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Commons Chamber

Volume 15: debated on Monday 14 December 1981

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House Of Commons

Monday 14 December 1981

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Private Business

Derbyshire Bill Lords

Read the Third time and passed, with amendments.

Humberside Bill

Order for Third Reading read.

To be read the Third time tomorrow.

Oral Answers To Questions

Trade

Road Vehicles (Imports-Exports)

1.

asked the Secretary of State for Trade what were the values, in £ sterling, of imports and exports of road vehicles for each of the past five years.

With permission, I will publish the information in the Official Report. At current prices, exports of road vehicles increased by 33 per cent. between 1976 and 1980 and imports by 134 per cent.

Are there not tremendous opportunities for our vehicle industries if the Government will only change their policies to give much greater help to exports? When will the Government take action to help our exports surpass our imports?

The hon. Gentleman will be delighted to know that for the four months of the current year for which figures can be identified—January, February, September and October—we are showing a £13 million surplus in the business.

Is not the situation deteriorating terrifyingly? Will the right hon. Gentleman confirm that in the last year for which figures are available our deficit on visible trade with the European Community was £2 billion, of which £1·3 billion was accounted for by our deficit on motor vehicles? With his long-standing and reasoned opposition to the Common Market, will the right hon. Gentleman take action over that unacceptable state of affairs?

The figures that the hon. Gentleman quotes are broadly true, but they could just as well reflect on the fortunes of our abilities in the motor trade as on our membership of the Community.

Following is the information:

United Kingdom Trade in Road Vehicles, 1976–80

£ million

Imports cif

Exports fob

19761,4312,376
19772,1342,872
19782,7973,070
19793,9433,148
19803,3483,156

Source: Overseas Trade Statistics of the United Kingdom, sac (R2) Division 78 and equivalent coverage under SITC (R1)).

Channel Tunnel

2.

asked the Secretary of State for Trade what is his assessment of the likely reduction in demand for capacity at airports in the South-East as a consequence of the diversion of traffic through a Channel tunnel.

This has been considered by the air traffic forecasting working party, which states in its report that the most modest tunnel schemes are expected to divert well below a year's growth of air traffic. The promoters of one of the more ambitious schemes claim that as many as 3·9 million passengers a year could be diverted from air routes by the end of the century, but even then the effect on South-East air traffic would be relatively small.

Is not the demand for airport and runway capacity more a function of the number of flights than of the number of passengers? As the Channel tunnel is likely to divert traffic from short-haul flights, will the hon. Gentleman reconsider his answer, as the Channel tunnel might make some planned expansion in airport capacity unnecessary?

My answer to the hon. Gentleman's first question is "No". Demand depends on flights and passengers. There is no point in running flights if there are no passengers on them.

The fixed Channel link would probably draw some passengers away from the regional as well as the London airports, but the lead times for construction means that it is unlikely to have a significant impact during this decade. On the estimates provided by the promoters, the number of passengers diverted from air travel by the end of the century is likely to be very small in comparison with forecast air traffic demand.

Bearing in mind the importance and potential of Southend airport, will the Government maintain the principle of fair competition and not pour funds into the Channel tunnel project, when it may not be needed?

I and all my colleagues are acutely aware of the importance of Southend airport, but my hon. Friend should speak to my right hon. Friend the Secretary of State for Transport about the Channel tunnel.

In the light of that encouraging information, will the Minister tell the Secretary of State that, in the present state of the economy, the need to make progress in constructing the Channel tunnel is urgent, as, if it is not built soon, it never will be?

I shall ensure that the hon. Gentleman's remarks are drawn to the attention of my right hon. Friend the Secretary of State.

Consultative Council On Local Government Finance

4.

asked the Secretary of State for Trade if he attends meetings of the Local Government Consultative Council.

When necessary, I represent my right hon. Friend at meetings of the Consultative Council on Local Government Finance.

In which case, I sympathise with the hon. Gentleman. Will the amount of money that is likely to be spent next year by local authorities on consumer protection be more or less than, or about the same as it is this year?

Expenditure by local authorities on consumer protection is estimated at £47 million for 1982–83, and that estimate has been agreed with the local authority associations concerned.

British Airports Authority

5.

asked the Secretary of State for Trade whether he expects to bring forward proposals to privatise the British Airports Authority.

Is my hon. Friend aware of the view held by many Conservative Members, that early privatisation of the British Airports Authority will be in the interest of airline operators, airport operators and, above all, the personnel, who could buy shares if such privatisation were to go through? Does he recognise that implicit in that demand is no criticism of the general management of the British Airports Authority—indeed, quite the reverse—but that urgent action in this sphere would be greatly appreciated?

I am glad that my hon. Friend made those remarks about the management of the British Airports Authority, with which remarks I completely agree. I am aware of the strong feeling among certain of my hon. Friends, and I draw attention to the remarks of my right hon. Friend the Secretary of State in c. 42 of Hansard of 16 November, which says all that needs to be said at present.

If they had, it would not arise on this question, and if it did, it would not be me who would answer.

Is my hon. Friend aware that there is great scope for the use of private contract services in many of the activities undertaken by the British Airports Authority? Will he consider issuing a circular—as my hon. Friend the Minister for Health has done to health authorities—urging the use of private enterprise wherever possible?

The British Airports Authority already uses many private enterprise companies within the airports and draws substantial profits and benefits from the duty-free franchise. I shall ensure that its attention is drawn towards examining what more can be done in that regard.

Industrial Goods (European Free Trade Area)

6.

asked the Secretary of State for Trade if he has discussed with his European Economic Community counterparts the possibility of a free trade area for industrial goods in Europe.

The Community's free trade agreements with the EFTA countries already extend to nearly all the rest of Western Europe all the principal benefits of industrial free trade available within the Community itself. There are also preferential trade agreements with nonmember Mediterranean States. Greece will be fully integrated into the Community customs union in 1986, and negotiations for Portuguese and Spanish membership of the Community are in progress.

I am grateful to my hon. Friend for that full reply. Does he accept that the idea of a free trade area between this country and the remainder of the Community that excluded trade in agricultural products would be a non-starter? Does he further accept that even if such a project were available it would do nothing to solve the problem of British failure to compete in the industrial markets of the world?

I have noted my hon. Friend's judgment with regard to his first point, but I emphasise to him that in 1981 there is evidence of our increasing competitiveness in the export of industrial goods.

Does the Minister agree that the remarks of the hon. Member for Hint, West (Sir A. Meyer) were utter nonsense? Does he further agree that in his initiative with our partners in the EEC he should be working either for the abolition of the CAP, or for its combination with a common industrial policy, which would have the same aims for the weaker industries as the CAP has for the weaker agricultural countries? Will he take that initiative?

I have noted the hon. Gentleman's points. The responsibility for those areas lies mainly with my right hon. Friend the Minister of Agriculture, Fisheries and Food and with my right hon. and learned Friend the Chancellor of the Exchequer.

West Germany (Trade Deficit)

7.

asked the Secretary of State for Trade if he will take steps to discuss with the Government of West Germany the deficit in manufactured trade with that country of over £2,000 million in 1980 with a view to improving the balance of trade.

No, Sir. With Western European countries our trade in manufactures largely reflects competitive differences.

Since the Foreign Secretary has already stated that our deficit with Japan of about £1 billion last year is costing this country tens of thousands of jobs, should not the Government consider seriously the horrendous £2 billion deficit with West Germany—the greatest deficit with any country? Will they investigate particularly whether any of that deficit stems not from competitiveness, but from non-tariff discrimination?

The two situations are simply not analogous. Japan has a well-established resistance to taking imports, as a result of which only 3 per cent. of its economy is accounted for by manufactured imports, whereas West Germany has a more open economy, taking over four times that percentage. That is an indication that we are in a free trade position where it is up to our manufacturers to do as well as they can.

Does not that deficit show how wide of the mark was the hon. Member for Hint, West (Sir A. Meyer) in his intervention?

I am not sure upon what nuance the right hon. Gentleman is seeking to alight, but I am certain that my hon. Friend the Member for Flint, West (Sir A. Meyer) is right in saying that our trading role in Western Europe will be largely a factor of our competitiveness.

Does the right hon. Gentleman agree that, in line with his remarks, the EEC has been a disaster for this country? Does he further agree that now is the time to introduce import controls on exports of motor vehicles, electronics, and so on, particularly from West Germany? Would that not be of great benefit to British industry?

I am sure that the experiences of the EEC are a disappointment for those who had euphoric expectations. When we come to apply descriptions the word "disaster" will relate to those who seek to introduce trade controls and import restrictions.

