 people find jobs. There is a very high degree of labour mobility in this country, much higher than is conceded by the party opposite on the election platform. But we are not talking about that. We are talking about 400,000 jobs a month plus 55,000 new permanent jobs. Nobody with any sense believes that such jobs are available.

My next point concerns the finances of the matter. The original statement in the Press contained a figure of £200 million. That was on the basis that under a Labour Government one should add another 25 per cent. so that the Labour Government could be criticised. It is universally believed that the figure that will be lost or given away is £162½ million. But that is quite wrong, because £35 million of that represents a Government guarantee of money which Chrysler will get from private banking sources. Only if the parent Chrysler corporation collapsed or defaulted would that money be lost. As that is not likely to happen, it will not be lost.

Of a further £55 million, £28 million is a loan on which we get interest. That sum of £28 million is secured by the parent company, and £27 million is on the assets of the United Kingdom company. It would be technically possible for Chrysler United Kingdom to default and for the parent corporation to refuse to accept its financial obligation, but that is highly unlikely. For a major American corporation to default in that way would be one of the most stupid things for it to do. If one imagines that it would do something so stupid, one takes £63 million off the £162½ million. If one thinks that the corporation would not do so, one deducts £90 million. That means that on the most pessimistic assessment, on all the doom-mongering of the hon. Member for Bridgwater, the total loss that the taxpayer can sustain for the whole four-year period is £72½ million, which is half of what we would have lost in one year if we had allowed the company to go under and we had paid out unemployment benefit.

The truth is not that the British car industry is perfect, not that the British Government never make a mistake, but that the Opposition, through prejudice or perhaps ignorance, have not carefully looked at the Chrysler situation because they did not want to do so. They were too worked up by the spectacular rumours which went around when it was originally set up. They have not done their homework. They do not deserve to win the Division, and I hope that they will not do so.

6.4 p.m.

Mr. Anthony Nelson (Chichester)

I have followed the hon. Member for Birmingham, Ladywood (Mr. Walden) with interest. I think he has brought some of his customary colour and life to the debate. I should like to mention two points which he raised, as I was shaking my head violently during his speech.

It is an undeniable fact that when one creates a potential liability for the British taxpayer of £162½ million and one reduces the debts of a subsidiary of an American company or increases the assets of it, that must affect the market capitalisation of that company in America, and that will be taken into account by the shareholders. There was a substantial increase in the share price of the Chrysler Corporation, and the increase was substantially more than that of other major car companies on the Stock Exchange.

With regard to the total liability of the British taxpayer, where does the hon. Gentleman think £162½ million comes from? If there is no liability involved in putting the money in, or if it has not been spent, let him tell us so. The fact is that the potential liability—in the worst possible circumstances, I agree—is £162.5 million. We all hope that the losses will not be as great as that, but in the last resort the British taxpayer is on the hook for that amount.

In discussing the Government's industrial policy in relation to the motor car industry and the criteria which they employ, it is fair to say that it is more easily identified by their deeds than by their words. The Government's approach as set out in the White Paper, "The British Motor Vehicle Industry", speaks lyrically of encouraging the fundamental changes in attitude", of reducing assembly capacity, establishing closer relations with the industry", and of providing …a stable economic environment". How hollow these statements seem in the wake of events. Are we encouraged to believe that the attitude of the packers at Linwood, who have now been promoted to production workers, displays a fundamental change in attitude? Are we satisfied that the relations between Lord Ryder and his prospective subsidiaries displays a closer relationship between Government and industry? Are we satisfied, at a time when the pound is sinking and when inflation is increasing, that we are on a more stable economic footing? In spite of the advice of the Industrial Development Advisory Board, the problems highlighted by the Central Policy Review Staff and the concern of the House of Commons Expenditure Committee at the lack of financial monitoring, the Government are liable to spend up to £2.8 billion on British Leyland, £162.5 million on Chrysler, and—who knows what?—on future ailing motor companies to subsidise in large part unviable businesses.

The Prime Minister, speaking to the Birmingham Chamber of Commerce last month, said that the motor industry could not necessarily rely on Government money if it continued to disrupt production. How strong is the Government's resolve? It was displayed at Linwood recently, but it did not come to the final stage where they had to cease all subsidy payments to Chrysler. The settlement to the packers of £1.10 a week was made by way only of regrading the status of those workers. Chrysler is committed to bringing its United Kingdom plants up to Coventry pay levels, but the £6 pay limit will prevent that commitment from being honoured. What is the Government's policy and what is the position with regard to that agreement?

Mr. Tom Litterick (Birmingham, Selly Oak)

Does the hon. Gentleman appreciate that a number of the employees are already above the Coventry levels? In addition, would the hon. Gentleman develop the point over which he skated very quickly? Does he think that the Government's job is to blackmail, bully, threaten and coerce free men into accepting working conditions which have never been negotiated and jointly agreed? Does he believe that that is the Government's rôle?

Mr. Nelson

With regard to the pay settlement I should make it clear that I am talking about the whole of the Chrysler company. It was an integral part of the negotiations for the settlement at Linwood. Secondly, with regard to the whole of the industry and the pressure that Government should put upon agreements, I think it was quite right that the Secretary of State did to a large measure try to assist in the difficult discussions which took place. Nevertheless, where the British taxpayer is on the hook to spend substantial sums of money on risk capital in industry, it is proper that we should endeavour to find out whether there is a possibility of getting binding agreements with those employed in industry that they will restrain their wage demands to a proper level.

With regard to the formulation of a credible industrial policy, one of the important constituents of this, which was presented to the NEDC, was that it should take account of consumer choice. While it is proper that we should be concerned about the taxpayers' liability, and about the effect that such funding will have on chances of employment, it is proper, in considering the future viability of the motor car industry, that we should take more notice in the future of the consumer's views and his demands.

Paragraph 10 of the White Paper states: The importance of the motor industry to the balance of payments, to employment and to the industrial structure of the UK make it imperative to achieve a substantial and viable volume car industry in this country. There is no mention of the consumer's choice or demands which should be accounted for in the industrial strategy for the car industry.

I should be interested to know what the Minister considers the future to be of the Motor Industry Consumer Council which was set up by the National Consumer Council to look into questions of planned obsolescence, after-sales service and representations to car companies in which the Government have a stake. What rôle will this body play, and how does the Minister hope to improve the dialogue between customers and manufacturers on these matters?

I want to remark briefly on British Leyland, which has been covered at length this afternoon. Hon. Members may have read some of the comments of Mr. John Barber, formerly a senior employee of British Leyland, which were published in the Financial Times today. He said: The art of the game is to develop cars in sectors of the markets which give the best volume/cost/price relationship for the talents of the particular company. Although the White Paper did not comment on the reason for Mr. Barber's dismissal following his criticism of the biblical Ryder Report, he raises some important arguments which the Government have a responsibility to taxpayers to answer.

First, the reduction of British Leyland models from its former 15 to its current seven is under way. However, it is suggested that four main bodies plus one unique one is the highest number British Leyland can sustain without low volume per model and the complexities and cost of running a large number of different production lines. This point was also made in paragraph 37 of the CPRS Report. That will cost the taxpayer money, and we should like to know whether the Government have had any consultations with the company to find out whether its proposals in this area follow any guidelines which they have set.

