asked the Chancellor of the Duchy of Lancaster when he last met the chairman of British Telecom; and what matters were discussed.

I have not yet met the new chairman of British Telecom. I had to cancel my appointment with him yesterday because I was engaged in proctracted Airbus negotiations. I hope that I shall meet him in the near future.

May I express regret at the difficulty that the right hon. and learned Gentleman is having in arranging a meeting? I know that he will have difficulty in getting through to the chairman on the telephone.

When the right hon. and learned Gentleman meets the chairman, will he reflect and admit candidly what a disaster privatisation has been for British Telecom? Will he admit to him and to the House that privatisation has meant low staff morale and low standards of efficiency and service? The only things that have not got lower are the quarterly bills. Will he express his frustration that, in the face of this disastrous performance, we have no power to intervene? Privatisation has meant a loss of millions of pounds to the taxpayer, a loss of power to the House and a loss of standards for consumers.

I agree with the director general's recent report and his comments that the standard of performance is not good enough and needs improving. I am glad that British Telecom is reintroducing standards of quality statistics at regular intervals and is setting itself targets and co-operating with the director general to see what can be done to remedy the matter. I do not accept that it is any consequence of privatisation. Our telephone service has not been perfect for many years, and there has been a decline in performance at the same time as a rise in demand and expectations that must be met. The process of privatisation, with growing competition and consumer choice, will help to improve the quality, and not work in the opposite direction.

When my right hon. and learned Friend meets the chairman of British Telecom, will he congratulate him on Telecom's decision to include postal codes in future telephone directories? Will he also pass on to the chairman the disquiet felt by many of my constituents who, for the first time, will have to pay for London telephone directories in the 01-area? They will have to pay £8 per set, and that is not a good advertisement for the efficiency of privatisation.

I shall certainly pass on to Mr. Vallance my hon. Friend's praise and strictures, which are both matters for the commercial judgment of British Telecom.

In addition to the points raised by the hon. Member for Motherwell, North (Dr. Reid), will the Chancellor ensure that he relays to British Telecom the anger that many companies feel about being charged additional costs for repair and maintenance of lines? Such lines are often vital for export businesses. That has been the case in my constituency, and I am sure that it is the case elsewhere, too. Will the right hon. and learned Gentleman ask British Telecom to review this aspect of its policy?

As I understand it, companies will continue to recieve the service that they pay for in their quarterly rentals. Those who require a higher quality, shorter notice and priority fault service will now have to pay for that. It was never free. Previously it was paid for by all subscribers. Now it will be paid for by those who receive it.

I understand the concern in Scotland about the telephone service. I trust that the hon. Lady shares my pleasure that Mercury has recently introduced its services in Scotland two years ahead of schedule.

One of the difficulties that my right hon. and learned Friend had with the privatisation of British Telecom was in ensuring healthy competition. Is healthy competition also at the forefront of his mind in connection with the proposed merger between British Airways and British Caledonian, because that one company would be 10 times as big as all its British competitors put together?

Competition in telephones is governed by our guarantees on the duopoly which will exist until 1990 in order to give Mercury time to become established. Then we will look at the prospects of widening the field still further. I know that my hon. Friend has strong feelings about the airlines merger, but he will realise that we are awaiting a report from the Monopolies and Mergers Commission.

The right hon. and learned Gentleman is bound to be aware of the welter of criticism directed at British Telecom over the last 12 to 18 months by hon. Members, the general public, the National Communications Union and Oftel. As I spent all my working life in British Telecom, this decision is disappointing and very saddening. The Minister must be aware that my hon. Friend the Member for Motherwell, North (Dr. Reid) was absolutely right when he said that these problems and poor performance are a direct consequence of privatisation and nothing else. As the Government are major shareholders in British Telecom, will the Minister use his influence to try to get British Telcom management to improve the quality of service? We must ensure that manpower levels in the industry are raised in line with the recommendations of the telecommunications unions. If this were done, the quality of service—[Interruption]

Order. Question please.

If this were done, the quality of service would improve and customers would get the standard of service that they require.

I am quite prepared to join in the criticisms of British Telecom as long as they are fair and recognise the efforts of the director general and the management to remedy matters. I have already welcomed some of the recent steps and the targets that British Telecom has set for itself. The hon. Gentleman's charge that privatisation has caused all the difficulties is quite ridiculous. Although not the only contribution, the biggest single contribution to the troubles this year came from the strike held in defence of overmanning and restrictive practices. It is obvious that if the hon. Gentleman were responsible for British Telecom he would want to reintroduce to British Telecom the old overmanning and Spanish practices.

rose—

Order. I am anxious to have more hon. Members asking questions than we have had in the past. May I ask for brief questions, leading to briefer answers?

asked the Chancellor of the Duchy of Lancaster if he will seek powers to offer access to European Community funding to rural areas of deprivation like north Devon which do not have assisted area status.

