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Trade And Industry

Volume 87: debated on Wednesday 27 November 1985

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Scotch Whisky


asked the Secretary of State for Trade and Industry if he will make a statement on Her Majesty's Government's policy towards the European Community's report on discrimination by the Japanese Government against imported Scotch whisky.

The Government welcome and are studying in detail the report published by the European Commission on exports to Japan of wines and liquor, including Scotch whisky. We are working in the Community towards a concerted strategy for resolving the difficulties still faced by those drinks in the Japanese market.

Does my right hon. Friend agree that that report confirms what many hon. Members on both sides of the House have been saying for some time—that the Japanese believe in free trade only for the Japanese? Is it not about time that we stopped pussyfooting around and said to the Japanese, "Remove discrimination against British products such as Scotch whisky and insurance within a specified time"—let us say six months. "If you do not, we shall take massive retaliatory action against your exports"? Have the Government not accepted the fact that it is no good talking politely to the Japanese, because they will merely bow and say, "Yes, in one or two years"? The only action they will appreciate is retaliatory action.

What my hon. Friend has said clearly strikes a chord in many parts of the House. We do not want to retaliate against Japanese exports to us. We want to get the Japanese to open up their market to us. That is what we should try to achieve, although we may not be able to. For once, my hon. Friend is slightly less than fair in what he says. A reduction in the tariff on Scotch whisky was included in the Japanese action programme in July. There has been some modest progress on that matter.

Is the Minister aware that, due to the external ownership of the Scotch whisky industry, large quantities of malt have been exported to Japan for blending, thus preventing an opportunity for bottled Scotch to be sold there? Does he believe that it would now be appropriate to ask NEDO to undertake a sectoral inquiry into the future of the whisky industry, especially in view of the takeover bids which are currently in progress?

I shall draw the hon. Gentleman's suggestion on the latter point to the attention of my right hon. Friend, who is principally involved with the whisky industry, and I take note of what the hon. Gentleman says.

Will my right hon. Friend bear in mind that every restriction on the export of Scotch whisky has an impact on employment in Scotland, especially in the distilleries in the Highlands? Will he do everything that he can to try to resolve this matter as quickly as possible?

As my hon. Friend points out, the problem is not related only to Japan. We are trying to obtain better access for Scotch whisky in other markets in the world. We are having some success with some of them. I agree with my hon. Friend that it is extremely important that we should remove what barriers we can to the export of Scotch whisky, which is one of our most important exports. If we get a new round of trade talks going, our prime aim will be to bring down those barriers.

We have been trying. This Government are not the only Government who have been trying. The European Commission has recently returned from a visit to Japan. It is about to formulate proposals which will go to the December Foreign Affairs Council. The House will no doubt be interested to hear the results.

Nationalised Industries (Share Flotations)


asked the Secretary of State for Trade and Industry what assessment he has made of the ability of the financial markets to absorb a series of large flotations of shares in nationalised industries.

The Parliamentary Under-Secretary of State for Trade and Industry
(Mr. John Butcher)

On the basis of the amounts that have been subscribed for attractive issues, I have no reason to doubt that the capacity of the financial markets will be sufficient.

I am sure the Minister will not be surprised to hear that neither do I doubt that. Does he acknowlege that although his party's objective is wider share ownership, his friends in the City are positively salivating at the possibility of so many blue-chip shares coming to the market? Their energies and the billions of pounds that they control will be directed to blue-chip flotations instead of funding new enterprises which could create new jobs in new industries elsewhere.

The other group of people that will be salivating are the population. The hon. Gentleman will be aware, for example, that arising from the British Telecom flotation, about 2 million subscribers were involved in what I thought was a Liberal principle of wider share ownership. I find the hon. Gentleman's attitude somewhat disconcerting.

Does my hon. Friend agree that the surplus of institutional cash flow over Government sales of gilts and assets during the next financial year will average nearly £2 billion per quarter, so that any suggestion that privatisation will lead to a shortage of investment funds is utter nonsense?

My hon. Friend has hit the nail on the head. The House may wish to know that in the 1985–86 financial year to date, net funds raised by new share issues totalled £6·5 billion, of which £4·6 billion was raised by the private sector and £1·9 billion by public sector issues.

Will it be possible to stop the fraud that took place at the time of the issue of BT shares? Will the Government take action against those who were fraudulently involved in making applications for shares in the BT flotation?

That is a matter for the Director of Public Prosecutions to decide on the basis of his investigations. I assure the hon. Gentleman that if there are lessons to be learnt on other aspects of the share issue procedures, we shall fully note those and consider them in future flotations.

Does my hon. Friend recall that prior to the flotation of British Telecom the Jeremiahs in the House and elsewhere said that there was no way in which the City could absorb such a large flotation and that he would need at least three tranches? As they were wrong, does my hon. Friend accept that when we consider further privatisation we can rest assured that there will be no problem from the flotation point of view?

