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5.43 pm
Miss Julie Kirkbride (Bromsgrove): I am glad to be able to speak in an important debate, and I congratulate my colleagues on the Front Bench on obtaining a debate on manufacturing industry and factory closures. I was extremely disappointed by the arrogant--some might say sneering--response of the Secretary of State to the legitimate concerns that have been raised. Manufacturing
and factory closures are particularly important to the west midlands. I am disappointed not to see a single Labour Member from my part of the world listening to the debate. Nor has any Member from Birmingham been here to make a point about the grave concerns facing manufacturing industry in the west midlands.
A small part of Rover's Longbridge plant is situated in Bromsgrove, and the rest of it is in the constituency of the hon. Member for Birmingham, Northfield (Mr. Burden), which borders mine. Some 14,000 people are employed at Longbridge, and 40,000 further jobs across the west midlands would be at risk if the plant were to close. Sadly, difficulties at Longbridge mean that 50 supply industry jobs in Bromsgrove--at UEF, which hon. Members may remember under its former and more famous name of Garringtons--have already gone because of the problems created for manufacturing industry by the Government's economic policy.
Some 1,500 jobs were cut at Longbridge in the summer when people on short-term contracts were told that the contracts would not be renewed. It will be a miserable Christmas for many of my constituents, because they have been put on short-time working, and their so-called Christmas holiday will be extended to keep them away from work. BMW management say that 25 per cent. of components for Longbridge should in future be outsourced abroad rather than in the west midlands, at an estimated saving of £250 million.
On top of that, there is the Mini. We were all looking forward to the relaunch of the Mini at its historic home at Longbridge, but the relaunch is in jeopardy as the car may be made at Rover's Cowley plant instead. The bottom line is that the Government have been told by BMW's management that they have until the end of November to come up with a scheme to ensure that Longbridge is not run down or discontinued. They have until then to ensure that the plant has a safe long-term future, a future that is in the interests of all of us, but particularly in the interests of my constituents.
It is legitimate to ask how we came to that position. How did our great flagship plant come to face such difficulties? It is a shame that the Chancellor is not obliged to appear this evening, for it was he who blamed the Longbridge workers for their situation, telling them that they were not productive enough. He said that it was their fault that the plant faced the terrible prospect of closure. The Chancellor's remarks were deeply offensive and hurtful following the great strides taken by workers at the Longbridge Rover plant. The days of Red Robbo under an old Labour Government in the 1970s have been left far behind. The work force have vastly improved their working practices, showing great willingness to protect their jobs by working in a modern market.
It is not true to say, as the Government do, that the workers are to blame and that productivity is the problem. It is not comparing like with like to say that Nissan workers in Sunderland have created the most efficient car plant in the country, with 98 cars per worker, while Rover's productivity is much lower, at 33 cars per worker. Nissan has a purpose-built plant on a green-field site with the most efficient and modern equipment, which produces the most efficient output possible. The Longbridge plant has existed for many decades. It is a distinctive brown-field site, situated on three little hills. Therefore,
the two cannot possibly be compared and it cannot be said that it is purely the workers' fault that productivity is so low.
Mr. Ian Bruce:
My hon. Friend may not know that the all-party motor group visited Land Rover at Solihull. I think that both sides of the House acknowledge--certainly the previous Secretary of State opened it--that that is probably among the most modern plants in Europe, if not the world. I wrote privately to the then Secretary of State about that plant's concern at the way in which the economy was being managed. The pound and interest rates were much too high and its German owners had said that it would not continue with the expansion and would have to start cutting back. That shows that it is nonsense to blame the lack of productivity at Longbridge for its problems.
Miss Kirkbride:
My hon. Friend makes the point to which I wanted to come. The problem is not one of productivity alone. Workers and management understand that productivity must be addressed. The Government acknowledge that, but, most unfairly, blame productivity for the problems at Longbridge. The crisis in the Longbridge car plant is the result of the Government's management of the economy. The high pound and the high exchange rate created the present difficulties.