North Devon is entitled to support from the European agricultural and social funds. The assisted areas must have prior claim on the regional development fund.

Does my hon. Friend accept that although agriculture is a vast and important industry in the west country it is not the only one and that many areas are desperately disappointed that, despite good ideas, they get no assistance with pump priming, which is so necessary to get outside private capital? Many of us feel that for the wrong reasons European money is not available to us. It is not right that all the money should go to inner cities or to other areas. Good ideas should be supported, wherever they come from.

I am aware of my hon. Friend's commitment to solving the problems that he so cogently argues. As the House knows, in its proposals for the reform of EC structural funds the Commission proposes concentrating on structurally less developed and declining industrial regions. What this means in practice for particular regions has yet to be fully worked out. I shall, of course, negotiate strongly for United Kingdom interests, especially those of my hon. Friend.

Will the Minister make sure that any changes in United Kingdom regional policy do not create a reason for the European Community not making available for development in rural areas that are suffering from deprivation the funds that have been coming forward? Will he give an assurance that if the Government pay more attention to inner cities that will not be at the expense of the rural areas?

As the hon. Gentleman knows, although we in the Department of Trade and Industry have ultimate responsibility for regional aid, in the first instance we accept the advice, after consultation, of my right hon. Friend the Secretary of State for Wales. The points made by the hon. Gentleman will have to be looked at. We have said that in any review which entails asking questions and seeking answers, a number of answers may come to a number of questions. We shall have to wait to see what they are.

Will my hon. Friend bear in mind that drawing lines on a map in any rural area, particularly north Devon, in no way indicates the situation on either side of the map? Does he accept that frequently one finds that areas that do not require assistance receive it and that other areas that on any fair basis should receive assistance do not? Can we get away from this nonsense of drawing lines on maps?

My hon. Friend will be aware that there was a considerable review and that the final map, produced in 1984, incorporated representations from Members of the House and from various regions. At the moment it is not in my mind to change that map, which is based on travel-to-work areas, which, although they have their limitations, none the less are the best building block that we have available at the moment.

asked the Chancellor of the Duchy of Lancaster whether he is satisfied that the revised approximations of the surrender value of life assurance policies proposed in the revised Lautro rule book will give sufficient information to allow investors to make an informed choice of policy; and what observations he has received on the above matters from the Director General of Fair Trading and the National Consumer Council.

Subject to the Secretary of State's statutory responsibilities in respect of competition, it is for the Securities and Investments Board to satisfy itself about the adequacy of Lautro's rule book. The Director General of Fair Trading is at present considering the competitive effects of Lautro's proposed rules and will report to the Secretary of State in due course. No observations on these proposals have been received.

My hon. Friend will no doubt recollect that the subject of surrender values has been of considerable concern to the constituents of many hon. Members and was the subject of considerable debate during the Committee proceedings on what is now the Financial Services Act 1986. Will my hon. Friend undertake to consult urgently on this matter, since it seems to me that at present the Lautro rule book is most unsatisfactory?

I hear what my hon. Friend says. I stress again that this is a matter for the SIB and for the Director General of Fair Trading. We have a statutory duty to consider the director general's report in due course and to consider the request of the Securities and Investments Board for consent to recognise Lautro. It would be wrong of me to comment in advance of receiving those representations.

Do the proposals in the Lautro rule book enable investors to understand the background to those companies in which they are perhaps investing their money? Would investors in insurance policies know that it was the double-crossing Prudential that sold out 4 per cent. of its Matthew Brown holding and enabled Scottish and Newcastle Breweries to move in and threaten the future of jobs in my constituency?

The hon. Gentleman draws me into another area upon which, as he understands, legal responsibilities prevent me from commenting. The first matter he raised is one that the Securities and Investments Board will consider.

Does my hon. Friend accept that the surrender value of a life assurance policy cannot be guaranteed and that recent events on world stock markets highlight the fact that, for many investors, a with-profits life assurance policy represents the best option, given that it provides many guarantees—unit-linked and other policies—where the direct relation between the value of funds and stock market prices can be all too difficult?

The point that my hon. Friend makes is undoubtedly one that the Securities and Investments Board will consider.

With the City now in the throes of a stock market collapse, is not the failure to bring fully into effect the Financial Services Act a gross dereliction of duty by the hon. Gentleman's Department?

The hon. Gentleman, when he has time to consider, will realise the fatuity of that observation. He knows that this is a complex structure that has to be brought into force at the right time. There is absolutely no point in having the wrong system in place earlier. It is much better to get the right system in place. It will be brought into force at the earliest opportunity. He will know, in any event, that a large number of powers under the Act are already in force and being used.

asked the Chancellor of the Duchy of Lancaster what support the United Kingdom is giving to the framework programme of research and development in the European Community.

I made clear our support for the framework programme at the Council of Ministers on 28 September when it was adopted. Thanks in large measure to our encouragement, the programme concentrates on the priority task of improving Europe's industrial competitiveness. The British research contribution to this European research effort is second to none.