I am grateful to my hon. Friend for that comment. The BT flotation vindicated all of the Government's hopes, particularly on wider share ownership. Even though the bitter opposition of the hon. Member for Newcastle-under-Lyme (Mr. Golding) to that measure is obviously still persisting, I hope that he will join me in congratulating the 96 per cent. of BT employees who took advantage of the share issue.

The Minister will be aware that the increase in the price of BT shares in one day showed clearly that the Government had sold them at well below their true value. Has not the privatisation timetable been forced by the need to create a large sum of money to be dispensed in electoral tax bribes in such a way that, once again, important British public assets will be sold at well below their true value, with greater pickings for the City, and to the ultimate public detriment?

The right hon. and learned Gentleman, perhaps willfully, misunderstands the working of the market. A fine judgment must always be made about what the market will stand when fixing a price on flotation, and Opposition Members enjoy misinterpreting that process. The advantages of privatisation stand in their own right as a means of obtaining wider share ownership.

Gulf States


asked the Secretary of State for Trade and Industry what plans he has to seek to increase trade with the Gulf states.

Trade with the Gulf states is about £3 billion annually. We are mounting a special programme, in conjunction with British trade associations and chambers of commerce, to increase awareness of export opportunities in Gulf markets, and I shall visit Kuwait, Oman and the Yemen Arab Republic next week.

Does my right hon. Friend agree that the Gulf states are one of our most important and succesful markets? Will he do all he can to support British business men who want to fight off competition from the Japanese, Italians and Germans?

I agree with my hon. Friend. The Gulf co-operation council area is now our third largest trading area after Europe and the United States. It is encouraging to note that Britain's exports to the Gulf are going up at a time when those of many other countries are going down.

Does my right hon. Friend agree that the recent potential exports of Tornadoes to Saudi Arabia and Oman is an indication of the great increase in trade with the Gulf states and that, while we can always improve on it, that is the sort of example that we should be following?

Why cut the export trade mission budget to the British Overseas Trade Board? Surely that has an immediate effect on trade with the Gulf.

I do not think that that is right. The figure for the BOTB has been held broadly constant, and I hope that there will be no effect on trade—[Interruption.] As I said, the figure is broadly constant. There is a small reduction consistent with what I have said. There will be very little effect on the level of our export promotion efforts.

Developing World (Orders)


asked the Secretary of State for Trade and Industry what steps the Government are taking to assist British companies to win export orders from the developing world.

In addition to the help given already by my Department, by the commercial services of the Foreign and Commonwealth Office and by the Overseas Development Administration, my right hon. and learned Friend announced on 12 November that the Government are introducing, under the aid and trade provision, a soft loan facility.

I very much welcome my right hon. Friend's success in producing the soft loan facility, which will put British companies on a more equal footing with their foreign competitors.

Is it not the case that already our aid and trade provision has produced £1,600 million of orders for British companies? What additional impact does my right hon. Friend think the new facility will have?

The figure that my hon. Friend cited for the value of orders that the ATP has secured is broadly accurate. The new soft loan facility announced by my right hon. and learned Friend will increase the potential business that could be won with the ATP from about £250 million a year now to £500 million a year by 1988–89, so it is a substantial increase.

May I emphasise the serious position in the heavy engineering industry, especially the turbine sector, which is trying to make inroads into developing countries, but which is being frustrated by the soft loan facilities introduced by France and other competitors? Is the Minister aware that that industry is losing magnificent opportunities in places such as China? What will he do about it?

I shall do exactly what I have already outlined. We have held discussions with the Chinese authoritities about a soft loan facility, and that is now available in China. I believe that companies in the hon. Gentleman's constituency are already in touch with my Department on that matter.

Does my right hon. Friend agree that the best service that the Government can render to both our exporters and the developing countries is to resist protectionism wherever it arises—whether in Japan, other countries or even this country?

I agree with my hon. Friend, which is why we have welcomed the GATT talks currently taking place in Geneva. I hope that they will lead to a proper round of talks next year.

While we welcome the extended scope of the aid and trade provision, does the Minister recognise how far short the measures announced in the Gracious Speech fall of what industry is requesting? Does not industry want a doubling of the money available under that scheme, with a roll-over provision so that what is not spent in one year can be spent in the following year, and a streamlining of the procedures by which decisions are taken? When will the Minister move on those important points?

I disagree utterly with the hon. Gentleman. Industry has welcomed my right hon. and learned Friend's announcement. We have already carried out streamlining and it is not presenting a problem at the present time. As I said a moment ago, the potential business that could be won with the new soft loan facility will double the effects of the ATP—

What is the difference? The effect is exactly the same—business will be doubled. That is a very substantial step, but it is typical of the Opposition to be grudging and resentful.

British Book Printing


asked the Secretary of State for Trade and Industry what representations he has had concerning United States trade restrictions affecting British book printing.

The Parliamentary Under-Secretary of State for Trade and Industry
(Mr. Michael Howard)

We have had several approaches from hon. Members expressing concern about a discriminatory element of United States copyright law, the manufacturing clause, which is wholly unjustified.

