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3.30 pm

The Secretary of State for Trade and Industry (Mr. Stephen Byers): With permission, I would like to make a statement concerning the latest developments at Rover.

Earlier today, BMW announced that it had agreed to sell Rover cars to the Phoenix consortium. Negotiations have been concluded and contracts signed. This is clearly good news--for the workers at Longbridge and the wider community in the west midlands. I am sure that it is news that all hon. Members will welcome, especially my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) who is at Longbridge this afternoon and has worked hard to support the work force during this difficult period.

The agreement reached earlier today will preserve volume car manufacture at Longbridge; it will safeguard the majority of jobs there and minimise the knock-on effect in the supply chain.

I would like to add my personal congratulations to John Towers for the way in which he pulled the consortium together and brought what I know have been difficult negotiations to a successful conclusion. He has been determined and dogged in the face of hostility and criticism. His personal strengths will be invaluable to the Phoenix consortium.

Since BMW's decision to sell Rover, the Government's main concern has been with the workers at Longbridge, Rover suppliers and the communities affected. They have faced a considerable period of uncertainty over the past six weeks. It has been something of a rollercoaster period for them--swinging between dismay and hope as their future was decided in various negotiations with BMW.

Today's news finally provides some welcome certainty for the Longbridge site. However, there will still be a number of redundancies. Our priority now is to do everything that we can to help those who will be affected, to provide training and to attract new jobs to the area. That is the role of Government--to manage change and to equip people for change, not to leave them the innocent victims of change.

We have always been clear that the role of Government is not to run commercial negotiations between the interested parties. The Phoenix consortium has not sought Government finance for its proposals. John Towers has always been clear with me that the Phoenix bid had to be viable on its own and would get funding from commercial sources, and that is the case.

The Government have not played the old role of throwing money at a problem in the hope that it would go away. Nor have we adopted the laissez-faire attitude of the previous Government--just standing to one side and doing nothing. Instead, we have taken an active role to facilitate the commercial negotiations over the future of Rover, and to provide support for those workers and companies adversely affected by commercial decisions.

Our role has been to bring people together and to move the negotiations forward. It was the Government who brought John Towers and BMW together for their first face-to-face meeting a month ago on 10 April and we have remained in contact with both parties throughout the negotiations.

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We must now turn our attention to those who will be adversely affected by today's announcement. I am pleased that most of the work force will be offered a future at Rover, but we need to provide support for those who, regrettably, will lose their jobs. The Government will do all that we can to help.

I can announce that the taskforce that we created will remain in place, and I expect that its continuing work will take account of all developments, including today's announcements and the consequences for suppliers. It will produce a final report to me at the end of June.

My right hon. Friend the Secretary of State for Education and Employment and I have already put in place measures to assist any workers made redundant, to help affected supplier companies and to assist in attracting new investment and employment. Those measures will remain in place.

I am also able to confirm that the £129 million promised to the taskforce will remain available for good-quality projects in the region that provide long-term economic regeneration and job creation.

We must not underestimate the remaining difficulties ahead. The new owners of Rover will have to sell cars in a highly competitive market. The car industry is a fast- moving global market, going through major structural change. These are difficult times for vehicle manufacturers throughout the world, but a number of recent announcements have shown the strength of vehicle manufacture in the United Kingdom.

Last week, Vauxhall announced £189 million of new investment, creating 500 new jobs in its Luton factory. Honda has announced £130 million of new investment in Swindon; Peugeot has doubled production; Jaguar achieved record sales and record production in 1999; and last month's sales figures showed that British-built cars increased their sales in the United Kingdom, against the general trend.

There will be many lessons to be learned from Longbridge, which we will need to reflect upon. However, it is clear that there can be no return to outdated interventionism. The corporate state has been tried, and it simply did not work. Neither did a naive reliance on laissez-faire, which led to a crippling obsession with what Government should not do. The role for Government is to create an environment that encourages enterprise and creates wealth and jobs--[Interruption.] A third way, if the right hon. Member for Bromley and Chislehurst (Mr. Forth) would have it so.