The Minister knows that that is ludicrously complacent and that the delays and obstructionist actions of the Government since they originally put the spanner in the works of the framework programme have led to damaging delays and the break-up of new groups and has allowed the Japanese and the Americans to take advantage of the scarcity of research.

Will he undertake to fight the short-sightedness of the Prime Minister on this issue and make sure that the £289 million that was taken out of the European framework research programme is put back into it right away?

I do not accept the hon. Gentleman's description of our role. The main contribution that we made to the discussions was to try to make the programme focus more clearly on genuine industrial priorities. We had very much in mind the need to compete with Japanese and American business on a European scale. I believe that we were principally responsible for improved targeting on key areas, such as information technology, industrial technology and telecommunications. The withholding of £289 million, which is pending settlement of the EC's overall budgetary decisions, will be reconsidered in the light of progress at the Copenhagen summit. It is not possible to go forward with any of these European programmes without having some regard to the overall budgetary disciplines of the European Community and the budget as a whole.

I recognise the importance that the Government place upon research efforts, including those of the EEC. Does my right hon. and learned Friend agree that British industry needs to make much more effort in investing in future technology? For example, in my consituency Westland Aerospace has invested substantially in composite material technology, which has enabled it to price competitively to enter the Ariane 5 project.

I accept my hon. Friend's basic premise. There is a case for saying that British industry as a whole should make a greater contribution to its research and development programmes. I acknowledge the excellent record of Westland.

Is the Minister aware that the consequence of Britain's opposition to the proposal in the framework programme, as originally advanced, has been that the worst features of it in the Government's eyes, such as joint research centre funding, have gone ahead, while the parts that have caught the rap are those that the Government would have liked to support, which have been the subject of delays, such as RACE and ESPRIT II?

The joint research centres have gone ahead because they have always been there. We have arrived at an understanding in the Council that we must seriously tackle the use of resources by the JRCs and ensure that, for example, more of their work is done for customers outside so that we ensure also the relevance and quality of what they are doing. I do not accept that we have caused damaging delays to the other programmes. The key ones, such as ESPRIT and RACE, are now going ahead with greatly enhanced budgets.

asked the Chancellor of the Duchy of Lancaster what representations he has received about the level of duty imposed by Japan on imported shoes and leather.

The Government have received a number of representations about Japan's import restrictions on leather and leather footwear. We and the European Community continue to press the Japanese Government to reduce these.

Is my hon. Friend aware that Japan operates a tariff quota system against imported footwear and leather that restricts quota and tariff at rates between 20 and 60 per cent.? Does my hon. Friend agree that this is not a reciprocal trading arrangement and that if Japan is interested in contributing towards the correcting of present world trade imbalances it could start by moving towards freer trade in this area?

My hon. Friend touches upon a raw nerve. In the context of the leather industry and the United States and of reaching an agreement with Japan under the GATT; in 1985 the United States put the emphasis on raising its tariff barriers, whereas the EEC chose to press for market opening by Japan, and as a result achieved lower tariffs with an increasing quota.

Is the Minister aware that the Japanese market has been closed totally for a long time to imports of British footwear, in the interests of protecting an under-privileged class in that prosperous country that happens to make domestic footwear? Is it not the case that Britain has never made adequate representations to open up the Japanese market in this area, with the result that footwear manufacturers in my constituency have suffered considerably?

The hon. Gentleman is aware that we take action whenever we can through the auspices of the GATT and through the European Economic Community.

Secondly, I understand what the hon. Gentleman is saying—[Interruption.]

Order.

We are always ready to hear any representations from any industrial sector, and we are in close touch with footwear manufacturers.

Will my hon. Friend use his best endeavours through the Uruguayan round in GATT; to ensure that effective measures are taken with the new Prime Minister of Japan, Mr. Takeshita, so that we receive a serious reduction in the amount of protectionism in Japan, which is currently contributing significantly to the difficulties in the world currency crisis?

Yes, Sir.

asked the Chancellor of the Duchy of Lancaster whether he has any plans for further measures to attract industry to the Alnwick and Amble areas.

We are always prepared to encourage industry to invest in various parts of the United Kingdom, and Alnwick and Amble is no exception.

If that is so, why does it remain an exception to the Government's development aid? Bearing in mind that the area has consistently higher levels of unemployment than many assisted areas, does the Minister realise that there will be disappointment in the area as he has nothing new to announce following the deputation that he received? Will he agree to visit the area soon to see how we are trying to help ourselves and how we are being prevented from doing that by discriminatory aids in other places?