I thank my hon. and learned Friend for that encouraging reply. In view of the deep concern felt in Norwich and elsewhere about the rule-breaking by the United States, will he tell us what representations he is making to the United States authorities about that practice? What action does he propose to take if it appears likely that that damaging clause will be extended?

My right hon. and learned Friend visited Washington last month and reminded the United States Administration of our objections to the clause and our expectation that they would work towards its abolition. Earlier this month the European Community sent a formal letter to the United States Government reminding them of their breach of international obligations.

Is my hon. and learned Friend aware that the British publishing industry is equally concerned about piracy, particularly on the part of Taiwan? Will he give an assurance that the Government are apprised of the situation?



asked the Secretary of State for Trade and Industry what privatisation proposals are currently being considered by his Department.

My right hon. and learned Friend plans to return to the private sector as many as possible of the publicly owned enterprises for which he is responsible. They include the remaining warship building yards of British Shipbuilders, Rolls-Royce, British Steel Corporation, and BL.

Will the Minister confirm newspaper reports that the Government intend that a substantial part of the next tranche of Cable and Wireless shares will go to institutional investors? How does that square with the desire to see wider share ownership among the general public?

It would not be right for me to confirm newspaper reports at this stage. In due course the House will be informed of the arrangements for that disposal.

Is my hon. Friend aware of the concern in my constituency about the future of English Estates, its funding, and its ability to redevelop Chatham dockyard? Will he decide whether to accept the management buy-out proposals as quickly as possible?

I am grateful to my hon. Friend for raising that matter. My right hon. and learned Friend the Secretary of State will be addressing himself to it later.

Is the Minister aware that there is no commercial or industrial justification for the proposed privatisation of Rolls-Royce—[HON. MEMBERS: "Why not?"]—because the company's viability is entirely dependent on Government contracts, Government aid for civil projects and the Government's purchasing power in relation to military projects? Given that total dependence, there should be public accountability, which can be achieved only while Rolls-Royce is in the public sector. Will the Minister therefore drop that item from his disgraceful shopping list?

No, I will not. Perhaps the hon. Gentleman will consider an analogy with British Aerospace, to which the same comments apply. Since 1980, when British Aerospace was once again privatised, its turnover has increased by 73 per cent. and its pre-tax profits have increased by 128 per cent. That is the reason for privatisation.

Economic Growth


asked the Secretary of State for Trade and Industry what has been the average annual growth in the economy over the last six years.

The Secretary of State for Trade and Industry and President of the Board of Trade
(Mr. Leon Brittan)

In the six years up to and including the first half of 1985, the annual average growth rate of gross domestic product was 1·25 per cent. Since the first half of 1981, the average growth rate has been 3 per cent.

Will the Secretary of State confirm that the annual average increase in output has been less than 1 per cent.? Grim as the national figures are, they actually hide unacceptable regional disparities. Will he confirm that the Welsh share of gross domestic product has fallen faster and to a lower level than that of any other region, with the exception of Northern Ireland, and is now 20 per cent. lower than the national average? Given that regional aid has been cut by £300 million this year, how does the right hon. and learned Gentleman expect regions of Britain to share in any growth that may come?

I do not accept the hon. Gentleman's general comments about the economy. They are belied by the fact that we are entering our fifth year of uninterrupted growth—[Interruption]—whether or not the hon. Gentleman regards that as a matter of amusement. The right test of regional policy is not simply the amount of money being spent. The changes that we have introduced to relate the amount being spent not just to capital investment, which might have taken place anyway, but to the production of jobs, represent a very sensible change of direction. So far, the results in terms of new jobs are encouraging.

If it is my right hon. and learned Friend's intention to help the regions in this way, what is the point in the Department giving £1 million in grants to English Sewing Limited to create 300 jobs in Scotland, while destroying 300 jobs in my constituency and that of my hon. Friend the Member for Amber Valley (Mr. Oppenheim) in Derbyshire?

I shall come to that, but my hon. Friend will be aware that the policy is normally to give assistance only where there is a net increase in jobs. I am advised that his figures are not accurate and that the number of jobs that will be created is substantially larger. However, I will of course look into my hon. Friend's point.

Does the Secretary of State agree that behind those figures lies the devastation of large sections of British manufacturing industry during the past six years? Will he persuade his colleagues that, instead of spending any resources that may be available at the time of the Budget on tax cuts, which will go into consumer expenditure, they should be put into soft loans, as has been done on the ATP scheme, to help British industry at home, and into more education and training, so that industry, particularly high technology industry, is not short of the skilled people it needs?

The hon. Gentleman does less than justice to the fact that output has entered its fifth year of growth and that manufacturing output is 11 per cent. above its 1981 level. The hon. Gentleman is right to identify particular areas of assistance, but the extent to which it can be given is a matter of judgment. I am sure that the Chancellor of the Exchequer will be interested to hear the hon. Gentleman's recommendations for the next Budget.

