§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]11.43 pm
§ Mr. Tam Dalyell (Linlithgow)
Let it not be forgotten that Leyland's plant at Bathgate was brought to Bathgate by a decision of Government — a Conservative Government, albeit under Harold Macmillan, Rab Butler, Iain Macleod, Christopher Soames, Jack Maclay and the right hon. Member for Old Bexley and Sidcup (Mr. Heath), with different and wiser policies than those of the present Prime Minister and the group of Ministers around her who make economic decisions.
Twenty-one years ago, the crusty old boss of Austin, Sir George Harriman, told me in Birmingham, "I always want you to remember that we came to Bathgate by decision of the Cabinet". That is what Harriman said.
The Government, having begun Bathgate's vehicle industry, cannot pass by on the other side of the road, like the biblical Levi, and leave central Scotland to industrial dereliction. In particular, the Government are bound by a decision of Parliament to consider the "political and social implications" of any significant decision in the corporate plan that the Government have to approve.
Before putting a question, of which I have given notice to Minsters through the Secretary of State for Scotland and his office, I have two observations to make. There is no complaint about either the product or the work force at Bathgate. On the contrary, both are regarded as excellent. The difficulty lies in the market. The problem is not that African countries do not want Bathgate vehicles but that at the moment they do not have the cash to pay for them. However, if African countries have no transport, or only clapped-out transport, how will they escape from a deep recession? It is a case of the chicken and the egg.
During the coming weeks, the Government should re-examine the Export Credits Guarantee Department's terms and the reasons why many countries are struck off the ECGD list. They should not say that there is no cash to help the ECGD. Last weekend, in reply to my parliamentary questions, it emerged that 54 prefabs in the Falklands cost more than £7 million. That is more than £1 million more than the cash needed for the development of the family 1 engine to continue.
There are 1,800 Falklanders and there are 1,800 workers and members of their families at Bathgate. Only £6 million is needed for the family 1 engine, but £6,000 million has been spent on or committed to the south Atlantic before 1988. The engine will cost only one thousandth of what we have spent on or committed to the Falklands. Will the Government help by reviving and reviewing the ECGD guidelines?
I shall be followed in this debate by my hon. Friend the Member for Livingston (Mr. Cook), who represents many of those who work at Bathgate, and by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), who is an Opposition Front Bench spokesman and also has a constituency interest. For us, the debate is about the erosion of the industrial base of our country.
§ Mr. Robin Cook (Livingston)
I am grateful to my hon. Friend the Member for Linlithgow (Mr. Dalyell) for the opportunity to speak briefly in this debate about the 744 Bathgate plant, which is situated in his constituency but draws about a third of its work force from my constituency.
I welcome the fact that the House is debating the matter tonight. The timing could not be better. My hon. Friend and I were assured earlier today that no decision had yet been taken about the future of the plant. However, it is clear that a decision will be reached in the next two months. Therefore, it is vital that the views of all who wish the plant to have a secure future should be heard in the coming two months.
What do the Government propose to do in the next two months to make sure that the decision involves a secure future for the workers and the plant at Bathgate?
My hon. Friend referred to the importance of export credit to the future of the truck line at Bathgate. I should like to expand my hon. Friend's comments about exports to the Third world.
It has long been apparent to many of us in the Opposition, and also to some Conservative Members, that the financial crisis in the Third world poses a major threat to the industrial economy of the advanced nations that depend on those countries for their markets. Therefore;, it has disappointed us that the Government have often been the most negative and least imaginative in their response to the debt crisis in Third-world nations. It is only two months since the Prime Minister was at Delhi vetoing every positive, constructive suggestion for reforming the international monetary order. I hope that in the light of the latest crisis, and yet another plant suffering from declining orders from the Third world, the Under-Secretary of State for Trade and Industry will be emboldened to go back to his colleagues and to exert pressure for a more positive and urgent British approach to finding a solution, because the fact is that those countries' lost purchasing power is this country's lost export orders.
My other point concerns the second major product line at Bathgate—the engine line. The Bathgate plant was promised the development of the Cummins family 1 engine. It is clear that that engine is needed not simply at Bathgate but by the British Leyland truck division. If the truck division is to have a successful competitive product in the medium future, it requires a new engine with which to compete. I therefore ask the Minister to do all in his power to make sure that that product gets the go ahead at Bathgate in the interests of the truck division and of the Scottish industrial economy. As my hon. Friend said, the sums involved in that investment are comparatively small, but they could make a major contribution to securing the future of this major public company.
I ask the Minister to give the House an assurance that when he examines the corporate plan that is now with his Department he will do so with a view to ensuring that there is provision in it for investment in the family 1 engine line to be unfrozen and for it to go ahead as a matter of urgency.