Will not that deficit figure and others of an equally depressing character disappear rapidly when the term "strike command" becomes associated once again with the Royal Air Force rather than the Transport and General Workers Union?

World Trade

8.

asked the Secretary of State for Trade whether he anticipates any improvement in world trade by volume in 1982; and what prospects he sees for improving the United Kingdom's share therein.

World trade in manufactures seems likely to grow rather faster next year than in 1981. Whether we shall raise our share will depend on our ability as a nation to sustain and build on this year's success in reducing inflation and increasing productivity.

Will that stimulate the reaction of Western Governments or can it all depend on the hidden hand?

I hesitate to try to define exactly what my hon. Friend has in mind, but I believe that our future performance will be greatly affected by our efforts to return to being fully competitive in world trade.

Will the Minister explain what possible logic there is for a Government who profess to be keen to stimulate our exports cutting back drastically their assistance to the British Overseas Trade Board and to exporters trying to obtain markets abroad?

The right hon. Member is wrong in his assessment. It is necessary for all Departments of Government, in these times of economic restraint, to accept that resources available to them may be reduced. Nevertheless, it requires them to make the best possible use of those resources. With regard to the British Overseas Trade Board, there were areas where expenditure was not justified. We have sought to concentrate the resource s and to use them most beneficially in developing overseas trade.

Has not one of the most notable achievements of British industry in the past two years been the high level of exports made as against the expectations of, amongst others, the Treasury?

My hon. Friend is right, and our exporters deserve congratulations for doing distinctly better than was expected last year by the extra successes that they have registered.

The Minister talks repeatedly about being competitive. How does he explain that countries in Europe, such as West Germany with a Socialist Government, are far more competitive than we are with a Tory Government?

If the hon Gentleman studied the policies followed in West Germany he would realise how unsuitable his comments were. Our greatest weakness has been our loss of 50 per cent. in competitiveness in the period between 1975 and 1980. During 1981 we recovered that loss of competitiveness to the extent of 10 per cent. But we have to go on and be entirely successful in being competitive in world trade terms.

Multi-Fibre Arrangement

9.

asked the Secretary of State for Trade if he will make a statement on progress on the renegotiation of the multi-fibre arrangement.

11.

asked the Secretary of State for Trade if he will make a statement on the latest progress towards renegotiation of the multi-fibre arrangement.

As my right hon. Friend the Lord Privy Seal reported on 10 December, the Council of Ministers met on 8 December to consider further arrangements covering low-cost textiles and clothing imports. It resolved a number of points outstanding from the November Council. These decisions will enable the Commission to continue its full participation in the negotiations in Geneva on multi-fibre arrangement renewal, and also to open negotiations on future arrangements with the preferential suppliers.

Negotiations in Geneva are continuing.

Is the Secretary of State aware of the very grave anxiety and concern on both sides of the House and on both sides of industry about the lack of information on the decisions reached in the Council of Ministers in Brussels? Is the right hon. Gentleman aware, further, that there are fears that the quota base level may be set at the level of 1982 quotas, with a foreseen loss of 30,000 jobs if that happens, rather than 1980 actual levels of imports? Will the right hon. Gentleman now say what base level—is it 1980 quotas, 1982 foreseen quotas or somewhere in between—the Council of Ministers has decided to adopt as its negotiating plank in Geneva?

The hon. Gentleman will be aware that it has always been the practice not to reveal the detailed negotiating mandate that is in the hands of the Commission.

As for the issue of 1980 actuals or quotas being used as the basis for multi-fibre arrangements No. 3, the Community is operating upon 1980 quotas with the use of a surge mechanism to moderate any take-up in the under-used quotas.

Is the right hon. Gentleman aware that it is both undesirable and dangerous to base the anti-surge mechanism on actual import levels in 1982, because it gives every incentive to supplying countries overseas to maximise their exports to us next year by every possible means, and because any restocking then will benefit them rather than domestic suppliers? Will not the anti-surge mechanism be ineffective if quotas currently under-utilised are filled by 1982?

The Commission has been charged to interpret and table the anti-surge proposals specifically to try to mitigate the differences which the hon. Gentleman has understandably identified.

When my right hon. Friend continues the discussions on the multi-fibre arrangement, will he ensure that an import control clause is incorporated in the agreement to prevent unfair competition from foreign imports, which have affected British manufacturers seriously over the last few years and continue to do so?

Clearly, such action would have to come within Community competence, but I should like to consider what my hon. Friend has suggested.

Will the Secretary of State say again whether agreement was reached at last week's meetings on resolving the various issues before the negotiators? Is he aware that there is a widespread feeling in the House and outside it that no agreement has been reached on growth rates, quotas, and the various ways of avoiding problems?

Will the right hon. Gentleman say again whether the base level is, as he said, the 1980 quotas or whether the Government have accepted, against our advice, that the 1982 quotas should be used as the base level?

I have nothing to add to my first reply.

I congratulate the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Dispatch Box, speaking from the Front Bench on behalf of the Opposition. I can tell him that the negotiations at Geneva are proceeding, and that today could be one of the most decisive days. There is little that I can tell the House, other than to await the outcome, especially of today's discussions.

I thank the right hon. Gentleman for his kind remarks, but I have to tell him that his answers are unsatisfactory. Will he say again whether agreement was reached at the Council of Ministers last week? If it was not reached, the right hon. Gentleman is in serious danger of grossly misleading the House.

I hope that the hon. Member for Batley and Morley will grow more charitable with experience in his new post. I believe that agreement was not reached. But the negotiations continue. I must remind the House that these negotiations are being undertaken on behalf of the European Community nations by the European Commission. It is one of the inevitable consequences that I cannot answer blandly for what is happening minute by minute and hour by hour in the negotiations, given the relationships that we have in the Community.

Has my right hon. Friend's Department made any progress on defining what is meant by a "recession clause" in the MFA, and is my right hon. Friend using that definition in the negotiations?

The Commission has the securing of a recession clause as one of its negotiating objectives. Again, it would not be consistent with precedent—and I do not intend to break precedent—to reveal the circumstances that the Commission counts as constituting a recession clause.

Japanese Light Vehicles

12.

asked the Secretary of State for Trade what is the level of penetration of the United Kingdom market by Japanese light vehicles.

Nineteen per cent. of the light commercial vehicles registered in the United Kingdom in the first 11 months of this year were manufactured in Japan.

Is such a high level in the interests of the United Kingdom economy as a whole? If it is not, what action will my right hon. Friend take, bearing in mind the action that the Japanese take against United Kingdom exports, especially of footwear?

The Society of Motor Manufacturers and Traders, which is responsible for the voluntary restraint arrangement that we have with Japan on these matters, has itself been involved in discussions with its opposite number in Japan. It has stated that the understanding that has resulted from its recent meeting should mean a sharp decrease in the Japanese share of the light commercial vehicle market.

Does not the right hon. Gentleman agree that we have now reached the stage with the Japanese, with all the hidden trade barriers that there are to exports from this or any other country to Japan, where we should tell the Japanese that we shall import one Japanese vehicle for every vehicle that they import from Britain?

I cannot think of a narrower, more unilateral approach to trade. The fact that the hon. Gentleman represents the soft Left reminds us how terribly difficult things must have become.

Will my right hon. Friend remind the House of the precise nature of the restraint agreement with Japan about the level of British imports of light vehicles?

It is an arrangement conducted between the SMMT and JAMA, its Japanese equivalent.

Is the right hon. Gentleman aware that the market of BTB Engineering Ltd., a firm in my constituency that manufactures light vans, has been adversely affected by the continuing and rising imports of light vans from Japan? What positive hope can he offer to the employees of that firm and many others in the country that make light vans? When will we get from the Government the same tough approach to imports from Japan as has been shown by both Right and Left Governments in France?

I cannot give the specific message to the hon. Gentleman's constituents that he seeks, but I can tell him that the SMMT has said that it is

"clearly satisfied with the outcome"
of the latest agreement. If one is obliged to have such trade restraints it is far better done in that way than by arbitrary Government quotas and tariffs.

Does my right hon. Friend agree that it is better for such agreements to be left to the industries to negotiate than for Governments to interfere, even if, as is the case with light commercial vehicles, one of our major manufacturers is a significant importer of Japanese products?

I am reluctant to give an off-the-cuff reply to the main part of my hon. Friend's question. I am not a great enthusiast of government by trade association, but any arrangement that involved the Government taking unilateral action could easily provoke counter-action under article 19 of the GATT, with serious and harmful consequences for our national economy. That is something that we have experienced.

