asked the Secretary of State for Trade and Industry what progress his Department has made in providing for the secure storage of industrial knowledge in the event of war.

The secure storage of industrial knowledge is a matter for the companies possessing it.

As the Government consider it prudent to spend over £17,000 million a year on defence, would it not be advisable seriously to consider the need to preserve industrial knowledge so that if the worst were to happen we would have something to fall back on, and not have to rely on other countries which are taking these precautions to preserve this knowledge for us?

It rather depends on what my hon. Friend means by "industrial knowledge". The House is aware that an inter-departmental study led by my Department is currently under way to identify the military and civil needs for industrial products in times of crisis and industry's ability to meet them. It may be that my hon. Friend has that in mind, in which case I can tell him that the study is currently in train.

If the worst were to happen, as the hon. Member for Ilford, South (Mr. Thorne) said, surely that would mean the complete annihilation not only of the industrial buildings but of the people of this country? There would be little need, if any, for industrial knowledge following that.

The hon. Gentleman is taking a particular view of certain future events. It is perfectly in order for my hon. Friend to ask his question to see whether contingencies are being worked on.

asked the Secretary of State for Trade and Industry what is his estimate of the likely reduction in the capacity of the steel industry in the United Kingdom during 1987 and 1988; and what measures he plans to adopt to meet European Economic Community proposals during or after 1989.

I have made no such estimates. There are no European Community proposals concerning steel capacity for 1989 or beyond.

Has not Britain borne, since 1979, a most unfair share of the cuts in Community steel capacity while we have watched other member states pursuing policies and making arrangements which are clearly unfair? Does he accept that there is an obligation that Britain shall maintain its present capacity in steel and special steels industries, and will he offer the House a firm commitment that the Government accept that obligation?

I agree with part of what the hon. Gentleman has said. Any reductions that ever took place would have to be within the context of statements that have been made within the framework of a strategy agreed with the Government and announced in August 1985.

Is not the way to increase and maintain our share of steel capacity the way that it is being done in Redcar and Skinningrove, in my constituency, where there is record output? Would that not be much helped by proceeding with the Channel tunnel, which will bring work to the steel industry for many years ahead?

I entirely agree with my hon. Friend on both those points.

Is the Secretary of State aware that in recent weeks a study by Anthony Bird Associates came to the conclusion that demand for steel in Europe is likely to increase up to 1990 at least? Another study by the American analyst Payne Webber reached the conclusion that the BSC is now producing the cheapest steel in Europe. In view of that, would not further capacity cuts in Britain be nonsense? Is A not in our interest for the quota system to be ended so that British industry can use its competitive strength?

I am not sure about the hon. Gentleman's last point, but I agree that the British Steel Corporation is highly competitive. As I said, any future reductions must be within the framework of that strategy.

Is not the BSC the most profitable steel business in Europe? In that context, if there have to be capacity cuts, to pursue the point made by the hon. Member for Rotherham (Mr. Crowther), are we not the best placed in Europe to compete against the European steel producers? Accordingly, we should not go along the lines of the Eurofer proposals. Let us do away with quotas and price restraints. We are more competitive than the European steel producers and we can beat the pants off them. Why should we cut capacity when the Italian, French and German industries are almost bankrupt and are inefficient?

My hon. Friend makes many important points. The Eurofer proposals have not yet been presented in their final form. There is an advantage to the United Kingdom having as stable a market as possible, and I agree with my hon. Friend about the great success of the BSC over the past years. I am grateful for his robust support.

Will the Secretary of State bear in mind that it is no reassurance for him to say that anything done will be done within the context of the strategy already agreed, because within that we have Ravenscraig, which has a guarantee that runs out next year? Therefore, if there were to be cuts on the scale that is envisaged, Ravenscraig would be vulnerable. Will he give us an assurance here and now, so that it can be understood in Brussels, that if figures of the magnitude being talked about in the press and in Brussels come forward, they will have to be without any co-operation from this country and we shall not accept any share of them?

I have already tried to explain that Eurofer has not yet put forward proposals. It has been invited to submit more detailed proposals by the beginning of March, in co-operation with the independent producers, as appropriate. Any contribution that the BSC has to make would have to be consistent with the present strategy, and it cannot prejudice any subsequent strategy agreed between it and the Government.

asked the Secretary of State for Trade and Industry if he will make a statement on what action the Government propose to take as a result of the announcement of the proposed closure of the Caterpillar factory at Uddingston.

asked the Secretary of State for Trade and Industry when his Department was informed about the proposed closure of the Caterpillar factory in Scotland.

asked the Secretary of State for Trade and Industry when any representative of his Department last met any representative of the Caterpillar Co. Ltd. to discuss the future of the company.

My Department was informed on 13 January. I attended the meeting between my right hon. and learned Friend the Secretary of State for Scotland and the president of Caterpillar on 20 January. DTI officials, together with Scottish Office officials, last met senior representatives of the company on 2 February. While I greatly regret the decision, and the manner in which it was taken, it is ultimately a commercial issue for the company to resolve. I have no plans at present for further discussions with Caterpillar, but in the time available before the planned closure takes place the possibilities for maintaining manufacturing operations and employment at Uddingston will be urgently explored. To this end, my hon. Friend the Parliamentary Under-Secretary of State for Scotland has put in hand a study of the facility and its marketability.