Does my right hon. and learned Friend agree that one of the essential ingredients for achieving greater economic growth is improved competitiveness, so that we must examine carefully industrial costs under the Government's control? In that context, does my right hon. and learned Friend agree that a reduction in employers' national insurance contributions would help competitiveness?

I am sure that my hon. Friend will also wish to take into account the fact that the national insurance surcharge has been removed. That was not an easy task, because of its size and the amount of revenue that it raised. My hon. Friend is right to stress the importance of improving competitiveness. Those concerned with reaching pay settlements should have that at the forefront of their minds if they wish to improve levels of employment, as we all do.

Has not the pathetic 1¼ per cent. growth in production been achieved entirely through increased North sea production, which was determined even before the Government came to office? Is not manufacturing production, in a year when the country is awash with energy, substantially lower than during the three-day week when electricity supplies were cut off? In view of that, what achievements do the Government have to boast about?

The right hon. Gentleman is living in an unreal world. [HON. MEMBERS: "Nonsense."] Yes, he is, if he thinks that oil should be excluded and does not matter and that the achievement of oil is automatic. That achievement was possible only as a result of private enterprise taking the opportunity to benefit from the oil. The right hon. Gentleman ignores the Budget changes which have facilitated the exploitation of marginal fields which otherwise would not have taken place.

Manufacturing Industry


asked the Secretary of State for Trade and Industry what steps he proposes to take to stabilise and improve the future of manufacturing industries in Lancashire.

The best prospects for industrial growth in Lancashire lie in the Government's wider economic policies, which are creating conditions for a sustainable growth in jobs and output.

Does the Minister accept that for the people of Lancashire that answer means nowt? Have not Government policies shown consistently that the Government have no interest in the regions or in manufacturing industry? When will they do something about getting industries on the move again and about looking after the regions?

The hon. Gentleman is comprehensively wrong about regional policy and about the role of manufacturing industry. Since November 1984, about £8 million has been deployed in regional aid assistance to Lancashire.

Does my hon. Friend accept that Lancaster city council, while making the best possible use of such grants as are available, believes that it is the duty of local people to attract industry? Is he aware that, in conjunction with the city council, moderate trade unions and the chambers of commerce, the area is attracting industry and has achieved the best job vacancy ratio in the county? Why do other councils not do likewise?

Inward investors in particular look hard at the calibre, quality and motivation of local authorities and at the attitude in the local community to enterprise when they make their location decisions. The job creation programme, which is home grown and self-induced by local dynamism, does not, perhaps, receive enough attention.

Is it not a fact that the manufacturing sector in the north-west region, which includes Lancashire, has lost more than 300,000 jobs, and has continued to lose jobs every year since the Government took office in 1979? Last year it lost more than 10,000 jobs. Is it not also a fact that the north-west region relies heavily on manufacturing for its economic base, its employment base and for income support, and that it is being crucified by the Government's policies, which are indifferent to manufacturing industry and have done nothing to increase output, which has continued to diminish in real terms since 1979?

I reject entirely the assertion that the Government are indifferent to the interests of the manufacturing sector. The phenomenon that the hon. Gentleman describes of a loss of the share of employment in manufacturing industry within various economies around the world is a common one, and the United Kingdom is not unique in that respect.

Research And Development


asked the Secretary of State for Trade and Industry if he is satisfied that sufficient priority is given to investment in research and development.

No, I am not satisfied. In addition to a public sector expenditure of £4·2 billion last year, the Government have done a great deal to encourage a higher level of investment in industrial research and development.

Does my hon. Friend agree that adequate expenditure on research and development is essential if we are to remain competitive internationally? Does he further agree that, despite the incentives given by the Government, many of our companies have been falling behind their competitors in the United States, Japan and elsewhere? May I suggest a modest proposal, which might help to focus investment attention on the sublect? It is that companies listed on the Stock Exchange should be required by law to include in their annual report and accounts an assessment of the amount they spend on research and development expenditure as a percentage of sales.

I am interested in my hon. Friend's point. I should have thought that most companies would find it in their own interests to make such a declaration. Frankly, I am surprised that more do not. At this stage, I should not like such a disclosure to be made compulsory, but should prefer it to be encouraged as a form of best practice by bodies, such as the Confederation of British Industry. I understand that the accounting standards committee is reviewing practice at present, and in the light of its recommendations we shall consider what further action might be taken.

Why does the Minister not think it desirable to require companies to publish their research and development figures? Is he aware that Britain is almost the only country that does not offer tax credit or other tax advantages for expenditure on research and development?

I have already explained to the House why I believe that it is not necessary to force companies to declare such figures. Because research and development have a direct impact on the bottom line, if the bottom line is less good than the company would wish it to be, it is in its interests to explain to its shareholders and the City in general the impact that research and development expenditure has had on it. Regarding fiscal incentives, I remind the hon. Gentleman that virtually all current research and development expenditure now qualifies for immediate 100 per cent. relief, as does capital expenditure on scientific research. The 100 per cent. initial allowance for scientific research is being retained, as the hon. Gentleman knows.