With regard to the right hon. Gentleman's remarks to my hon. Friend the Member for Warrington (Mr. Hoyle), is it not crystal clear that the Japanese attitude to external trade is somewhat unilateral in character, in the sense that they have a low level of manufactured imports? Is it not also clear that, because our level of exports to Japan is so pitifully low, the scope for retaliation is necessarily limited? Will the right hon. Gentleman confirm that it is necessary continuously and relentlessly to put the maximum amount of Government pressure on the Japanese to get them to alter their attitude to world trade?

As a distinguished Scotsman, the right hon. Gentleman should not be too flippant about the ability of the Japanese to take harmful trade retaliation measures against us. The Scotch whisky industry is particularly well established in that market. Indeed, Scotch whisky is our largest single selling item in Japan. I believe that the most helpful way forward is to open up the Japanese market to our exports and for us to welcome Japanese investment in this country.

The Secretary of State may be right to reject the idea of a narrow. unilateralist approach to trade, and he frequently shelters behind the Commission's responsibility, but will he confirm that we are the most open market in the Community and that the French, Germans, Italians and everyone else in the Community seem much more capable of reducing Japanese imports, without facing any risk of retaliation?

It is a matter for genuine debate whether the United Kingdom is a more open market to the Japanese than is Germany.

Ussr (United Kingdom Exports)

14.

asked the Secretary of State for Trade what recent initiatives he has taken to encourage exports to the Union of Soviet Socialist Republics.

A number of initiatives discussed at the May 1981 meeting of the British-Soviet Joint Commission are being pursued, including co-operation in the energy and automotive sectors.

I commend those initiatives. Will my right hon. Friend confirm that trade between the two countries has consistently been at an imbalance of 2:1 in Russia's favour for about 20 years? A significant reason is that it is in our interests to re-export some Russian imports, but does my right hon. Friend agree that the time has come when we can say to the Russian Government, with legitimate concern, that if they do not take more of our exports, particularly machinery and goods. we have the right to review imports of what we regard as inessential goods, including, though not exclusively, vodka and caviar?

Leaving out the movement of diamonds, which benefits British firms, the trade balance is not too adverse to us. For example, we have a considerable surplus of trade in manufactured products. We are not significantly dependent on Soviet imports, except diamonds and precious stones. Our imports from the Soviet Union largely comprise raw materials, such as oil products and timber, and any replacement of those supplies would certainly take place at a higher cost to the economy and the consumer.

Can my right hon. Friend assure the House that the Government are being exceedingly cautious about trade with the Soviet Union at present, particularly on high-technology items that could improve the Soviet Union's military potential? Can she also confirm that if the Soviet Union sent even one man across the Polish border trade with the Soviet Union would be terminated?

We trust that Poland will be left to settle its own affairs without interference from any quarter. I cannot speculate on how the United Kingdom and other Western countries would react if the Soviet Union intervened. We very much hope that it will not do so. It is clear that Soviet intervention would have far-reaching consequences for our relations in every sphere. In line with the policy agreed after the invasion of Afghanistan, the United Kingdom is not processing export licence cases that would require the unanimous approval of our COCOM partners. There are limited exemptions to that policy; for example, equipment intended for medical use only.

Apart from what the right hon. Lady has already said, does any aspect of Russian foreign policy or Russia's denial of civil rights have any effect on trade policy?

The hon. Gentleman will be aware that the Government have made abundantly clear their view about the Soviet Union's appalling—I repeat appalling—human rights record, but I believe that trade that is genuinely to our mutual advantage should continue.

Can my right hon. Friend assure the House that the Government will not provide export credits to the Soviet Union for vast sums at massively subsidised rates, as did the previous Government, much to the detriment of the United Kingdom?

I can give my hon. Friend that assurance. We offer credit to the Soviet Union on the same terms as those offered by other OECD countries. There would be no sense in offering either worse or better terms or discriminating in favour of the Soviet Union. The agreement that ended in February 1980 is not to be renewed.

European Community—Japan

15.

asked the Secretary of State for Trade if there are further plans for co-ordinated European Economic Community approaches to Japan to encourage a more equitable and economically stable trading relationship with the Community; and if he will make a statement on the present position.

At the meeting of the Foreign Affairs Council on 8 December a list of requests for specific action was adopted. The list is being transmitted to the Japanese Government. It stresses the need for Japan both to open up her home markets and to moderate her exports in sensitive sectors. The Council will be assessing the Japanese response in February 1982.

As I have addressed the question to the Secretary of State in his communautaire role, I hope that he will not be as tetchy as he was last time. Is there any time scale on the request to the Japanese or any threat of retaliatory sanctions if they do not respond positively? With reference to the right hon. Gentleman's earlier remarks about Scotch whisky, may I remind him that he is here as a representative of the Tories and not of Suntory?

I am sorry that my tetchiness provokes such music-hall humour. I will do much to avoid that in future. The hon. Gentleman must not take the fact that I remind him that he belongs to the most communautaire party in the House as a sign of tetchiness. As to the time scale involved, I have said that the Council will be assessing the Japanese response in February 1982 and I cannot go beyond that.

Will my right hon. Friend continue, both directly and through the channels of the Community, to make it clear to the Japanese Government that we are anxious to see an expansion of open world trade, but that the continuation of such free trade depends on all countries opening their markets to one another and that if calls for restrictionism continue to grow it will be the fault of the Japanese themselves?

I am happy to give that assurance to my hon. Friend. The same points have been noted by the American Administration as well as the nations of Western Europe.

Will the right hon. Gentleman confirm that the less the Japanese import from other countries the more capital they have to export to other countries?

Yes. That is why I think that the two factors should be kept clearly in context.

Will my right hon. Friend accept that everyone wishes to encourage and support his efforts to liberalise Japanese trade? Does he agree that if we want to turn the recession into the most catastrophic international slump, the best way of doing so would be to endeavour to insist that every country's trade must balance exactly 50 per cent. with that of every other country?

Monopolies And Mergers Commission

16.

asked the Secretary of State for Trade whether he is satisfied with the powers of the Monopolies and Mergers Commission.

Does my right hon. Friend agree that the powers of the Monopolies and Mergers Commission would be better used in tackling public sector monopolies such as coal, gas, electricity and the British Leyland price ring—which maintains car prices in the United Kingdom at thousands of pounds in excess of prices on the Continent—rather than using its powers to determine who should run that over-large sweet shop in Knightsbridge?

I have a good deal of sympathy with what I think is the point that my hon. Friend is making, which is that the service to consumers, the prices offered by the public sector industries and the service that they render to the economy as a whole are far less satisfactory than the contribution made by the private sector. If that is my hon. Friend's point, I entirely agree with him. The Government have recently announced measures to strengthen the Commission's role in the external scrutiny of the nationalised industries' efficiency. The membership and staff are being reinforced as necessary. Existing powers to call for information are sufficient for all present purposes.

If the Minister is so satisfied with the powers of the Commission, might she also explain to it the difference between commercial danger and crises of identity, an example of which was raised in the House of Fraser and Lonrho merger?

I think that the legislation is sufficiently explicit for the Monopolies and Mergers Commission. The hon. Gentleman will be aware that the Commission has wide discretion in determining the criteria—

These are all matters for ongoing Government consideration. The Commission is an independent body and that is its main strength. It has wide expertise to call upon and the Government will not criticise individual reports from the Commission.

Does my right hon. Friend recognise that to some of us, at least, the criteria adopted by the Commission in considering the House of Fraser issue, and to some extent the Sealink reference, are rather worrying? Will she continue to ensure that she keeps an eye on the criteria that are adopted? Is she aware that some of us think that we are getting the wrong answers and that we may be asking the wrong questions?

I am not sure whether my hon. Friend is aware of the recommendations contained in the Liesner report of July 1980. The Government took a keen interest in the recommendations and they will continue to consider them. That matter will be part of the ongoing consideration of policy concerning the Monopolies and Mergers Commission and the competition policy that is involved. These are matters for continuing consideration and are dependent on the legislative timetable.

Is the right hon. Lady aware that, following the decision of her right hon. Friend on the inquiry into the acquisition of the House of Fraser, it was said that undertakings were expected to be given by Lonrho Ltd. to the Director General of Fair Trading? Since that time there has been considerable comment in the press and elsewhere to the effect that the undertakings have not been forthcoming. It is rumoured that some artifices are being adopted to try to avoid the recommendation and the Secretary of State's decision. Will the right hon. Lady make it crystal clear that the decision is meant to stick on all the parties to that effect?