The hon. Gentleman came to see me, and I also received a delegation from Northumberland recently, and the case was made very cogently. The hon. Gentleman will be aware that I said to him, as I said to the delegation, that we are not minded at this stage to change the map, which took a long time to create and which we believe is in the interests of long-term investment and should be maintained as it is for a time. I am always delighted to receive invitations from hon. Members on both sides of the House to visit constituencies, and I was particularly delighted to receive an invitation to visit such an attractive part of the country as that represented by the hon. Member for Berwick-upon-Tweed (Mr. Beith).

asked the Chancellor of the Duchy of Lancaster what action is being taken about false labelling of textiles, especially the overstatement of wool content in garments; and if he will make a statement.

The European Commission has been investigating this matter and I understand that its findings will soon be published. Local authorities are responsible for the enforcement of fibre content regulations in the United Kingdom, and last year they were advised by my Department about the concerns expressed by the hon. Gentleman.

When will the Government take some effective action to stop overseas textile producers, especially the Italians, ripping off British textile consumers in the blatant way that they have been doing for years? Does he realise that ministerial huffing and puffing, ministerial stiff notes and ministerial wrist slapping mean nothing at all to Common Market crooks who are making a fortune out of placing false labels on textile products? When will he do something to stop that racket?

I note what the hon. Gentleman says. However, we must consider how the regulations brought into force by Parliament are enforced. The West Yorkshire county council has brought a number of successful prosecutions. There have been 351 prosecutions nationwide under the regulations since 1978 and no fewer than 182 in West Yorkshire.

Does my hon. Friend accept that by the time the procedures that we operate are carried through, the damage is done? Does he also accept that part of the problem lies with the European Community, which prevailed upon us to alter what was hitherto very adequate labelling legislation?

The change to which my hon. Friend referred has no impact on this area. People who misdescribe goods will still be subject to prosecution under the Trade Descriptions Act 1968. That is the most effective way to stamp out that objectionable practice.

asked the Chancellor of the Duchy of Lancaster if he will make a statement on the United Kingdom's trade with Afghanistan.

United Kingdom exports to the market in 1986 were £11·4 million and imports £11·9 million. We neither encourage nor discourage trade with Afghanistan, and support for British exporters is confined to basic market information available from my Department on request.

I want to ask the right hon. and learned Gentleman a question of which I gave his Department notice. Has the Department of Trade and Industry any end user certificates for the Blowpipe missiles that have found their way to Kabul?

I congratulate the hon. Gentleman on his persistence. However, he knows perfectly well that it has never been the practice in the House for Ministers to answer questions of that kind or to give information on that sort of subject.

Does my right hon. and learned Friend recall that when the Russians invaded Afghanistan in 1980 the European Community broke off negotiations with COMECON'? Surely the situation has not changed, as the Russians remain in Afghanistan and our approach to trade with Afghanistan should have a similar policy.

I described our policy on trade with Afghanistan, and obviously at the moment Afghanistan is best described as a difficult market because of the Russian occupation and the civil war that is in progress. With regard to the export of sensitive items that have been described, it is not the practice of Ministers to answer questions on those subjects in the House.

asked the Chancellor of the Duchy of Lancaster what is the most recent figure for output in manufacturing industry; and how this compares with the figure for the same month 14 years ago.

My hon. Friend will appreciate that monthly data can be erratic. However, since the trough of the recession in 1981 manufacturing output has increased by over 20 per cent. to reach a level of 111·5 in August 1987, based on 1980 equal to 100. This was about 3 per cent. lower than the level of output in August 1973.

I welcome the recent improvement in manufacturing output, but is it satisfactory that manufacturing output is still lower than it was in August 1973, 14 years ago?

No. Of course, I would accept that that is a disappointing factor, but it reflects the poor performance of manufacturing industry in the 1970s. I should prefer to agree with the earlier part of my hon. Friend's question, which is that at the moment industrial activity in Britain is in fine fettle. If one talks to industries the length and breadth of the country, as I am now doing, one finds that they are extremely bullish about prospects and are looking forward to the future with a great deal of excitement and interest.

The Minister talks of confidence, but what will now happen to manufacturing industry as a result of the collapse of shares, which shows that there is no confidence in the economy under the Government?

The hon. Gentleman betrays his ignorance by the tone of his question. As he will know, coming from an industrial constituency as I do, that if he were to talk to his local companies, big and small, they would tell him that no matter what is happening on the stock market they are doing very well and want to do better.

Should not Opposition Members temper their righteous indignation by bearing in mind that manufacturing output in 1979 was rather lower than it was in 1974?

My hon. Friend is right. I am not even sure whether the Opposition's indignation is righteous.

I and my colleagues disassociate ourselves from the official Opposition's apparent wish to will Britain into economic recession, but will the Minister accept that any sustained industrial recovery in Britain is dependent on international trade and confidence and industry's ability to obtain funds from the City? In those circumstances, will not pressing ahead with the BP share flotation tomorrow be likely to depress the City and make it more difficult for British industry to obtain funds to sustain its future investment?

