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Caroline Nokes (Romsey and Southampton North) (Con)
It is, as ever, a pleasure to serve under your chairmanship, Sir Roger. I thank Mr Speaker for his assistance in securing this important and timely debate, as well as the many right hon. and hon. Members present today from the immediate Southampton area and further afield. I am conscious that several other colleagues would also have been present if not for ill health and delegations to other parts of the world.
Two weeks ago, Ford announced a major restructuring of its operations in Europe and confirmed that it would be closing its assembly plant at Swaythling, the factory where the iconic Transit, the world’s most famous van, is assembled. I am sure that the Transit needs no introduction; the name is now synonymous with light industrial vehicles in the same way that the name Hoover is synonymous with vacuum cleaners.
The first Transit, sold in 1965, was manufactured at Langley in Berkshire, before the plant moved to Southampton 40 years ago. The Southampton plant, much bigger than Langley, was able to handle the considerable growth in demand that the Transit enjoyed among tradesmen—and, if Jeremy Clarkson is to be believed, armed robbers. Over the years, the Transit has been made at plants in Belgium and the Netherlands, which, along with the Swaythling plant, have either closed or will now close. The Transit continues to be manufactured in Turkey and China.
I am tempted to focus on the bigger macro-economic issues that have brought about this situation, including globalisation and large corporations’ ability to shift production to countries where the cost base is lower. I could also concentrate on the granting of a European Investment Bank loan in June to the Ford factory at Kocaeli, Turkey, which will now benefit directly from the closure of Swaythling. That £80 million loan, which EIB documents state was for the modernisation of the factory, is guaranteed by the British taxpayer.
I remind hon. Members that the decision does not merely have political implications; nor does it solely impact on the profit and loss forecast. It is not just an accounting decision or an issue simply of where a vehicle is assembled. As community leaders have emphasised, it is a human issue, especially for the approximately 2,000 people in the Southampton area who depend on Ford in one way or another for their livelihoods.
Mark Field (Cities of London and Westminster) (Con)
Does my hon. Friend recognise that it also affects the London economy? The hon. Member for Dagenham and Rainham (Jon Cruddas) will undoubtedly want to speak later. The stamping and tooling operations plant at Dagenham, where Ford began its UK operations in the 1920s, will close next July. Does my hon. Friend agree that we need to work across parties, support the Mayor of London in his plans and, in particular, consolidate all the Ford activities at Dagenham south of the London-Southend railway line to ensure proper regeneration north of that area? I hope that Ford will play an active role in fulfilling its community obligations in the months and years ahead.
Caroline Nokes
My hon. Friend makes an excellent point. I have consistently called for a cross-party, as well as a cross-country, effort. I am conscious of the efforts that the Mayor of London is already making.
The news is devastating to those employed by Ford, especially contractors and those active in the supply chain, who cannot benefit from the redundancy payments available to direct employees. I am thinking particularly of the residents of Mansbridge, in the shadow of the Ford plant. As well as losing a significant economic driver and employer, they now face uncertainty about what will happen to the plant when Ford ceases production. Wherever this debate leads, we must bring ourselves back to the heart of the matter: how can we in the House give practical support to those who have just lost their jobs?
We must be forward-looking and find solutions to the immediate problems faced by the community. Although the decision has been made and will not be reversed, Ford none the less has questions to answer. I am sure that Opposition Members will also pick up on that theme. The fact that Ford is developing a plant in Turkey that will benefit from UK redundancies with a loan guaranteed by the UK taxpayer has caused concern and anger.
It is imperative that Ministers seek to establish from Ford when the decision was made to close Swaythling. Was it before the loan was signed off on 27 June this year? If so, did anyone in Government know of the decision to move production to Turkey before the announcement the week before last? If it is shown that Ford decided to close Swaythling before accepting the loan, serious questions must be asked about the company’s conduct. Indeed, if Ford accepted the loan knowing that it would be used to consign Swaythling to history, then I, like many in my local community, expect Ford either to repay the loan or, better still, make a corresponding payment to the Solent local enterprise partnership that could be used to regenerate Southampton’s economy. Ford had a moral duty to declare its hand before asking UK taxpayers to fund their own redundancies. I seek the Minister’s assistance in helping Ford to understand that and account for its actions.
As I argued last week, the issue is of national significance. Although the net impact of the closure is the loss of 500 direct jobs at the factory and further jobs in the supply chain, Southampton is a key economic driver in the south and south-east and has an important part to play in the national economy. What hits Mansbridge and Swaythling, like a stone thrown into a pond, will send waves across Southampton, the region and the whole country.
This debate should therefore touch on three key issues. First, why and when was Ford’s decision reached? Secondly, what impact will it have? Thirdly and most importantly, what can be done to minimise negative effects on the city and the wider region?
On the first question, the people of Southampton have a right to know whether there was anything the Government could have done to prevent the decision. I look to the Minister for assistance, particularly on the question of the EIB loan, which needs explanation and justification. However, I suspect that the answers can only come from Detroit, not from Ministers.
To some extent, however, it is a moot point. Whether the money signed off in June was granted before or after Ford decided to close Swaythling, the money loaned to assist the Turkish plant could only have disadvantaged Southampton and would never have benefited it. By guaranteeing the loan, the UK taxpayer has helped Turkey to import British jobs at the undoubted expense of the UK taxpayer. It is therefore up to Ford to show some moral responsibility toward those who have just subsidised their own redundancy. The UK taxpayer should not be supporting the dividends of Ford’s shareholders. I could not help but notice that in the hours following Ford’s announcement, its share price jumped from £10.36, itself a considerable improvement on the immediate past, to £11.16. The markets may have reacted well to job losses in Hampshire, but Ford now has a duty to those on whose P45s its future profitability has been built.