I am much gratified by the right hon. Gentleman's knowledge of commentary and rumour. Any action that had to be taken would depend on the circumstances. I can give him the assurance that if necessary there would be recourse to the order-making powers under the fair trading legislation.

Spain (Balance Of Trade)

17.

asked the Secretary of State for Trade what is the United Kingdom's balance of trade with Spain in motor vehicles, castings and forgings.

In 1980 there was a crude deficit of £135 million on trade with Spain in motor vehicles and a surplus of £93,000 on trade in iron and steel castings and forgings. It is not possible to identify separately trade in either all castings and forgings or those specific to motor vehicle use.

Does my hon. Friend realise that the imbalance of trade in motor vehicles could be speedily rectified if the discriminatory Spanish import duties and export subsidies were removed, thus allowing the Metro, for example, to compete with the Fiesta? Will my right hon. Friend ensure that no further progress is made in the discussions on Spain's accession to the EEC until suitable undertakings are received from the Spanish Government on discriminatory import duties and export subsidies?

My hon. Friend is right to say that the present Spanish duties have an impact upon our car exports to that market. We have made the most vigorous representations to the Spaniards about this inequity. As my hon. Friend may know, there is a European Community-Spanish joint committee and we have today in Brussels sought to have this issue further discussed.

Is it the Government's policy in the negotiations over Spain's entry into the EEC to insist that there should be free trade in industrial products from the start of any long transition period or at the end of it?

The Government would like to see a transitional arrangement that was reasonably short and that had substantial tariff cuts from the beginning.

British Products (Counterfeiting)

18.

asked the Secretary of State for Trade what complaints he has received recently about counterfeiting of British products by overseas manufacturers; and what steps he has taken.

In the past six months we have received three complaints about the counterfeiting of British products by overseas manufacturers. We urge British companies to secure the greatest possible protection for their patents, trade marks and designs and we are prepared to back them in pursuing cases where patents, trade marks and designs are infringed. In many cases these efforts are successful, but I shall not he satisfied until the practice has been brought effectively under control.

Why is the Minister so reluctant to give maximum support to complaints by Smith and Welstood, whose heating stoves, which are manufactured at Bonnybridge in my constituency, are being counterfeited by unscrupulous manufacturers in Taiwan, who are using the counterfeits to undermine Smith and Welstood's position in the international market? If the international courts are unable or unwilling to take effective action against the pirates, will the right hon. Lady consider imposing import restrictions on Taiwan until such time as it stops illegal practices that are damaging to industry and that destroy jobs in Britain?

We very much sympathise with the dilemma of Smith and Welstood and other small companies. We have advised Smith and Welstood on how it might protect its rights. The company has yet to respond to our offer of a meeting to discuss how it might pursue its complaints. As the United Kingdom has no diplomatic relations with Taiwan it is not possible to make direct representations to the Taiwanese Government. However, the British Government have warned Taiwan publicly on a number of occasions of their deep concern about counterfeiting. It appears that the Taiwanese authorities are now taking these warnings seriously, because in August they introduced a series of measures aimed at stopping malpractices. These measures included a review of policy and of fines as alternatives to prison sentences, which may be made longer.

The Minister may be aware that 12 months ago the Prime Minister of Taiwan assured the Select Committee on Trade and Industry that prosecutions would take place if specific instances were provided by British firms. Is the right hon. Lady aware of successful prosecutions in Taiwan against counterfeiters?

I was not aware of the statement to which the hon. Gentleman referred. However, the number of cases brought to the attention of the Department has decreased significantly in recent months. I hope that that is the result of the successful resolution of such cases in Taiwan and the result of the measures to which I have referred.

Will my right hon. Friend outline the role of the Sheffield defence fund and its relationship with the Government? The term "Made in Sheffield" hitherto implied "Made in Sheffield" and not in a Sheffield elsewhere in the world. Is she now satisfied that the relationship between the Government and that fund is working well?

I am sure that my hon. Friend is aware, as is the whole House, that I laid regulations before the House to require country-of-origin marking in particular on such goods as those produced by the Sheffield manufacturers to which he is referring, and that those country-of-origin markings make the matter perfectly clear if blanks, for example, are produced in Taiwan or any other country, or in any place other than Sheffield.

Is the right hon. Lady aware that it is not enough to refer British companies to their legal rights in third countries and that she ought to make it clear to the Taiwanese Government that if they cannot control the export of counterfeit goods from that country to third countries, we most certainly can control the entry of Taiwanese goods, whether counterfeit or genuine, into Britain?

I have already said that the Government have publicly made it clear to the Government of Taiwan that we disapprove of counterfeiting. We have made public statements to that effect—not through diplomatic channels, because they do not exist—and the Taiwanese authorities have taken action. It now remains to be seen whether that action is appropriate and adequate. From the reduction in the number of cases, it would appear that it is proving to be successful. It is far too soon to make a judgment.

Overseas Development

Least Developed Countries

27.

asked the Lord Privy Seal if he will take steps to increase United Kingdom aid to the least developed countries.

It remains the Government's intention to continue to give priority to the poorest countries, including the least developed, in allocating aid. When the health of the economy improves, the Government hope that they will be able to do more.

Will there be any increase in British aid in real terms to these countries next year as a result of pledges made by the Government at the recent United Nations conference on this subject?

At that conference we pledged ourselves to the target of 0·15 per cent. of GNP but no specific time was given for it. We shall attempt to achieve it as soon as we can.

Is my hon. Friend aware that the best aid that we can give to the least developed countries is to provide a market for their goods in this country? In this regard, will he be particularly delicate with the least developed countries in respect of the multifibre arrangement negotiations, because they have not increased their markets substantially in this country, and if we are genuine in our desire to help them we must provide a reasonable market for their textiles here?

Yes, I take note of the points that my hon. Friend has made. They are points of which the Community, which is the negotiating body on this occasion, is well aware. It is a question more appropriate to my right hon. Friend the Secretary of State for Trade.

Are not double standards revealed in the Minister's answer? Will he confirm that in Mexico the Prime Minister approved a subsidy of £30 million to a British firm for a steel project in that country, which is not one of the poorest countries? Will he also confirm that she approved a grant of £150 million to the same British firm for a steel project in India without that project going through the normal procedures in the right hon. Gentlemen's Department? If that is so, how does the Minister justify the disgraceful fact that this money came from a much reduced aid budget?

It came from that section of the aid budget called the aid/trade provision, which was set up under the Labour Government, and it is doing exactly what that Labour Government wanted to do, which was to use a certain proportion, albeit a small proportion, of our aid to help our industries in Britain with orders that have to be subject to developmental appraisal.

Does my hon. Friend agree that one of the best ways to increase aid to the least developed countries is through the Commonwealth Development Corporation, which has considerably increased its dispersals to the least developed countries in the past five years? Is my hon. Friend yet able to tell us the conclusions of the interdepartmental review on the future of the CDC?

I agree with the first part of that question. On the second part, perhaps my hon. Friend would await the answer to his question later on the Order Paper.

Students (Underdeveloped Countries)

28.

asked the Lord Privy Seal what progress has been made by his Department in providing assistance through overseas aid to enable students from underdeveloped countries to be educated at British universities.

As my hon. Friend the Minister of State, Foreign and Commonwealth Office told the House last March, we are making additional funds available this year to restore to the levels of 1978 and 1979 the number of new awards available under our training programme for the Governments of developing countries. In 1980–81 there were about 3,900 new awards and in the current year the number is expected to exceed 4,600.

Were the Minister and his Department consulted over the amazing decision on overseas student fees, whereby foreign and Commonwealth medical students are being charged £6,000 a year this year, while students coming from the EEC or the French overseas territories are paying only about £900? In view of this ridiculous situation, will the Minister give an assurance that underdeveloped countries in the Commonwealth will continue to get increased aid to help their students to come to Britain?

Yes. The developing countries concerned are able to use part of their development aid for education. As I have just said, we hope to have 4,600 new awards this year. In 1980 there were over 14,000 students under the aid programme in Britain, which was exactly the same number as in 1978.

Does the Minister agree that his answer in regard to the multi-fibre arrangement and the difference in fees that have to be charged in Britain to students from the French overseas départments and the Commonwealth show that the House and the British Government have no control over either matter? Will he make representations about these matters to his right hon. and noble Friend the Foreign Secretary, bearing in mind that people in Britain are fearful of the extent of the erosion of the powers of this House by the EEC?

