Downing Street Years - Margaret Thatcher [69]
In many ways British Leyland presented a similar challenge to the Government as BSC, though in a still more acute and politically difficult form. Like BSC, BL was effectively state-owned and controlled, though technically it was not a nationalized industry. The company had become a symbol of Britain’s industrial decline and of trade union bloody-mindedness. However, by the time I entered No. 10 it had also begun to symbolize the fightback by management. Michael Edwardes, BL’s Chairman, had already demonstrated his grit in taking on the trade union militants who had brought the British car industry to its knees. I knew that whatever we decided to do about BL would have an impact on the psychology and morale of British managers as a whole, and I was determined to send the right signals. Unfortunately, unlike the case of BSC, it became increasingly clear that the action required to support BL’s stand against trade union obstruction diverged form what was required on purely commercoal grounds. This was a problem: but we had to back Michael Edwardes.
We had indicated in Opposition our hostility to the Ryder Plan for BL with its enormous cost, unmatched by sufficiently rigorous measures to increase productivity and earn profits.* My first direct experience as Prime Minister of BL’s difficulties came in September 1979 when Keith Joseph informed me of BL’s dreadful half-yearly results and of the measures the Chairman and Board intended to take. The new plan involved the closure of BL’s Coventry plant. At least 25,000 jobs would be lost. Productivity would be increased. The development of BL’s medium car range of models would be accelerated. The BL Board said that the Company would require additional funds beyond the £225 million remaining of the £1 billion which Labour, under the Ryder Plan, had in principle committed. In response, Keith made no financial promises. He told BL to look at the scope for raising money from its own resources — that is sales of profitable parts of the company. There was no immediate need to take decisions about funding until the Government received the new BL Corporate Plan from the National Enterprise Board (NEB) in November.
BL’s workers were to be balloted on the Corporate Plan. If it received substantial majority support the Government would find it very difficult to turn down and, as quickly became apparent, the company would want a further £200 million above and beyond the final tranche of Ryder money. The ballot, of which the result would be announced on 1 November, seemed likely to go the company’s way. But it might not; and that would present its own immediate problems. For if the ballot showed anything other than overwhelming support for the company’s proposals there would be speculation about its future, with the prospect of BL’s many small and medium-sized creditors demanding immediate payment and the large holders of loan stock adding to the pressure. BL might be forced precipitately into liquidation in circumstances which would make it impossible for us to formulate a sensible response and for an orderly disposal of its assets to take place. The economic implications of such a collapse were appalling. One hundred and fifty thousand people were employed by the company in the UK; there were perhaps an equal number of jobs in the component and other supplying industries dependent on BL. It was suggested that complete closure would mean a net loss to the balance of trade of around £2,200 million a year and according to the NEB it might cost the Government as much as £1 billion.
There was no mistaking the political and economic gravity of the decisions required. Closure would have some awful consequences, but we must never give the impression that it was unthinkable. If ever the company and workforce came to believe that, there would be no limit to their demands on the public purse. For this reason Keith and I decided not to agree to BL’s request for the Government to issue an undertaking to honour the company’s debt. They had wanted us to publish a letter to this effect even before the ballot