Chris Huhne
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Chris Huhne (Eastleigh) (LD)
It is a pleasure to serve under your chairmanship, Sir Roger. I thank my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) for securing the debate, with the strong support of the other local MPs.
The most crucial point to make about the closure of the plant at Southampton is that the work force have done absolutely everything in their power to make a success of the plant, with substantial increases in productivity and substantial savings in costs. No fault can conceivably attach to any of the employees. The plant is a key part of our local economy. It is on the southern edge of my Eastleigh constituency and many of the employees come from the town, in particular, Boyatt Wood. As my hon. Friend said, the plant has been manufacturing Transits since 1972; that is an iconic vehicle and the plant is its home.
I have two fundamental concerns about Ford’s decision. The first, which is similar to that expressed by the right hon. Member for Southampton, Itchen (Mr Denham), is that the Ford Motor Company made commitments which it has broken. On 28 November 2008, three local MPs—myself, the then Member for Romsey, Sandra Gidley, and the hon. Member for Southampton, Test (Dr Whitehead)—went to see the head of Ford’s European operations, John Fleming, at the company offices in London. The right hon. Gentleman was a Minister at the time, but was clearly there in spirit. We had all campaigned hard to save the plant and we all came out of that meeting without any doubt about its significance. We all told the local media the same thing—I have a cutting with me. The plant was safe, despite the downturn in the market and despite what might turn out to be the loss of a considerable number of jobs.
Appropriately, the right hon. Gentleman quoted the letter he received from John Fleming in which Ford’s head of European operations made a clear commitment to investment in chassis cab production and to a future for the plant. Those commitments are what make the closure different. Ford is a major multinational and, as my hon. Friend the Member for Romsey and Southampton North has shown, is profitable globally, yet it is flying in the face of its past promises. It has done so in a way that may be difficult to challenge in court, but there was clearly a moral commitment on the part of the company.
Unlike bond holders, employees cannot take the company to court for breach of its promises, but customers will no doubt draw their own conclusions about a company that is prepared to walk away from firm commitments when they consider the value of Ford warranties, for example. In addition, as the right hon. Member for Southampton, Itchen, said, Ministers will, before signing any further cheques for the company, rightly ask for clear understandings, including of why the company considers it appropriate to go back on its commitments. There has been no change in management; John Fleming, the head of European operations at the time, is now the head of global operations, based in Detroit, so it is not a question of the Ford Motor Company changing management and therefore forgetting its commitments.
Furthermore, in 2008 and 2009 two big pieces of material help were available to Ford: a £450 million EIB loan, of which more than £380 million had to be guaranteed by the UK taxpayer as a condition of its extension; and the scrappage scheme introduced by the previous Government, which was designed to boost demand in the car and van market. Indeed, we pressed for the scheme to include the commercial van market, and it was of material help. It beggars belief that such help could have been agreed without commitments being made to Ministers, so we have to ask: what commitments were made to Ministers? That is not advice to Ministers in a previous Government so it is not covered by privilege; any meeting between a Minister and an executive of the Ford Motor Company would have had present a member of the Minister’s private office taking an extensive note of exactly what the Ford executive said, and that will be a matter of record within the Department for Business, Innovation and Skills. I ask the Minister to find out exactly what the record was and what the undertakings were, and to draw the necessary conclusions.
That is crucial to the second big issue about the closure, which is the position of the rest of the work force. As my hon. Friend the Member for Romsey and Southampton North said, it is not only a question of those directly employed by Ford, who have had a commitment that there will be no compulsory redundancies. Although that is a limited commitment, given the absence of alternative Ford workplaces in the area, I have no doubt that the company will do the right thing by its own employees, but what about the subcontractors on site, such as the Penske employees? What about the supply chain? What about the commitment to the whole local economy and to making sure that we survive this hammer blow, as we have survived many other blows in the past? I want the Minister’s assurance that he will make absolutely certain that Ford respects its previous commitments and, if it does not, that he uses that to come away with clear commitments not only to the direct Ford employees, but to the wider work force dependent on the plant.