My right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs always reads Hansard in respect of the questions that I answer, and he will read the hon. Gentleman's very sage observations. My hon. Friend the Under-Secretary of State for Education and Science told the House on 23 November that the Government are committed, in common with other member States, to promoting student mobility within the Common Market. It is as a result of our membership of the Common Market that this has happened. I think that it is within the memory of hon. Members that this was not a matter of which I, and one or two others, including my right hon. Friend the Secretary of State for Energy, approved at the time.

Does the Minister accept that last year's decision by the Government to reduce the amount of money available for overseas students and the introduction of full cost fees have been disastrous for many students in underdeveloped countries? Does he not accept that, even if enlightened and humanitarian reasons should not prevail, in terms of our self-interest it has been a disastrous decision to introduce full cost fees and that we ought to reverse that decision and include more people from those countries in our educational institutions so that courses at universities in Great Britain will not have to close?

I do not think that the policy has been disastrous. There is no question of a return to the earlier general subsidy for all overseas students. If the hon. Gentleman would be kind enough to read what I said in my previous answers, he would understand that it has not been quite as disastrous as he has made out. Commonwealth students alone predominated by a ratio of 2:1.

Does my hon. Friend not agree that the matter to which my lion. Friend the Member for Southend, East (Mr. Taylor) referred is a preposterous situation that demands the collective attention of the Government to get it put right in negotiation with our Common Market partners?

Yes, it is a question for the whole Government. An interdepartmental group of officials are monitoring the impact of increased fees on overseas student numbers. It has done it for one year, and it is doing it for a second year.

Was the interdepartmental group consulted about the decision last week, when the home student fee was halved, thus doubling the subsidy to EEC students and increasing the differential, making the position far worse than that suggested by the hon. Member for Southend, East (Mr. Taylor)? Was the Minister consulted about the decision taken last week to increase the differential between Commonwealth students and EEC students?

India

29.

asked the Lord Privy Seal if, in view of the proposed purchase by India of Mirage fighters from France to a value in excess of £100 million, he will reduce the aid to that country by a similar amount.

My right hon. Friend will not be surprised that I am somewhat disappointed by his reply. Does he agree that where a country can afford to spend this amount on sophisticated weapons, particularly with our overseas competitors, the whole question of the need for aid is brought into doubt?

Can my right hon. Friend understand the irritation of my constituents, who, with a local male unemployment rate of 23½ per cent., are told that the Government cannot find the money to make Bridlington a development area, but find that the Government can grant large sums of money to countries that are spending massive sums on sophisticated arms?

Yes, I can understand the feeling of those people, but they should understand that, under article 51 of the United Nations charter, every country has the right to self-defence. India has bought Jaguar aircraft from Britain. The contract for the Mirage deal is still being negotiated; nothing has yet been finalised.

Poland

3.30 pm

With permission, Mr. Speaker, I will make a statement on Poland.

Martial law was declared in Poland from midnight on 12–13 December. A Military Council for National Salvation, consisting of military leaders, has been set up under the Prime Minister and Party Secretary, General Jaruzelski. Military commissars have been appointed to oversee central and local government. Other steps taken include the sealing of the borders, the severing of telex and telephone links, the imposition of a curfew, the suspension of civil liberties, a ban on strikes and gatherings other than religious ceremonies, a takeover of the broadcasting system, and suspension of regional broadcasts.

General Jaruzelski announced these measures in a speech broadcast to the Polish people early on 13 December. He stressed that they were intended to be of short duration and would be rescinded when calm and order were restored. He said that the measures were intended to preserve the fundamentals of the Polish "Renewal" and that reforms would be continued. We regard these two commitments as very important.

There are no reports of danger to the safety of members of the British community in Poland. The British embassy is in touch with British nationals and as a precautionary measure has advised them to stay at home. This advice has also been broadcast, at the Government's request, on the BBC world service.

Her Majesty's Government are following developments with the closest attention and with great concern. We are, and shall remain, in close consultation with our partners in the Ten and in the North Atlantic Alliance. The next few days would appear to be of critical importance to the future of Poland. We sincerely hope that the Polish Government and people will be able to resolve their problems without bloodshed, by compromise and consensus. We shall observe a policy of strict non-intervention, and we expect the same of all signatories of the Helsinki Final Act.

The official Opposition share the concern of Her Majesty's Government at what has happened in Poland in the last 24 hours. I think that we would all agree that it is a tragedy that the movement towards greater freedom and democracy in Poland over the last 12 months has been halted. We must hope, with Her Majesty's Government, that the progress will be resumed as soon as possible.

We agree that there must be no intervention by foreign Governments in the attempts of the Polish people to solve their own problems peacefully by their own efforts. It would be a disaster if any action or statement by any representative of any Western Government were taken as justification or excuse for intervention by the Soviet Government or by any East European Government.

The right hon. Gentleman will be aware that the Polish economy is extremely fragile and that it depends very largely on the readiness of Western banks and Governments to reschedule Polish debt. I understand that agreement has been reached at the technical level between the banks and Governments concerned on such a rescheduling. It was due to have taken place during the next week or so. Can the right hon. Gentleman assure the House that Her Majesty's Government will use their influence with all concerned, both banks and Governments, on the Western side, to ensure that the debt is rescheduled and that Poland is enabled to have access to the amount of foreign exchange that she needs to keep her economy on the road. If they do so, they will have the full support of Her Majesty's Opposition.

I am grateful to the right hon. Gentleman for his support for the position that I have enunciated on behalf of Her Majesty's Government. In particular, I am grateful for his support for our view that intervention by any other State in the internal affairs of Poland would be a most serious matter.

The right hon. Gentleman is correct about the Polish economy. Poland's economic difficulties are well known. Over the past few months Her Majesty's Government have agreed to the rescheduling of debt and to the provision of new credit, but the Government are not solely involved; there are also the commercial banks. Our view is that it would be premature for them to take any decision to change what they had agreed.

What justification or business have we to express the opinion that the matters on which there is disagreement in Poland ought to be settled by compromise?

If there were intervention by a foreign Power, or if there were any attempt in Poland to settle matters by force, it might well involve our friends and allies in Western Europe. This is a matter that must concern Her Majesty's Government and, I should have thought, the right hon. Gentleman.

I appreciate that we must pursue a policy of non-intervention in physical terms, but does my right hon. Friend agree that the Polish Government and Poland have been subjected to completely unacceptable pressures from the Soviet Union and other members of the Warsaw Pact? Would it not be more appropriate for Her Majesty's Government at least to express regret at the suppression of the degree of freedom that had developed in Poland over the last few months?

It is always a matter of regret to Her Majesty's Government if civil liberties are suppressed and a curfew and martial law are imposed by any Government over their people. Our chargé d'affaires in Warsaw had a meeting yesterday with the Polish Deputy Foreign Minister and made Her Majesty's Government's views very clear.

Is the Minister aware of the widespread support in Britain for the struggle of the Polish people against the tyranny and inefficiency of the Communist regime? Is he also aware that he commands the full support of the SDP—[Interruption.]—in his call for non-intervention by the Soviet Union in the internal affairs of Poland? Will he bear in mind that the stark tragedy occurring today in Poland should be a warning to us all of the fate that would engulf us if we were to fall under the jackboot of the Marxist philosophy?

I am, as always, grateful for the support of the hon. Gentleman and his party. I am particularly grateful for the support that he and others have expressed for Her Majesty's Government's view that intervention by any other Power would lead to an extremely grave situation. It must be for the Polish people themselves to decide.

I share the concern expressed by my right hon. Friend about the developments in Poland, and I support his warning against any intervention by a third party, but is he aware that there is a further pressing problem? Is he aware of the considerable effort mounted by British and Polish charities in this country in recent months to channel essential food and medical supplies, through the Church and through Solidarity, to people in dire deed? If he is correct in saying that the frontiers have been closed and all communications cut off, is that flow of humanitarian aid to cease? As some contact has evidently been made at diplomatic level, will the right hon. Gentleman use his good offices to ensure that at least humanitarian aid of that nature does not cease and that the Polish people are not left to go through the depths of a hard winter at the mercy of a cruel and oppressive regime?

Yes, the Government are well aware of the substantial efforts made by voluntary and Church organisations, particularly in the supply of food and medicines. As my noble Friend the Under-Secretary of State said in the House of Lords only last week, the Government have been helping to co-ordinate those efforts. I am sorry to tell the House that the restrictions imposed from Sunday have gravely hampered that work. We shall, of course, make representations that such humanitarian work should be allowed to continue.