Secondly, British Leyland's top management perhaps lacks some of the car marketing and production experience which is necessary to revive the company's fortunes. I suggest that the position may be substantially worsened under the direction of the National Enterprise Board. If the Minister can make any conciliatory remarks on this matter I should be grateful.

British Leyland's strength lies in superior production engineering, yet the Government's policy in practice is orientated towards continuity of existing production, that is to say, subsidising the production of cars that people do not want to buy, as opposed to improvements in the quality control, and pitching of new models at the up-market volume car market.

I turn to Chrysler. The Government have estimated that the losses this year may amount to £40 million, which is approximately the same as the losses last year, with a £20 million contingency. However, at present the company is faced with a drop of some 25,000 units in exports to Iran and has set a target of 81½per cent. as the market share in the United Kingdom for its marketing team. We welcome the percentage share which it was able to achieve in the first month of this year, but it has a substantial way to go to achieve this average target for the rest of the year. Production changes, the phasing out of old models and labour difficulties in switching the Avenger from Coventry to Linwood could bring this loss to over £60 million.

In such circumstances there is no agreement under the documents that were exchanged to cover losses in excess of £60 million this year. The Government's limit to the end of this year is £50 million and Chrysler's share in loss funding is £10 million. What happens if it is more? The Executive Vice-President of Chrysler (Europe), Mr. Gwain Gillespie, said that Chrysler would have to take another look at the agreement. Therefore, it is proper to ask, if the loss is substantially more, whether the taxpayer is on the hook for a larger amount. I hope that the Minister can give us his views on that.

There is still no satisfactory answer as to how Chrysler will finance four new models in its programme out of the £55 million capital grant. Mr. Riccardo said that the programme would be achieved by integrating model policy more closely with Simca in France. It is important that we should inquire what this will mean in terms of jobs in this country. Are the six models and the production locations to be rationalised sufficiently, and what will this do to average cost per unit? What studies have the Government undertaken in this area to ensure that the production, efficiency and productivity targets meet the requirements that the Government set in their funding?

The Industrial Development Advisory Board recommended against the Chrysler rescue plan, but the majority of the Board were prepared to accept the scheme if greater capital commitment from Chrysler were to be forthcoming, if the Government had a right to curtail or vary their commitment and if there were binding agreement with the work force on manning levels and productivity. These are the minimum conditions that should obtain.

Greater investment and higher productivity are, however, not necessarily the best medicine for an industry which may in certain sections be overmanned. Although we are often compared with the success of other car-producing nations, notably Japan, it is also fair to say that, as the international demand for cars dwindles or remains static, many of them will now be encountering some of the structural problems that we have.

I want to ask the Minister about the future of the Jensen company which is based in West Bromwich—an area of high unemployment. The plant is due for closure in April if no solution is reached. What discussions has the Department of Industry had with a view to injecting money into that company? The good intentions of this Government are so often replaced with political expediency that this is a proper question to ask.

6.15 p.m.

Mr. Les Huckfield (Nuneaton)

I am sure that many of my constituents wish that they had got as much of their car manufacturing experience from the Library as the hon. Member for Chichester (Mr. Nelson) did. The hon. Gentleman referred to bringing Chrysler's pay rates up to those of Coventry's. He does not know about the dispute at Linwood, where one reason for the management's digging in was the fact that in the possible transfer of the Avenger from Coventry to Linwood it was possible that they would have to bring Coventry rates up to those paid at Linwood. Therefore, when the hon. Gentleman mentions bringing the whole of Chrysler United Kingdom rates up to those of Coventry, he should know what he is saying.

I am not surprised at the completely out-of-touch remarks of Conservative Members. The notional liability that the Government may incur will arise only if everything goes wrong with the deal of £162 million. Let us not forget that it was on 17th December that the hon. Member for Henley (Mr. Heseltine), who at present is ill, managed to excel himself and increase the total to £358 million. If we take into account the fact that he increased the total capital cost to £218 million and the total Government contribution to the losses to £105 million, we may wonder what the Opposition know about the car industry. In doing that the hon. Member for Henley conveniently forgot to take into his calculation the fact that the Chrysler Corporation has an obligation to pay for half the losses incurred, up to £72,500,000.

Furthermore, in his calculations the hon. Gentleman completely omitted to say that many of the planning and development stages for the new models envisaged in the declaration of intent have already been paid for. From the pronouncements that have come from the Opposition it is apparent that hon. Gentlemen have not gone closely into the deal.

I accept that the deal that was negotiated by my right hon. Friend the Secretary of State for Industry and others was not the most perfect that could have been concluded. Nevertheless, only £63 million—arrived at in the negotiations—out of £162 million will be paid by the Government if the parent company, namely, the Chrysler Corporation, totally defaults. A further £27 million could arise if the assets of Chrysler United Kingdom are not sufficient to guarantee half of the £55 million loan if the parent company totally fails to meet its obligations.

When Conservative Members refer to £162 million it bears repeating that even if the deal goes completely wrong and the Chrysler Corporation reneges on its obligations the Government liability is only £63 million.

As for the total losses to which the Government are committed, again, £72½ million over the next four years is the total loss only if everything goes wrong. Again, however, the parent corporation is committed to meeting £32½ million of that. Therefore, we ought to have a far better analysis from all the self-styled and self-proclaimed financial wizards that appear on the Opposition Front Bench nowadays.

I do not proclaim that this is the last word, or the deal to end all deals, but when the Press and Opposition Members talk about £162 million, they really ought to know what they are talking about. I believe that this deal may not last for the whole of the planned duration. I have constantly said that, inside and outside the House. Nevertheless, if it gives my right hon. Friend the Secretary of State a breathing space in which he can plan what to do with the British car industry, I believe that the deal has been well worth concluding.

What we have to do now is to see what we want for the whole British motor industry. I am talking not just about Chrysler but about British Leyland as well. I say to my hon. Friend the Member for Renfrewshire, West (Mr. Buchan)—with whom I agree on most other things—that I was one of those who did not favour the public ownership or the nationalisation of Chrysler United Kingdom, as an option, a way out, or a solution to these kinds of difficulties. I have always thought that the nationalisation of Chrysler, because of the rationalisation that it would ultimately have entailed, would mean far more redundancies and planned rationalisation. The only alternative to a massive rationalisation programme and redundancies would have been another British Leyland-style support operation. The Government could not have afforded that. Even if they could have afforded it, it would have totally jeopardised plans for British Leyland. Surely Opposition Members must have some regard for the value of the Iranian contract—at least £100 million a year for supplying CKD Avengers to Iran—and for the kind of Middle East market that we could have lost.

The most important argument that we must bring to bear on this agreement is the fact that if Chrysler United Kingdom had been allowed to collapse up to 10 per cent. of the British car market could have been left vacant and a prey to Japanese and German imports—indeed, all imports. Considering the fact that British Leyland now has 90,000 customers waiting for cars—and British Leyland, I think, made a very fundamental miscalculation in its "Superdeal" sales campaign—I do not believe, as the Think Tank Report impiles, that British Leyland or other British manufacturers would be in a position to supply 10 per cent. of that market if Chrysler vacated it.