Does my hon. Friend accept that the midlands lost a motor cycle industry in the mistaken belief that we had perfected the motor cycle, and because of an unwillingness on the part of the management and unions to invest further in research and development?

I take my hon. Friend's point. It is important for all sectors of British industry to consider new products and materials, particularly when their order books are full.

In assessing the priorities given to research, does the Minister agree that far too high a priority is given to defence-related research—more than 50 per cent. and much higher than any other OECD country? Is he aware, for example, that recently the Ministry of Defence has laid aside a further £5 million for basic computer research, provided it is matched by £5 million from the civilian research council? Does he recognise that that will further dry up research resources? Is he aware that the Pentagon is now trying to get its hands on Alvey flagship research for the SDI programme? Is he not worried about that, and what will he do about it?

The hon. Gentleman will be aware that many of the fundamental technologies that are of relevance in the defence world are also relevant in the civil sector. He seems to want to have it both ways. He is extolling the Department of Defence in the United States, almost seeming to imply that we should follow that role model. I do not know whether his constituents, who are interested in the helicopter industry, would necessarily want to support a diminution of expenditure on research and development.

Does my hon. Friend agree that unless we invest more in research and development and British microelectronics, we shall end up as a nation of assemblers of Japanese components?

I agree, and it is important that we pay due attention to examples such as Japan, where 75 per cent. of research and development is done by industry itself.

If the situation is as satisfactory as the Minister, in his complacent way, asserts, why is it that every week of this year the head of every research institution and the president of the British Association for the Advancement of Science complains so loudly about the Government's cuts in research and development budgets?

As usual, the right hon. and learned Gentleman was not doing me the courtesy of listening to what I said. My first words in answering the original question were to the effect that I was not satisfied. I dare say that all research and development establishments and directors will always believe that they could use a larger budget. We have discussed with all these people what the correct priorities might be. We must at times be prepared to do something extremely difficult in research and development, which is to be ready to terminate some programmes which may appear to have run out of steam, and to put extra priority into other programmes with potential.

British Shipbuilders


asked the Secretary of State for Trade and Industry what is the present position regarding the proposed privatisation of British Shipbuilders' warship building yards.

British Shipbuilders has already sold three of its warship building yards—Yarrow Shipbuilders Ltd., Vosper Thornycroft (UK) Ltd. and Brooke Marine Ltd. Negotiations are continuing for the sale of the others—Vickers Shipbuilding and Engineering Ltd. and its subsidiary Cammell Laird Ltd., Swan Hunter Shipbuilders Ltd., and Hall Russell Ltd.

The Minister will have seen the reply given yesterday by the Minister of State for Defence Procurement about the ordering programme for the type 23 frigates, and he will know with what dismay his answer was greeted on Tyneside. Will the Minister confirm that the Government's failure to honour their earlier commitments to Tyneside about the replacement of type 23 frigates at Swan Hunters has set back privatisation for that yard and, further, that the subsequent redundancy notices are being delayed until after the Tyne Bridge by-election?

The recent industrial relations in that yard will not have helped the hon. Gentleman in championing the cause of his constituents, which I know he is anxious to do. The order programme is a matter for my right hon. Friend the Minister of State for Defence Procurement, who will no doubt note carefully what the hon. Gentleman has said this afternoon.

Will the Minister admit that any further delay in ordering the type 23 frigates not only puts his privatisation timetable in jeopardy, but puts at risk hundreds of jobs at Swan Hunter and in the north generally, which has already lost 219,000 jobs in the past six years? Will he come clean and answer the point put to him by my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown)—that his failure to tell us about the jobs at risk at Swan Hunter in the north-east has less to do with concern about the future of the shipbuilding industry and more to do with his concern about the fate of the Conservative candidate in the forthcoming by-election?

I have no doubt that the candidate in the by-election is more than able to look after himself[Interruption]—sorry, herself—and that she will be able to meet that point. I repeat that this is a matter for my right hon. Friend the Minister, and will also be observed by the lady who is standing in the by-election.

Industry (Capital Investment)


asked the Secretary of State for Trade and Industry what are the latest figures for capital investment in industry; and how these compare with the figures for the past two years.

Total capital investment in United Kingdom industry in 1984 reached more than £26·8 billion, the highest level on record and 10 per cent. above the 1983 level of £24·4 billion. In the first half of 1985, total industrial investment was 6 per cent. above that in the corresponding period in 1984.

Those are encouraging figures for the economy, but does my right hon. and learned Friend agree that in the end both investment and jobs depend on the profits made by industry, so it is important that the profitability of British industry is at its highest since 1973 and that prospects for the coming year are good?

My hon. Friend is absolutely right. No industry will invest if it cannot afford to do so—hence the importance of profitability. Even with profits, however, no industry will invest unless its prospects appear to it to be good. Therefore, the high figure for investment that I have given shows not only ability to invest but confidence in the future on the part of British industry.

