Industrial Strategy — House of Commons, 2018-04-18
Topic: Macroeconomics
John Eugene Joseph Dromey (Labour, Centre-left): Erdington is rich in talent, but is one of the poorest constituencies in the country. It is, however, blessed by the industrial belt that stretches along the M6, at the heart of which is the giant Jaguar plant. Back in 2010, I was involved with the new management brought in by Tata to turn around the plant from closure. It has gone from strength to strength since and has doubled in size. Just up the Chester Road from the Jaguar plant is GKN—Guest, Keen and Nettlefolds—a 259-year-old company which, on the back of the success of Jaguar, has gone from 500 to 800 employees. It is at the heart of a motor manufacturing cluster in the midlands—a world-class success story that is in part built on foundations that we laid in government with the establishment of the Automotive Council However welcome some of the things said today about industrial strategy are, developments in relation to both Jaguar Land Rover and GKN potentially make a mockery of that talk. The Secretary of State is a good man with whom I have worked over the years, such as on the Heseltine initiative in 2012 and on securing investment for the new low-emission engine plant in Wolverhampton in 2012-13, but the simple reality is that Jaguar Land Rover is facing mounting problems with the combination of uncertainty over Brexit on the one hand and the grotesque mishandling of the transition from diesel on the other. We have gone down from 3,000 workers in the Jag to 2,200, with no production for six weeks, and now 1,000 are being laid off at Solihull, with 360 workers being transferred from the Jag over to Solihull. Little wonder that when the workers were briefed on Monday, they were described to me as being "numb." So, too, were the GKN workers when I was with them in the Driveline plant on that bleak day of 29 March with the takeover by Melrose. It was a rerun of what happened over Cadbury. I led the battle against the Kraft takeover of Cadbury, when a debt-laden American multinational took over a successful and profitable British icon because 31% of the shares were bought by hedge funds Exactly the same thing happened over GKN. We had hoped, after Cadbury, that progress would be made on a new corporate takeover regime. We had discussions with the Government at the time about freezing the share register at the time of a bid, for example, and about a proposal for shareholders needing to have held shares for six months before they could vote. We discussed a whole range of potential mechanisms, including a public interest test, but little progress was made and GKN was ultimately left open to a predator, Melrose, as vultures such as Elliott—described as the world’s most ruthless hedge fund—circled. They were utterly cynical in their approach. They were there for a matter of weeks in a company with a 259-year-old history, and their aim was simply to make a quick buck on the back of that corporate takeover. Theirs was a fleeting interest, and it was fundamentally wrong I welcome some of the contents of the industrial strategy, but I hope that the Government will listen to the wise words of the shadow Secretary of State about going yet further, crucially on Jaguar Land Rover and on the lessons of GKN. On Jaguar Land Rover, the transition to electric has been called a just transition, and all parties should be involved in the next stage: the road to zero. Crucially, that will need support from the Government—for research and development, for example—but that has been nowhere near good enough so far. Investment in infrastructure will also be needed. In parallel to that, I have to say that there must be no more playing to the gallery, exciting fears in the meantime, by the Secretary of State for Environment, Food and Rural Affairs. His statements on the transition from diesel have been at the heart of the collapse in diesel car sales by 37%, despite the fact that the new diesel technology is infinitely better for the environment than the old On GKN, I still hope that the Government will use their power under section 58 of the Enterprise Act 2002. If they do not, the guarantees given thus far will simply not go far enough. The most immediate task for the Government is to ensure that they play their part in extracting cast-iron guarantees for the future. They must then look towards introducing a Cadbury-GKN law. There must be no more leaving it to the market, red in tooth and claw—what the Daily Mail called "an abuse of capitalism". Crucially, at the centre of our industrial strategy, to achieve a long-termism of approach, we need a new corporate takeover regime that is in the best interests of British industry, British investors and British workers. That is what our country needs, and it is what we look to the Government to deliver.