Michael Fallon
I will certainly look at that point. The local enterprise partnership has said that it will try to identify the specific impact on the supply chain. If it has requests to make as a result of that work, we certainly stand ready to assist it. It also asked us for specific assistance in two other respects. First, it asked whether it was possible to accelerate the roll-out of phase 2 of the Bridging the Gap project, which, rather confusingly, was announced under round 3 of the regional growth fund in the middle of October. The project will provide grant support to individuals and small businesses in the Southampton and Isle of Wight area. Secondly, the LEP asked whether it was possible to broaden the remit of the scheme so that Ford employees living outside the specific boundaries of the local enterprise partnership could also benefit from the proposal.
On the first point, I have asked officials to see what can be done to accelerate the due diligence required of the bid. I am confident that we can shorten that process and ensure that money is made available more quickly. Bidding under round 3—the arrangements for the finalisation of the selected bids—is already subject to faster time limits, which were put in place after the experience of rounds 1 and 2. As for the boundaries, I think—I hope that hon. Members will agree—that it would be wrong to discriminate against someone who has worked at the plant simply because they live outside the geographical boundary of the local enterprise partnership area. I have asked officials to look specifically at what we can do to ensure that there is no such discrimination.
The future of the site itself has also been raised today. I can understand that the community and the local enterprise partnership are keen to retain such a prominent and iconic site for manufacturing use, but that will depend on the site’s ownership and planning status, which is, in the first instance, a matter for the planning authority. Let me say though that we, too, are keen to see it remain in industrial use. We have already notified its availability to UK Trade and Investment to ensure that inward investors are aware of the opportunity there, and we are happy to work with the local planning authority to do everything that we can to ensure that the site remains in manufacturing or industrial use.
My hon. Friend the Member for Romsey and Southampton North suggested extending the enterprise zone. There is already an enterprise zone in the area on the Daedalus site, some 15 miles away. I understand her request that we should create another one. Of course we will await advice on that from the Solent local enterprise partnership. The LEP covers Southampton and Portsmouth, and it really is for it to advise us on whether it sees the need to create a specific zone around the site, or whether it wants to enlarge the other zone and so on. We await advice from the local enterprise partnership.
It would be wrong not to touch on the Dagenham area. The hon. Member for Dagenham and Rainham (Jon Cruddas) has spoken eloquently for his constituents, and I know that he is in regular touch with the plant there. Following the Mayor of London’s standing commitment to lead a response to any large-scale redundancies in London, he hosted a constructive meeting of partners, including Jobcentre Plus, the Skills Funding Agency, the London borough of Barking and Dagenham and my officials, last Friday. The Mayor will work with all those partners and with Ford to develop support arrangements for the affected Ford workers and their families.
In partnership with the London enterprise panel, the Greater London assembly and the borough are already considering the long-term impact on the Dagenham area, including how new opportunities to retain a high value-added and high-skills local economy can be realised on the back of the continuing and substantial commitment of Ford to Dagenham, about which the hon. Member for Dagenham and Rainham has spoken and which we should not forget in the circumstances surrounding the regrettable decision to close the Southampton plant.
Ford has indicated that it hopes that the inevitable redundancies will be voluntary. It expects that around 300 people may want to relocate within Ford’s remaining UK operations, rather than take the voluntary redundancy package, and it has hired Lee Hecht Harrison, a global outplacement provider, to work with it at both the affected sites to help individuals. Whatever criticisms we may have about the circumstances in which the decision to close the Southampton plant was made, we should welcome Ford’s commitment to do everything that it can to help its employees after that decision was made.
Chris Huhne
Has the Minister had any contact with Ford executives about extending that package to the subcontractors on site and, indeed, to people in the supply chain, particularly given the availability of an outplacement agency, which can have an important effect on job opportunities in the future?