We must be assured that another loan granted to Ford—from the regional growth fund, and intended for research and development of low-carbon technologies—did not prejudice the operation in Swaythling or represent Ford’s reneging on any previous commitments to Southampton. It is in Ford’s best interests to demonstrate good faith in both those matters.
Of course Ford’s financial performance must be considered. It is in no one’s interest for a company to risk insolvency that, even after the redundancies in Southampton and Dagenham, employs nearly 14,000 people in the UK. Undoubtedly, there has been a huge fall in demand for the Transit. Sales are down 20% since 2007, and so far this year, Ford Europe has lost $468 million on the back of a 26% decline in revenue. Sales are down 17% from last year.
Ford also states that the Turkish factory offers labour costs that are one third of those in Southampton, and the excess capacity there means that Southampton’s production can easily be absorbed in Turkey. On the face of it, even taking into account the costs of redundancies and site amelioration and disposal, the closure of the Southampton factory may seem a rational, commercially sound decision; but if adopted, that position must be balanced against the fact that Ford globally made an enormous $2.2 billion profit last year, $200 million more than the previous year. Although Ford wishes to act to preserve its commercial viability and profitability, and some of that profit will undoubtedly have been reinvested in plant, research and development and product development, I struggle to see why a subsidiary of a company making $2.2 billion needs cheap loans from UK taxpayers to export UK jobs to a country that is still outside the EU.
Ford has a moral and social responsibility to both the city it is leaving behind, which it once called the home of the Transit, and the supply chain, which will now be broken, to ensure that the economic hole it is creating is filled with sustainable employment and economic activity. Ford should not look to the Government or the taxpayer to subsidise its moral and social responsibilities. It should step up to the plate and work with Government, local business and other agencies to ensure that its exit does not harm the local and regional economy, but benefits it by fuelling economic growth and sustainable, high-skilled, quality jobs, thereby ensuring that Turkey’s gain in the long term might also be Southampton’s gain.
Secondly, on the impact of the decision, Southampton has some of the south-east’s most deprived areas in terms of employment, health, housing and education. It is ranked 81st out of 326 local authorities for deprivation. It has some of the region’s highest levels of young people not in education, employment or training, levels that are comparable to parts of the north-east—a problem that this decision will make worse, given that Ford is my constituency’s single biggest employer. That is why community groups are so concerned and why I am so keen that Ford face up to its responsibilities to the community in which it has co-existed for so long. Rather as Ghandi wished the British to retreat from India as friends, the legacy of Ford’s time in Southampton could be both ongoing and positive for the city and Ford’s reputation.
Thirdly, and for me, most importantly, we must look ahead. This debate must highlight the need for the business community to expand and create new jobs. I have emphasised the need for the Solent region to be successful in its bid for city deal funding, but there are other ways in which the Government can provide support. Hampshire already has a local enterprise zone at HMS Daedalus, but I cannot think of a better location for a second one than at Swaythling, adjacent to the M27 motorway, where significant junction improvements are scheduled to make access to the major road network easier. Additionally, the Government’s Growing Places fund has already provided money to the LEP, but in this situation further specifically targeted support is needed.
I seek Government help in encouraging Ford to augment existing help, particularly for those in the supply chain who will not benefit from generous redundancy payments. Ford must not merely aim to meet its legal minimum requirements; it has a wider responsibility. I was heartened to learn that Ford has a trust fund which, with some modification of its limits, could be used for this purpose. Although the fund makes relatively small grants aimed at education, the trust also aims to
“develop a skilled workforce committed to improving the business whilst maintaining employment opportunities now and for the future “.
Therefore, in line with its own stated social responsibility aims, I call upon Ford to outline how it will fund and work with the local business community, the city and county councils, neighbouring local authorities, and national Government to ensure that the legacy of Ford’s time in Southampton is a highly skilled work force filling high-skilled jobs. The Ford trust states:
“Being a good corporate citizen is an essential part of how we do business. Both globally and locally, we have an ongoing commitment to helping and supporting the communities we operate in “.
I hope that this commitment to communities in which Ford operates is also extended to the communities in which it used to operate.
Ford can do a number of things immediately. It can create a rescue fund to which suppliers can apply for funding to help them develop new markets, and announce how it intends to dispose of a critical 52-acre employment site on the edge of the city. Perhaps Ford will even consider donating an ameliorated site to the city council for the establishment of a business park and local enterprise zone. Much of this could be funded by the reallocation of money received from the European Investment Bank to modernise the factory that will be building the Transit vans once built in Southampton.
This House is where the country looks to in times of trouble. It is where, in times past, some of the greatest words of encouragement have been uttered and where worried people have historically looked for answers. At this sad and worrying time for the people of Southampton, the country will once again be looking to this House to debate their concerns and fears, and for new optimism. I hope that Ford will join with other agencies and heed the calls in this debate for it to leave a legacy that will endure and be a testament to excellent corporate and social responsibility, not one that reflects the unacceptable face of global capitalism.
It is important—I look forward to the Minister’s response on this point particularly—that the local enterprise partnership, BIS Local and other local agencies work together to ensure that retraining opportunities are maximised. I know the Minister is currently looking at that with the local growth White Paper, which sets out the Government’s aspiration for growth to be driven by local communities and businesses. This will, I hope, focus on retraining, which Ford should be a partner in and providing funds for.
Finally, I ask the Minister urgently to consider creating a Southampton local enterprise zone, which would be an engine of growth, job creation and retraining in Southampton. As Ford’s decision to close its factory illustrates, that is now more urgently needed than ever.
Sir Roger Gale (in the Chair)
Order. This is a matter of importance to Members of Parliament in the Southampton area and nationally. It is therefore important that the Opposition and Government Front-Bench spokesmen have a significant amount of time to respond, where ordinarily we might curtail those responses in the interests of Back Benchers. For that reason, I shall exercise my powers to impose a six-minute time limit on speeches, which I hope will allow hon. Members to contribute while at the same time giving the Front-Bench spokesmen an equally adequate time to respond. We have a piece of high technology that will give hon. Members one minute’s warning.