While it is possible to understand the desire of Trade and Industry Ministers to hide behind the embarrassment of the Secretary of State for Scotland, is it not about time that the Minister did something in these circumstances and took some action? Is this another case of the Department washing its hands of British manufacturing industry, and a further sign of the Government's planned retreat from manufacture?

No, Sir. I robustly deny those accusations. I make it clear that we stand solidly behind the actions of my right hon. and learned Friend the Secretary of State for Scotland, in seeking to persuade the company to review and reverse its decision. It is not just my right hon. Friend the Secretary of State for Trade and Industry and my right hon. and learned Friend the Secretary of State for Scotland but my right hon. Friend the Prime Minister who has written to the Caterpillar company on this issue, seeking a review of the decision. As the hon. Gentleman fully understands, at the end of the day the company has to arrive at a decision in relation to its assets.

What public funds were put into this company and how were they used?

There is another question on the Order Paper which relates to that. The hon. Member will be aware that when public funds are invested in a company and when closure takes place, rules apply for the recovery of such funds as are then extant.

Is the Minister aware that it is less than four months since the executive vice-president of Caterpillar promised that there would be a £1 billion funding of schemes at all of the company's 30 sites throughout the world, and that that included a £62 million investment at Uddington? Is it not an absolute shambles when the Government are prepared to be a doormat for the Americans and to resign their public responsibility? Are we now to see all such machinery imported into this country? Do the Government not have a responsibility, if only for the balance of payments implications?

I cannot agree with the hon. Gentleman. I must remind him that there is massive investment in Britain by American companies to provide jobs in most important parts of our manufacturing industry. In this case the company took a decision to make the investment in good faith last Sepetember and then apparently reviewed again its worldwide capacity. That is what gave rise to a change in the decision that the company announced. My right hon. and learned Friend the Secretary of State for Scotland rightly took the view that the company's review of capacity was hardly compatible with the decision about the investment. I wholly share that view.

In this serious situation created by Caterpillar, will my hon. Friend bear in mind that, proportionately, some areas where there are factories supplying major components to Caterpillar are equally severely hit? Will he extend the area of the inquiry by his hon. Friend the Under-Secretary of State for Scotland to those areas as well?

I am grateful to my hon. Friend for that observation, and I shall certainly pass it to my hon. Friend the Under-Secretary of State for Scotland.

As the Minister has correctly said, he met the president of Caterpillar in London about the proposed closure. Since that meeting has he made any overtures to the Americans, because there is no possible chance of anything happening if he does business with the local management? Their jobs are also on the line. Does the hon. Gentleman not think that at this stage the Government should try every possible way to get a meeting with the Americans to try to persuade them to keep the factory open in the interests of the 1,221 workers who are employed there?

The hon. Gentleman will be aware that in response to the pressure applied by the Secretary of State for Scotland there was a meeting with the president and a team from Peoria who came over here for these discussions. He will be further aware that as a result of that meeting the company was asked to review and reverse its decision. That request was backed up by a letter from the Prime Minister. The company reviewed the matter but, unfortunately, it decided to confirm the decision. As far as I am aware, no further meetings are planned at the sort of level to which the hon. Gentleman referred.

Does my hon. Friend agree that Caterpillar has behaved dishonourably and deplorably, first in accepting a generous offer of financial support for its major investment programme and, secondly, in abruptly cancelling the programme and announcing the closure of the plant? Bearing in mind that no Government can oblige a multinational company to remain in the United Kingdom, will my hon. Friend remind the Opposition that Ministers from the Prime Minister down have done all that they possibly can to persuade Caterpillar to change its mind, and that the Government have acted with commendable speed in putting in contingency plans to maintain manufacturing operations and employment at Uddingston?

There is no doubt that my hon. Friend makes an eloquent case, and by raising the matter recently on the Adjournment he demonstrated his commitment to this issue. I can assure him that my right hon. and hon. Friends at the Scottish Office and others have played a significant part in trying to reverse the Caterpillar decision. As my hon. Friend says, this is ultimately a matter for the company. Having met, in company with my hon. Friend the Under-Secretary of State for Scotland, representatives of the Caterpillar work force who came to the Ravenscraig plant on Monday, I can quite understand the real anger that they have been evincing.

Does the Minister not fully understand the utter outrage and lack of comprehension in Scotland about the fact that this factory, which was supposed to have been boosted by a £62 million investment programme and which is already very modern, is now to be closed? Does he not realise that this may well be a consequence of the cut in regional development grant affecting Scotland? Furthermore, as there is now a Scotland-England divide in terms of unemployment, will the Government do something to prevent yet another plug being pulled on the Scottish economy?