Will the Secretary of State come to the real world and to my constituency in the north-east of Manchester to see what was once a vibrant manufacturing industrial base now in complete isolation, with empty factories standing like tombstones of a once proud past? Does he appreciate that that is what Prince Charles was talking about when he said that we were becoming a fourth-rate nation? Prince Charles and the voters of this country should realise that we are becoming a fourth-rate nation because we have a fourth-rate Government. People cannot live on fraudulent claims and promises. When are we to have real investment?

The hon. Gentleman does less than justice to his constituents by ignoring the fact that assisted area status has been given to Manchester and the figures show that that is being used on a very substantial scale. To talk about investment in the real world while ignoring figures showing the highest level of investment on record does not do justice to the hon. Gentleman's constituents. The confidence of British industry will be best served in the interests of the hon. Gentleman's constituents and their employment if he accepts the improving situation instead of trying to ignore it for political reasons.

I welcome the increased investment and congratulate the Government on achieving it, but does my right hon. and learned Friend agree that the figure is still totally inadequate? Does he further agree that industry will invest and plan for the future only if it believes that the Government are entirely behind it in seeking to create additional jobs, and that that will be achieved only if the Government protect British industry from unfair competition? With regard to the clothing and textile industries, will my right hon. and learned Friend give an assurance that the Government will take a more robust attitude in defence of British industry in the current multi-fibre arrangement negotiations?

The answer to my hon. Friend's question is given in the fact that manufacturing investment rose by 14·5 per cent. in the past year. That shows confidence on the part of British industry in the policies being followed by the Government. As for the multi-fibre arrangement, the Government are committed to negotiating a further arrangement on the terms stated by my right hon. Friend the Minister for Trade.

The Secretary of State has cited manufacturing industry as an example of the Government's success. Is he aware that the level of manufacturing investment to which he referred is not merely 21 per cent. below the level in 1979, but lower than the levels for 1978, 1977, 1976, 1975 and 1974, and £1 billion lower, than in 1970, when the then Labour Government went out of office, and also lower than 1969? Does the right hon. and learned Gentleman realise that he has to go back to 1968 to find a comparably low figure under a Labour Government? Is he proud of those 17 wasted years?

I am proud of the fact that capital investment in United Kingdom industry reached more than £26·8 billion in 1984—the highest level on record. I have given figures showing the improvement for manufacturing industry. The right hon. Gentleman is not doing himself, his party or the country any good by concentrating exclusively on manufacturing industry, at the expense of capital investment.

European Steel Council


asked the Secretary of State for Trade and Industry if he will make a statement on the outcome of the European Steel Council in Luxembourg on 29 and 30 October.

I was extremely pleased by the outcome of the Steel Council on 29 October. Industry Ministers agreed a tough new code on state aids to the steel industry, which should protect all United Kingdom steel firms against the risk of subsidies to their continental competitors. The first steps were also taken towards a return to a free market in steel, with the ending of quotas on coated sheet and reinforcing bar.

In addition, my hon. Friend the Minister of State negotiated an improvement in BSC's quota of 360,000 tonnes. The corporation has had to resort to expensive and uncertain quota purchases over the last two years to maintain its share of the United Kingdom market at a time when the United Kingdom economy was expanding faster than continental economies. This quota increase should consolidate BSC's position after the acquisition of Alphasteel, without the need for more ad hoc deals.

Does my right hon. and learned Friend agree that BSC is now one of the most cost-effective steel producers in Europe, and compares well with Japan and the United States? Does not this welcome increase in quota achieved by my hon. Friend the Minister of State represent an opportunity for BSC to achieve increased viability, which is the only means of securing job security and its long-term future?

My hon. Friend is absolutely right. The private and public steel industries' achievements have been substantial and are worthy of my hon. Friend's commendation.

What further closures are intended in the engineering steels sector, since the Govenment are to put money into the new private sector company that will take over next April, and since the Council of Ministers has decided that no state aid will be permissible after January unless associated with capacity reductions? Can the House feel confident that the right hon. and learned Gentleman knows more about the steel industry than does the Minister of State, who, four weeks ago, assured me and my hon. Friend the Member for Wentworth (Mr. Hardy) that rumours of further cuts were complete conjecture, at the very moment when BSC' was announcing them in Rotherham?

I assure the hon. Gentleman that our agreement to the completions package does not have any implications for closures such as he has in mind.

Does the Secretary of State accept BSC's prediction in its corporate plan that there will be no increase in demand for steel in the 1990s because of the further decline of British manufacturing industry?

I do not accept the question in the terms that the right hon. and learned Gentleman has employed. BSC has to make its plans. It is entitled to do so. The basis of the Government's decisions in regard to steel were announced in August and have not changed since then.

Industrial Competitiveness

asked the Secretary of State for Trade and Industry if he will make a statement on the implications for the competitiveness of British industry of the change in average unit labour costs between 1982 and the third quarter of 1985.