I am delighted to hear that the hon. Gentleman, representing all his hon. Friends present today, takes a view which is at least contrary to that of the official Opposition. However, it is not for me to comment on the BP deal, which is very much a matter for my right hon. Friend the Chancellor of the Exchequer.

Does not the investment in manufacturing that is now taking place in Yorkshire suggest that many companies are confident about Britain's economic future?

My hon. Friend is right. As a Lancashire Member as well, I can confirm that the north is doing exceptionally well.

Does the Minister accept that manufacturing output is not only lower than it was in 1973, but lower than it was in the second quarter of 1979? That abysmal performance has been matched only by those great manufacturing powers of Barbados, Fiji, Greece, Malawi, South Africa and Zambia. With that record from the years of oil opportunity, what does he expect now when industry is bring crucified by record high interest rates and a pound which has appreciated 18 per cent. in real terms since last September? Why does he not take his right hon. Friend the Chancellor by the elbow and say, "Look Nigel, enough is enough. Get interest rates down"?

The Opposition are struggling to find bad news when the fact is that if one travels, as many hon. Members should do and have done during the recess, among British industry, talking to companies and listening to what they have to say—[Interruption.] The CBI said only recently that things have been going exceptionally well. Anyone who flies in the face of that information is clearly trying to knock Britain instead of talk us up.

What is my hon. Friend going to do about a part of manufacturing industry for which his Ministry is responsible, namely, Land Rover? When will Land Rover increase its production and competitiveness in the world market?

I suspect that that is slightly outside the terms of the question. None the less, it is a matter to which the company should pay considerable attention, which it is doing. My hon. Friend the Member for Solihull (Mr. Taylor), who is sitting behind me but is prevented from contributing to the debate on this question, knows better than most what a success story Land Rover is and continues to be.

asked the Chancellor of the Duchy of Lancaster when he expects to announce the level of financial support for the British Space Centre.

The Government have decided not to increase public expenditure on space above the current level, which is already running at over £100 million a year.

Will the Minister bear in mind when he goes to the meeting on 9 and 10 November that the Japanese are currently considering a report from their space committee at NASA which proposes an increase in spending this year from 120 billion yen to 300 billion to 400 billion yen, with a further target of raising that spending—all on civilian space products—to 6 trillion yen by the end of the century?

The Minister will know from the reports from Japan that it is targeting that spending on civilian products because of the dramatic recovery that it expects for space activity. Does he not consider it rather silly to go to the meeting with such a low spending plan for Britain?

I shall go to the meeting of the European Space Agency at the The Hague explaining that Britain wishes to play a constructive and useful role in the agency. However, we have argued repeatedly, and will continue to argue, that the ESA plan should be based on financial, scientific and commercial reality. We should judge carefully which targets to spend money on. I am sure that the Japanese have made a similar hard-nosed appraisal of their investment, and we believe that Europe should do the same in regard to its space effort.

Does my right hon. and learned Friend accept the importance of the space industry to the country's technology base, and will he take this opportunity of reconfirming the Government's commitment to the success of that industry in the future?

Indeed I do accept the importance of the space industry. It is because we accept it that we are already spending such substantial sums on the space programme, and why we have taken part in the discussions on the European programme. I intend over the next few months to continue to hold discussions with British companies about the way in which we can obtain scientific and industrial value from our commitment to space. That is the message that I shall be taking to the ESA. It is no good arguing, however, that any money spent on any space programme is justifiable when it reaches the considerable sums arrived at by the European agency.

Does the Minister agree that, unless we invest in the European programmes, we shall not retain our scientists and engineers, who will find opportunities, if not in Europe, in America and elsewhere? Does he also agree that if we are to play a useful part in the technological advances of the 21st century we must retain those scientists now?

We must encourage and support the scientists whom we have, and, in particular, we must maintain the undoubted lead that parts of the scientific and industrial community have here—for example, in space satellites. We are telling the ESA that, while we shall continue our membership, we wish to question the objective of programmes such as Hermes, which appear to be based on a desire to achieve a European manned presence in space by the turn of the century. But there is no real doubt in the British scientific and industrial community about either the scientific or the commercial worth of that programme.

Does my right hon. and learned Friend agree that an essential preliminary to long-term decisions is a clear understanding between Government and industry on what our objectives should be? Is he confident that we can arrive at such an understanding in the time scale that is necessary if opportunities are not to be lost?

My hon. Friend asks a cogent question. It is important that we continue as rapidly as possible the discussions taking place between the BNSC, British industrialists and myself to work out a clear strategy to define our objectives. It is unlikely that we shall have completed that by the time of the meeting at The Hague. On the other hand, I think that there is a very good case for asking the agency as a whole, and its members, to make a fundamental reappraisal of where they wish to target their efforts and on which programmes they ought to concentrate.

Does the Minister agree with his right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) that in refusing further support for space research the Government have taken leave of their senses? Will he explain why he is right and why his counterparts in France, Germany, Italy, the United States, Japan, Canada and even India, all of whom spend more than we do on space research, are wrong?