I understand the hon. Gentleman's intemperance on these issues, but he will know that much of the last part of his question is a matter not for me but for my right hon. and learned Friend the Secretary of State for Scotland. With regard to his first comments, there has been a full discussion of the issues involved in this case and there is no question but that this issue has raised a very real question mark over the extent to which such investments can be guaranteed by those who are making the decision. However, it is a fact that manufacturing industry in this country is subject to major competitive pressures, and certainly the manufacture of heavy equipment such as this is not exempt from those pressures. The review of worldwide capacity has nothing to do with regional grant policy in Scotland.

Does the Minister believe for one moment that an assessment of worldwide capacity changed so dramatically in a matter of weeks? Does he not appreciate that the Caterpillar company has deceived the Government, the unions, the work force and the local management in a wholly calculating and ruthless manner? Surely it is not tolerable for a multinational company to abandon the interests of a work force and community which has given 30 years' service to that company. Does the Minister not understand that only a week or so ago the Secretary of State for Scotland was assuring Scottish Members that the decision was not accepted by the Government, and that only yesterday the Under-Secretary of State for Scotland confirmed that? The hon. Gentleman appears to be taking a different line today. What is the Government's policy, and what action do the Government propose to take in the face of a company which has deliberately and calculatingly deceived them and this country?

I note the right hon. and learned Gentleman's comments. I take it that he is making an extremely strong attack upon the way in which the investment was made and the consequences in the light of the decision that the company has taken. I feel that I should warn the right hon. and learned Gentleman about whether those remarks will have a beneficial effect on American investment in Scotland. There are very real issues at stake. The fact is that my right hon. and learned Friend the Secretary of State for Scotland does not believe that the end of the road is nigh. He has not been persuaded of the company's statement that ultimately it has to close. Not many people can be persuaded of that. However, the realism has to be faced. The company has taken that decision, it has been asked to review it, has reviewed it and has confirmed it. In the statement issued by my hon. Friend the Under-Secretary of State for Scotland he makes it clear that while my right hon. and learned Friend the Secretary of State remains unpersuaded regarding the company's decision to close at Uddingston, it is most important now to use the time available before the planned closure takes place to explore all possibilities for maintaining manufacturing operations and employment at the Uddingston facility. That is the policy being pursued, and it is the correct policy.

asked the Secretary of State for Trade and Industry if he will make it his policy to promote the formation of a consultative body consisting of representatives of the trade unions, industry and his Department to co-ordinate the role of industry in civil protection.

No, Sir.

I must confess to being somewhat disappointed with my right hon. Friend's reply. Does he not recognise the importance of the fact that all parties to industry should be prepared for emergencies and should plan for disasters. Against the background of the new responsibility of so many local authorities, is it not right that my hon. Friend's Department should give some lead in those consultations?

What my hon. Friend asks is not to deny that the civil contingencies unit exists and that the Government engage in planning for the sort of eventuality that he describes. In response to the second part of his question, I should say that information that enables worthwhile civil contingencies plans to be drawn up is not made any easier by the fact that certain local authorities seem to decide that they will not co-operate in the provision of the necessary information.

asked the Secretary of State for Trade and Industry what discussions he has had with the trade unions concerning the recently announced redundancies at Rover.

I met a delegation including trade union representatives from Leyland Trucks yesterday, led by my hon. Friend the Member for South Ribble (Mr. Atkins).

Does the Minister not realise that contrary to the announcement made three weeks ago by Mr. Graham Day and the Government that 1,265 staff jobs were to be lost through voluntary redundancy only 300 people have volunteered so far? Does he not realise the anxiety and distress that will be caused to families in Oxford and Birmingham if compulsory redundancies have to be forced through?

Of course I understand that, and the hon. Lady is right to say that those are the facts. However, we are less than four weeks into the 90-day period allowed for responding and the company tells me that it will continue to work hard to achieve the total by voluntary means. I hope that that will be possible. The hon. Lady will be encouraged by the fact that the week before last 500 extra people were taken on at Cowley, so there is good news as well as bad.

Is my right hon. Friend aware that I am particularly grateful, as are the members of the delegation who came to see him yesterday, for the way in which he received them and heard their representations? Does he recognise that it is a continuing cry of many trade union leaders that the consultation they receive from the top of Leyland vehicles is perhaps not as good as it should be? Therefore, I am grateful to him, on their behalf as well as mine, for the fact that we have been able to arrange a meeting with Graham Day tomorrow, so that the trade unions may put their case to him. Which will be beneficial for future consultations on the future of the company.

Consultation is a matter for the company and the unions to resolve under the normal consultation procedures, but I am pleased that a delegation is to be received tomorrow and I am certain that that point will be debated.

Does my right hon. Friend agree that the evidence of 400 redundancies to be called for among white-collar workers at Cowley, followed by the announcement of 500 new production jobs there, is evidence of a company which is at last coming to terms with its management costs and production effectiveness? Does he agree that that is an encouraging sign for future prospects?

My hon. Friend has a point. It has been extremely encouraging to see since Christmas an important improvement in the Rover Group's market share. That is encouraging and bodes well for the future of the company.