Mr John Denham (Southampton, Itchen) (Lab)
I will work within the time you have allocated, Sir Roger. I congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing the debate.
The Ford Motor Company has behaved shabbily. I have worked with the company over many years, sometimes with good news and sometimes, more recently, with bad news, but the relationship has always been one of openness, transparency and willingness to engage. None of those characteristics have been present in this decision.
I should read into the record a letter I received from John Fleming, then European head of Ford, in February 2009:
“Dear John,
Thank you for making the time for our discussion earlier this week”.
Having set out some of the economic challenges, he continued:
“In November last year I offered my assurances to yourself, Lord Mandelson and to your constituency colleagues in Southampton would receive the necessary investment to manufacture the Chassis Cab version of the next generation Transit. After extensive studies, which were shared with our union colleagues, this was the only investment option that met both the cost and profitability requirements demanded of the business.
I remain committed to the future of Southampton and, as I have stated in my recent letter to all Ford of Britain employees, I can re-confirm that it is our plan to build the next generation Transit Chassis Cab there. The sourcing and Chassis Cabs to Southampton gives the plant a meaningful and profitable manufacturing future and I trust you will continue to share my view that this is a positive development for the plant.”
That is the last official communication that I ever had from Ford about the future of Southampton; at no stage since has there been any indication of doubts about that strategy. It is true that its implementation was delayed because of the investment required to move to the chassis cabs, but the latest that that was to happen was next summer—indeed, the unions at Ford had been discussing with the management how the summer closedown would be handled to enable that shift to take place—but then the decision was announced.
Last spring, with my hon. Friends the Members for Wrexham (Ian Lucas) and for Dagenham and Rainham (Jon Cruddas), I was at a dinner of what could be called Ford’s Labour MPs, where the discussion was not about closure, but about the possibility of winning extra orders. The irony of ironies is that, at that dinner, Ford asked us to lobby the European Union about a trade deal with other countries that was going to be harmful to manufacturing in Europe. Given the outcome of Ford’s decision, that seems extraordinary.
Reputations are hard won and easily lost. I believe that it will be a long time before any Government of any colour in this country will sit down with Ford without wondering whether the people on the other side of the table are telling the truth. It saddens me to say that, but that is where we are today. A parliamentary reply I received on Friday revealed 12 meetings since the last election between Ford and Ministers in the current Government. We cannot fault Ministers for their willingness to meet with the Ford Motor Company over that time. I believe Ministers when they tell us that Ford did not let them in on the plans or share them, which is bad conduct by the company.
I have two or three things to say quickly, because I do not have much time. It is extraordinary that a regional growth fund grant was made to Ford without the Government being aware of the wider Ford strategy. I simply say that that is a weakness of the regional growth fund compared with the old regional development agency structures, which were much more likely to ensure that the bits of government dealing with major companies were aware of the whole of the company strategy. By dividing the regional growth fund into separate grants, there is no sense of engagement with the company.
Similar issues apply to the European Investment Bank. I am grateful to the office of Peter Skinner, MEP, for this information. Yesterday the EIB was claiming that the loan was fine because Turkey is “upstream” of the UK and is an assembly site, not a component manufacturer. Well, Southampton is an assembly site and not a component manufacturer. Those involved in the EIB decision have questions to answer. The Chancellor is a governor of the EIB; Britain was represented by an official, Peter Curwen; and there would also have been an opinion from the European Commission about the loan. We need to know whether the Commission, the EIB and the UK representatives were aware of the situation in Southampton and the likely implication of the loan for the future of that site.
The truth is that it is impossible for Governments to dictate to transnational companies what they do. They can influence to some extent what such companies do, but only if every sinew is strained to ensure that they have the maximum influence on the company.
I had hoped to speak for longer, but let me now turn to the existing work force. As the hon. Member for Romsey and Southampton North said, Ford’s commitment must go way beyond those directly employed by the company. There are more than 200 non-Ford employees on the site; they are not working in logistics or making the seats for the Transits, and they are not covered by the redundancy terms now on offer. Ford must extend its support to far more people.
Finally, I emphasise to the Minister that the taskforce established under the leadership of the city council and the local enterprise partnership will need serious resources. The last time we had such a taskforce, we had RDAs, colleges had money to spend and local government had money to invest, but none of those resources exists now and significant additional funding will be necessary to make any taskforce viable. That will be needed to support not only the individuals affected, but the supply chain companies—81 supply the factory in Southampton—which need help to reorient their businesses to win orders from elsewhere in British manufacturing, other parts of the motor industry, or overseas. We must have resources from the Government, Ford and whoever to make the taskforce viable. Simply recycling some money that might have been coming in Hampshire’s direction anyway as a result of the LEP or other growth strategies will not be good enough.
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.
Dr Alan Whitehead (Southampton, Test) (Lab)
I want immediately to take up where my colleagues who represent south Hampshire left off this morning. An important aspect of this debate is the extent to which, at all stages, hon. Members for the area affected by Ford in Southampton have, in good times and bad, rallied to ensure that Ford was supported as far as it could be. They have ensured jointly that as much information as possible about Ford’s plans was obtained and disseminated, and as the right hon. Member for Eastleigh (Chris Huhne) said, they have taken part in meetings at which Ford gave assurances about how the Southampton plant would operate and its prospects.
As the right hon. Gentleman emphasised, at the meeting with John Fleming in November 2008, the three hon. Members from the area around Ford’s operation who attended obtained cast-iron assurances about the plant’s future, what it would be doing and its development of a chassis cab. The hon. Members present understood that those assurances extended not just to Ford’s central operation, but to its whole operation, including all the ancillary supply chains and the associated arrangements. I recall that that was part of the discussion at that time.