My right hon. Friend the previous Minister for Information Technology took part in a Rome conference that sketched the outlines of the European Space Agency programmes. Since then the costs have more than doubled. Programmes such as Hermes, for manned space flight at the end of the century, have been added to the programme. When my right hon. Friend was in office, and since I have been in office, we have argued consistently that these plans are grandiose, not well targeted and do not provide for enough industrial and commercial participation. Simply to say that India spends more than we do on its space programme and that therefore we should spend millions more, willy-nilly, regardless of what ESA is putting forward, is not the most scientific or intellectual contribution to the debate.

Should not my right hon. and learned Friend bear in mind the advice of ACOST, which, as reported in the national press, has suggested that either we should give sufficient money to space or get out of it? Is it not bad for international collaboration if we cease to take a positive line on both space and reasearch?

I have an advantage over my hon. Friend, because I have received the advice of ACOST, whereas he has to rely on newspaper reports. I shall be paying regard to the advice of ACOST. I agree entirely with my hon. Friend's conclusion that we must make a positive contribution, but a positive contribution is to request the European Space Agency seriously to reappraise its programmes and stop being led into grandiose, prestige projects that are of dubious scientific and economic value.

asked the Chancellor of the Duchy of Lancaster if he will make a statement on the latest figures for expenditure on research and development in British industry.

The most recent estimates for expenditure on research and development performed in British industry are for 1985. Between 1981 and 1985 there was an increase in real terms of 12 per cent. in research financed by industry. I welcome this rise. The main responsibility for spending more on civil research and development should continue to rest with industry, as the House of Lords Select Committee on Civil Research and Development recognised in its recent report.

I welcome the increase in research and development in chemicals, electronics and motor vehicles, in particular since 1981, but does the Minister not agree that it is a matter of concern that since 1981 overall research and development in industry as a proportion of national income has fallen? With industry funding of research and development still so far behind that of our industrial competitors, is not the Government's attitude in response to the House of Lords Select Committee report still far too complacent? Are the Government not aware of the desperate state of science and technology in this country?

I agree in part with the hon. Gentleman's diagnosis of the problem. We should still like there to be increased investment in well-judged research and development by British industry. I am glad to say that the latest figures show that there has been a very welcome real terms increase. It may be that our figures are out of date and that we are still commenting on the position in the depths of the recession, whereas now it is very much better. We have promised to report back to the House of Lords and to the House when we have completed our review of the Government's research and development priorities.

Is it not the case that private companies that are involved in space research and development have said that they will pay their own whack but that they expect the Government to provide proper investment so as to increase the research and development technological base. We cannot be in something like the European Space Agency — a British initiative — by simply paying our basic membership fees and then expecting to take advantage of all its facilities.

I agree with my hon. Friend that some companies have continued to contribute and have contributed even more since August towards the preparatory work on some of the optional programmes of the space agency. It is also fair to say that most of the industries concerned share our concern about the way in which the European Space Agency produces its programmes and the limited acknowledgement that that agency sometimes gives to the part that industry and commerce have to play and ought to play in guiding priorities. I want to continue discussions with British industry to make sure that we have a much clearer strategy about where UK Limited ought to be going.

asked the Chancellor of the Duchy of Lancaster what is the current deficit in the balance of trade between the United Kingdom and the other countries of the European Economic Community.

In the 12 months to September the deficit was £8½ billion, on the balance of payments basis.

Will the Minister confirm that among the figures there is a £9 billion deficit in manufactured goods alone? Is it not the case that, especially since 1979, there has been a massive export of jobs in manufacturing industry from Britain to Europe? Will the right hon. and learned Gentleman give the House his latest estimate of the date when membership of the European Community will be beneficial to British manufacturing industries?

Comments of that kind have to be set against the historical basis, whereby I think it is right to say that Britain has always imported more manufactured goods from western Europe than it has exported to western Europe— [Interruption.] — well, certainly since about 1870.

Our trade with the European Community has grown substantially since our membership. It now provides a market for about half our exports, whereas it provided a market for about a third of them before we joined the Community in 1970. The hon. Gentleman also ought to know that, in recent years, the balance between imports and exports between ourselves and the European Community has been improving substantially in our favour. Between 1986 and 1987, in the first nine months, exports grew by 20 per cent., while imports grew by 13 per cent. thereby improving the trade balance from our point of view.

Does my right hon. and learned Friend agree that if further progress is made towards the internal market our balance of trade will improve significantly, as we will be able to to increase our exports of financial services to other member states?

I certainly do, and I believe that that should be our biggest single priority when we consider the advantages that we can derive from the European Community. We should decide, as urgently as possible, exactly how British industry will respond to the change from our domestic market to the much enlarged single. European market, which undoubtedly will be completed by 1992.

asked the Chancellor of the Duchy of Lancaster if he is satisfied with the progress made by the Handsworth task force in stimulating employment in Birmingham.

