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5.52 pm
Mr. Steve McCabe (Birmingham, Hall Green): I take no pleasure in participating in this debate; this is a sad day for the west midlands. We have heard that if Longbridge closes or substantially cuts back, that would cost about 9,000 jobs, and the multiplier effect might result in a further 40,000 jobs being lost across the west midlands. Some 20,000 of those will be in Birmingham, many in my constituency. We could see unemployment in Birmingham rising to 15 per cent. if the worst scenario is played out. Over 2,000 companies in the west midlands in the automotive supply chain are vulnerable to a substantial shutdown at Longbridge, and it is estimated that they could lose about 30 per cent. of their business as a result.
It is true that Birmingham has been able to diversify following the earlier job shocks of the 1980s recessions, and that financial, professional and business services are rapidly emerging as Birmingham's main earners. None
the less, Longbridge continues to play a vital role in the life and livelihoods of Birmingham people. I agree with the policy director of the Birmingham chamber of commerce, who said only yesterday that
We also need to know whether Alchemy Partners intends to run Rover production at about 250,000 units, as suggested in today's Financial Times, which is about a quarter of present capacity. I notice that Jon Moulton is quoted as saying that he looks to exit as quickly as possible, within at least three years. That is hardly an encouraging signal for the workers at Longbridge. After all, he is the man who sacked 120,000 workers within days of taking over Parker Pens.
Mr. Ian Bruce:
Is it not strange that BMW effectively gave 48 hours' notice of its intention to get rid of the plants? Does the hon. Gentleman think that BMW wants Rover cars to be in competition with it in the future, or does it simply want a fire sale to close Rover down as quickly as possible?
Mr. McCabe:
None of BMW's recent announcements have been well timed or helpful. Since BMW's acquisition of Rover, there have been persistent rumours about BMW's real intentions, and it has specifically been suggested that it wanted to get its hands on the Land Rover four-wheel drive technology and the other profitable parts of the company. I wanted to believe that BMW was telling the truth when it denied those rumours and I initially interpreted its investment at Longbridge and the development of the new Mini assembly, as well as the promise of £1.7 billion of investment, as evidence that it was acting in good faith. However, it appears today that that trust was misplaced.
I do not deny that BMW has experienced problems at Longbridge. It is an old plant, as everybody acknowledges. However, the treatment of the people who work for Rover has been a disgrace. The workers have given all that they can. They accepted BMW's new and much less favourable working conditions, they have come to terms with huge job losses and they have put their faith in the promises and assurances of the BMW executives. However, the workers have been let down.
Unfortunately, the recent experience is not new. It is part of a much longer trend for which the Opposition have to take some of the responsibility. In 1988, when they were in Government, they sold Rover to British Aerospace for £150 million, in clear breach of EU rules. That was just the start of what has proved to be a succession of shoddy deals at the workers' expense, especially those at Longbridge. Although BAe was later forced to pay back a large part of the sweeteners that it received, it still made a profit of £400 million on a company that it had held on to for only five years.
In fact, as part of the initial giveaway by the Conservative Government, BAe was not allowed to relinquish control of Rover for five years on pain of
incurring financial penalties. BAe waited five years and six months before selling Rover to BMW, and it is clear that BAe never had any commitment to Rover. The Conservative Government must have known that, even when they were going out of their way to flog the company on the cheap. [Interruption.] I am not quite sure what the hon. Member for South Dorset (Mr. Bruce) said, but the point is that Rover was flogged on the cheap in breach of European rules. As my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) said, if one reads the NAO report, the criticisms are clear. Indeed, the report from the Select Committee on Trade and Industry contains damning criticisms. There is no doubt about what was intended.
Mr. Ian Bruce:
The hon. Gentleman did not hear what I said, which was that the Secretary of State has just given £500 million to British Aerospace, the company that the hon. Gentleman has been criticising. Is he saying the right hon. Gentleman has got that wrong as well?
Mr. McCabe:
The problem with the hon. Gentleman's position is that my right hon. Friend made money available as part of a negotiated deal. I am talking about a deal on the cheap that was in breach of European rules, over which the previous Government were criticised by the National Audit Office and by a Select Committee of this House. The two sets of circumstances are pretty different.
The matter did not end with the fiasco of the sale to British Aerospace. When that company then decided to offload Rover to BMW, the right hon. Member for Henley (Mr. Heseltine), the then President of the Board of Trade, said that it was part of a strategy to help British industry win. Some strategy, some win: I do not think that people at Longbridge feel that they have won today.
There have been several comments about BMW's suggestion that the problems stem from the strength of the pound. Yet that ignores the facts--that BMW's sales in the UK benefit from the strong pound, that the company has already screwed down its UK suppliers to the tightest possible margins, and that it has even proposed paying them in euros. I therefore do not know how much weight should be placed on that argument.
The strength of the pound has contributed to Rover's problems, but UK car output last year reached its highest level for 27 years. That was largely due to increased export sales, with two out of three cars going to the overseas market. During the same period, Rover car sales fell by nearly 25 per cent. That must in part be due, as the right hon. Member for Sutton Coldfield (Sir N. Fowler) said, to the persistent sabotaging of the product by BMW's untimely speculations.
Sadly, BMW is pulling the plug at the very time when sales have stabilised and even begun to rise, especially in mainland Europe. It is difficult to understand the company's strategy.
The Opposition have tried to blame the Government for the recent turn of events. Perhaps they should reflect on the fact that the previous Conservative Government initiated the chain of events that have finally done for Rover. Moreover, while the Government were negotiating grant aid for BMW last year, the former shadow trade and
industry spokesman, the right hon. Member for Wokingham (Mr. Redwood), who is no longer present, opposed the Government's offer of grant aid to Longbridge. He is on record as saying that he is opposed to large public investment to help regions hit by job losses. I think that the people in Longbridge know whom they would rather have to depend on in a crisis such as this.
I have some sympathy for BMW in one respect--I agree with the right hon. Member for Sutton Coldfield about this--and that is with regard to the actions of the European Commission in dealing with the grant inquiries. I do not accept that the European Commission's investigation was vital to BMW's announcement, but we are entitled to wonder what its true purpose was.
Commissioner Monti said originally that the Commission merely wanted to look at the proposals. It may be that BMW always intended to undertake the asset stripping in which it has now indulged, and that the company's earlier pronouncements were merely a blind. We shall probably never know, but the Commission's actions have not exactly helped matters.
it could be a huge disaster for the region, particularly if it goes to a buyer from outside the automotive industry.
Consequently, like many other hon. Members, I think that we need urgent information about Alchemy Partners. We have had some information from the hon. Member for Bournemouth, West (Mr. Butterfill), but that only added to my worries. We need to know what the company's plans are and whether another car company is waiting in the wings.
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