Everything seemed fine with those assurances, as Ford sought to suggest in briefings, until three or four days before it set out its decision. The suggestion that suddenly, on a Thursday afternoon, its international management decided to pull stumps on its plants in Genk and particularly in Swaythling is incredible. That underlines the urgency of obtaining answers to questions about the money that Ford obtained from the regional growth fund and, as importantly, the £80 million loan from the European Investment Bank.
It is difficult to believe that those loans were obtained when the original 2008 assurances stood at the time that the discussions were entered into. Either Ford did not give the information that should have been before both bodies before the loans were agreed, or the people who were responsible for discussing them had information that could and should have caused them to take a more careful view of how those loans should have been set out. That underlines what my right hon. Friend the Member for Southampton, Itchen (Mr Denham) emphasised: the extreme sadness with which some Members of Parliament in the Southampton area feel about the break between past working arrangements with Ford locally and the clear issues that now arise. I like to think that, even at this stage, Ford might consider what that means for its national and international reputation, its responsibilities to Southampton, its past investment in Southampton and, more importantly, Southampton’s investment in Ford’s operation for many years.
I join my colleagues in making three suggestions. First, the work force who are involved not centrally in production but in the supply chain that has supported Ford’s success in Swaythling should be considered on an equal basis with those in the Ford plant as far as future support is concerned. Secondly, any decisions by Ford about the plant’s future should take account of whether it can continue with a presence in the area, in any shape or form. That might provide the opportunity for Ford employees to relocate, as the right hon. Member for Eastleigh said, in not very favourable circumstances, as there are no Ford plants anywhere near Southampton. If there is a continuing presence in Southampton, perhaps some of the work force currently employed at Swaythling could be relocated more locally. Thirdly, Southampton has invested in Ford’s Transit operation for more than 40 years, and the vehicle and the site are iconic. The workers have probably paid for it many times over in the work that has gone into it and the profit that has come out.
If Ford attempts to raise funds by selling that site, in addition to the funds that it obtains by exporting its benefits to Turkey, that will be an additional slap in the face for the local area, which has put so much into Ford in the past. The minimum that I expect Ford to say is that the site will not be sold for development or other purposes, but will be donated to the community and the city that have put so much into Ford and have been such a pivotal part of its success in making that site work for so many years. If that happens, we might at least have the opportunity in Southampton and the surrounding area to bring to that site some of the industry, jobs and prosperity that have been part of it in the past. If Ford would leave that small legacy to the city of Southampton, it would be at least some reparation for what seems to me is a grubby episode.
Jon Cruddas (Dagenham and Rainham) (Lab)
As is the custom, I, too, congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this debate and those who have made contributions. We share the deep concern for our constituents and their material well-being following the announcement.
The workers who are employed at the Ford Dagenham stamping plant and tool room operations were shocked and bewildered by the hundreds of Ford job losses announced a couple of weeks ago. I have spoken to many of the workers who have been affected by the announcement, and the consistent response was almost disbelief. We were blind-sided on Thursday 25 October, which was a bad day for manufacturing in the UK, in Southampton and in my part of east London.
The Dagenham estate was built in 1929 and has been Ford Motor Company’s centre of production ever since. A couple of weeks before the announcement, I visited the stamping plant, the tool room and the two parts of the engine facility to meet management and workers to discuss bringing more workers to the plant. No one mentioned possible closure; it was not an issue. We knew that announcements were coming, but our concern was to secure more investment in the engine plant by getting the new Panther engine into Dagenham.
The background is that the Dagenham diesel engine plant and diesel centre covers some 2.5 million square feet, and employs approximately 2,000 employees. In 2011, nearly 1 million engine units were shipped from the estate. At present, the Lynx engine operation in Dagenham has an annual capacity of some 320,000 engines. That is scheduled to finish in the second quarter of 2013. The Puma engine capacity is another 400,000 a year. Our emphasis in the discussions was on securing the Panther engine at the Dagenham estate, because there is a natural fit in both the time line and capacity at the estate.
We have been lobbying people at the highest level of the Ford Motor Company internationally and the Government regarding the new engine, to ensure that the investment comes to Dagenham, so guaranteeing future jobs. An application for round 3 of the regional growth fund, covering questions of plant readiness and training requirements, was included in that process.
News of the job losses will worry many local families who are either employed directly by Ford or have a business that relies on trade created by the plant. At a time when the economy is suffering so much and when families are struggling to pay their monthly bills, the announcement is not good. I am sure that there will be generous voluntary redundancy offers from the company, and it has assured us all—I assume—that those who want a job will be redeployed at least across the Dagenham estate. In reality, however, the jobs will be gone for good. Those quality manufacturing jobs will not be available to young people in the borough in future, and the closure will shake down in terms of the supply chain, affecting local families and people’s future job prospects.
However, in the bipartisan spirit of our debate, I add that I am pleased that the Mayor of London has convened an emergency taskforce to deal with the effects of Ford’s announcement in east London. That will include representatives from the London enterprise panel, the London borough of Barking and Dagenham, the Department for Business, Innovation and Skills, the Skills Funding Agency, the Department for Work and Pensions and Jobcentre Plus. It has already met, and some of us will meet Ford’s chairman, Joe Greenwell, over the next couple of days to alert him to the establishment of the taskforce and to ask him for help. The Mayor of London is important for the future of parts of the estate, and the Greater London authority is a significant landowner in the area. The Dagenham stamping and tool room operations site is immediately adjacent to the GLA’s Beam Park and Chequers Corner sites, as well as being within close proximity to the Sanofi site due to close next year.