Is the Lord Privy Seal aware that his reply to the hon. Member for Essex, South-East (Sir B. Braine) is unsatisfactory? Is he aware also that, as voluntary organisations have been sending substantial amounts of food and medicine, I inquired of the Polish Government this morning about the position? Is he further aware that the lorries supplying those goods are in Britain and that permission would be granted for them to take supplies to homes for the elderly and for children and to hospitals? Would not our solidarity with the Polish people be better shown by positive help than by some of the bellicose statements that have been made today?

I am delighted to hear that the right hon. Gentleman has been in touch with the Polish Government, and I hope that his efforts to further that humanitarian work will bear fruit. We, too, are seeking to pursuade the Polish Government to allow into Poland vehicles containing food, medical supplies, and so on, raised by the voluntary efforts of people in this country.

I echo the sentiments expressed by other parties. Is the Lord Privy Seal prepared to press the various banking and other agencies further on the rescheduling of the Polish hard currency debt? Will he contact the director-general of the BBC to ensure that objective, impartial news services are available to the Polish people through the BBC overseas service?

As I have said, the Government believe that it is too early for anyone—the Government or private commercial banks—to make any change in the arrangements so far agreed with the Polish Government about the rescheduling of debt and the provision of further credit. We must see how the situation develops.

I have no doubt that the BBC will continue to give impartial reports of events in Poland. As I have said, the world service has been broadcasting advice to British citizens in Poland. In view of the difficulties caused by the suspension of telephone links, and so forth, it is important that our subjects in Poland should be aware of the Government's advice.

Will the right hon. Gentleman clarify his comments about the rescheduling of debt? I understand that the agreement reached between the Polish Government and Western Governments and Western banks at the technical level was due to be signed last week. Will the right hon. Gentleman confirm that the meaning of his comments is that the rescheduling agreement should be signed forthwith? Can he give any information about the position of Mr. Lech Walesa? Is he at liberty and perhaps in negotiating contact with the Polish Government?

I understand that the final agreements were due to be signed this week. Clearly, we shall have to decide how to proceed as day succeeds day. From the information that we have so far, it is clear that we should not jump into making changes in what was previously agreed. That is the position as I speak today.

I understand that Mr. Lech Walesa is at liberty and is in touch with the Polish Government.

Order. I shall do my best to call those hon. Members who have been rising in their places, but there is a Private Member's motion on unemployment in Wales, which will have to finish at 7 o'clock, and there is also another statement, so I hope that questions will be brief.

Does my right hon. Friend consider that it would help the right hon. Member for Down, South (Mr. Powell) if he were to recall the gallant way in which the Polish soldiers kept the bright light of freedom burning in this country during the Second World War and the special relationship that we have with the Polish people? Will my right hon. Friend therefore, be stronger and ask the Soviet Government not to intervene in Poland?

If my hon. Friend studies my statement he will find that that is precisely what the Government are asking of the Soviet Government, and, indeed, of every other Government. With regard to the Polish people, I do not think that anyone in the House would disagree with the view that what affects Poland must be of great concern to us.

Although what happens in Poland is clearly a matter for the Poles, will the Government remind the new military authorities that Solidarity is in a real sense the Polish nation and that any repression or reversal of the reforms achieved since August 1980 would in the end be self-defeating? Secondly, what efforts is the Minister making to ensure that food parcels from this country get through to Poland?

I think that I have already dealt with the second part of the hon. Gentleman's question. W e are doing all that we can to persuade the Polish authorities to allow food parcels and other gifts of a humanitarian nature to help to alleviate the sufferings of the Polish people, which everyone recognises to be extremely serious.

On the first part of the hon. Gentleman's question, I must repeat that this is a matter that can be settled only by the Polish people themselves.

Will my right hon. Friend confirm that the bans on meetings and on a free press are clearly in breach of the human rights basket of the Helsinki agreement? In the light of that, does he intend to continue with the Helsinki process? Can he give an assurance that on all the practical matters that the West must now consider, such as food supplies, credits and technology, the NATO Allies will act in concert and will remain united on this issue, which they failed to do on Afghanistan?

The answer to the first part of my hon. Friend's question is "Yes". The answer to the second part is that we are in close touch with our NATO partners—we were in touch yesterday, and another meeting is scheduled for today—because we believe that it is essential that we keep closely together and act in concert.

Will the Minister seek an early meeting with the new Polish ambassador and impress upon him that, although we wish to continue to help the Poles to overcome their economic crisis, it will be on the basis that there is widespread support in this country for the aims of the free trade union, Solidarity, and a widespread view that the economic crisis has been brought about not by Polish trade unionists but by those who have held a monopoly of power in Poland for 35 years?

We are using every means available to us to convey our views to the Polish Government, including their representatives here. I shall, of course, draw the attention of the Polish Government to what the hon. Gentleman has said.

Recalling that it was in defence of the freedom of Poland that Great Britain drew the sword against Nazi Germany in 1939, will the Government send a warm message of support and solidarity to the Polish people in their hour of trial? Does my right hon. Friend agree that it is a moral outrage that 36 years after the end of the Second World War Soviet troops remain in occupation of Poland? Finally, will the Government look again at the number of hours currently being broadcast by the BBC to Poland in the Polish language and see that this is stepped up?

I do not believe that the Polish people are in any doubt about the feelings of both the Government and everyone in Britain because of their contribution 40 years ago, as well as our admiration for the Polish people. I shall study the amount of time made available for BBC broadcasts in Polish and discuss with the BBC whether it could or should be profitably extended.

Is the right hon. Gentleman aware that those of us who believe in genuine trade unionism everywhere, be it in Chile, Britain or Poland, must be deeply disturbed by the action that has been taken by the Polish authorities? Is he also aware that the message from the British labour movement is now one of complete solidarity with the Polish people in their time of crisis?

I believe that all the people in Britain, be they trade unionists, members of the Labour Party or whatever, have followed events in Poland over recent months with the greatest of interest and admiration for the activities of the Polish people. I do not know whether it would be appropriate for me to send messages on behalf of the Labour Party, but I take note of what the hon. Gentleman has said.

My right hon. Friend has stressed the importance of nonintervention by other nations. Does that include the use of Soviet troops that are garrisoned in Poland?

In our view, non-intervention by other nations means every other nation. We believe that this is a matter primarily for the Polish people themselves. They ought to be allowed to organise their own affairs and settle their own differences without intervention by anyone else.

Is the right hon. Gentleman aware that the only hope of preventing the sort of intervention referred to by the hon. Member for Windsor and Maidenhead (Dr. Glym) is by enabling the Polish people to survive? I have just returned from Poland, where everyone is agreed that survival is the key. What is being done to move mountains of food—not just food parcels—so that people can eat? Why is it sensible for British citizens to stay at home, when the Minister should know that they will have nothing at all to eat if they do so?

I have already been asked about food parcels and voluntary organisations. The Government have made large quantities of food available over the last few months. We have contributed nearly 500, 000 tonnes of barley, 10,000 tonnes of butter and 3,000 tonnes of beef. That was part of an effort by ourselves and our European partners to alleviate shortages of the kind to which the hon. and learned Gentleman referred. It is essential that the Polish people are enabled to survive the winter, and the Government will continue to help in the way that I have described.

Will my right hon. Friend give an undertaking to review within the next 24 hours Polish language broadcasts? If the resources are insufficient, will some means be found to ensure that those broadcasts are performed in such a way that the Polish people can understand what is happening?

I assure my hon. Friend that I shall review this matter not within the next 24 hours but within the next six.

Will my right hon. Friend be prepared to make another statement if there is intervention by an outside Power? Will he make it plain to the Polish authorities that international cooperation on debts and aid to Poland will to a large extent be contingent on there being no interference by an outside Power?

I note what my hon. Friend said in the second part of his question. I am always ready to make a statement about any matter that affects us all.

Will my right hon. Friend comment on the possibility that Russian troops are already in action in Poland, only in Polish uniform? Will he comment also on the possibility that there is some connection between Israel's smash-and-grab raid in the Golan and problems in Central Europe?

Does the right hon. Gentleman agree that Britain has a moral obligation towards Poland as a result of the decisions taken by Sir Winston Churchill, as Prime Minister, to put Poland in the Soviet sphere of influence after the Second World War, and that inflammatory speeches at this time by persons who object to that policy will not be helpful to anyone? The important thing is that we should all do our best to assist the Polish people to achieve a peaceful solution of their problems and to ease the economic background to a peaceful solution in every way that we can, including the provision of aid, financial assistance and food, as the Community has already agreed to do.