What I am saying, in other words, is that the only alternative to this rescue plan must be a policy of import controls. If Opposition Members want to oppose this deal they must tell the House and the country who is to supply the 10 per cent. of the market that would have been vacated by Chrysler. I do not believe that it would have been British motor manufacturers, because of their capacity problems and production difficulties. It could certainly have been the Japanese, Italians and Germans, who at present have very high stocks of cars in this country and high numbers planned to come here.

My main point is that in both the Chrysler and the British Leyland rescue operations, which were to some extent forced upon the Government—the Government had to do something about both of them—now that we have injected the initial tranche into British Leyland and made the initial injection into Chrysler, we must have both undertakings working, and working efficiently, for the sake of the workers, the customers and the dealers. We have to do that above all, and to do it immediately and efficiently.

However, during the two years that we have—I assume that we have a possible two-year period in which to think matters out—we must get down to thinking to what extent this country intends to stay in the small and medium end of the model ranges. We still have not decided that. To what extent, for example, ought we try to compete with Datsun, Toyota and Volkswagen, which have capacity for 2 million units a year, at least? To what extent ought we to be contending with Ford of Europe, General Motors Europe, Citroen-Peugeot, or Renault, with a capacity of at least 1½ million units a year? My right hon. Friend must decide to what extent this country ought to be competing in that end of the market and to what extent we ought to be using public money for that.

I end as I began. I do not think that this is the most perfect of all possible rescues, but I recognise the contribution that my right hon. Friend has made to saving the jobs of my constituents. This deal will not cost anything like £162 million. If it costs half of that sum I shall be very surprised indeed. During this breathing space let us work out what kind of car industry we want, because merely injecting Government money into British Leyland and Chrysler does not automatically give us the industry that the nation deserves.

6.25 p.m.

Mr. Nigel Lawson (Blaby)

I should like, first, to address myself—with great respect to the hon. Member for Nuneaton (Mr. Huckfield)—to the twaddle that we heard a short time ago from the hon. Member for Birmingham, Ladywood (Mr. Walden), who seemed to think that economic illiteracy somehow became literate if it came to his ear from the mouth of the Chancellor of the Duchy of Lancaster. I am afraid that even in such circumstances it remains economic illiteracy. In the brief time at my disposal, I shall try to demonstrate why.

The hon. Member for Ladywood says that if the 25,000 people at Chrysler and the 55,000 people in ancillary industries had all gone on the scap heap it would have cost £150 million a year. First, I have news for the hon. Gentleman. Under the Government's plan one-third of the Chrysler workers are due for redundancy—so there is £50 million of the hon. Gentleman's £150 million gone. It is already down to £100 million. But what is £50 million more or less to the hon. Gentleman?

Mr. Brian Walden

If the hon. Gentleman is going to use figures, he might as well get them right. I was talking about £55 million. There will be 8,000 redundancies. The hon. Gentleman is already talking more about the ancillary workers.

Mr. Lawson

The hon. Gentleman is absolutely wrong. He takes the 25,000 and uses a multiplier of roughly three to estimate the total unemployment, including workers in ancillary industries. But 8,000—roughly one-third—of the Chrysler workers are to be made redundant anyway under the Government's plan.

Mr. Walden

Ancillary workers.

Mr. Lawson

Right, but the 8,000 of the 25,000 Chrysler workers will be made redundant anyway, and there are ancillary workers connected with what they would have been doing. Therefore, the sum is reduced from £150 million to £100 million. However, that £100 million is arrived at on the assumption that the people concerned will be unemployed for a whole year. When there was a voluntary redundancy scheme at Linwood, more people volunteered to be made redundant than the firm actually needed to make redundant. Those people would hardly have done that if they had thought that they would be out of work for a year. Of course they would not; nothing of the sort. They knew that they could get better and more secure jobs in a reasonable period.

It is no use Labour Members muttering because they do not like the truth and the facts. I speak as someone in whose constituency there are many Chrysler workers.

The fact is that even now, in the trough of the recession, when the average length of time that people remain on the unemployed register has increased considerably, that length of time has nevertheless increased only to six months. That is too long, and of course no one likes people to be unemployed for that length of time, but it is six months and not a year.

Therefore, we must apply that factor to the £100 million, which brings it down to £50 million. That itself is an exaggeration, because of the pre-supposition at the beginning that the whole Chrysler operation would have closed down, although that has never been suggested by anyone. What the Opposition suggested, as was set out in the excellent criteria paper that we are meant to be debating, was that a receiver or liquidator should be brought in and that the viable parts should be kept going. Certainly that is true of the commercial vehicle division of Chrysler, which employs 3,000 people—and again, there are ancillary workers connected with them. If our proposals had been adopted, the total cost would have come out at about £30 million.

Mr. John Wells (Maidstone)

While my hon. Friend is on the subject of the viable parts of Chrysler, may I remind him that it is absolutely deplorable that the Government have done nothing about Chrysler at Maidstone, which is one of the few parts that is totally viable? The Minister failed to answer a letter that I wrote to him months ago——

Mr. Speaker

Order. This is a very brief debate and long interventions are not welcome. Mr. Wilson.

Mr. Lawson

The Prime Minister and I share the same birthday, Mr. Speaker, but not many other things. I am sure that that intervention was sufficiently full to receive a reply from the Minister who answers the debate.

The fact of the matter is that we are talking about £30 million if the Opposition's strategy had been adopted, which is also the strategy of the criteria document. Against this, there is a liability of £162½ million under the Government scheme. It might be less.

Mr. Walden

It will be.

Mr. Lawson

The hon. Gentleman says confidently that it will be less. Chrysler, which knows something about its own business, and in particular, Mr. Riccardo, who knows something about his company, were so confident about the future of that company that they offered the Government £35 million to take it away from them, lock, stock and barrel. The hon. Gentleman says that it will be less. It may be, but it may be more.

The hon. Member for Nuneaton gave the game away when he said that he does not believe that this deal will last the full four years of the agreement. He is right, because Mr. Riccardo and Chrysler will be coming back for more money long before the four years are up.

The hon. Member for Ladywood, for whom I have the greatest respect, must in future find a better and more impartial source for his information on the Chrysler deal than the Chancellor of the Duchy of Lancaster.

This debate has been something of a disappointment to me. This important criteria document was half extracted from the Secretary of State for Industry and half volunteered, although it was a very strange thing that it was not volunteered until I tabled my Written Question. I cannot think why, if the right hon. Gentleman was so keen on its being widely known, it was not published earlier. But now that it has been published, I thought that the right hon. Gentleman was going to talk about it and explain the importance of the various criteria. I thought that he would explain to his hon. Friends how important it was that a receiver should be brought in, particularly in the assisted areas.

That matter would be of interest to those at Linwood, because there are certain benefits that a receiver could get in assisted areas. I thought that the right hon. Gentleman would explain to his hon. Friends what the criteria now were and what the importance of profitability was—some of them do not fully recognise it—and that he would say how, although he was terribly sorry that he was overruled in Cabinet and, therefore, that the criteria could not be adopted in this case, nevertheless they were sound criteria and they would be adopted in future. It was this total failure to talk about the future that was particularly worrying to me and to others.