I urge Ford to investigate how Sanofi has dealt with its exit from my constituency over the last couple of years. Sanofi has worked brilliantly with the local community to redevelop its site and build more jobs and community facilities in the area. I request that Ford enters into similar discussions to ensure that the stamping and tooling operations site is decommissioned with limited detrimental impact to the local area and with an eye on future regenerative potential. The majority of redundancies will not come into effect until mid-2013. The expectation is that the stamping plant building will be decommissioned and shuttered, with all parts stripped and sold, and that that will take nine to 12 months after the closure next July.
As with Sanofi, I would like to think that Ford will release land for regeneration north of the railway line, following both demolition and clearance of the stamping plant and all related buildings, including remediation, decontamination and cleansing of the released land. That should be done with a view to future economic regeneration, perhaps as part of the Ford exit costs, given the benefits that the company has extracted for nearly 100 years from our part of east London.
I must put on record, however, that Ford’s announcement had some positive elements that should not be ignored; by that, I mean the decision to invest in the new two litre, four cylinder, low carbon dioxide Panther diesel engine at the Dagenham engine plant. The combined engine output will remain at approximately 1 million engines a year, and the new engine will support some 3,500 engineering, design, admin and support jobs in nearby Dunton.
Overall, although I welcome the news about the investment in the new Panther engine in my constituency —we have been fighting for that for months—I cannot hide my disappointment about the latest decision. We must do everything that we can to support local residents affected by the closures and those in the broader community. We will raise those points with Mr Greenwell here in Parliament this week.
Ian Lucas (Wrexham) (Lab)
I had not intended to speak, Sir Roger, as I am conscious of the local interest in Dagenham and Southampton in this matter, but I would like to make one point relating to the UK Automotive Council. Will the Minister ask that organisation whether any aspect of Ford’s actions was raised with any officer or individual from the council? The organisation is, of course, jointly chaired by the Secretary of State. Has the issue as a whole been contemplated in discussions of automotive strategy that take place at that organisation? It is an important body, which has been a key part of the renaissance of British manufacturing and the automotive sector in the UK economy.
Much depends on frankness between the parties involved. It means that the Government come to the aid of the industry when it is in trouble. The right hon. Member for Eastleigh (Chris Huhne) mentioned the car scrappage scheme. Ford was extremely vocal to me at that time of great crisis in the UK automotive industry, calling for the introduction of the scrappage scheme. At that difficult time, all political parties supported the scheme’s introduction. If there is no frank relationship between the industry and the Government, it means that should there be a difficult time in future and should a similar call be made, the Government and those who have taken part in this debate will think twice before assisting businesses such as Ford.
Ford must realise the ill will among good people caused by its decision, and in particular by the fact that individuals who had worked hard with the business over the years to improve its prospects and help it in times of need were given no opportunity to try to safeguard the future of the jobs at Southampton and Dagenham. That has a cost. It is unfortunate that we are in this position, but I hope that that message is carried back to Ford at the highest level, because there will be a major impact on the relationship between the automotive sector and the Government, and particularly, between Ford, Members of the House, and the Government.
Mr Denham
While my hon. Friend is on that theme, does he agree that there is a sharp contrast between the way in which companies such as Nissan, Toyota, Honda and BMW responded to the assistance that they were given after the global banking crisis? They worked together through the Automotive Council to build up vehicle assembly in this country, so that it is now one of the success stories of the British economy that we can celebrate. The Ford Motor Company has pursued a very different strategy: although there has been investment in engines, it has run down its vehicle assembly in this country.
Ian Lucas
There is a marked contrast. One of the most disappointing aspects of the announcement was that it followed positive announcements on the automotive industry over the past four years. Britain has become an investment destination of choice as far as the international automotive industry is concerned, so it is very difficult to understand why Ford was not even prepared to engage with the UK Government and MPs to try to address the difficulties that the company had in continuing the manufacturing in Southampton and in those parts of the Dagenham operation that are to cease.
I hope that Ford will listen carefully to the debate, and that it will consider closely its relationship with both the Automotive Council and the Government. I hope, too that it will engage and be open in discussions and ensure that this type of decision—without notice, without partnership—does not happen again.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this important and timely debate, and I pay tribute to the Members who have supported her.
My immediate concern, as it has been throughout the course of today’s debate, is about the 1,100 Ford workers who will lose their jobs with the closure of both the Transit factory in Swaythling and the stamping operation in Dagenham, as well as the wider impact that will have on subcontractors, the supply chain, and workers in those areas. The workers at those plants, many of whom have worked either directly or indirectly at Ford for many years, have important skills for our manufacturing base, and naturally they will be anxious about their future and that of their families.
The message from today’s debate is obvious, and the Minister must clearly set out what reassurances he can provide. What precisely will his Government, working with the company, local council leaders, the Mayor’s office and others, do to secure to alternative employment? How will the workers at Southampton and Dagenham be helped? What specific initiatives, whether the formation of an enterprise zone or of a focused taskforce such as the one already set up in east London, are being put in place to help? What is the Minister doing to co-ordinate action across central and local government for the benefit of the workers employed both directly and indirectly and in the wider supply chain who are at risk of redundancy?
As you quite astutely said, Sir Roger, there is a wider and more fundamental issue. The repercussions extend beyond Southampton and Dagenham. Let us be in no doubt: this is a devastating blow to this country’s manufacturing base. Ford is an important global company and we want the company to stay and to prosper in the UK. In that regard, as my hon. Friend the Member for Dagenham and Rainham (Jon Cruddas) said, its £1.5 billion programme of investment in advanced manufacturing and the production of the new low-carbon Panther diesel engine, designed and engineered at Dunton and made in Dagenham, is very welcome. It reinforces the UK’s competitive advantage in Europe’s engine design and manufacturing market, and we need to continue that.