I am very much in agreement with the right hon. Gentleman. Everyone in the House is conscious of the service rendered by Poland to the Allied cause during the last war. We are conscious of the efforts that have recently been made to re-establish democracy in Poland. The last thing that anyone wants to do is to hinder those efforts. We want to help as much as we can. If at present we can be most useful by providing food and other essentials to enable the Polish people to survive what, unfortunately, is likely to be a severe winter, that is what we should concentrate on.

I will call the hon. Member for Stretford (Mr. Churchill). [HON. MEMBERS: "No."] Order. The hon. Gentleman was referred almost by name—[Interruption.] Well, I felt that he was. Mr. Churchill.

On a point of order, Mr. Speaker. I was referring to the hon. Gentleman's grandfather, not to him—

On a point of order, Mr. Speaker. I am obliged to you for calling me. Is it in order for the right hon. Member for Leeds, East (Mr. Healey)—who just cast aspersions on the memory of my grandfather, particularly with regard to the fate of the Polish people at the end of the war—to be reminded that under the terms of the Yalta agreement, Marshal Stalin agreed—

Steel Industry

3.56 pm

With permission, Mr. Speaker, I should like to make a statement about the private sector of the steel industry.

When the 14 major companies in the United Kingdom steel industry were nationalised in 1967, it was recognised by the Government of the day that special measures were needed to ensure fair competition between the public sector, which was expected to represent well over two-thirds of the industry, and the private sector, which would consist of about 100 firms covering the remainder of the industry. Accordingly, the 1967 Iron and Steel Act contained provisions to this end.

When Britain joined the European Community on 1 January 1973 the steel industry in this country came under the regime of the Treaty of Paris—the European Coal and Steel Community—and, in so far as products fell outside that treaty, within the industrial articles of the Treaty of Rome.

Since the competition provisions of the 1967 Act were inconsistent with those treaties, they were repealed by the European Communities Act 1972. Accordingly, since then competition between the BSC and the private sector has been governed by the provisions of those treaties.

As the House well knows, the period since 1974 has been one of continuing, indeed, intensifying, decline for the whole European steel industry. Production in Europe, which in 1974 was 156 million tonnes of liquid steel, had fallen by 1980 to 128 million tonnes, leaving substantial spare capacity.

Price competition became increasingly intense. Prices today are lower in money terms than they were two years ago. At the same time, costs—particularly energy costs—have continued to increase. By mid-1980 there was hardly a steel company in Europe operating profitably.

Those difficulties were so great that, although the Treaty of Paris prohibits State subsidies to the steel industry, the Council gave its assent to a decision of February 1980 which allowed the Commission to give temporary approval to State aids linked with restructuring.

Towards the end of 1980 mandatory production quotas were introduced by the Commission, with the approval of the Council. Despite these measures, by mid-1981 the Community steel industry faced crisis conditions. Prices were well below any possible break-even point for the industry and severe disruption through massive overcapacity and unrestricted competition threatened.

Accordingly, a further crisis package of measures was agreed comprising the extension of mandatory production quotas for some products, voluntary industry restraint agreements, monitored by the Commission, for others, and strict enforcement of the ECSC rules on pricing transparency by both producers and the larger distributors. It is against that background that the position of the private sector in the United Kingdom falls to be considered.

The measures to stabilise prices and to increase them so that firms may once again move into profitability will, of course, help the private sector along with the rest, but, by itself, this will not be enough. In other Community countries various forms of aid are available from Governments, both to public and privately owned companies. In Britain help has been confined to the British Steel Corporation. The private sector has received no assistance apart from regional aids, which are also available to the BSC.

Since 1975 successive Governments have made available to the British Steel Corporation a total sum approaching £5,000 million partly to fund operating losses, partly to finance investment in the modernisation of plant, and partly to meet the costs of closures and rationalisation, mainly redundancy and resettlement costs.

The British Independent Steel Producers Association has for some time been making representations to the Government about the extreme unfairness of the system under which it is expected to operate. The association has pointed out that steel is unique in that it has its own regime under the Treaty of Paris, something that is not applicable to any other industry.

The association has pointed out that in no other European country have massive sums of aid been given to the public sector while nothing has been given to the private sector. It has pointed out that the effect of this is that even where Community aid is available it has gone exclusively to the BSC. I have been giving urgent consideration to this powerful case.

I am pleased to tell the House that I have decided to introduce a scheme under section 8 of the Industry Act 1972 to help the private sector steel companies in Britain with rationalisation and restructuring projects and with the costs of redundancies.

The scheme will offer up to £22 million of assistance to the industry by the end of 1984. Eligible projects will attract grant at the rate of 25 per cent. The scheme will also guarantee 85 per cent. of the cost of statutory redundancy payments, and in addition provide a maximum contribution of £500 per person to the employer's costs of any ex gratia or severance payments.

This scheme is intended to cover steel products as defined by the Treaty of Paris, with the addition of the drawing, cold rolling and cold forming of steel, but excluding the drawing and manufacture of steel wire and wire products. I will publish details of the eligible sectors of the industry in the Official Report, and they are available in the Vote Office. Full details of the scheme will be available very shortly from my Department.

The scheme has, of course, to conform with the obligations that we undertook when we agreed to the ECSC decision on state aids, promulgated in August of this year. As such, it has to be confined to assisting restructuring, rationalisation and redundancies. Applications for help with restructuring projects must be made by September 1982. No payments can be made after 31 December 1984.

As required by the treaty, the scheme is being notified to the Commission for approval, but I do not anticipate difficulties in this regard.

Quite separately, the steel casting sector has drawn up a scheme to allow the rationalisation of that part of the industry whereby firms reducing capacity will be compensated by a voluntary levy paid by companies remaining in production. To work, the scheme requires front end loading and I am giving urgent consideration to making a grant under section 8 of the Industry Act 1972.

Any payment would be conditional on a substantial majority of this industry agreeing to fund a significant reduction in capacity, thus fulfilling the requirements of section 406 of the Income and Corporation Taxes Act 1970.

The Government are determined to secure the survival of a healthy, profitable and, hopefully, expanding private sector in steel. I believe that the measures I have announced are fair and responsible. They can be accommodated without any increase in the allocations to my Department. I commend them to the House.

The Opposition have supported both the private and the public sectors of the steel industry, and will continue to do so, because such support saves jobs and assists our basic industries and our economy. The Secretary of State's proposals are modest by any criteria. We want to maintain jobs and sustain capacity. We do not want to see redundancies increased and capacity reduced even further. The reduction in both the private and public sectors has already gone much too far. I hope that the Secretary of State will be able to say that his statement is not just a redundancy package, but is something far more significant.

The statement raises the crucial question of Government intervention in the whole of the private sector. While the proposals amount to modest redundancy payments of £500 to any person made redundant, they will raise a few questions and cause eyebrows to be raised in the rest of the private sector. However the statement is phrased, it amounts to Government intervention in the private sector.

The statement says nothing about imports into the European Community, which are causing great difficulty. The right hon. Gentleman's hon. Friend the Under-Secretary of State referred to this matter only last week. What steps are being taken to see that these imports are controlled in a way that is beneficial to our industry?

The Secretary of State briefly mentioned energy costs. Again, we look, apparently without hope to Government intervention in regard to energy prices, which represent one of the major costs faced by the steel industry in both the private and public sectors.

What discussions has the Secretary of State undertaken with the United States about the American market and the effect of proposed restrictions on the British steel industry, not least the private sector, which exports considerable quantities of steel to the United States?

The key paragraph of the right hon. Gentleman's statement says:
"Any payment will be conditional on a substantial majority of this industry agreeing to fund a significant reduction in capacity",
and it goes on to refer to section 406 of the Income and Corporation Taxes Act 1970. Can the right hon. Gentleman give the House more information?

Finally—[Interruption]—this is an extremely important statement, following which I am sure my hon. Friends, at least, want to hear questions put to the Secretary of State on issues where men's jobs are at stake—the Opposition will want to study the statement in more detail. I give notice to the Secretary of State that the Opposition may ask for a fuller debate on the proposals.

I am grateful to the right hon. Gentleman for this general welcome for my statement. I assure him that this is not just a redundancy package. On the contrary, we would secure the approval of the Community for this package of aids only if it involved measures for the restructuring of the capacity of the industry. Like the right hon. Gentleman, I hope that the steel industry, both the public and the private sectors, will, as I indicated in the statement, eventually be able, when the market turns up, to meet increased demand by increased production. I told the Select Committee last week that the British Steel Corporation could increase its output by up to 20 per cent. without any increase in capacity.