Not only did the right hon. Gentleman not go through the criteria and explain what they are; this document has never been published as an official document. It has no official number, it has no White Paper number, and no House of Commons number. I suggest to the right hon. Gentleman, as he is here, that he should publish it, first of all, as a White Paper and incorporate it lock, stock and barrel as a schedule to the Industry Act 1975.

I feel that the right hon. Gentleman should not only have gone through the criteria document and explained its importance but should have given an assurance for the future and said "The Chrysler deal was very difficult, but in future we shall apply these criteria. There will be no more backsliding, as there was with Chrysler. We mean business about this."

The significance of this has not been fully understood by the Press. I have here The Times for 28th January. It had a big story on this document. It was a little late—28th January—as the document came out on 12th January, but, after all, it was The Times, and one cannot expect everything. On 28th January The Times got round to it and it headed its story—"Government tightens rescue rules." The story was all about how, in the aftermath of Chrysler, the Government were tightening up on their rescue rules. The House knows that these rules came out long before Chrysler. The right hon. Gentleman knows it. Chrysler was an aberration, a falling away from the path of virtue.

We would therefore like a firm indication that in future these criteria will be adhered to. It is very alarming that we have not been told in any way how this document will be applied on future occasions. What we are debating now is the Government's failure to apply their criteria. We want to know fairly and squarely where the document now stands and whether the Government are going to apply it in future or whether they will go in for "phoney" job preservation, based on fake figures such as we heard from the hon. Member for Ladywood.

6.35 p.m.

Mr. Michael Grylls (Surrey, North-West)

I join my hon. Friend the Member for Blaby (Mr. Lawson) in his censure of the Secretary of State. I do not know whether the right hon. Gentleman came here with the guidelines—the criteria—but, if he did not, perhaps he will give the document to the Minister of State so that he can say something about it. My hon. Friend the Member for Blaby was absolutely right; this is what the debate is about. The Government knew perfectly well what the debate was about; it was in the Business Statement. It is not our fault if the usual channels on the Government side have become blocked up. They must have known perfectly well that this is what the debate would be about. We give them one more opportunity and express the hope that the hon. Gentleman will be able to say something about the criteria later.

The hon. Member for Birmingham, Ladywood (Mr. Walden) talked about Linwood becoming a disaster area—that was more or less the implication of what he said about Linwood—if there were a large number of redundancies. It is not so very widely known, but no doubt it is known to the hon. Member for Renfrew-shire, West (Mr. Buchan), that in the local employment area of Linwood there are 86,000 jobs and at present Linwood itself represents only 7,000 of those. Those are the figures I have. So it was gross exaggeration to talk of Linwood turning into a ghost town. The hon. Member for Ladywood may know Birmingham very well, but I am glad to see the hon. Member for Renfrewshire, West sitting next to him, because he is no doubt putting him right.

I want to reinforce the very important point made by my hon. Friend the Member for Blaby about those who applied for redundancies. If there had been any danger of Linwood becoming a ghost town—a prospect which fills the minds of all of us with horror—not so many would have applied for redundancies. In response to the reduction of 1,250 announced by the company, 2,319 applied for redundancy. That effectively answers that point. I know that the hon. Member for Ladywood is very well informed about many things, but clearly the facts about Linwood are inaccurate.

Mr. Buchan


Mr. Grylls

I shall try to give way later. This leads me into the whole question of the Linwood dispute. This is central to the Government guidelines, because it is something that happened only a very few days ago and is of great concern to the Government. The Secretary of State and the Prime Minister made speeches about the Linwood dispute. The hon. Member for Renfrew-shire, West and I had words about the affair earlier.

I quote what the Scotsman said about the Linwood affair in the middle of it, because this is, perhaps, a fair analysis of what happened: The management have shown themselves insensitive to the mood and reaction of the workers and once again the workers have been too quick to jump to the defence of their colleagues. I think that the Scotsman very fairly was apportioning blame on both sides. I do not know whether the hon. Member for Renfrewshire, West will agree with that, but I believe that is a fair analysis of the situation. It is not accurate to accuse the Opposition of saying that this is all the fault of the work people at Linwood.

Mr. Buchan

This is the first time that I have learned that the Scotsman reflected the views of the official Opposition. I have always thought that it was the bugle of the Scottish National Party. I do not know what the hon. Member is talking about when he refers to 86,000 and 7,000. He will have to work that out with his innumerate friend. He must remember that the people at the factory there have been working on short time for a year with not very high take-home pay—not much higher than unemployment pay. That was the background and that is the continuing prospect. Against that background, and with the 7 per cent. or 8 per cent. unemployment in the area, the closure of Linwood would have meant disaster——

Mr. Speaker

Order. I understand that the hon. Member for Renfrewshire, West (Mr. Buchan) has already addressed the House. Other hon. Members failed to get in. There is only a brief time left for winding up.

Mr. Grylls

I gave way to the hon. Gentleman because I wanted to be as fair as possible. In quoting the Scotsman, I tried to put an uncontroversial view which I think is right.

In the middle of this expensive dispute, when the car factory came to a standstill, the Secretary of State made dire threats that money would not be forthcoming, and there was courageous condemnation of the strike by Mr. John Boyd, who said that he thought the dispute was deplorable and that the men should return to work. The sad thing was that nobody believed the Secretary of State's threats. Bernard Levin put it very well in an attractive phrase when he said that everybody knew that the Government's yells and fierce faces were only for show. Nobody took the slightest notice of the Secretary of State's threats to withhold the next tranche of money. As the Select Committee said, it was not a practical possibility. Clearly, the workers at Linwood also thought that.

There was a settlement after 19 hours of negotiation by ACAS, but the result of the Arbitration was inevitable. It was rather like the love play of a prehistoric monster—a long process, but with a predictable result. We knew that as soon as negotiations began there would be a surrender. The management got itself into that position and then surrendered, thus encouraging the repetition of the same sort of thing.

That dispute has been settled, but we look through the criteria in vain to see any general principle referring to industrial relations. Neither in British Leyland nor in Chrysler has there been any clear-cut commitment from the workers. The taxpayer has been told that he must pay up and that he cannot argue, but the workers have made no commitment to play their part.

There has been much reference to the Industry Act 1972. When he was Secretary of State, my right hon. Friend the Member for Knutsford (Mr. Davies), in dealing with Dan McGarvey and others over the Upper Clyde situation, obtained a firm commitment from the unions that there would be industrial peace before a penny of the taxpayers' money was committed. There were hopeful noises in the Ryder Report about things changing at British Leyland, and the Chrysler contract, signed by the Secretary of State on 5th January, contains a clause allowing the right hon. Gentleman to withhold payments if industrial relations do not improve. The next payment is due on 15th February. The sum involved is £15 million. Curiously, the payment is being made on a Sunday.

Mr. Varley


Mr. Grylls

It is a Sunday, but that is just one of those mistakes which do not matter.