However, the point and the blow remain: this announcement is the end of an era. It brings to an end a century of Ford vehicle manufacturing in Britain. Ford started in Dagenham some 90 years ago—when we think of Ford, we often think of Dagenham, and vice versa. The iconic Ford Transit van, which for 40 years has been the symbol of Britain’s white van man and is the automotive industry’s modern-day equivalent of the workhorse, will no longer be made in this country, but will instead be produced in Turkey, as the hon. Member for Romsey and Southampton North said. At a time when Ministers from the Prime Minister down speak of the need to rebalance the economy towards manufacturing and of the march of the makers, this decision in a sector that is often lauded as a productive and efficient part of the economy shows the need for business and Government to work ever closer together to implement an active industrial strategy.
I have a number of questions to put to the Minister, supplementing much of what has already been discussed in today’s excellent debate. I will speak in very broad terms. I would like to hear the Minister’s assessment of what the volume car market in Europe will look like in the future, and how that assessment affects Government’s approach to the sector. As the hon. Lady pointed out, car and van sales have fallen dramatically on the continent in the past couple of years—by some 20%. There is, let us be honest, overcapacity in car and van production capabilities in Europe. Ford’s decision in the UK a couple of weeks ago must be seen in the wider context of what the company has done with the closure of an assembly plant in Belgium, as well as the closure of a factory near Paris for Peugeot Citroën and the shutting of facilities for Opel.
Mr Denham
My hon. Friend talks of overcapacity in Europe. Does he acknowledge the point made by a number of the Southampton Members present that what Southampton has been up against is not overcapacity in Europe, but overcapacity in Turkey? Ford has pursued a strategy of developing a 300,000-plus vehicle plant in Turkey, with the assistance from the European Investment Bank, and that is what many of us question. That is at the root of Southampton’s problems, so the question is really about the company’s strategy in seeking to locate such a massive proportion of its production for the European market outside the European Union.
Mr Wright
I shall respond to my right hon. Friend in two ways. First, he is absolutely right about overcapacity in Turkey and the extent to which British taxpayers helped to push production away from the UK to Turkey. That will be one of my themes.
Secondly, my right hon. Friend makes an important strategic point about Ford’s direction of travel. Other car makers—Nissan, Honda, Toyota and others—have worked very successfully with the current Government and the previous Government in setting out a clear, long-term strategy to have assembly, design and manufacture here in the UK, but also to expand the markets further afield. Jaguar Land Rover is a very important case in point. As my hon. Friend the Member for Wrexham (Ian Lucas), who was an excellent Minister for the automotive sector, said, that close co-operation between business and Government when it comes to setting out a long-term strategy and expanding export markets has been for the benefit of the car industry. I would like something similar to what we have seen with Nissan, Honda, Toyota, Jaguar Land Rover and others to have been implemented with Ford. Sadly, that has not been the case.
I would like to hear what the Minister thinks the car industry, and particularly volume car makers with European manufacturing capability, will look like in the next few decades. Is the decline and overcapacity cyclical or structural? If it is structural—if the Minister thinks that we are seeing a general movement away from Europe towards new markets in the east and in south America—what impact will that have on other volume car and van manufacturers in the UK? We have talked about the UK automotive industry being a success story—something that, on a cross-party basis, we all want to see continue—so what does the Minister expect other manufacturers to do, given Ford’s decision? What are Government doing, in working closely with business, the Automotive Council and others, to ensure that we can mitigate the risks in this country? What co-ordination is taking place across Europe to ensure that general economic conditions on the continent, and specifically lack of demand, are being addressed? What discussions is the Minister having with his counterparts across Europe to ensure that the European car industry is not lost altogether?
My reference to discussions between Government and business brings me to my next question. Where does Ford’s decision leave the Government’s industrial strategy? The Secretary of State can talk a good game—he has had plenty of practice, having made 16 speeches on the matter since coming to office. In his speech of 11 September at Imperial college, he mentioned how Government
“must plan for the long term. Government must work with business.”
He went on to say:
“The second strand of our industrial strategy is to build a collaborative strategic partnership with key sectors. The examples I often give are aerospace, automotives, and life sciences... What is the starting point for this? We are dealing on a global scale with fierce competition—between companies and countries... Different industrial sectors require varying degrees of government support... At the other end are sectors that require a long-term, strategic partnership with government. We have the institutions to deal with them; the Automotive Council and Aerospace Leaders Group are models of what I have in mind.”
Indeed, the BIS paper entitled “Industrial Strategy: UK Sector Analysis”, which was published at the same time as the Secretary of State’s speech, stated:
“The UK has a strong comparative advantage in the aerospace and automotive industries which, because of their highly innovative nature, are a major source of knowledge and innovation spillovers... Both industries also have very important local economy and rebalancing effects.”
Certainly rebalancing is very important: we need a rebalancing towards manufacturing. On the other point, about local economies, the hon. Member for Romsey and Southampton North and other hon. Members have made very important and pertinent points about the impact that this decision will have on the Southampton economy. My hon. Friend the Member for Dagenham and Rainham mentioned the importance of the Ford plant to the east London economy.
We agree with much of the analysis by BIS. Much of current policy in terms of the setting up of the Automotive Council and the ensuing benefits in terms of increased investment in the likes of Jaguar Land Rover and Nissan began under the previous Labour Government. Continuity of policy, to allow global firms to plan investment in the UK for the long term, is something on which Opposition Members will support the Government. However, in relation to Ford’s announcement, the Secretary of State’s words about an active industrial strategy ring hollow. As I said, he often talks a mean game about assisting and working with productive sectors of the economy to allow them to improve and thrive, and we all want to support the UK automotive industry, but Ford’s decision showed him to be out of the loop, floundering and too weak within Whitehall to be able to offer a constructive solution.
There was no dialogue between Government and the company—indeed, following the announcement, the Secretary of State told The Southern Daily Echo that Ministers had felt “let down” and would have asked Ford
“what on earth was going on”.