I am very satisfied with the progress made by the Government's Handsworth task force in stimulating employment in the Handsworth area of Birmingham. Since it was set up in February 1986 the task force has been very successful in targeting Government programmes more effectively in Handsworth. It has also worked closely with the local community and the private sector to encourage the growth of enterprise and employment for local people. In total 45 projects have received task force top-up support amounting to some £2·4 million, which has helped to lever a further £4 million from private sector and other public sector sources.

I thank the Minister for that answer and pay tribute to that small contribution to the Handsworth part of my constituency. Is the Minister not disappointed that the task force was unable to help more people already in work stay in work by its refusal to fund the latchkey project at the Handsworth day care centre? The day care centre was told by the task force that it fulfilled all the criteria, but that it did not have a politically high enough profile. Does the Minister accept that that is not a good enough reason for not giving away Government money?

I very much doubt that that was the reason, and I shall inquire into it. I shall go back and look at that case again. I realise that the hon. Gentleman is constrained to give faint praise to the task force, and perhaps I should be constrained in giving faint praise to him and the Birmingham city council. There is, however, a high level of co-operation in Handsworth between the task force, the city council and on all political fronts. I shall certainly make sure that no projects are turned down for any party political or other political reason.

asked the Chancellor of the Duchy of Lancaster what is the latest balance of trade in manufactured goods.

In the first nine months of 1987 there was a deficit on trade in manufactures of £4·8 billion.

Is the Minister not ashamed to stand at the Dispatch Box and confess that the manufacturing trading deficit for 1987 now looks so bad that it is in danger of beating even last year's record deficit of nearly £5½ billion? As a trading nation we would be down the plughole were it not for North sea oil. Would it not be in order for the Prime Minister to sack the Secretary of State responsible for this abysmal performance — the worst deficit in Britain's manufacturing history — instead of considering giving him another sinecure as chairman of the Tory party, whose policies are responsible for this fiasco?

The hon. Gentleman knows that this country's overall trade position so far this year is better than forecast by the Chancellor in his Budget. It reflects the extremely encouraging outlook and continuing improvement in our manufacturing performance, so clearly described by my hon. Friend the Minister earlier. As he said, it is no good scratching about for particular statistics to try to demonstrate a pessimistic outlook. The hon. Gentleman should look at the latest Confederation of British Industry industrial trends survey, which is the most encouraging for many years in describing Britain's industrial and manufacturing outlook.

Does my right hon. and learned Friend agree that virtually every industry in the west midlands is experiencing an upturn in its export potential—and none more so than the motor car industry, where some of the tied manufacturers of European companies are re-exporting their products to mainland Europe? Is that not a testimony to the quality and productivity of the British worker?

One of the most encouraging aspects of our present manufacturing scene is how well motor vehicles production is doing and how much, especially in the west midlands, performance is outstripping that of our European competitors. It is proving a very good investment for the multinational car industry. That is even extending to Scotland where, as my hon. Friend knows, Ford is anxious to invest in a new plant in Dundee —unless the labour and trade union movement succeed in driving away that investment with a return to the bad old industrial practices that have caused so much damage in the past.

Does the Minister accept that many ordinary people judge the wealth and prosperity of the economy of this nation by our manufacturing industries and not by the paper wealth of the City? Is he aware that many industrialists and others are concerned about the Government's apparent complacency over Britain continuing to import more manufactured goods than it exports? When will the Government take real action to improve the position in our manufacturing industries? What action do they propose to rectify the current position?

The country needs all the earnings that it can get, both from the manufacturing and the service sectors of the economy, including our strong financial services sector. Of course, I take pleasure in the fact that manufacturing output and investment are now rising strongly. As my hon. Friend the Member for Birmingham, Northfield (Mr. King) said, for many industries the current outlook is very much better than it has been for many years.

Will my right hon. and learned Friend do all that he can to persuade the American Government and Congress that they should not respond to the current financial crisis by erecting additional trade barriers, especially in textiles, which is of particular interest in my constituency?

I entirely agree with my hon. Friend. Obviously, we are concerned about some of the proposals before the American Congress. We very much hope that protectionist pressures will not grow and that the Administration and Congress will reject any such pressures. I am glad to say that our trading relationship with America is not especially threatened. For example, there was a successful outcome yesterday to the talks I had, as one of the Airbus Ministers, with the President's trade representative. We successfully eased misunderstandings and paved the way to an eventual agreement that would allow fair trade in the civil aircraft sector.

Is the Minister aware that there is serious concern about the effect on international trade of the stock market collapse and the turbulence in the foreign exchange markets? Does he agree with the Chancellor's statement that the behaviour of the stock markets is absurd, and with the Prime Minister's statement that the behaviour of the foreign exchange markets is 95 per cent. speculation? If so, what are his Department's proposals to reassure those who manufacture in the real economy and to control those who speculate in the casino economy of the markets?