Does the right hon. Gentleman plan to invoke that clause if there are industrial relations problems? I hope that there will not be such problems, but we should know the right hon. Gentleman's plans, as the clause is in the contract. People have a right to demand of the Government—who have committed the investment of public money—and of the House—which has approved that commitment—that firm assurances be obtained from the employees that they will play their part. The people involved, including the management, should know that there is no chance of their adopting the attitude that they have a meal ticket for life because they are in a firm either taken over by the Government or, as in the case of Chrysler, supported by it.

I do not underestimate the serious industrial relations problems in the motor car industry throughout the world. Those responsible for the CPRS Report visited five plants in Europe. As far as I know, no overseas visits were made by those who produced the Ryder Report. The CPRS Report found that the British factories started late and finished early compared with the European ones, and stopped before and during shifts, whereas the European plants had their production going virtually non-stop. We must get to the bottom of the problem.

There is clearly an international problem of working conditions in the industry. Is it because of noise, monotony, or the way in which the work is organised? Can the work be made more interesting? I believe that one report spoke of the slavery of production in the industry. That may be a fair comment.

In the axle factory at Elsdon, in the United States, an employee, James Johnson, recently had a dispute with a foreman. He left the factory and returned with a shot-gun, with which he shot and killed two foremen. His defence lawyer claimed that conditions were so bad that he was not responsible for his actions. When the judge and jury visited the plant they found conditions so abominable that they decided that poor Mr. Johnson was temporarily out of his mind when he shot the foremen. There are problems in motor plants, and ours, unfortunately, are worse than others.

We want to hear from the Government today what thought they have given to these problems. They and the taxpayer are now deeply financially involved in the industry. I welcome the announcement by the Secretary of State that he is setting up a high-powered group under his chairmanship, but, as my hon. Friend the Member for Bromsgrove and Red-ditch (Mr. Miller) said, it is all very well to set up a group ; the situation in the industry is so serious that we need to make changes immediately. Yet another report will not suffice. For example, what is happening about amalgamating bargaining units, and about participation agreements?

There has been some progress in British Leyland, which we welcome, but will the Government use their massive investment programme to try to persuade the unions to reduce their numbers in the factories? I understand from the Select Committee Report that British Leyland has to deal with 17 different unions. I can imagine nothing worse for the unions and management. It is one of the things that make the British industry so much more troublesome than many of its competitors. We want evidence that the Government are doing something about it.

I hope that the Secretary of State's group will not sit for the next six or seven months, but will study the problems immediately to find out what makes factories in this country so different compared with, for example, the Chrysler factory in France—Simca—which is described as a certain winner, with huge investment and huge profits. It has not had a strike for 23 years. One of its workers, who was interviewed recently, said of the management "They have thought about us". It may be one of the faults in this country that that does not happen here.

Many other workers who were interviewed said that they wanted nothing to do with politics. They said that all they wanted from a union was more money, and the only two subjects that raised enthusiasm among them were cars and girls. I believe that that is a proper sense of priority, although some of us might reverse the order.

The Opposition will continue to oppose and criticise the Government for their attitude to the industry and their lack of control over investment until we can see signs that the firms in which they have invested are improving. Until then, we have a right, on behalf of the public, to be dubious and to ask the Government to work much harder on the matter. There is not much that we can do about public expenditure. That is why we have sought to reduce the Secretary of State's salary by £1,000. Incidentally, because of taxation that reduction would not make much difference to him.

I ask my hon. Friends to support the motion in the Lobby.

6.50 p.m.

The Minister of Stele, Department of Industry (Mr. Gerald Kaufman)

The Opposition are constantly demanding debates in this House on all kinds of subjects, and after two and a half hours of this brief and scrappy debate it is still difficult to know why they have wasted a Supply Day by choosing this particular topic. I suspect that originally it was selected to give the hon. Member for Henley (Mr. Heseltine) the chance to treat us to his well-known turn yet again, but most unfortunately he has fallen ill and the debate has lost its sole justification. We miss him. This matinee performance has been like Hamlet without the gravedigger.

But we really did not need yet another debate about British Leyland. We have debated it ad nauseam and almost ad infinitum, and the House had repeatedly expressed its support for the Government's approach. We did not need this debate either to go over the old familiar ground about Chrysler. We debated Chrysler at length before Christmas, two days running, and returned to the subject a fortnight ago. On every occasion the House has supported the Government by substantial majorities.

The Opposition, it seems, still do not understand the facts. My hon. Friends the Members for Birmingham, Ladywood (Mr. Walden) and Nuneaton (Mr. Huckfield) have given those facts again today, and no hon. Member opposite was able to refute them, although the hon. Member for Blaby (Mr. Lawson) took twice his allotted time in failing to do so.

Nor are we debating the principle of State aid to the motor industry. Previous Tory Governments have provided lavish aid to that industry. Indeed, Linwood would not be a motor car town if generous Tory regional assistance had not attracted the industry to Renfrew-shire, as the hon. Member for Colne Valley (Mr. Wainwright) fairly pointed out. Indeed, apparently the hon. Member for Chichester (Mr. Nelson) wants us to provide aid for Jensen, but presumably, if we provided the aid he has asked for, he would vote against it as well.

The Tories surely cannot have staged this debate either because they disapprove of this Government having used the Industry Act 1972 as the channel for continuing their aid to the car industry. After all, the Tories created that Act as a major instrument of policy, brushing aside the doleful and reiterated warnings of the present shadow Secretary of State for Energy, the hon. Member for Oswestry (Mr. Biffen), who opposed the Act throughout its passage in the House of Commons.

The Tories cannot contend either that their Act was all right but that in operating Section 8 we are disregarding their own strict criteria, because they never published any criteria whatever for Section 8. They conducted their own rescue cases—NVT under the 1972 Act and Rolls-Royce under separate legislation—on pretty much the same basis as we have proceeded.

The hon. Member for Bridgwater (Mr. King) talked about the criteria as having been at last extracted from us. But the Tories never had any criteria on Section 8 to be extracted from them at all. I am delighted that the hon. Member for Blaby rejoiced so much in the fact that I have placed a very large number of copies of the criteria in the Vote Office. The way he went on about it made one feel that that will be the peak of his political career.

My right hon. Friend the Secretary of State has demonstrated how much more lavish and, indeed, profligate the progenitor of the 1972 Act, the right hon. Member for Knutsford (Mr. Davies), was ready to be. Nor can the Opposition, however much they try, very credibly get righteously indignant about any alleged departures by this Government from the industrial strategy announced at Chequers.

The hon. Member for Bridgwater complained that our strategy was late in coming. But the Conservative Government never had any industrial strategy at all, except by recourse to the presses to print sufficient money to spend their way out of the economic difficulties which they themselves had created. But hon. Members opposite may say that all that was in the old, unregenerate days, the bad old Heath days, when they turned away from the true faith and shattered the tablets that the right hon. Member for Leeds, North-East (Sir K. Joseph) had carried down from Mount Selsdon. Now we are told that the Opposition have seen the error of their ways and have repented. Their former Secretaries of State for Trade and Industry have been consigned to the Back Benches, and hardheaded realism reigns supreme once again. But the view very much depends on which part of this Palace one's vantage point is.