So much for open, constructive and honest dialogue between Government and business. Answers to parliamentary questions from my hon. Friend the Member for Streatham (Mr Umunna) further revealed Ministers’ ignorance of the facts and failure to ask the right questions. As my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said, since the coalition came to office in May 2010, Ministers have met Ford executives on—well, I make it 13 separate occasions, but I might not be able to count; my right hon. Friend said 12.
Mr Wright
I welcome my right hon. Friend’s clarification.
Since coming to office, the new Minister has met Ford on two occasions. We welcome such early engagement; that is exactly how it should be for an iconic global manufacturing company in a key industrial sector for the country. In his response today, will he outline what was discussed when he met Ford? Were the company’s future strategic direction and capacity issues within Europe not discussed? Did he not inquire what the company’s response might be to overcapacity on the continent and how that might affect Ford’s manufacturing in the UK relative to the company’s operations in Belgium, Valencia or even Turkey? Has Ford, as has been suggested today, reneged on previously agreed commitments?
Does the Minister agree that joined up, co-ordinated government is part of an effective active industrial strategy? Did he make Ford executives an offer to discuss matters relating to Ford and future investment with other Ministers? Did he speak to Ministers in the Department for Transport about how the competitiveness of Swaythling and Dagenham could be enhanced through infrastructure improvements in logistics or connectivity, improvements to the road network and the M27, or improvements to rail networks in the east end of London? That is what the Secretary of State should have been thinking about when he referred in his speech to the fact that:
“We are dealing on a global scale with fierce competition—between companies and countries.”
Instead, I have to say, with some degree of sadness, Government Ministers have been asleep at the wheel.
Assistance from Government inevitably comes down to finance. I have two questions, both of which were raised in the debate. The European Investment Bank approved the £80 million loan to Ford Otosan, which runs the Turkish plant, as part of a £452 million structuring deal for the production facility to
“support the future manufacturing of the new Ford Transit”.
The 27 EU countries own the EIB, and its board of governors includes the Chancellor of the Exchequer. The role of the governors, as it says on its website, includes deciding
“on the Bank’s participation in financing operations outside the European Union as well as on capital increases”.
Given that, what role did the Chancellor have in fulfilling his duties as a governor of the EIB in signing off the investment? What role did he and officials play in ensuring that the investment went to Turkey? It simply defies belief that British taxpayers, as well as other European taxpayers, have provided funds to a facility in a country outside the EU that undermines the competitiveness of manufacturing in the UK. Will the Minister specifically address that point?
The second aspect of Government funding concerns the award of regional growth fund money to Ford a matter of days before the closure announcements. In answer to a written parliamentary question from my right hon. Friend the Member for Southampton, Itchen, the Minister stated:
“As part of its relationship with Ford UK, the Department’s Automotive Unit has regular and ongoing discussions with the company. Those discussions included understanding the context to Ford’s bid for…(RGF) support… The RGF Secretariat did not have any other discussions with Ford UK about their strategic plans.”—[Official Report, 2 November 2012; Vol. 552, c. 430W.]
As my right hon. Friend said, is that not a huge failing in the RGF process? What did Ministers and their officials know about the wider context of Ford’s strategy in the UK? Did they not inquire about the longer-term view of the company in this country? If not, why not? Does not that show that Ministers are incapable of producing a proper co-ordinated and long-term active industrial strategy?
As my hon. Friend the Member for Wrexham said, we cannot have a productive and honest relationship between business and Government, or rebalance the economy towards manufacturing, by tossing a few grants here and there. As Lord Heseltine said in his growth review published last week, we need a strategic approach to each sector and to ensure that each pound of taxpayers’ money offered to companies gives the best possible long-term, sustainable, competitive deal. Is the Minister suggesting that no such strategic discussion or consideration took place as part of the RGF bid?
Mr Denham
First, does my hon. Friend agree that it would be good to hear the Minister accede to the request from the right hon. Member for Eastleigh (Chris Huhne) to make available any notes on discussions with the company in 2008 and 2009? I believe that they would show that Ministers discussed topics such as the future of Swaythling in discussions about EIB loans and so on. Secondly, it would be helpful, and I mean this in a non-partisan way, if the Minister undertook to review his Department’s and the Treasury’s engagement in the RGF and the EIB to see what lessons can be learned from these two extraordinary events.
Mr Wright
My right hon. Friend makes two important points that I hope the Minister will address. I will sit down now, because right hon. and hon. Members have raised many significant concerns during this important debate. There are huge implications not only for Southampton and Dagenham—I say that with the greatest respect—but for the wider manufacturing base in a key sector that should be productive for the UK economy. Manufacturing must be at the heart of what we do and the automotive industry must be at the heart of manufacturing. Ford’s announcement is a blow. I hope the Minister will address the concerns raised today.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I congratulate my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) on securing this important debate. I thank all of those who have contributed for doing so in a relatively non-partisan way. Hon. Members have spoken frankly and asked some tough questions, but, until the previous contribution, we have approached the issue in a non-party political way.
I will focus on some of the broad areas that I have been asked about, but I am happy to address specific questions, be interrupted or to reply by letter if I have missed anything out. I shall address: what we were told in the Department; the circumstances surrounding the European Investment Bank loan; the support that we are able to offer Southampton and Dagenham now; and Ford’s future in the UK. I hope to wrap up in that most of the points made in the debate.
First, what were we told when? As recently as 7 September, when my officials specifically asked Ford about Southampton, Ford assured us that it would continue to produce the new chassis cab variant in 2013. Ford has invested regularly in Southampton, including significant sums this year. We therefore had no reason to question what we were told. Amid a sharp deterioration in the mainland European vehicle market, Ford’s board decided on Friday 19 October to close the site. Ford contacted my Department the next working day, Monday 22 October, to arrange a discussion between the Secretary of State and the Chairman/CEO of Ford Europe. That phone call took place on the evening of Wednesday 24 October. We did not know of Ford’s plans in advance of that conversation.