When the Secretary of State next meets the trade unions, will he reaffirm the Government's commitment to sustain the Rover Group as a volume producer on into the future? With that in mind, will he give a clear commitment to support the company's plans to introduce the AR6 Metro replacement, which will be a vital component in retaining the Rover Group as a volume producer?

I think that the hon. Gentleman was present last week when I announced the acceptance of the Rover Group's corporate plan in its totality, so I can assure him that I am backing that company. I also answered questions on that detailed point last week. We are doing exactly what the Rover company has asked us.

Is my right hon. Friend aware of the delight and satisfaction of the trade unions within the west midlands area at his statement last week, which gives them the confidence on which to build a successful business in liaison with DAF trucks and as part of the Rover Group?

The Government have done everything in their power to help the Rover Group and now it is up to it to win its share in the market place. I see no reason why it should not do so.

If the Government and Mr. Graham Day want to improve the quality of Austin Rover vehicles, does it make sense to sack engineering and technical staff?

That must be a matter for the company. It must decide on the best commercial prospects for it and the best way to realise them. The hon. Gentleman will not expect me to run the company; it is for the management to run it. If he has a detailed point that he wants to raise, perhaps he will be good enough to write to me.

Does my right hon. Friend agree that it would also be constructive and sympathetic to the original question to point out that in the midlands there are additionally in the private sector 700 jobs available at Jaguar, which is released from the Leyland Group?

That is a very good point. I notice that we do not hear so much about Jaguar from the Opposition Benches. I never quite understand why.

asked the Secretary of State for Trade and Industry if he has received any representations concerning the Securities and Investments Board's application to be the designated regulatory body for the financial services sector referred to in his answer on 10 February, Official Report, column 165, to the hon. Member for Chichester (Mr. Nelson).

asked the Secretary of State for Trade and Industry, pursuant to his answer to the hon. Member for Chichester (Mr. Nelson) on 10 February, Official Report, column 165, if he is now in a position to make a statement on progress on his consideration of the Securities and Investments Board's application to be considered as the designated agency for the regulation of the financial services sector.

My right hon. Friend received the SIB's request for transfer of powers on 10 February. As required by the Financial Services Act, my right hon. Friend has sent to the Director General of Fair Trading a copy of the material submitted by the SIB. My right hon. Friend and I have received a number of letters concerning the SIB's proposals, which will be fully considered. If, after considering the Director General's report and any other points put to him, my right hon. Friend is satisfied that the requirements of the Act have been met, he will lay the necessary order as soon as possible.

Will my hon. and learned Friend confirm that important questions on competition arise in relation to these rules? Will he confirm that it is the intention that the smaller bodies, those which do not necessarily come within the more recognised activities but which nevertheless are important, should be maintained and need to have a fair opportunity to get into the financial services sector? Does my hon. and learned Friend agree that we should do nothing that would in any way discriminate against those bodies and that we should make sure that they have a fair deal together with everybody else?

Yes. These are matters which, no doubt, the Director General of Fair Trading will look at in the context of competition. My right hon. Friend the Secretary of State will consider his report carefully, paying particular attention to the considerations to which my hon. Friend has referred.

How does the Minister distinguish between the powers of the Securities and Investments Board, the powers of Department of Trade and Industry inspectors and the powers of the fraud squad? Why does the hon. and learned Gentleman not let the fraud squad go into Guinness to sort it out? Is it that the Government are deliberately trying to duck a full investigation into what is going on in that company?

It is difficult to see how this matter arises out of the Securities and Investments Board's proposals. The position on Guinness is that, as soon as it is appropriate for the fraud squad to be involved in criminal aspects of the investigation, it will be.

Does my hon. and learned Friend agree with the article in The Guardian on 9 February to the effect that the SEC's embarrassment over the Boesky affair shows that no matter what form of legal framework one has, and no matter what sort of sophisticated computers one uses, what is needed is not that sort of framework but political will? Does my hon. and learned Friend agree that the Financial Services Act contains that political will? Will he assure the House that the Act will be implemented as quickly as possible?

I entirely agree with my hon. Friend. I can certainly give him that assurance. The article in The Guardian to which he referred was particularly interesting. After an analysis of the differences between our system and the SEC, it concluded:

"None of this seems terribly encouraging for advocates in Britain of an SEC."

I welcome the proposal to transfer these powers to the SIB. Will my hon. and learned Friend confirm that all the additional powers which were enabled to be transferred to the SIB will, in fact, be transferred and that the SIB will be a watchdog that is able to bite as well as to bark? In particular, following the whingeing of some of the major banks about how they will be prejudicially affected by the polarisation issues, will my hon. and learned Friend give an assurance, as requested by my hon. Friend the Member for Stafford (Mr. Cash), that the smaller entrants, especially the independent intermediaries, will not be prejudicially affected by any such order?

My right hon. Friend the Secretary of State will, of course, carefully consider all the applications which have been made by the SIB for the transfer of particular powers in the Act. Of course, my right hon. Friend will have full regard to the interests of the intermediaries, to which my hon. Friend referred, in the light of such considerations as may be drawn to his attention by the Director General of Fair Trading.

