GKN Aerospace, Kings Norton

Lindsay Hoyle Excerpts

Wednesday 24th April 2019 Commons Chamber

[Richard Burden]

My hon. Friend makes a good point, and I hope that we hear some strong statements from the Minister about what the Government are going to do.

Last year, not only had Melrose sought to assure the Business, Energy and Industrial Strategy Committee of its intentions, but it provided a series of similar undertakings to Ministers. In the Business Secretary’s statement to the House on 24 April, one year to the day before this debate, he declared:

“I look to the management to honour its commitments in both the spirit and the letter, and to create a strong future for GKN, its employees, its suppliers, and the industrial sectors in which it will play a major role.”—[Official Report, 24 April 2018; Vol. 639, c. 760.]

He also said:

“Melrose has also agreed to meet my officials and me every six months to provide updates on its ownership of GKN.”—[Official Report, 24 April 2018; Vol. 639, c. 759.]

In the light of all that, one might have expected Ministers to have told the company this month that, rather than close the Kings Norton site, they expected it to honour the spirit, as well as the letter, of the undertakings it had given. Instead, in a written answer to me on 16 April, I was informed that the Secretary of State had been told that the closure plan was the result of

“an internal strategic review by GKN”

and that it was

“a commercial decision for GKN Aerospace and not in contravention of the deed of covenant agreed between BEIs and Melrose.”

If Melrose has indeed been meeting the Secretary of State’s officials every six months as promised, has anything been said in those meetings about the future of the Kings Norton plant being in doubt? If so, what alternatives to closure did BEIS urge on Melrose, and what was the company’s response? If not, what on earth is the point of these six-monthly reviews if they are not expected to cover an issue as important as the closure of a plant?

Of course, BEIS is not the only Department with which Melrose entered a deed of covenant last year. The Business Secretary told the House that the Ministry of Defence had received undertakings that would

“prevent the disposal of the…business, components of a business or assets without the consent of the Government”.—[Official Report, 24 April 2018; Vol. 639, c. 759.]

The Kings Norton plant produces windscreens and windows for military as well as civilian aircraft, so can we assume that the MOD will now step in? Apparently not. A written answer from that Department on 15 April told me that, as defence work is being “moved, not stopped”, the Secretary of State for Defence would not be issuing a note of concern under the covenant.

I assume the Minister spoke to his colleagues in the MOD before this debate, so can he tell me whether GKN has made an unambiguous commitment to retain in the UK all defence-related work undertaken by the Kings Norton plant? What has GKN said about how it plans to dispose of the Kings Norton plant after closure?

No doubt the Minister will tell me about the various investments GKN has announced in its aerospace and automotive divisions at other plants in the UK, and I welcome those investments. However, the first that employees at GKN Aerospace in Kings Norton knew of the company’s plans to close their plant was when they were told on 5 April 2019. That is simply not good enough, and it is a breach of faith with what Melrose said last year.

If the company believes there is a profitability issue at Kings Norton, should not Ministers be telling it that the spirit of the undertakings given last year means that it should first discuss the situation, and the options for the future, with the trade unions representing employees before decisions are made, rather than simply informing them afterwards? When Melrose said last year that its mission is “to power” the Government’s industrial strategy to secure “the best outcomes” for employees, suppliers, customers and the wider economy, is it not reasonable to ask what assessment it has made of the impact of closing the Kings Norton plant on the local economy? My hon. Friend the Member for Coventry South (Mr Cunningham) made that point earlier. Has BEIS asked the company that question and, if so, what has been the company’s response?

I do not believe that GKN now telling the Government it has conducted a strategic review is satisfactory. Do Ministers accept the need to press the company further? How did GKN reach this decision? What alternatives have been, or still could be, considered? What, in detail, is going to happen to the defence work carried out at Kings Norton, and how does GKN plan to dispose of the asset that is the Kings Norton plant? Finally, what impact, in practice, will closing Kings Norton have on the industrial strategy in Birmingham?

Without clear and convincing answers on those points, I ask the Minister to join me and other hon. Members in saying that Melrose and GKN should think again.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

I welcome the Minister, Andrew Stephenson, on his first run out.

--- Later in debate ---

[Wayne David (Caerphilly) (Lab)]

Will the Minister give way?

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. I am sorry, but the hon. Gentleman cannot intervene from the Front Bench.

[Andrew Stephenson]

Thank you, Mr Deputy Speaker. As they did during the merger of GKN and Melrose, the Government continue to act to ensure that mergers result in the best outcomes for the United Kingdom. Our merger regime is a key part of the UK’s dynamic economy. Mergers and takeovers can bring great benefits to consumers and the economy. The UK has the third highest foreign direct investment stock in the world, behind the US and China. That investment means jobs in growing sectors and more opportunities to develop our skills base, and it helps companies to deliver products and services at competitive prices.