We are obviously disappointed that, on this occasion, Ford chose not to engage with us until the day before the announcement. It gave us no opportunity to discuss the decision, which we would have expected and preferred. It made the decision based on a thorough analysis of its commercial operations in Europe.
Last Tuesday, 30 October, Ford published its latest financial results, which revealed a $1.02 billion pre-tax loss for the first nine months of 2012 for its operations in Europe, reinforcing why it has had to take difficult commercial decisions to restructure its European business and place it on a more sustainable footing.
Demand for light commercial vehicles has fallen dramatically in Europe over recent years, with the Transit seeing a sharp fall in sales. The company is clear that it can no longer support two van production facilities in Europe and must seek to consolidate production at one. Unfortunately, the Southampton plant is unable to compete with Ford’s newer factory in Turkey where labour and production costs are significantly cheaper than those in the United Kingdom. The Secretary of State and our officials probed that differential with the company, but we are clear that those differences are too high to bridge.
Let me turn now to the circumstances surrounding the European Investment Bank loan. The loan to Ford for its Turkish Transit van operation was approved as part of the EIB’s support for Turkey’s integration into the European Union economy. The Turkish operation has been in existence since 2001, and since 2009, it has made all versions of the Transit apart from the chassis cab variant, which is made at Southampton. The EIB loan for the Turkish operation was for retooling the Turkish plant for the production of the next model in 2013 and was not based on the cessation of production at Southampton. It is therefore incorrect to imply that the EIB loan is itself responsible for exporting jobs from the UK. Indeed, Ford tells us that it will not be increasing capacity at the Turkish site.
The EIB makes investments in key markets outside and inside the European Union. For instance, Ford UK benefited from up to £400 million of EIB funding back in 2010.
Mr Denham
For the record, I do not think that any Member has suggested that the loan to Turkey was responsible for the closure of the Southampton plant, but rather that it undoubtedly helped Ford to develop Turkey, which therefore helped it to close the plant. The key question is, would British officials involved in that decision have given the go-ahead to that loan—it was a loan rather than a grant—had they been aware of Ford’s plans for Southampton and Dagenham?
Michael Fallon
I do not wholly accept that. Ford was already planning to develop the new model at its Turkish plant. That plant has the capacity to produce more than 100,000 units per year of all types of van. Southampton, as we know, only made 28,000 units of one van variant each year. Even if the Turkish factory had not got the loan from the EIB, it is unrealistic to suggest that the entire new model production would have moved to the smaller Southampton factory, and that is the issue.
On the assistance that we need to make available to those affected by the move, I fully appreciate the concerns that have been expressed for the workers at Southampton and those at the associated stamping plant at Dagenham, along with their families and the wider communities in each area. I accept that it should be the Government’s priority and responsibility to do their very best to help those affected.
In Southampton, both the Secretary of State for Business and I have been in discussion with the chairman of the Solent local enterprise partnership, Doug Morrison, to ask directly what we can do to help. As Members here will know, the local enterprise partnership held an emergency board meeting on Thursday. I discussed the matter with the chairman on Friday, and he told me that a multi-agency taskforce is now being established, including representatives from the local enterprise partnership, Southampton city council, Eastleigh borough council as well as officials from my Department and other agencies, including Jobcentre Plus and the Skills Funding Agency. The taskforce will work in partnership with Ford until the plant closes next summer to ensure support is in place for affected employees and small and medium-sized enterprises in the supply chain.
Caroline Nokes
On that point, the Minister will no doubt be aware that between 2003 and 2008 there was, within the automotive and aerospace sectors, the supply chain group programme, which was funded by the regional development agencies. Has the Minister given any thought to the introduction of a similar scheme, which might be of specific assistance to those companies in the supply chain?
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.
Mr Denham
I am grateful to the Minister for giving way, but perhaps I can just put it on the record that this is where we disagree and that, in the view of many of us, the regional growth fund should engage with a company’s wider strategy and not simply assess the merits of an individual decision.
Michael Fallon
I note that point and I heard the right hon. Gentleman make it in his earlier contribution. I am not sure whether, under the old system, the four regional development agencies that would have been involved—I think that is the number—would have been part of that process, but I will certainly reflect on what he has said.
What is important is that we are capturing this new work in the UK and we are playing to our world-class strengths of design, engineering and advanced manufacturing. That is the direction that we should be moving in, as we seek to rebalance our economy, drive forward growth and secure greater export revenues. That is the front and centre of our industrial strategy. Without our support, the Ford projects that I have mentioned would have gone elsewhere, which would have undermined the UK’s position as the centre of choice for Ford’s engine programme and our ability to bid for and win new work.
In conclusion, a number of points have been made today. Let me re-emphasise that I share the disappointment of every Member who has spoken in the debate at Ford’s decision to close the Swaythling plant. I regret the circumstances in which that decision was made and communicated to the Department and, indeed, to colleagues here in Parliament. Nevertheless, we will commit to work with local partners; we will do all that we can to help those affected by the closures; and we will continue to work with Ford to build on its major and ongoing commitment to the automotive sector in the UK.
Sir Roger Gale (in the Chair)
May I take this opportunity to thank all right hon. and hon. Members who are in Westminster Hall, both for the largely non-partisan manner in which the debate has been conducted and for seeking to accommodate both Front Benchers in the manner that they have been accommodated? As I said earlier, this is an important subject, and I hope and believe that those watching in a wider audience may just have seen a little of the House of Commons at its very best this morning. Thank you all very much indeed.
If the right hon. and hon. Members who are leaving Westminster Hall could do so quietly, in a moment we will proceed to the next debate.