Does the Minister never read the business pages? Against the background of the City scandals which have dominated those pages, does the hon. and learned Gentleman really intend to ask the House to approve the desgination of a board which will not comprise public servants, the only formal status of which is as a private company limited by guarantee, whose only income will be from the City that it is supposed to police, and which will have no powers over the takeover panel or Lloyd's insurance, where the worst scandals have occurred? Why do the Government now insist that trade unions need an independent statutory commission, but say that regulation of the City can be left to self-regulation by their friends there? Why do the Government not accept that the City needs a system of supervision at least as tough as the system that they are imposing on the trade union movement?

The hon. Gentleman knows perfectly well that to characterise the system under the Financial Services Act 1986 as self-regulation is a gross misnomer. He knows that a firm and tough statutory framework is provided by the Act. When I invited the hon. Gentleman in the last debate that we had on this matter in the House to identify a single power that resided in the SEC that was not in the possession of the SIB, the only power that he rose to mention was a power that the SEC does not possess.

asked the Secretary of State for Trade and Industry what representations he has received concerning spending by his Department on support for research and development in the current year.

My Department has received a number of representatives, including from the technology requirements board which was set up to advise me on the development and implementation of policy for industrial research and development.

I know my right hon. Friend will agree that no one underestimates, or should underestimate, the role of research and development. Can he give us any figures today on how current R and D compares with the position five or 10 years ago? Can he also comment on the co-ordination that exists in R and D between his Department of State and others? I am sure that my right hon. Friend will agree that there can be no more vital a subject for the welfare of the nation.

I agree with my hon. Friend. There is frequent co-ordination and the very closest collaboration between my Department and other Departments involved in research and development. That collaboration has never been greater than it is at present. With regard to the first part of my hon. Friend's question, my Department's support for R and D has trebled in cash terms and doubled in real terms since 1979. It will further increase from £383 million in the current year to £445 million in 1989–90.

Can the Secretary of State explain why his Department refused to finance research and development into the oil and gas engine industry, especially when that development would lead to the creation of a new manufacturing base in the north of England for the next 50 years? Is he aware that the information that he has been given by his departmental officers is wrong and that, as a consequence of his Department refusing to finance that R and D, the Japanese are willing to finance it provided that the manufacturing base is created in Japan and not in this country? Why does the Minister refuse to meet me on this matter? Why does he refuse to meet my constituents who have an interest in this issue?

I think that there is a misunderstanding here. I am sorry if the hon. Gentleman feels that we have not offered to meet him. We suggested that when the matters have been clarified—and I have written to the hon. Gentleman and the company about these matters—we shall be delighted to have a meeting at which either one of my hon. Friends or I will discuss the matter with the hon. Gentleman. The hon. Gentleman will understand that the project to which he has referred must offer exceptional national benefits, and the evidence from boiler and burner manufacturers is now being provided. When that arrives, we shall be delighted to look at the matter again.

Would not British industry be more likely to produce more saleable goods if the Government encouraged it to do a little more of its own research and development instead of relying purely on Government sources?

We need both, and my hon. Friend made a good point when he said that expenditure by industry on research and development is, with many shining exceptions, nevertheless still inadequate. I believe that more should be done.

Will the Secretary of State take note of the representations that he has received from the west Yorkshire area about the need for more research and development following the rundown of the textile and clothing industry and the mining industry? Will he also take note of the representations that he has received, especially from the Wakefield and Dewsbury travel-to-work area, which covers my constituency, where unemployment is now in the region of 16 per cent.? Will he accept that there is a need for further research and development, and will he act to ensure that there is an industrial base in the area to ensure job opportunities?

I shall certainly consider the points that the hon. Gentleman has referred to, and any others that he may care to raise with me. It is common ground on both sides of the House that there should be more expenditure by industry on research and development.

Is my right hon. Friend aware that because of the decline of traditional industries in the Yorkshire and Humberside region there has been a fall of about 35 per cent. in employment in six years, whereas the business expansion scheme seems to have gone to service industries in London and the south-east to the tune of more than 60 per cent.? Will he give an undertaking that his Department will look at the impact of the various schemes on the north and its industries at and particularly the eligibility of Yorkshire and Humberside for the new EEC Comett scheme— the Community action programme for education and training in technology?

Of course I shall look at that, as my hon. Friend asks me to do so. I have seen the figures for the amount of money going to the south as opposed to the north. One must also consider what applications have been received. This is a complex matter which we are studying in detail.

Does the Secretary of State accept that not only do we have a smaller GDP than Japan, Germany and the United States of America, but that we spend a smaller proportion of it on research and development, with the inevitable and inexorable result that we are slipping further behind in our competitiveness in high technology? Does he also accept that an even more insidious and dangerous consequence is the accelerating brain drain, which is demonstrated by the fact that 20 per cent. of elected fellows of the Royal Society who were educated in Britain are permanently resident abroad?

I am extremely surprised that any member of the Labour party dares to talk about the brain drain. The Labour Government's policies of high taxation, which the party promises to introduce, caused the brain drain of the past. If the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had his way, the brain drain would become a brain flood. That must be common ground.

