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Vauxhall (Luton)

3.31 pm

The Secretary of State for Trade and Industry (Mr. Stephen Byers): With permission, Mr. Speaker, I shall make a statement concerning yesterday's announcement by General Motors to end car production at its Vauxhall plant in Luton.

As hon. Members will know, over recent months, General Motors has been conducting a worldwide review of its operations. The results of that review were announced yesterday. The decision in relation to Luton is a bitter blow, with the prospect of 2,000 jobs being lost by this time next year. Our efforts must be directed towards assisting the individuals affected, and the local community, through what will clearly be a difficult period.

In this statement I shall outline the steps that the Government will take. But it is important that, before I do that, the House considers the reasons given by General Motors for its decision. The company has made it clear that this is part of a Europe-wide restructuring procedure, which will result in more than 5,000 job losses across Europe. General Motors has stated that the restructuring is a response to overcapacity in the car market and rapidly changing European market conditions, with lower sales than expected and a shift in customer preferences towards smaller vehicles.

The announcement is part of an overall restructuring by General Motors, designed to reduce salaried employment levels by 10 per cent. in north America and Europe over the next 12 months--cutting 10,000 jobs worldwide. Despite yesterday's announcement, Vauxhall will remain an important manufacturer in the United Kingdom. It has confirmed that it will continue with its investment plans for a new van to be manufactured at Luton, and that planned production volumes for the project will be increased. That will secure more than 2,000 jobs.

Ellesmere Port will continue to produce Astra cars and V6 engines, employing more than 4,000 people. Vauxhall also announced yesterday that a study is being made of the possibility of incorporating the next generation Vectra and turning the Ellesmere Port plant into a two-model "flex" plant. It is therefore clear that this is part of a worldwide restructuring by General Motors, resulting in job losses in north America and mainland Europe as well as in Luton.

The challenge is to provide new job opportunities for the future to replace the jobs lost as a result of yesterday's decision. That is why yesterday I, with my right hon. Friend the Minister for Employment, Welfare to Work and Equal Opportunities, announced that the Government would take steps to help those affected and to strengthen the local economy.

The Employment Service, working closely with Vauxhall, local authorities and other relevant bodies, will provide a package of advice and assistance to individual employees. The package will include rapid response units providing a personal service to help people find new jobs, an on-site job shop to offer vacancies, help with job applications and offer a fast-track benefits service, and retraining programmes that will offer guidance on further education and training opportunities.

The rapid response units have a good record in finding new employment for people affected by major job losses. At Fujitsu, in County Durham, a rapid response unit

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helped to ensure that about 94 per cent. of the work force found new jobs within 12 months. At Siemens, in north Tyneside, the Employment Service played a major role in helping about 90 per cent. of the work force find new employment.

Taken together, the measures will ensure that Vauxhall employees are given the best opportunity for a secure future and that the effects on the local economy are reduced. Additionally, we have asked the regional development agency to take the lead in identifying the action necessary to support the local economy and the employment base. The RDA has already begun that task and, this afternoon, is meeting the local authority and other relevant organisations. It will also establish a planning partnership to identify the practical measures necessary to assist in economic regeneration and job creation.

As a result of decisions taken by the Government, Luton is now part of our assisted areas map and, as such, qualifies for regional selective assistance. That will clearly be an enormous advantage in securing jobs in the future.

Of particular concern must be the position of businesses that supply Vauxhall, for which special support will be necessary. The RDA will therefore help companies in the supply chain to diversify, to find new business and to minimise the impact on the wider local economy.

It is clear that, at a time of globalisation, many sectors of our industry are going through major restructuring. In such circumstances, the Government's role has to be to provide economic stability, and that is exactly what the Government are doing. The underlying strengths of our economy are clear, as two sets of figures published today demonstrate. Today's labour market figures show that the employment level is 300,000 higher than at this time last year, and official figures published this morning show that the stock of foreign direct investment in the United Kingdom has increased by 21 per cent. in the past year, from £188 billion to £227 billion.

I am, however, the first to acknowledge that the figures will be of little comfort for the thousands of workers in Luton. Many hon. Members will understand the sense of anger that they feel, particularly about the manner in which they learned of their fate. This will be a bleak Christmas for those affected by Vauxhall's decision, and we must do all that we can to help them through the difficult months ahead. By working together, I am confident that we will be able to meet the challenges of the next 12 months.

Mr. David Heathcoat-Amory (Wells): I am grateful to the Secretary of State for responding to our request for a statement on this matter and for giving me an advance sight of his proposals.