On the Floor of the House, value for money and viability are the Opposition's watchwords, and this is emphasised by the selective way hon. Members opposite quote from our criteria, with paragraph 21, dealing with social costs and employment considerations, carefully ignored. Up on the Committee floor, however, those social and employment considerations which they reject down here are still very much official Tory policy—policy backed not only by their voices but by their votes as well.

The hon. Member for Bridgwater and the hon. Member for Henley are not only their party's spokesmen on the motor car industry but are its spokesmen on the shipbuilding industry as well. Last week, in Standing Committee D, which is considering the Aircraft and Shipbuilding Industries Bill, we debated a most important amendment most powerfully moved by my right hon. Friend the Member for Sunderland, North (Mr. Willey). That amendment instructed the Secretary of State, in carrying out his function of giving general directions in the publicly-owned shipbuilding industry, to take account of considerations relating to regional areas and, in particular, employment considerations within those areas.

My right hon. Friend, in moving the amendment, flatly rejected what he described as the narrow objective of commercial judgment. We in the Government resisted his argument and the amendment. But it was carried against us and inserted into the Bill. It was carried because it was supported by the voices and the votes of the official Opposition spokesmen, including the hon. Members for Henley and Bridgwater. They voted in favour of regional and employment considerations and against commercial judgment—"commercial judgment", the very words that the hon. Member for Bridgwater has used against us in this debate.

Now the House can choose what opinion to hold. Either the Opposition upstairs in Standing Committee D were simply acting opportunistically and were cynically inserting into a major——

Mr. Hal Miller

On a point of order, Mr. Speaker. Is it in order for the Minister of State to waste the time of the House on matters taking place upstairs?

Mr. Speaker

Order. The Minister of State has only two minutes left.

Mr. Kaufman

Either the Opposition upstairs in Standing Committee D were acting opportunistically and were cynically inserting into a major legislative measure an important provision in which they did not believe, or else they did believe upstairs in what they were saying and doing.

Mr. Miller

On a point of order, Mr. Speaker. Standing Committee D has not yet reported. Is the Minister of State in order in referring to its proceedings on the Floor of the House?

Mr. Speaker

If the Committee Hansard is available, the Minister of State is entitled to make what I call a gentle reference to it.

Mr. Kaufman

In either case, everything that the Opposition have said in this debate, all their pleas for profitability, viability and commercial judgment, has been hypocritical humbug. The Opposition in this debate stand condemned for opportunistic hypocrisy. I ask the House to confirm that condemnation by voting down this paltry and cynical motion.

Question put, That the salary of the Secretary of State for Industry should be reduced by the sum of £1,000:—

The House proceeded to a Division.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

(seated and covered): On a point of order, Mr. Speaker. I have to inform you that there has been a miscount in the "No" Lobby. I have to report this to you before the figure is announced. I therefore give you notice that there is a dispute on the Division figures.

Mr. Speaker

I understand that I must have the Tellers at the Table to make the complaint which the right hon. Gentleman has made.

The Tellers being come to the Table—

Mr. J. D. Dormand (Lord Commissioner of the Treasury)

I wish to confirm what the Parliamentary Secretary to the Treasury has said, that there was some confusion on at least two occasions during the telling. I support the claim that there was a miscount.

Mr. Speaker

Do the other Tellers agree?

The Tellers indicated assent.

Mr. John Peyton (Yeovil)

(seated and covered): On a point of order, Mr. Speaker. I am not quite sure whether a Division is still on. Perhaps you would be kind enough to rule whether there is a Division in progress so that I know whether to stand up or whether to keep this thing on my head.

Mr. Speaker

The Division is on until I get the result. If there is a dispute, I shall make an announcement to the House.

Mr. Peyton

(seated and covered): I had misunderstood you, Mr. Speaker. I thought you had ruled that there had been a miscount and, therefore, the Division could not be on.

Mr. Speaker

I shall be ruling so within a few minutes. It was not in order for me to do so then. I am follow-precedent entirely. When there is a disagreement about a Division, the House must take another decision. That is clearly understood.

Mr. Peyton

(seated and covered): On a point of order, Mr. Speaker. The point I wish to put to you is whether this is the moment at which the Question should be put again.

Mr. Speaker

Yes. This is entirely in accordance with precedent. I shall call the Division off and will put the Question again.

Mr. Peyton

(seated and covered): Further to that point of order, Mr. Speaker. I wonder whether this is correct. All that we have heard is an allegation that two mistakes were made during the count. It seems a mysterious and facile way for the Government to get rid of a result which may well be unwelcome to them.

Mr. Speaker

As I understand the position, I am not likely to receive the figures. The Tellers are here. It is in the best interests of the House, if we are to have another Division, that we move to it now to save time on the next business.

Mr. Mellish

(seated and covered): Further to that point of order, Mr. Speaker. I wish to support the right hon. Member for Yeovil (Mr. Peyton) in his point of order. I do not know about the dispute in the sense of how it happened or why, nor am I aware of any of the figures involved. However, the business that is to follow this evening is important. Another Division now would in many respects give an untrue picture—[HON. MEMBERS: "Oh!"] Hon. Members should not push their luck. I am wondering whether it is in order and follows precedent for the vote to be taken on another evening to be

decided between the usual channels. [HON. MEMBERS: "No."] If there is another Division now, it will be an unrealistic vote. Many hon. Members on both sides of the House have gone home.

Mr. Speaker

I wish I could be of help, but, as I understand my duty, it is quite clear that I have to put the Question as soon as we have finished the points of order.

Mr. Dormand

(seated and covered): On a point of order, Mr. Speaker. The word "dispute" has been used on two occasions. For the record, there is no dispute between the Tellers. The Tellers from both sides are in agreement about the mistake. There is no dispute.

Mr. Speaker

If the House does not wish to divide again, nobody will shout. However, as both Tellers have agreed that there is a mistake, my duty is clear. Whether there is a Division depends on whether hon. Members shout.

Question put:

The House divided: Ayes 214, Noes 209.