Internationally comparable figures on unit labour costs in manufacturing are available only for the second quarter of 1985. These show that since 1982 unit labour costs in domestic currency rose by nearly 9 per cent. in the United Kingdom, remained broadly constant in the United States and actually fell in Germany and Japan, and reinforce the need for pay moderation if we are to remain competitive.

Does the Minister not agree that the Chancellor's enthusiasm for high interest and exchange rates can, at best, keep the situation as it is, but is far more likely to make it a great deal worse in the near future? Does he agree that that means that the relative decline of our manufacturing sector must continue?

No, that does not follow at all. It is essential that interest rates are set to maintain the monetary conditions necessary to keep downward pressure on inflation. Unless wage increases are limited and linked to output, today's pay rises will be tomorrow's job losses.

Now that inflation is falling steadily and will probably, in due course, go below 4 per cent., is there any justification for the annual round of pay increases that are not linked to productivity?

My hon. Friend is bringing the House back to the statement made during the CBI annual conference at Harrogate, the essence of which was that there should be no wage increases unless they are linked to output.

Is there not a direct causal connection between the sharp loss of competitiveness that is shown in all the indices and the sudden and unwelcome appearance of a deficit in our trade in manufactures? Why have the Government's policies produced this unfortunate concurrence?

I reject totally the hon. Gentleman's assertion that the deficit has been caused by the Government's policies. He conveniently ignores the fact that the trough of 1981 was directly attributable to the overmanning and low productivity that developed under the Labour Government.



asked the Secretary of State for Trade and Industry what is the current annual deficit on visible trade with Japan.

In the period from November 1984 to October 1985 the United Kingdom had a visible trade deficit of £3,054 million with Japan.

In view of the appallingly high and worsening deficit, is it not time that the British Government urgently convened a conference of all the countries in a similar position to plan concerted action against Japan, which would include specific targets for the reduction of the deficit? Does my right hon. Friend recognise that there is a great difference between free trade and so-called free trade conducted on unfair terms, which is the most evil form of protectionism?

I note my hon. Friend's remarks, and we discussed the matter on an earlier question. I am not sure whether a conference of the countries affected would be appropriate. We must await the Commission's proposals in the light of the visit to Japan. To be fair, in July the Japanese announced an action programme. They should now quantify what they expect to achieve from their import programme.

Does my right hon. Friend agree that the best method of reducing the trade deficit would be to persuade more British people to buy British goods? Is he aware of the action of the "Think British" campaign, and what will he do to support that campaign?

I strongly believe that people should buy British when British goods are competitive and are the best quality, as they so frequently are. I hope that people will note my hon. Friend's important point.

Is the Minister aware that we are doing precisely what the Japanese want us to do—playing the waiting game and taking no action? Why does the Minister not wake up and recognise that all the Western economies must take some concerted action to deal with the problem? The Japanese must be taught a lesson. They must play the game by the rules followed by all other major manufacturing nations. Why does the Minister not do something as he sits in his office?

The hon. Gentleman is a little unfair. The EC has just sent a mission to Japan—

The United Kingdom's trading policy must be directed through the EC, because it is a member of the Community. The Commission has just sent a mission to Japan, and a report will be published during the next few weeks. We shall discuss the matter in December and make any decisions thereafter.



asked the Secretary of State for Trade and Industry what is his Department's policy on financial support for export contracts to Thailand.

My Department and others have a range of means of assisting United Kingdom companies exporting to Thailand. We shall continue to deploy financial assistance as effectively as possible in support of such exporters.

Is my right hon. Friend aware of the gratitude of my constituents who work for Leyland Bus for the efforts that he made on their behalf in relation to the deal to sell buses to the Bangkok mass transit system? In view of the recent lay-offs at Leyland Bus, will my right hon. Friend continue to press the case for that company, especially since it beat world-wide competition to achieve success in that tender? Any further financial support that he can give will be greatly appreciated.

We shall do what we can to help Leyland Bus. We have already offered substantial aid of some £20 million in support of Leyland's bid under the aid and trade Community budget. I have had several discussions with Thai Ministers about the project, and I was pleased that the Thai Foreign Minister recently replied to my right hon. and learned Friend the Foreign Secretary saying that he was confident that his colleagues on the Thai Council of Ministers would continue to give the Leyland consortium every opportunity to present its ideas. That is a good bid, and I hope that some proposal will be successful.

English Estates


asked the Secretary of State for Trade and Industry if he will make a statement on the future role of English Estates.

English Estates will continue to play a vital role in implementing our policies. In particular, the advance factory programme is one of the most effective and responsive instruments of regional policy, to which I attach the greatest importance. English Estates provides the Government with the best available means of carrying out that programme

I thank my right hon. and learned Friend for his reply. Does he agree that there is concern that if the much-heralded management buy-out were to proceed without strings attached, and without pre-conditions, there would not be enough factory space available in the assisted areas to take up the unprecedented demand that apparently exists for much-needed factory space in those areas? Will my right hon. and learned Friend explore further the possibility of covenant guarantees to ensure that if there were a management buy-out, firms could at least still set up in the assisted areas?