The ending of car production by Vauxhall at Luton is indeed a terrible blow to the work force there, to supplying companies and to many of the other companies in Luton that depend on the buoyancy of the local economy. It is a particular blow that the massive redundancies were announced without warning just before Christmas. I agree with the Secretary of State that everything must be done to help those who are affected by the redundancies, including help to find jobs and, when necessary, to obtain retraining.

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It is not, however, an isolated closure: it is part of a very damaging pattern of closures that has been accelerating in recent months. Ford has announced that it is ending car production at Dagenham, with the loss of thousands of jobs there. The Nissan plant in Sunderland is also threatened. During the Rover fiasco earlier this year, we saw how out of touch the Government had become with the motor industry and its problems.

Of course there is an overcapacity problem in the motor industry. We all know about that, and the Government cannot cure that problem. However, the Government can cure their own tax and regulation policies. Since the general election, they have piled on layer upon layer of extra business taxes and regulations, which have particularly damaged manufacturing industry and undermined its success in difficult world markets. We warned the Secretary of State about that; we have been telling him about it for months, but he has done nothing about it and we are beginning to see the results of that complacency.

The Secretary of State gave an employment figure for the economy as a whole. What he did not tell us is what is happening to manufacturing employment. Can he confirm that, since May 1997, manufacturing employment has fallen by 206,000, having risen under the previous Government? I am grateful to the House of Commons Library for providing me with that figure.

Can the right hon. Gentleman explain why motor manufacturers such as Nissan, Toyota and BMW came to this country? They were attracted to Britain under the previous Government, but under the present Government, they have left or they are engaged in massive and damaging cost and employment reductions.

Can the Secretary of State tell the House what he is doing, not to cure a problem after it has occurred, but to help the industry and prevent more closures in future? Specifically, where is the aid for Nissan in Sunderland that he promised months ago? The application is sitting on some desk in the European Commission. When is that aid to be paid to Nissan? Will we be faced with another catastrophe if that plant moves to France?

Lastly, when will the Secretary of State start to roll back the tide of escalating taxation and regulations, which the CBI estimated will cost British industry an extra £32 billion over the life of this Parliament? Specifically, what will the Secretary of State tell the Chancellor of the Exchequer to do about the new energy tax that is to be paid by all businesses in the United Kingdom from 1 April--the so-called climate change levy? That will be particularly damaging to the motor industry, unless the industry relocates to another country that does not have the tax.

Can the Secretary of State tell us at last what he will do, not to go on taxing and regulating British businesses and the motor industry, but to start to help those industries and all who work in them, to stop such catastrophes happening in the future?

Mr. Byers: I regret that the right hon. Gentleman did not address the present difficulties being faced by workers at Luton. He paid lip service to that and spent much of his contribution speaking about issues that were not related to the announcement that General Motors made yesterday with regard to Luton.

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General Motors made it clear yesterday why it was taking action in relation to Europe. It was because of overcapacity in the car market and, as the General Motors press notice stated,

with lower sales than expected. Those were the reasons given for the decision, which related to Europe. If the right hon. Gentleman cares to read the statement made by General Motors, he will see that it reflects exactly those points. It was a worldwide issue and it was being addressed by the worldwide review. It would have been interesting had the right hon. Gentleman dealt with the real history behind the decisions being taken by General Motors, because it is far more complicated than he would lead the House to believe.

The right hon. Gentleman talks about more than £10 billion of burdens being imposed on business. What he does not tell the House is that that includes the right for people to have four weeks paid holiday a year as well as the national minimum wage. For most people, those are not red tape or administrative burdens but decent minimum standards for people in the workplace. The shadow Chancellor endorsed the national minimum wage without consulting his shadow Cabinet colleagues--many who sit on the Opposition Front Bench still disagree with the principle of a national minimum wage.

The reality is that the tax burden--corporation tax--has been reduced for companies in the United Kingdom. The right hon. Gentleman talked about employment levels in manufacturing. He is right to point out that, to be precise, 206,000 manufacturing jobs have been lost since May 1997. He did not tell the House about the record under the Conservative Government when, on average, 150,000 manufacturing jobs were lost for each of the 19 years of Conservative rule.

Economic stability will be the way in which we shall create the framework within which manufacturing can prosper--not turning the clock back 10 years to inflation at 10 per cent., interest rates at 15 per cent. and more than 1 million manufacturing jobs lost in one year as a result of the policies that the Conservative party pursued. We shall remain firm to our economic commitment of stability. In the medium and long terms, that is the only way to create the climate in Britain for more employment growth and prosperity in manufacturing.

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