Obviously, it is important that in order to return to stability in the markets we should retain the present atmosphere of business confidence both in this country and in most of the other developed countries. The fact that the real economy of Britain is so strong should reassure those investing in the markets. At a time of great concern throughout the world, it is possible to feel more confident in Britain because of our improvement in productivity and performance and the underlying strength of the economy.

asked the Chancellor of the Duchy of Lancaster when he last met the directors of (a) Oftel and (b) Ofgas to discuss the level of consumer satisfaction and competition in the relevant industries.

I expect to meet the Director General of Telecommunications shortly and to discuss a number of subjects of current interest. Meetings with the Director General of Gas Supply are a matter for my right hon. Friend the Secretary of State for Energy, I am glad to say.

Will the Minister acknowledge that the current anxieties about consumer interests and competition in both telecommunications and gas show the Government's mistake in privatising those organisations as monopolies and highlights their inability to open them up to effective competition or to regulate them? Will he comment on the fatuous remark of the Secretary of State for Scotland that it was up to British Telecom to promote competition against itself?

With respect, I do not regard either organisation as entirely a monopoly. At present British Telecom is in competition only with Mercury, but we have also liberalised parts of its business and in the longer term I believe that we can look forward to greater competition. British Gas is, of course, in competition with the electricity industry. It is important that these organisations are properly regulated and controlled, in the interest of consumers. In my area of responsibility the Director General of Oftel has all the powers that he requires. I am glad to say that he has initiated a large number of inquiries into the recent performance of the Post Office and British Telecom, and I believe that he is taking steps to protect the consumer interest.

When my right hon. and learned Friend meets the Director General of Oftel, will he point out that I have never had any cause for complaint about the telephone service and have received no complaints from my constituents?— [Interruption.] Does my right hon. and learned Friend agree that 99 per cent. of the criticism that we hear is both gratuitous and political?

The general view seems to be that my hon. Friend, as ever, is a lucky man in the experience of most of us. Nevertheless, he makes a valid point. We are all aware of public concern about shortcomings in British Telecom's performance. It should be remembered, however, that it has 22 million subscribers, a growing demand for services and increasing technological change in those services. It was also badly damaged by a serious strike earlier this year. Complaints should therefore be kept in proportion and refer both to the management and to the work force.

Will the Minister tell the Director General of Oftel that it is time for a crackdown on the soft porn being peddled by British Telecom on the premium services and that the profit motive should come behind public good taste? I appreciate that the Minister is struggling to find an answer, as he did not expect this to come up today.

I suggest that when next speaking to his constituents the hon. Gentleman should rest his sore throat by using the telephone rather than trying to communicate directly. Most services of the kind to which the hon. Gentleman referred are provided by outside companies using British Telecom facilities and not by British Telecom itself. Nevertheless, there is some cause for complaint. We have set up an independent committee to consider the complaints received and to decide what services are suitable for our telecommunications system.

asked the Chancellor of the Duchy of Lancaster when he expects to make a statement on his space plan.

The Government have decided not to increase public expenditure on space above the current level, which is already running at £100 million per year.

Will my right hon. and learned Friend confirm that the British space industry has yet to be formally consulted on the space plan? When his hon. Friend the Under-Secretary of State visited the Space 87 exhibition in Brighton earlier this month, was he not impressed by the presence of the French space industry, which receives far more recognition and support from its Government than does our industry, and by the fact that it is far larger and employs more people as a result? Will my right hon. and learned Friend bear that in mind when he goes to The Hague next month?

My hon. Friend says that the industry has not been formally consulted, but I think that most leading industrialists in this sector are in regular contact with the British National Space Centre. I am already having discussions with many people in the industry and I intend to continue discussions in the coming months to get our strategy clear. There is certainly heavy French participation in the European Space Agency and the French are pressing particular programmes. We have to collaborate with them as essential partners in many areas, but we must make sure, with them, that we are spending our money wisely on objectives of mutual advantage.

asked the Chancellor of the Duchy of Lancaster what was his Department's total budget for regional aid to industry in each of the English regions, Scotland and Wales in the last year for which full figures are available.

The figures for my Department's spend on regional aid to industry in each of the English regions, Scotland and Wales in 1986–87 will be issued in the Official Report.

Is the Minister's Department now conducting a review of regional aid, and if so, what are the terms of reference? In view of the importance of regional aid to Wales, which aid has been slashed since 1979, during the review will the hon. Gentleman consult the Secretary of State for Wales, who is known to be a keen supporter of regional aid?

When any new team of Ministers comes into office, it is right and proper that they should ask questions and receive answers. That is exactly what we are doing at the moment. We hope to have the answers to the questions that we posed in the not too distant future. In the meantime, of course, we always consult our right hon. Friends, and my right hon. Friend the Secretary of State for Wales is no exception.