Covenant guarantees have their own problems, but I can assure my hon. Friend that I would not agree to a management buy-out that had the effect that he fears. I would agree to it only if it led to a more responsive and effective advance factory programme of the kind that we want. The objective is clear, and I am not yet satisfied with the proposals put forward.

Will the Secretary of State take this opportunity to place on record the fact that the Government will ensure that sufficient funds are made available for English Estates to carry out the full development plan for the Chatham dockyard area?

I have already answered questions on the Chatham project that English Estates is undertaking, but I can assure the hon. Gentleman that I understand his concern.

Is it not standing regional policy on its head to cut back industrial development by English Estates in the counties of Cleveland and Durham, while encouraging English Estates to fund the development of the dockyard in the south-east?

The Chatham aspect was agreed in particular circumstances, but I agree with my hon. Friend that the main thrust of regional policy has to be in the regions. It is in that context that I am looking at the proposals that have been put forward. It is worth pointing out that the new policy, which reaches its anniversary tomorrow, has shown that to mid-October in the west midlands, for example, £17 million of aid has been approved for projects creating or safeguarding nearly 12,000 jobs. That is just one example. I am giving the House and hon. Members further details.

Will the Secretary of State tell his Parliamentary Under-Secretary in the other place that I am delighted to know that he is visiting the Lister high technology park in my constituency, which was built by English Estates? Will he urge his ministerial colleague to travel to Bradford by train, rather than fly, as he proposes, so that he can see for himself the deplorable rail services which my constituents have to endure every day—a matter which I raised on the Adjournment last night—[Interruption.]

If the Secretary of State links expenditure on regional aid to the creation of jobs, does it not automatically follow that a reduction of two thirds in overall expenditure on regional aid since the Government came into office is a major cause of unemployment in the regions?

No, it points to nothing of the sort, because the regional policy in its previous form was not well directed to producing jobs. It was a policy which provided vast sums of money to firms engaged in capital investment, but did not lead to a substantial number of new jobs. The new policy is firmly targeted at new jobs, and the prospects look extremely good. For example, so far regional selective assistance offers of £222 million have been made, and under the new scheme regional development grants of £82 million have been made in the limited time since then. That is far better targeted than the old policy.

Northern Region


asked the Secretary of State for Trade and Industry what has been the reduction in real terms in regional assistance to industry in the northern region since 1978–79.

There was a reduction of 57 per cent. in real terms in regional assistance to industry in the northern region between 1978–79 and 1984–85. One of the reasons for that is that we are directing our assistance more cost-effectively.

Is it not a scandal that the Minister is able to give a figure of that scale to the House in view of the steady, scandalous climb in unemployment in the northern region since the Government came to office? Is not his Government's lack of care for the region illustrated, not only by his and his colleagues' ignorance of what is going on in the region, but by his ignorance of his own party's candidate in the Tyne Bridge by-election?

The hon. Gentleman should be aware that, at almost 97 per cent., the north-east remains the region with the highest assisted area coverage. He should also be aware that, under section 7, assistance is demand-led, and the support going into the region under that section depends on the quality and number of applications coming forward.

On a point of order, Mr. Speaker. Can you advise me on a matter that arises directly out of question No. 10? I asked the Minister about the privatisation of Swan Hunter shipyard in my constituency and he said that that was a matter for the Ministry of Defence. The Table Office will not accept that. Can you advise me to which Department I should address my questions in future and which Minister is responsible?

On a point of order Mr. Speaker. When the Parliamentary Under-Secretary of State was replying to question No. 10 asked by my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown), he referred to the Conservative candidate in Tyne Bridge constituency in the male tense—

The reference to the female candidate in the male tense is not correct. I do not say that the Chair is responsible, but I should like to refer to the official record, which is your responsibility, Mr. Speaker. I am not aware that the person standing as a Conservative candidate in the Tyne Bridge constituency is masquerading—

Order. All this sounds like an Adjournment debate. It is not a matter for me at all. What is the point of order for me—and succinctly, please?

I was coming to the point of order, which you must rule on as custodian of the Official Report. I am concerned because, as you know, from time to time Official Reporters have to alter or correct incorrect statements made by right hon. and hon. Members so that the report is factual. Will you give a ruling—here comes the point of order—that the reference to the Conservative candidate in Tyne Bridge constituency as a male be deleted from the official record and a reference to the candidate as a female be inserted? Alternatively, will you rule that the Leader of the House should come to the Dispatch Box and make a statement to verify the gender of the person who is standing as a female?

I think that I have got the drift of the hon. Gentleman's argument. We need not have the official record corrected. The hon. Gentleman has done that.

On a point of order, Mr. Speaker. May I say that, whether she is male or female, she is very good anyway?