As for the proportion of national output spent on research and development, my right hon. Friend the Prime Minister gave some specific examples of this in questions last Thursday. It is more complex than the right hon. Gentleman suggests.

asked the Secretary of State for Trade and Industry if he will introduce legislation to empower the Monopolies and Mergers Commission to order a company whose takeover bid has been judged to be against the public interest to reimburse any reasonable costs incurred by the company or companies which were the subject of that takeover bid; and if he will make a statement.

I have noted my hon. Friend's suggestion, which will be considered in the work of the Department's present review of law and policy on mergers and restrictive trade practices.

Does my hon. and learned Friend accept that there has been a substantial increase in the number of takeover bids, both hostile and against the public interest? Does he agree that something must be done to help companies which are fighting hostile bids and which are cramped in their style in terms of taking on staff or of promoting their products because they must fight back through the national media? I cite especially Allied-Lyons.

There has been an increase in contested bids, although they are not necessarily against the public interest. My hon. Friend's point will be taken into account in the context of the review, but it is important not to overlook the advantages that can follow takeovers.

Would it not be a good idea to recover some of the costs from the predator? For example, now that the Secretary of State has rejected Ferruzzi's bid for the British Sugar Corporation, why should not that Italian company pay some of the costs of its predatory activities in Britain?

This point will be considered in the context of the review. When we talk about proposed takeovers of British companies by foreign companies, we should remember that companies from Britain are frequently engaged in similar activities overseas.

Will my hon. and learned Friend confirm that I have written to him in connection with the future of the Manchester Ship Canal Company and the hostile bid for that company from Highams and Mr. John Whittaker, who in my view are involved in unacceptable commerical practices, not least share splitting, in seeking to overrule the long-established articles of association of the company, which were set down to aid and promote the long-term interests of the small shareholder? Will he treat this matter with great urgency, bearing in mind the fact that Highams has sought an extraordinary general meeting on Friday to oust the directors of the Manchester Ship Canal Company and to impose its own? It has little or no interest in the long-term future of the company as a whole, only in its land and assets.

I certainly confirm that my hon. Friend has written to me on this matter. Indeed, I hope that by now he has received my reply. I am happy to assure him that the matter is the subject of urgent consideration in my Department.

Does the Minister not yet fully understand that the spate of takeovers that have been permitted in recent months and years has led to chronic "short-termitis" in British industry, which means that companies will not make long-term commitments to capital development, research and development or education and training? Despite all this evidence, why do the Government stick to only one criterion— that of competition? Why do we have to keep reviewing policy? Should it not simply be changed to take account of the industrial realities of Britain today?

I do not accept that the consequences of takeovers are as the right hon. and learned Gentleman suggested. It is important not to overlook the beneficial consequences that can flow from takeovers, which can frequently lead to sleepy management being given a shake-up and the assets of the target company being used more productively than would otherwise be the case. Nor is it correct to say that competition is the only criterion on which references are made to the Monopolies and Mergers Commission. However, these matters are under review and all aspects are being considered in the context of that review.

Does my hon. and learned Friend agree that a hostile takeover that concludes in an unsatisfactory manner, which may be unlawful and against the rules of the takeover panel, must eventually, if it damages the locality, be against the public interest? Is that not an area that is new to us and one that we must examine carefully?

I agree with my hon. Friend that these matters must be carefully examined, but I am not certain that I can accept his proposition that such a situation will always necessarily be against the public interest.

asked the Secretary of State for Trade and Industry what is his Department's policy towards counter trade agreements with developing nations.

The Government's policy is to support the further development of an open cash-based multilateral trading system. However, counter trade is a requirement in certain markets and I hope that British exporters will consider carefully the commercial opportunities that exist.

Does the Minister accept that some Third world countries are obliged to resort to counter trade because they are starved of hard currency? What steps will the Government take against the failure of the Baker proposals, the burgeoning problems of international debt and the lack of financial liquidity in the Third world to promote the open, multilateral cash-based system that he seeks to achieve?

The hon. Gentleman is right to say that those offers are most prevalent in Third world, developing countries that are suffering from currency difficulties. My Department offers advice, information and general guidance. We publish an annual guide to counter trade and we also have a list of specialist counter traders to whom the inquirer can refer for further information.

Can the Minister confirm that the developing countries are among the few nations with which we have a healthy trade surplus? Will he also confirm that this month's figures show that our deficit with the European Community trebled last year and that our deficit with Japan increased by one fifth? Does his Department have any policy to counter our ballooning trade gap, other than praying that the Prime Minister calls a general election as soon as possible?

An election fever-type general question does not sit happily with a detailed, thoughtful, constructive question about counter trade. Were it possible for us to correct some of the imbalances in our internal trade with the European Community by recourse to counter trade, no one would be happier than me.

Will my hon. Friend reaffirm the Government's commitment to a policy of free trade? What journeys does my hon. Friend have it in mind to make in these coming months to promote the Government's excellent trade record and enhance his own high reputation?