Maria Eagle:
I have the front gate of a car plant, although not the plant itself, in my constituency--Ford at Halewood--and Vauxhall is at Ellesmere Port in the north-west. Both are old car plants which are now expanding vastly. How does the hon. Lady explain the difference between what is happening at Longbridge and what is happening at Halewood and Ellesmere Port?
Miss Kirkbride:
I am glad that the hon. Lady has raised those issues. If she will forgive me, rather than give a direct answer now I shall address those points in my speech; the House will understand my speech better if I am allowed to deal with those points in the order that I see fit.
The Longbridge plant suffered particularly from the high exchange rate resulting from the Government's decision to make an independent Bank of England which misjudged the rate at which interest rates should be set because it was not capable of knowing the Government's wider economic policy. Interest rates were kept too high for too long with the result that the pound shot through the DM3 ceiling, which I cannot remember its reaching before. For some time the pound reached a completely unacceptable level for manufacturing industry.
Earlier this spring the Longbridge plant was able to hedge its currency transactions. It had bought forward at an exchange rate of DM2.40 to the pound. Sadly, that arrangement came to an end just when the Government's exchange rate policy meant that there were over DM3 to the pound. The effect of that was that the price of the Rover 400 made at Longbridge shot up in Germany from DM29,000 to DM39,000, vastly overpricing that car in the German market, with the result that Rover exports completely collapsed.
At the same time, Rover faced difficulties in its home market. Because the pound was so high, resulting in cars coming from abroad at a much cheaper rate than had
previously been experienced, the British car market was flooded with Italian, French and German cars, which, because of aggressive marketing, could be sold more cheaply in Britain. Other European companies were looking for somewhere to sell their cars because, as a result of the collapse in Asia, they were not able to sell their cars in the same volume in that market. They looked to our market which provided easy pickings because of the Government's exchange rate policy. As a result, by the end of this year, BMW will face a £600 million loss at the Longbridge plant.
Mr. Hoyle:
What the hon. Lady says does not quite add up, because Rover cars are 30 per cent. cheaper in Europe than in the United Kingdom, and, in fairness, French cars coming to Britain are up to 40 per cent. dearer than in their own market. Therefore, I cannot see the logic of what she is saying. Is she looking for a cash investment for Longbridge from the Government? Is that what is needed?
Miss Kirkbride:
I am sure that the hon. Gentleman is only making a debating point and that he really does know that every home market has its own considerations and, sadly, the price of cars on the continent does not necessarily impact on the price of cars here. Like must be compared with like, and a DM10,000 increase on Rover cars in the German market would clearly cause a major problem for BMW when it tried to sell the Rover 400 in that market.
The hon. Gentleman rightly asks what should be done. The first point, which I hope will not be lost on the Minister, is that the Government's economic policy has some bearing on the situation. I notice that, for all the protestations that the Bank of England is independent, Treasury Ministers at least have recently asked it to listen to their pleas for a reduction in interest rates which, to the satisfaction of the House, is what we had last week.
Mr. Leslie:
Would the hon. Lady suggest that independence for the Bank of England be scrapped?
Miss Kirkbride:
It is difficult to say that the Bank of England is truly independent when members of the Monetary Policy Committee are appointed by the Government on relatively short-term contracts. Independence is not as clear cut as it might be in America and Germany. However, that is something of a red herring when we are discussing the real issue of my constituents' jobs at the Longbridge car plant.
The biggest problem facing Longbridge is where to go from here. It is clear that the unions have shown their willingness to co-operate in any way that they can to make those jobs as secure as possible, and I congratulate them on that. Although criticisms have been made of the BMW management they are rather unfair. BMW has invested £2.5 billion in the Rover car industry in the United Kingdom since it took it over. Land Rover has been a great success. The Cowley car plant is clearly doing better than Longbridge. BMW has shown itself willing to invest in the production of the new Rover 75, which had a fabulous reception at the motor show until the management acknowledged the difficulties at Longbridge. That clearly has put rather a damper on things.
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