Division No. 62.] AYES [7.20 p.m.
Adley, Robert Corrie, John Hayhoe, Barney
Aitken, Jonathan Costain, A. P. Hicks, Robert
Alison, Michael Crawford, Douglas Higgins, Terence L.
Amery, Rt Hon Julian Critchley, Julian Holland, Philip
Arnold. Tom Crowder, F. P. Hooson, Emlyn
Atkins, Rt Hon H. (Spelthorne) Dean, Paul (N Somerset) Howell, David (Guildford)
Baker, Kenneth Dodsworth, Geoffrey Howells, Geraint (cardigan)
Banks, Robert Douglas-Hamilton, Lord James Hunt, John
Bell, Ronald du Cann, Rt Hon Edward Hurd, Douglas
Bennett, Sir Frederic (Torbay) Durant, Tony Hutchison, Michael Clark
Berry, Hon Anthony Eden, Rt Hon Sir John Irving, Charles (Cheltenham)
Blaker, Peter Elliott, Sir William James, David
Body, Richard Evans, Gwynfor (Carmarthen) Jessel, Toby
Boscawen, Hon Robert Eyre, Reginald Johnston, Russell (Inverness)
Bottomley, Peter Fairbairn, Nicholas Jones, Arthur (Daventry)
Bowden, A. (Brighton, Kemptown) Fairgrieve, Russell Jopling, Michael
Boyson, Dr Rhodes (Brent) Farr, John Joseph, Rt Hon Sir Keith
Braine, Sir Bernard Finsberg, Geoffrey Kaberry, Sir Donald
Brittan, Leon Fisher, Sir Nigel Kilfedder, James
Brown, Sir Edward (Bath) Fookes, Miss Janet Kimball, Marcus
Bryan, Sir Paul Fowler, Norman (Sutton C'f'd) King, Evelyn (South Dorset)
Buchanan-Smith, Alick Fox, Marcus King, Tom (Bridgwater)
Budgen, Nick Fraser, Rt Hon H. (Stafford & St) Kitson, Sir Timothy
Bulmer, Esmond Freud, Clement Knight, Mrs Jill
Burden, F. A. Gardiner, George (Reigate) Knox, David
Butler, Adam (Bosworth) Gilmour, Rt Hon Ian (Cheasham) Lamont, Norman
Carlisle, Mark Gilmour, Sir John (East Fife) Lane, David
Carson, John Glyn, Dr Alan Langford-Holt, Sir John
Chalker, Mrs Lynda Godber, Rt Hon Joseph Latham, Michael (Melton)
Churchill, W. S. Goodhew, Victor Lawrence, Ivan
Clark, Alan (Plymouth, Sutton) Gorst, John Lawson, Nigel
Clark, William (Croydon S) Gower, Sir Raymond (Barry) Le Merchant, Spencer
Clarke, Kenneth (Rushcliffe) Grant, Anthony (Harrow C) Lester, Jim (Beeston)
Clegg, Walter Grylls, Michael Lewis, Kenneth (Rutland)
Cockcroft, John Hamilton, Michael (Salisbury) Lloyd, Ian
Cooke, Robert (Bristol W) Hampson, Dr Keith Loveridge, John
Cope, John Harrison, Col Sir Harwood (Eye) Luce, Richard
Cordle, John H. Harvie Anderson, Rt Hon Miss McAdden, Sir Stephen
Cormack, Patrick Hawkins, Paul MacCormick, Iain
McCrindle, Robert Page, Rt Hon R. Graham (Crosby) Spence, John
Macfarlane, Neil Pardoe, John Sproat, Iain
MacGregor, John Parkinson, Cecil Stanbrook, Ivor
Macmillan, Rt Hon M. (Farnham) Pattie, Geoffrey Stanley, John
McNair-Wilson, M. (Newbury) Penhaligon, David Steel, David (Roxburgh)
McNair-Wilson, P. (New Forest) Peyton, Rt Hon John Steen, Anthony (Wavertree)
Madel, David Pink, R. Bonner Stewart, Donald (Western Isles)
Marshall, Michael (Arundel) Prior, Rt Hon James Stewart, Ian (Hitchin)
Marten, Neil Pym, Rt Hon Francis Stokes, John
Maudling, Rt Hon Reginald Raison, Timothy Taylor, R. (Croydon NW)
Mawby, Ray Rathbone, Tim Taylor, Teddy (Cathcart)
Maxwell-Hyslop, Robin Rees, Peter (Dover & Deal) Tebbit, Norman
Mayhew, Patrick Rees-Davies, W. R. Temple-Morris, Peter
Miller, Hal (Bromsgrove) Renton, Rt Hon Sir D. (Hunts) Thatcher, Rt Hon Margaret
Mills, Peter Renton, Tim (Mid-Sussex) Thomas, Rt Hon P. (Hendon S)
Miscampbell, Norman Ridley, Hon Nicholas Thorpe, Rt Hon Jeremy (N Devon)
Mitchell, David (Basingstoke) Ridsdale, Julian Trotter Neville
Moate, Roger Rifkind, Malcolm van Straubenzee, W. R.
Monro, Hector Rippon, Rt Hon Geoffrey Vaughan, Dr Gerard
Montgomery, Fergus Roberts, Wyn (Conway) Viggers, Peter
Moore, John (Croydon C) Ross, Stephen (Isle of Wight) Wakeham, John
More, Jasper (Ludlow) Rossi, Hugh (Hornsey) Wall, Patrick
Morgan, Geraint Rost, Peter (SE Derbyshire) Watt, Hamish
Morris, Michael (Northampton S) Sainsbury, Tim Weatherill, Bernard
Morrison, Charles (Devizes) St. John-Stevas, Norman Wells, John
Mudd, David Shaw, Giles (Pudsey) Welsh, Andrew
Neave, Airey Shepherd, Colin Wilson, Gordon (Dundee E)
Nelson, Anthony Shersby, Michael Winterton, Nicholas
Neubert, Michael Silvester, Fred Young, Sir G. (Ealing, Acton)
Newton, Tony Sims, Roger
Nott, John Sinclair, Sir George TELLERS FOR THE AYES:
Onslow, Cranley Smith, Cyril (Rochdale) Mr. John Stradling Thomas and
Oppenheim, Mrs Sally Smith, Dudley (Warwick) Mr. W. Benyon.
Page, John (Harrow West) Speed, Keith
Archer, Peter English, Michael Lamond, James
Armstrong, Ernest Ennals, David Leadbitter, Ted
Ashley, Jack Evans, Ioan (Aberdare) Lestor, Miss Joan (Eton & Slough)
Atkins, Ronald (Preston N) Ewing, Harry (Stirling) Lever, Rt Hon Harold
Bagier, Gordon A. T. Fernyhough, Rt Hn E. Lewis, Ron (Carlisle)
Bates, Alf Fitch, Alan (Wigan) Litterick, Tom
Benn, Rt Hon Anthony Wedgwood Fitt, Gerard (Belfast W) Loyden, Eddie
Bennett. Andrew (Stockport N) Flannery, Martin Luard, Evan
Bidwell, Sydney Fletcher, Raymond (Ilkeston) Lyon, Alexander (York)
Bishop, E. S. Fletcher, Ted (Darlington) Mabon, Dr J. Dickson
Boardman, H. Foot, Rt Hon Michael McCartney, Hugh
Booth, Albert Ford, Ben McCusker, H.
Bradley, Tom Fowler, Gerald (The Wrekin) McElhone, Frank
Bray, Dr Jeremy Fraser, John (Lambeth, N'w'd) MacFarquhar, Roderick
Brown, Hugh D. (Provan) Freeson, Reginald McGuire, Michael (Ince)
Brown, Ronald (Hackney S) Garrett, John (Norwich S) Mackenzie, Gregor
Buchan, Norman Garrett, W. E. (Wallsend) Mackintosh, John P.
Callaghan, Jim (Middleton & P) George, Bruce McMillan, Tom (Glasgow C)
Canavan, Dennis Gilbert, Dr John McNamara, Kevin
Carmichael, Neil Golding, John Madden, Max
Carter-Jones, Lewis Graham, Ted Mahon, Simon
Cartwright, John Grant, George (Morpeth) Mallalieu, J. P. W.
Castle, Rt Hon Barbara Grocott, Bruce Marquand, David
Clemitson, Ivor Hamilton, James (Bothwell) Marshall, Dr Edmund (Goole)
Cocks, Michael (Bristol S) Hardy, Peter Marshall, Jim (Leicester S)
Cohen, Stanley Harper, Joseph Maynard, Miss Joan
Coleman, Donald Harrison, Walter (Wakefield) Meacher, Michael
Corbett, Robin Heffer, Eric S. Mellish, Rt Hon Robert
Cox, Thomas (Tooting) Hooley, Frank Mendelson, John
Craigen, J. M. (Maryhill) Horam, John Mikardo, Ian
Crawshaw, Richard Howell, Denis (B'ham, Sm H) Millan, Bruce
Cryer, Bob Hoyle, Doug (Nelson) Miller, Dr M. S. (E Kilbride)
Cunningham, G. (Islington S) Hughes, Robert (Aberdeen N) Moonman, Eric
Cunningham. Dr J. (Whiten) Hunter, Adam Morris, Alfred (Wythenshawe)
Davidson, Arthur Jackson, Colin (Brighouse) Morris, Charles R. (Openshaw)
Davies, Bryan (Enfield N) Jackson, Miss Margaret (Lincoln) Mulley, Rt Hon Frederick
Davis Clinton (Hackney C) Janner, Greville Murray, Rt Hon Ronald King
Dean, Joseph (Leeds West) Jeger, Mrs Lena Newens, Stanley
Delargy, Hugh Jenkins, Rt Hon Roy (Stechford) Noble, Mike
Dell, Rt Hon Edmund John, Brynmor Oakes, Gordon
Dempsey, James Johnson, James (Hull West) Ogden, Eric
Doig, Peter Jones, Alec (Rhondda) O'Halloran, Michael
Dormand, J. D. Jones, Barry (East Flint) O'Malley, Rt Hon Brian
Dunnett, Jack Jones, Dan (Burnley) Palmer, Arthur
Eadie, Alex Judd, Frank Park, George
Edge, Geoff Kaufman, Gerald Parker, John
Edwards, Robert (Wolv SE) Kerr, Russell Pavitt, Laurie
Ellis, John (Brigg & Scun) Kilroy-Silk, Robert Peart, Rt Hon Fred
Phipps, Dr Colin Skinner, Dennis Walker, Terry (Kingswood)
Prentice, Rt Hon Reg Small, William Ward, Michael
Price, C. (Lewisham W) Snape, Peter Watkins, David
Price, William (Rugby) Spearing, Nigel Weetch, Ken
Radice, Giles Spriggs, Leslie Wellbeloved, James
Richardson, Miss Jo Stallard, A. W. White, Frank R. (Bury)
Roberts, Albert (Normanton) Stoddart, David Whitehead, Phillip
Roberts, Gwilym (Cannock) Stonehouse, Rt Hon John Whitlock, William
Roderick, Caerwyn Stott, Roger Williams, Alan (Swansea W)
Rodgers, George (Chorley) Strang, Gavin Williams, Alan Lee (Hornch'ch)
Rooker, J. W. Strauss, Rt Hon G. R. Williams, Rt Hon Shirley (Hertford)
Roper, John Summerskill, Hon Dr Shirley Williams, W. T. (Warrington)
Rose, Paul B. Taylor, Mrs Ann (Bolton W) Wilson, Alexander (Hamilton)
Ross, Rt Hon W. (Kilmarnock) Thomas, Jeffrey (Abertillery) Wilson, William (Coventry SE)
Ross, William (Londonderry) Thomas, Ron (Bristol NW) Wise, Mrs Audrey
Sandelson, Neville Thorne, Stan (Preston South) Woodall, Alec
Selby, Harry Tierney, Sydney Woof, Robert
Shaw, Arnold (Ilford South) Tomney, Frank Wrigglesworth, Ian
Sheldon, Robert (Ashton-u-Lyne) Torney, Tom Young, David (Bolton E)
Shore, Rt Hon Peter Urwin, T. W.
Silkin, Rt Hon John (Deptford) Varley, Rt Hon Eric G. TELLERS FOR THE NOES:
Sillars, James Wainwright, Edwin (Dearne V) Mr. James A. Dunn and
Silverman, Julius Walker, Harold (Doncaster) Mr. Tom Pendry.