On the question of a general policy of intervention in the private sector, I must point out to the right hon. Gentleman that this case is unique. No other industry has had to face a combination of a substantial regime from the Community, under the Treaty of Paris, coupled with a massive subsidisation of a major public sector competitor in its own country. That is what makes the private sector of steel unique. I thought it right, as an exception to the Government's general policy of non-intervention, to come forward with this scheme.

The question of imports to the EEC from outside was the subject of a decision by the Foreign Affairs Council last week, when a negotiating mandate was agreed for the renewal of voluntary restraint agreements with overseas countries. These negotiations must now take place. We, of course, were party to that mandate.

The Government are acutely aware of the specific problem that electricity costs cause to major high-load factor users. That is a matter for my right hon. Friend the Secretary of State for Energy. The Government are considering the serious difficulty caused to parts of industry by energy costs.

The right hon. Gentleman asked about the American market. I had meetings last week with Senator Brock, the President's special trade negotiator. We discussed the difficulties that have emerged in America as a result of the suits for anti-dumping and countervailing duties. Section 406 of the Income and Corporation Taxes Act provides for a special tax relief in cases that fall within the restrictive conditions of the steel casting sector. The levy is relevant only to that separate scheme for the casting sector. We have not yet had a firm proposal, but I am considering whether it has a case for aid.

Whether there should be a debate is a matter for my right hon. Friend the Leader of the House.

I thank my right hon. Friend for his practical statement. When one bears in mind the fact that the BSC has received about £5,000 million of taxpayers' money, £22 million to help the private sector to reorganise is not excessive. I hope that this will not be the start of a continual drip feed. What steps will my right hon. Friend take to ensure that the rest of the EEC steel producers cut their production, as we have done in the United Kingdom, to allow our steel producers, both private and public, to move into profit?

I am grateful to my hon. Friend for his welcome of the measures that I have announced. A large part of the £5,000 million given to the BSC was to fund the losses and to provide for investment. Only a part went towards restructuring. I accept that substantial sums were involved. I accept also that if the European Community's regime is to be effective it must be applied fairly and firmly by the Commission to all members.

I am sorry to say that the weather disrupted the meeting of EEC Industry Ministers that I convened last week. Only one Minister managed to survive the snowstorms and reach London. It is for the Belgian Presidency to reconvene that meeting, I hope early in the new year. The purpose of the meeting will be to review progress under the June agreement and to call upon the Commission to carry out its terms in respect of all members of the Community without fear or favour so that all are treated equally.

Order. I believe that these questions should finish at 4.30 pm at the latest, to be fair to those who wish to take part in the Private Members' business. I hope, therefore, that questions will be brief.

Does the Secretary of State understand that some Opposition Members think that his statement represents, if not a U-turn, a U-swerve in the Government's realisation that intervention is necessary? There are shades of 1972 about it.

As £22 million is a modest sum, how many firms will benefit, what will be the scale of job losses and how will the miserable sum of £500 and the 85 per cent. guarantee compare with the sums that BSC workers receive?

I cannot reply to the right hon. and learned Gentleman's questions about how many firms and redundancies will be involved until the industry comes forward with schemes for restructuring and the consequences of them. The sum of £22 million is considered reasonable in the light of the likely development, but we cannot be certain about that.

Redundancy payments to be funded by the Government under the scheme amount to 85 per cent. of the statutory redundancy, plus 85 per cent. of anything above that up to a maximum of £500. If one assumes an average statutory payment of £1,500, which is right for the industry, that is an average of £800 extra and amounts to an average payment of about 63 per cent. that is funded by the Government. That is less than steel corporation workers receive, but it is fair to say that the British Steel Corporation conducted a massive investment campaign, which resulted in huge over-capacity in steel and a correspondingly large restructuring and rationalising job. In those circumstances, it was right that where there were large numbers of redundancies, sometimes in extremely painful circumstances, the sums paid to BSC workers should have been larger than the funds available to the private sector. We are talking now of a smaller scheme, and more modest sums are appropriate.

Order. If questions and answers are as long as that, many hon. Members will be disappointed.

I welcome the Secretary of State's statement, but does he accept that if more money had been made available earlier for restructuring there would not be the need now to spend money on redundancies? May I press the right hon. Gentleman further on how many redundancies are likely to occur? Has he any idea of what proportion of the money will go on restructuring and what proportion on redundancies? How many people made redundant by the BSC were re-employed?

My reply to the hon. Gentleman's first question is that I cannot add to what I said to the right hon. and learned Member for Aberavon (Mr. Morris). BSC (Industry) Ltd has been successful in placing many of its redundant steel workers. I pay tribute to the work of Sir Charles Villiers and his staff. If the hon. Gentleman tables a question about the numbers involved, I shall do my best to answer it.

I congratulate my right hon. Friend on moving so quickly to make up the deficiency in the treatment of the steel industry by the Government and the ECSC. I thank him warmly for remedying an injustice about which many of my hon. Friends felt strongly, and about which I felt very strongly, to the point of resignation. May we have an assurance that the money is not intended to include further Phoenix-type deals between the private and public sectors, but that they will be considered separately?

I am grateful for my hon. Friend's generous comments. In fairness to my predecessor it is right to point out that he instituted a system to ensure fair competition between the public and private sectors, which proved valuable and helpful until the recent collapse of steel prices in Europe. That gave rise to the serious problems that confront the private sector. I assure my hon. Friend that the money is not intended primarily for the so-called Phoenix schemes. The funding for Phoenix 1 came out of the BSC's external financing limits.

As such a large amount of public money is involved for use on a global basis throughout the private sector, which we support, and because we cannot expect a corporate plan for the private sector, may we have a general plan for reconstruction in the private sector?

I would not regard myself or my Department as in the least competent to try to draw up a structural plan for an industry that is as complex, as technological and as rapidly changing as the steel industry. That must be left to the management of the industry. If it comes up with a plan that involves a measure of restructuring, we shall help with the cost.

I welcome my right hon. Friend's statement, which I understand lessens the discrimination that has been practised by successive Governments against the private sector of the steel industry. Will my right hon. Friend bear in mind the question asked by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and recognise that the £22 million to be made available by the end of 1984 has to be put in the context of the £6,000 million or more of public subsidy to the British Steel Corporation? Does my right hon. Friend agree that the best way to avoid discrimination between the private and public sectors is by significantly reducing the public sector subsidy? What hope can he give the House of that?

The sum of £5,000 million to which I referred relates to the period since 1975. In evidence to the Select Committee last week I said that the British Steel Corporation was on target to halve its loss this year over last year and to breaking even next year. That, of course, will lead to substantially reduced funding from the Exchequer for the corporation. We are discussing what may happen in the future in the context of the BSC's corporate plan, and certainly an element of privatisation through Phoenix schemes will form part of the Government's plan.

Does the right hon. Gentleman appreciate that, although his package will be welcome to many private steel manufacturers, not least the Alpha steel works in Newport, the real job of a Secretary of State for Industry is to announce an end to cuts in our manufacturing capacity? Is he aware that what we need now is an expansionist package?

I hope that the hon. Gentleman will have noted the announcement that the underlying rate of growth in manufacturing output is reported by my statisticians to be 2 per cent. per quarter. That is a helpful and hopeful sign. Of course, that is over a short period and we must hope that it will continue.

In the steel industry throughout Europe, in previous decades there was a substantial investment in new capacity. This is now far in excess of the market demand for steel, so rationalisation and withdrawal of capacity had to be the order of the day. What I have announced, will help the private sector to some extent instead of concentrating the help solely on the British Steel Corporation.

Will my right hon. Friend accept that many of us welcome and understand the justness of the move, but does he agree that we must aim for a return to profitability of the whole private sector, and will he bear in mind that public sector costs have borne heavily on the private sector in the last two years? Will he use his position in the Government to fight to control public sector costs in the coming year?

I understand and greatly sympathise with what my hon. Friend has said. I firmly believe that competition is the most effective way to get any organisation to keep its cost, and therefore its prices, under control. I know that my hon. Friend cheers as loudly as I do when I point out that the Government have done more to introduce competition into State industry in the last two and a half years than their predecessors did in the last 30 years.

The Minister said that he was hoping for advance, but does he accept that there can be little advance for £22 million, which could be described as too little too late? The Minister said that there had been a 28 million tonne contraction in steel capacity in Europe in the past six years, but does he acknowledge that Britain has supplied the greater part of that, and that if other countries had operated EEC policy as scrupulously and as diligently as Britain has done we might not have been facing the current level of industrial decline in steel areas?