Certainly, on whatever journeys I make, I am always keen to explore all trading opportunities, especially those in the area of counter trade. That is a growing sector and one in which, as the hon. Member for Livingston (Mr. Cook) said, the United Kingdom has a favourable balance.

asked the Secretary of State for Trade and Industry how much money has been received by the Caterpillar Company Ltd. in Government support since it was established.

It is not customary to provide details of the Department's grants to individual companies beyond the limited information published in "British Business on Regional Development Grants" and certain support schemes under the Industrial Development Act 1982 and its predecessor. This shows that, since 1975, individual direct payments to the Caterpillar Company of sums of over £25,000 of regional development grant have totalled £4·7 million. Offers of selective financial assistance to Caterpillar UK under sections 7 and 8 of the Act, in respect of which some payment has been made, amount to £3 million for investment at Glasgow and Leicester.

In view of the figures and the humiliating defeat for the Secretary of State for Scotland in this matter, what action does the Minister intend to take to try to get some of that money back from Caterpillar? How will he spend that money to ensure that the tragic loss of jobs in Scotland is at least alleviated in some way?

I understand the hon. Gentleman's fair supplementary question. If the company proceeds with its closure, the recovery of earlier grant in respect of the Glasgow plant is a matter for which my right hon. and learned Friend the Secretary of State for Scotland will be responsible. There are rules regarding repayments, as I said in response to an earlier question. They will indeed be followed.

The House will be reassured by what my hon. Friend has said. In the light of the serious economic consequences for the area if the regrettable closure decision is confirmed, will his Department, with the Scottish Office, sympathetically and urgently review any applications for selective financial assistance for the area that have been turned down in the past few months?

My hon. Friend will be aware that my hon. Friend the Under-Secretary of State for Scotland is looking urgently at the marketability of the Caterpillar site for the continuation of manufacturing and employment. Obviously, if opportunities attract regional grant I have no doubt that they will be most urgently considered.

Why were the Government so completely out of touch with the corporate thinking of a company which is so heavily assisted by the Government? Will the Minister comment on the disturbing statements that were made yesterday by the chairman of the company about the future of the Leicestershire plant?

I do not understand the first part of the hon. Gentleman's question. Had he been present earlier when the matter was fully discussed, he may have gained the information that he seeks. If I have misunderstood him, I know that he will write a pertinent letter to me on the issue.

I can confirm that information has been sought and received from the chairman of Caterpillar, which confirms that the commitment to the Leicestershire plant is total. The remarks reported in yesterday's edition of the Financial Times about the supposed devaluation of the dollar were made off-the-cuff in reply to a hypothetical question in Las Vegas. It does not appear to me that currency speculation in Las Vegas is always a true record of what takes place.

asked the Secretary of State for Trade and Industry what is the most recent figure for output in manufacturing industry; and what was the comparable figure for the same month seven years ago.

The hon. Member will appreciate that monthly data can be erratic. However, since the trough of the recession in 1981 manufacturing output has increased by 14 per cent. to reach a level of 106·0 in December 1986, based on 1980 equal to 100. This was some 5 per cent. lower than the level of output in December 1979. Productivity, however, is now 31 per cent. higher than the 1979 figure.

Does my right hon. Friend consider that the present figure and that for seven years ago show that manufacturing industry has made satisfactory progress in the past seven years?

The recent trends show that it is doing so. For the past eight months up to and including December 1986 we have seen consecutive growth in each month in manufacturing output. Indeed, if the forecast in the autumn statement of 4 per cent. growth, which has been confirmed as a forecast by many outside observers, is achieved in 1987 it will be the best year for manufacturing output and growth since 1973.

Does the Minister agree that he should compare the figure with that of 1979? Is not productivity still below that year's figure? Indeed, if we had an economic recovery, we could not meet the output needed in the steel industry and other basic industries. Is it not once more a case of measuring from a small base, the decline of which must be attributed to the Government?

I said in my first answer, which I am sure the hon. Gentleman heard, that the figures I gave were 5 per cent. lower than the level of output in December 1979. It is somewhat disingenuous of the hon. Gentleman to suggest that what happened in the 18-month period from May 1979 was anything other than the consequence of the Labour Government.

Does my right hon. Friend agree that the companies which have come through the trauma of the recession are now more competitive and have better prospects than before? In particular, the companies which have kept themselves to the forefront of technology have prospered. In Lincoln, in the past seven years Marconi has doubled its employment and has more than doubled the value of its output.

There are many examples, like those that my hon. Friend adduced. We can all express satisfaction about GEC's record in Lincoln.

asked the Secretary of State for Trade and Industry what representations he has received about Government support for the Airbus project.

My Department has received representations about the provision of Government support for the Airbus A330/A340 project from a number of hon. Members, from trades union representatives and from others with an interest in these projects, including Airbus Industrie and British Aerospace.

Following the successful launch last week of the A320, will the Secretary of State assure the House of the Government's continuing financial support for the A330 and the A340? Will he also assure the House that the Government will continue to resist American pressure—pressure that seems to be absolutely determined to destroy, once and for all, the British aircraft industry?