There is a sombre background to this debate on the future of the Bathgate plant. In the catchment area from which the work force comes, unemployment exceeds 20 per cent. If there are any more major redundancies at the Bathgate plant, those leaving the gates will not find any work in the surrounding area. For many of them the truth is that they would find that they had no work until they dropped out of the labour force when they reached 65 years of age. That is a sombre background, and it must condition our approach. We ask for the additional investment not on 745 those grounds alone but because Bathgate has a successful and dedicated work force. The workers are disciplined and have shown in the past their willingness to accept productivity changes and changes in work practices. They can make a success of the investment if they get it. They deserve to be given the chance.
§ Mr. Donald Dewar (Glasgow, Garscadden)
I congratulate my hon. Friend the Member for Linlithgow (Mr. Dalyell) on his timing and ingenuity in getting this Adjournment debate and on the fact that he widened it to include all the Scottish operations of Leyland Vehicles, which allows me to say a brief word about the Albion plant, which is a constituency interest of mine.
As the Minister and many Scottish Members will know, 387 redundancies at the Albion plant were announced the other day. That is a bitter pill to swallow. When I became a Member of Parliament about five years ago, the work force was well over 2,000. It is now scheduled to fall to just over 1,000. We have seen cut after cut in an area of Glasgow where unemployment is becoming more of a plague and where the fears of redundancy are all too real. The work force has fought hard over the years to try to secure the future of the plant. It deserves a period of stability and the support of Leyland Vehicles.
Reference was made earlier to the meeting with the management which I attended with my hon. Friends the Members for Linlithgow and for Livingston (Mr. Cook). We sought some assurances about the future of the Albion plant. I believe it needs a good deal of investment, perhaps not massive sums of money but specific and significant investment, if it is to achieve the levels of activity that will give it the secure future to which I referred. It is also very important that Albion continues to be the supplier of axles to Leyland Vehicles as a whole. After all, over the years it has been encouraged to concentrate on axle production only, losing its assembly site, and it is only fair that in return it should get the support that will allow it to capitalise upon the undoubted skill of the work force and the energy it has shown in very difficult conditions over the years.
This matter is relevant to the Government, and it is important that these points are made to Ministers, because the corporate plan of Leyland Vehicles is now before the Government, and a number of factors included in the undertaking refer to social and political implications of change that are the business of Ministers.
I have already referred to the impact of unemployment in the west of Glasgow on the area I represent. I hope that all these factors will be borne in mind when Ministers take decisions about the corporate plan and have discussions with management, taking into consideration not just commercial criteria but the wider implications of what is being decided for the many hundreds of people who depend upon the Albion and Bathgate plants.
On a wider note, may I reinforce the points that have been made by my hon. Friends about the Bathgate plant? It is a facility of central importance not just to Bathgate, Blackburn, Whitburn, Armadale and the towns around it but to the Scottish economy. I hope that Ministers will recognise that they have a part to play—perhaps a small and limited part, but a significant part—in fighting to make sure that this plant retains its place in Scottish 746 economic life. My hon. Friends have referred to the importance of the African orders and to the importance of ECGD cover. I hope that that point has been well noted. There is also the possible influence on investment. It is clear, as my hon. Friend the Member for Livingston said, that, if Bathgate is to have a future in the engine line or, indeed, if Leyland Vehicles is to have a future, it is necessary to have a new generation of engine, whether the family one or some equivalent, not too many years hence.
The special relationship that the submission of the corporate plan represents and the social and economic implications of which Ministers are the guardians underline the importance of the venture. I hope—I am sure I speak for my hon. Friends and, indeed, for many people in Scotland—that at least the Government will remember that they have to defend these wider interests and bear them constantly in mind.
It is not just a question of a narrow, commerical criterion, although that must weigh heavily with management in particular; there are these wider horizons. It is essential that the Scottish economy is not asked to take another hammer blow of the kind that has become all to familiar in the last two or three years when—I accept that no decisions have been taken yet—the decisions are taken on Bathgate. I hope that we never come to the bitter point where a closure or massive redundancies are threatened. If that were to happen, it would be a serious decision for Ministers. I hope they will accept their responsibilities to the wider community of Scotland, as well as to Bathgate in particular and to the other communities that are so dependent upon this plant.
§ The Under-Secretary of State for Trade and Industry (Mr. John Butcher)
Hon. Gentlemen opposite have done their constituents a great service in raising a matter of some considerable concern and, of course, of some urgent topicality. The numbers present here tonight are adequate testimony to the seriousness with which hon. Members on both sides of the House view the question.