Michael Fallon
I am very happy to undertake to look at that point. The right hon. Gentleman raised the supply chain in his meeting with the Secretary of State. As I say, we will certainly look at that point. We are waiting for more evidence from the local enterprise partnership about the scale and degree of the supply chain, and exactly where the jobs affected might lie, but I am happy to consider that point and I will get back to him.
As I was saying, we have ensured that the local Jobcentre Plus teams and the Skills Funding Agency are involved in both Southampton and Dagenham. The SFA will work with colleges and training providers in the local areas to ensure that support is available to any employees who are at risk of redundancy, and the national careers service can offer free careers advice on upskilling or retraining for alternative employment.
I will turn shortly to the future of Ford in the UK, but before I do so I will attempt to answer some of the questions that the hon. Member for Hartlepool (Mr Wright) put to me. He asked me to assess the European market. I am not sure whether it is for me to do that, but the manufacturers certainly tell us that there remains significant and structural overcapacity throughout the European marketplace. We have seen that in the closures proposed at Peugeot and in the recent profit warning from Renault. I do not think that there can be any doubt that some quite significant restructuring lies ahead for the European market. Of course, that is a market that the Turkish Ford plant supplies.
The hon. Gentleman asked me more specifically if I had discussed these matters in my discussions with Ford. I met Ford on 5 September—my second day in office—and again on 25 and 26 September, in the meetings that I had with most of the major automotive companies in the margins of the Paris motor show. Yes, we certainly discussed overcapacity, but we were given absolutely no hint that that overcapacity had any implications for Ford’s operations in the UK.
The hon. Gentleman also asked whether we talk to other Departments. Yes, we talk to other Departments, and issues are raised with us by the major investors, not least about the taxation of low-carbon vehicles, and so on. So, as I say, we do talk to other Departments.
The hon. Gentleman finally asked about the strategic approach, and discussing that approach is the point at which I should turn to the future of Ford’s long-term commitment to the UK and to the efforts that we and previous Governments have made to secure that commitment to research and development and, in particular, to engine design and manufacturing operations in the UK.
It is important to remind ourselves that Ford is a very important part of the UK automotive sector and has been for more than a century. Ford employs more than 12,000 people in the UK and invests more than £400 million each year here on high-quality R and D—about a quarter of the total UK automotive R and D spend.
Even more significantly, the UK supplies more than a third of Ford’s total global demand for petrol and diesel engines. As part of that, the UK supplies more than half Ford’s total global diesel engine requirement. These are astonishing statistics, all the more so because the engines are not only built here but designed here. That is why, despite the circumstances that have brought us together this morning, I am delighted that Ford has subsequently confirmed that it will design, engineer and build its brand new low-carbon diesel engine in the UK.
Of course, Ford applied for help from round 3 of the regional growth fund to enable that project to go ahead. On 19 October, we announced our conditional offer of £9.3 million to support Ford’s investment of £156 million into Dagenham to build an all-new engine series at the plant. It may be of no comfort to those in the Southampton area, but that investment will safeguard some 450 jobs and create 50 new jobs, while supporting many more in the supply chain and wider economy. Ford expects to follow that project with a new petrol engine at Bridgend, and together these projects will ensure that the UK retains its crown as Ford’s global centre of powertrain excellence.
I was specifically asked about the circumstances of the regional growth fund bid. Of course, the bid is appraised by an independent panel, chaired by Lord Heseltine, and it is separately appraised by our secretariat, assessing it on its own merits against the fund’s objectives, which include the employment that the bid would create or safeguard, as well as the investment and the benefits to the wider community that it would bring to the UK.
I need to be absolutely straight with colleagues here and say that we look at such bids independently; we do not have discussions with the company about the rest of its strategic plans right across the UK; and we look at each bid on its merits and measure its compliance with our criteria. Of course, all the allocations are then subject to due diligence—an important process that is built in to protect the public purse.