Yes, on the latter point I can certainly give the hon. Gentleman that assurance. My right hon. Friend the Minister for Information Technology met American trade officials on 2 February and made that absolutely clear. As to the first part of the hon. Gentleman's question, I think the House knows that the Government are considering an application at this time, and I shall bear the hon. Gentleman's views in mind.

Does my right hon. Friend agree that among the many reasons why the A330 and the A340 should be supported is the fact that they will end the Boeing monopoly on the long-haul airliner market, a monopoly that Boeing abused, to the detriment of the aerospace industry in Britain and in Europe?

I shall certainly bear that point of view in mind, too.

In dealing with the application this time, will the Secretary of State not be quite so slow as the Government were about the Airbus 320, which is already proving to be such a major success? The A330 and the A340 are vital to the aerospace industries in this country. The whole country is waiting for a favourable decision—for the Government to say yes and to allow British Aerospace and all the other companies to go ahead.

I assure the hon. Gentleman that we shall reach a decision within a reasonable time scale. This is a very big decision. It involves a great deal of money. The taxpayers' interests are involved. It is very important that it should be considered very carefully, but there will be no undue delay.

Having visited Airbus in Toulouse yesterday, may I tell my right hon. Friend that a decision by Her Majesty's Government is long overdue and that the whole project is very vulnerable, unless the British Government go ahead? If they do not, the Germans and the French will not pursue either of those projects. Secondly, will my right hon. Friend bring into his consideration the fact that the British equipment industry is not at the moment included in the proposals and that it looks forward to some initiative from Her Majesty's Government to support it?

I am sorry to have to disagree with my hon. Friend, but the decision is not overdue. We are acting at the moment in parallel with the decision-making timetables of the French and German Governments and with the collaboration of Airbus Industrie and its partners towards fulfilling the desired conditions for the launch. The A340 specification was changed as recently as December, so I do not think that there has been any undue delay.

Given that the uncertainty is causing some damage to the prospects, and given also that the Government are bound to support Airbus and British Aerospace, why will the Secretary of State not stop dithering and announce a decision?

I do not know what the hon. Gentleman is talking about. It is causing no damaging uncertainty at all. There is no uncertainty; there is no damage. I am extremely surprised that the House should not wish me to consider carefully an application for the spending of several hundred million pounds of taxpayers' money. It seems to me to be only right that the matter should be very carefully considered. That is what we shall do. We shall announce the Government's decision within a reasonable time.

asked the Secretary of State for Trade and Industry when he expects to announce his response to the representations which he has received on his Department's consultative document on the European Community's eighth directive.

I shall make an announcement as soon as possible. My hon. Friend will appreciate, though, that it may take some time to complete our analysis of the many responses to the consultative document and carry out such further consultations with the accountancy profession and other representative bodies as may he desirable before decisions on future policy can be taken.

I am grateful to my hon. and learned Friend for his reply. However, will he confirm that the overwhelming consensus of the representations that he has received through his Department's consultation paper have confirmed that there should not be a rotation of auditors and, moreover, that there should not he any ban on accounting firms being able to offer a range of professional services to their clients?

As the analysis is not yet complete, I am not sure that I can accede to my hon. Friend's question in quite the terms that he puts it. However, I can tell him that the suggestions to which he has referred have proved to be somewhat less than universally popular.

asked the Secretary of State for Trade and Industry what measures are being taken by the Government to foster economic growth and industrial expansion in the north of England.

Recognising its problems, we redesignated many parts of the north of England as assisted areas following the 1984 review of regional industrial policy. Taking the north as the north-east, north-west and Yorkshire and Humberside regions, 70 per cent. of its working population are within assisted areas. Since 1979 firms in the north have benefited from nearly £2 billion of regional assistance, creating or safeguarding around 219,000 jobs.

I am grateful to my hon. Friend for that answer, which shows that he is only too well aware of the problems in the northern cities. Does he agree that constant talk of the north as a depressed region only perpetuates its negative image? Instead, will he support Bradford's approach, which, through its "Bradford's Bouncing Back" campaign, highlights the positive aspects of economic life in that city?

I totally agree with my hon. Friend. It is ridiculous that we should, as it were, attempt to paint the north as an area where there are clogs and cloth caps and nothing else. "Bradford's Bouncing Back" is assuredly an exceptionally fine slogan. If Bradford bounces back, Pudsey will prosper too.

Given the catastrophic fall in the real value of manufacturing investment in the north of 41 per cent. since 1979, what is the sense of the 50 per cent. cut over the coming year in the value of regional development grants, especially as they have been halved since 1979? If the Minister will not support the Labour party's proposals for a northern development agency, will he at least listen to the proposals from the unholy alliance of the right hon. Member for Henley (Mr. Heseltine) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), who now support, outside the Cabinet, proposals for development agencies which they did not support when they were in the Cabinet'?

I cannot disagree more with the hon. Gentleman. It is a fact that we are engaged in developing a number of agencies which can promote beneficial investment in the regions. As the Northern Development Company is one of those, he will be aware that it is a substantial recipient of Government funds. The budget proposition made by the company is currently under discussion and I hope to make an announcement very soon.