To the hon. Member for Livingston (Mr. Cook) I say, through you, Mr. Deputy Speaker, that I do not agree with the commentator he quoted, albeit it is in a historical context, who spoke of leaving Scotland to industrial dereliction. Nor do the Government believe that there is a faint possibility of that happening. As testimony to that, I cite the presence of some of my hon. Friends who represent Scottish constituencies, including my hon. Friend the Under-Secretary of State for Scotland.
The hon. Member for Linlithgow (Mr. Dalyell) said that many commentators who are familiar with the Bathgate plant and its products have no complaint about the product and the work force. He said that the difficulty lies in the market. This is not the occasion on which to indulge in nit-picking or to bandy details; there may be a difference in how we would record the facts of the past few years, but generally we agree with the hon. Gentleman's major assertion that the prime difficulty is in the market place. We will not indulge in union-bashing or in criticising the work force of the Bathgate plant.
The hon. Member for Linlithgow rightly drew attention to the various forms of aid that have been given to BL and to the role that the ECGD has played in invigorating and encouraging growth in markets. I shall deal with that in detail, because the hon. Gentleman was good enough to advise us of his preoccupation with that issue.
747 The hon. Gentleman said, Mr. Deputy Speaker, that we are talking about a sum equivalent to one-thousandth of the expenditure in the Falklands. That is his target. We have been debating today other targets and we have found extreme difficulty in persuading hon. Members on both sides of the House that there are legitimate ways of finding savings. We can all find worthy recipients of a subsequent redeployment of resources. That is always a matter of controversy. It involves value judgments and is all about the priorities that we set, as parties and as individuals, in spending programmes.
The hon. Gentleman was right to relate his remarks to the foreign aid programme. A huge amount of the output of Bathgate, and of Leyland Vehicles in general, has gone to the Third world, particularly to Africa. The Government also believe in the industrial regeneration of this country, which, of course, includes Scotland.
The hon. Member for Livingston also spoke of the financial crisis in the Third world. I am pleased to assure him that the comments made in the debate will be referred to my right hon. Friend the Minister for Trade. However, leaving aside the ECGD, which is concerned more with trade than with aid, and looking solely at the overseas aid programme, the figures show that, to sustain the volume of orders going to Bathgate only three years ago, we should have to pre-empt about 8 per cent, of the foreign aid programme and gear it entirely to the output from that one plant in order to secure, say, £100 million of orders. That would be a very difficult and controversial decision to make.
We do not look with enthusiasm or indifference at any trend that could bring 20 per cent, unemployment to this part of Scotland or any other. [HON. MEMBERS: "We have that already."] Yes, we have over 20 per cent, unemployment in parts of Scotland and England, but our target is to reduce that and not to endure it.
We shall look at the comments of the hon. Member for Glasgow, Garscadden (Mr. Dewar) in the context of the corporate plan. He spoke eloquently in defence of his constituents.
I ought to make it clear, Mr. Deputy Speaker, that the Government fully recognise the concern that has been expressed. We shall have it prominently in our minds as we consider the BL board's corporate plan, which we have recently received. The House will understand that I cannot at this stage discuss the contents of the plan, which includes the board's plans for Leyland Vehicles. However, it may be helpful if I outline some of the background to the problems that are the subject of the debate.
For many years, Leyland Vehicles was a very profitable business. Until 1974 it was the market leader in trucks in the United Kingdom, and it was a very successful exporter to a large number of developing countries, many of them former British colonies in Africa. In several of these countries Leyland established assembly plants and built up something approaching a monopoly of the truck and bus markets.
I visited Sudan about two years ago, Mr. Deputy Speaker, and it was with pleasure and delight that I saw so many British, and in this case Leyland, trucks on the roads of that severely underdeveloped country. This export business was so valuable to Leyland that it was even worth while to manufacture a range of trucks specifically designed for the requirements of African purchasers.
However, even back in the mid-1970s, when BL's commercial vehicle business was profitable, there were 748 worrying signs. The company's share of the domestic truck market was 26.3 per cent, in 1975. By 1978 it had plummeted to below 20 per cent.—and this was at a time when the United Kingdom truck market was growing rapidly. In 1978 the commercial vehicle operation recorded a loss for the first time. With hindsight, it is not difficult to see that if the market turned down the business could be in very severe difficulty indeed. And turn down it did. Although a record number of trucks—nearly 80,000 —were sold in 1979, the market fell to about 60,000 in 1980 and 45,000 in 1981. Meanwhile Leyland's market share continued to fall, down to 17.3 per cent, in 1979 and 16 per cent, in 1981.