Today belongs to John Towers, the Phoenix consortium, the workers at Longbridge and the people of the west midlands. Through adversity, they have all demonstrated great strengths, and we look forward to working with them to meet the challenges that lie ahead.

Mrs. Angela Browning (Tiverton and Honiton): We welcome the fact that the Phoenix bid has been secured. We are particularly encouraged that it attracted financial support from the market.

It is nearly a year since the Secretary of State said that the long-term future of Longbridge was secure. He said today that there are lessons to be learned. I hope that this time, he and his Department will at least take an interest in the progress of Rover, and not be the last to know what is happening in an important industry in the UK.

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Although we have followed with interest the information that has come out today, I have some questions for the Secretary of State. Phoenix has taken over production of the business, but has it also acquired all the assets at Longbridge? What is the Secretary of State's understanding of the long-term future of the Swindon plant, on which Phoenix now has an option? Can he confirm exactly how many redundancies are expected?

How will today's announcement impact on the Rover dealerships? Are their futures secure? Does the right hon. Gentleman anticipate supporting applications for European Union funds for the company or for the region? What arrangements have been made for the export distribution of Rover, which has been locked into the BMW operation in Munich?

When the R30 was proposed, I asked the Secretary of State in a written question what impact that would have on UK suppliers. He replied that the R30 would provide opportunities for UK suppliers. Does the Phoenix bid continue to offer opportunities for UK suppliers?

Finally, how confident is the Secretary of State about the much-needed investment in the short term before Rover breaks even in two years' time?

Mr. Byers: I think that there will be disappointment on both sides of the House that the hon. Lady was not able to congratulate John Towers on the role that he has played. There will be disappointment that the right hon. Member for Wokingham (Mr. Redwood), who has criticised John Towers and Phoenix throughout the exercise, is not even in the House this afternoon for the statement.

The reality is that the people of Longbridge and of the west midlands will judge the Conservative party by its response to this issue. It ill becomes Conservative Members to talk about playing party politics with this issue, because that is exactly what they have done throughout. While we were getting our sleeves rolled up and doing the work, they were doing nothing. They were issuing press releases and notices that did not help the negotiations at all.

The reality is that there is a new owner for Rover, with a viable future--and with the commercial decisions that will have to be taken. However, it is not the job of Government to intervene in those commercial decisions. The hon. Lady will be pleased to know that the dealer network supports the proposal; the network is part of the Phoenix consortium.

As for the assets at Longbridge, we know that Hamshall--the engine facility--and Powertrain will be retained in the ownership of BMW. There will be developments at Longbridge which BMW and, no doubt, the Phoenix consortium will need to discuss.

The matter offers a clear lesson about the role of Government. The negotiations have been commercial; we have brought people together and I am pleased that there has been a successful conclusion. However, it is not part of our role to intervene in the way suggested by the hon. Lady. That is not the part that we shall play. We intend to support and facilitate. John Towers and Phoenix have made it clear that they have no proposals for applications for public finance, so I do not intend to answer a hypothetical question.

Mr. Martin O'Neill (Ochil): I congratulate my right hon. Friend on his statement. He has not had the easiest

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of rides over this issue, but, were it not for his persistence in backing the Phoenix proposal and ensuring that it was on the agenda, we should not have reached this stage. In congratulating John Towers on his persistence, we must give due credit to the persistence displayed by my right hon. Friend.

I do not want to strike a sour note, but I have one question. The sums involved are comparatively small when set against the ambitions for the new models that are being developed. Is there any evidence that further funding could be available? I realise that the Government have no responsibility whatever to achieve such funding, but, as my right hon. Friend has played a part in bringing people together, can he tell us anything about the further investment that will be necessary for the survival and success of the scheme?

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