Question accordingly agreed to.

Resolved, That the salary of the Secretary of State for Industry should be reduced by the sum of £1,000.

Mr. Mellish

On a point of order. Mr. Speaker. The figures which the Tellers have announced and which you have confirmed, resulting from a three-line Whip operated by the Conservative Party and my party for a Division at 7 o'clock to be followed by Private Business, indicate that the vote is not a true reflection. I hope that we shall hear a statement from the Opposition Front Bench that the vote is not relevant. Vast numbers of Government supporters have left the House, and I should like it to be recorded that the Government do not accept the decision which has been recorded.

Mr. Speaker

What the Government accept is not my responsibility. The "Good Book" is absolutely clear. I had no choice but to call a second Division in those circumstances. I cannot be held responsible, except for declaring the result.

Mr. Maxwell-Hyslop

Further to that point of order, Mr. Speaker. The whole House knows that the ruling you have given is the only ruling you could have given, and that the Parliamentary Secretary to the Treasury did not raise a point of order but abused the point of order procedure to make a statement.

Mr. Speaker

I am deeply grateful for any compliment from the hon. Gentleman.

Mr. Mellish

Further to that point of order, Mr. Speaker. I have invited the Opposition Front Bench, through the usual channels, to make their comments. If they are not prepared so to do, I wish to record again that this is not a true vote, and the Opposition know it.

Mr. Peyton

Further to that point of order, Mr. Speaker. For once in my life, I have nothing to say.

Mr. Patrick Cormack (Staffordshire, South-West)

Further to that point of order, Mr. Speaker. Is it true that the Prime Minister has gone to see the Queen?

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

On a point of order, Mr. Speaker. I thought I heard the Parliamentary Secretary to the Treasury say that the Government would not accept the verdict of this honourable House. I suggest to you, Mr. Speaker, that that is a breach of the privileges of the House. Whatever the House decides, it is surely sovereign and its will must have effect. Unless some question arises about the Division which we have just held, it surely must be for you to ask the right hon. Gentleman to withdraw that remark. The sovereignty of this House demands that whatever decision it makes be binding on those on whom the decision is meant to be binding.

Mr. Speaker

The House has had a fair share of time on points of order. I must make perfectly clear that I am not responsible for the carrying out of decisions that are taken by the House. What the Government do and what the Opposition do are their business as long as they keep order in the House.

Mr. Mellish

Further to that point of order, Mr. Speaker. I give notice, Sir, that, in view of what has happened tonight and the vote that has been recorded, I shall have discussions through the usual channels and put down the appropriate motion next week.

Mr. Geoffrey Finsberg (Hampstead)

Further to that point of order, Mr. Speaker. May we have your guidance? Might we know what the usual motion is and whether there is a precedent for the inability of the Chief Whip to hold his numbers here and then to try to abuse the procedures of the House?

Mr. Speaker

Order. We are reduced to each side scoring off the other rather than pursuing points of order.

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