This fall in demand did not only affect Leyland. All European truck makers have been, and still are, going through a very difficult time. European truck sales fell by some 30 per cent, between 1979 and 1982, and virtually all the major European companies are running well under capacity. Figures are understandably hard to come by, but it is doubtful whether more than a very few are currently making profits. Traditionally, Leyland Trucks and its continental competitors have been able to look to their markets outside Europe to sustain them through the leaner years of the European investment cycle. However, as I shall explain in a minute, this has not been the case this time round, at least for the middle eastern and African markets, where Leyland Trucks is strong. The result has been too much capacity chasing too little business within Europe, which has reduced volumes and drastically squeezed margins throughout the industry.
I mentioned a moment ago that, at the same time as it attempted to weather these storms in Europe, Leyland also faced considerable difficulties in its export markets. These were caused largely by the severe economic difficulties of many important Third-world countries, which led to very sharp falls in the demand for Leyland trucks in these countries. The world recession has exposed the fragility of the external financial position of a number of important countries. Big elements of this crisis have beer large current account deficits due to factors such as unexpectedly slow growth in export volumes due to recession in industrial countries, reduced export earnings due to falls in commodity prices and the 1979 oil price rise — a series of issues that the hon. Member for Linlithgow has raised on a number of occasions in the House. He will know that high world interest rates have been another adverse factor.
We all know now the litany of events and problems that arose from the oil price changes, but they had a particularly dramatic effect in central and east Africa. It is one of the sad ironies of this crisis that it has affected most of all, and most dramatically of all, those countries that were least able to afford the high prices and the international crisis that followed and that had difficulties in servicing their debts. That brings us back to the parochial, in terms of the world, but nevertheless important issue, for the people of Scotland, of Leyland Trucks.
One of the major impacts of the debt problem has naturally been on trade. Developing countries were forced to react to the drying-up of new loans by cutting back sharply on imports in the last couple of years. An important contribution to reversing this situation would be a revival in developed economies, which would make it easier for developing countries to earn sufficient through exporting to service their debts. For that reason, it is in the 749 interests of developing countries as well as ourselves to stick to the Government's policies for the domestic market, which are designed to ensure and promote sound, sustainable growth.
The ECGD is a commercially based operation working to commercially justifiable criteria. It is not Government policy to support credit in those markets where there is no reasonable prospect of repayment. It would not make economic sense to extend cover to uneconomic markets to bolster United Kingdom exports in the short term.
§ Mr. Dalyell
That may be true in Nigeria in the short term, but not in the medium or long term. This is an oil-based economy and potentially a rich country. Do not advanced countries have some obligation at least to tide over major sectors of manufacturing industry at such a time?
§ Mr. Butcher
Had the hon. Gentleman allowed me to continue a little further, I would have qualified my opening statement on ECGD. The Department of Trade and Industry is anxious to underpin those pressures which give continuity to our domestic manufacturing and service selling base. However, I must report to the House that the scope of ECGD cover for exports to Nigeria is currently under review in the light of the arrears payments due to exporters, on which the Nigerians have requested relief. The Government are aware of the importance of Nigeria to Leyland Vehicles' operations, and this will be borne in mind in assessing any additional cover which may be made available to the company. The hon. Gentleman will know that ECGD has a general and statutory obligation to act commercially and is, therefore, precluded from offering credit cover where, in its judgment, the chances of repayment are too remote to justify it.
This is a complex matter, Mr. Deputy Speaker, and I give an undertaking to the hon. Gentleman, as there will 750 not be time to record the details in the House tonight, to provide him with a circular that has been sent to ECGD policy holders in respect of Nigeria, advising them on how to take their businesses forward with their current policies and how to renegotiate some of those policies. It may be helpful if the hon. Gentleman takes the copy that I have here tonight, which is in the public domain, with which he may be able to advise those who are pressing him for advice.
The Government would have difficulty in re-routeing a massive chunk of the foreign aid programme. ECGD is more a trade than an aid-based measure, and we are circulating those trading with Nigeria to advise them of the best way to proceed.
Mr. Speaker, for the past 14 minutes I have been referring to you as Mr. Deputy Speaker. However, while indulging in an Adjournment debate with the hon. Member for Linlithgow, you will forgive me for occasionally thinking that I am in a time warp. I am aware of your promotion since the previous Parliament.
§ Mr. Dalyell
Is the Minister aware that this company is the only indigenous British truck manufacturer? Could the Government reflect on whether France, Germany, Japan, or any other advanced country, would allow this to happen — although we do not accept the closure of Bathgate? Would not another advanced country step in to protect its indigenous truck manufacturer?
§ Mr. Butcher
It is a preoccupation of the Department of Trade and Industry to see many issues from a limited, United Kingdom point of view, which is another way of putting what the hon. Gentleman has just said—
§ The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at thirteen minutes past Twelve o'clock.