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Trade And Industry

Volume 165: debated on Wednesday 17 January 1990

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English Estates


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

The Secretary of State for Trade and Industry and President of the Board of Trade
(Mr. Nicholas Ridley)

As already announced, a consultant's study is looking at a variety of aspects of English Estates' activities.

Given that his father was a founder director of the enterprise as long ago as 1936, does the Secretary of State accept that there must be some remorse and resentment because the Government may dismantle the corporation in the near future when the consultant's report is produced? Will the Secretary of State make a statement on that? About 5,000 factory units provide a large amount of employment in areas such as the north-west that are experiencing industrial decline. At 1989 prices, since the last year of the Labour Government—1979—the north-west has suffered to the tune of about £180 million through lost regional selective assistance and regional development grants.

I shall take the hon. Gentleman's points in the reverse order. First, 1979 was a bleak time indeed for the north-west and the regions, but the situation has greatly improved since we have had 10 years of sound Conservative Government. I am grateful for the hon. Gentleman's acknowledgement of that. Secondly, I have no intention of dismantling English Estates. It might be of value to use the large amount of capital that is invested in factories in more productive directions in future, but that will not affect the factories themselves. Thirdly, I am extremely grateful to the hon. Gentleman for the tribute that he paid to my father for responding to the needs of the time when he assisted in setting up English Estates. I, too, intend to respond to the needs of the time in the most helpful way possible.

My right hon. Friend will be aware that the headquarters of English Estates is on Tyneside. May I draw his attention to the considerable part that English Estates has paid in the success story of the transformation of industry and commerce in the north-east? In particular, I commend the quality of management of English Estates. We should retain that asset in future.

I am grateful to my hon. Friend. I agree that the cradle of English Estates' birth was in the north-east, and its activities there have been immensely beneficial to that region. Needs and requirements change at all times, and it is correct that we should look at how best to help the regions, particularly through the vehicle of English Estates and, if necessary, make changes. I have not received the consultant's report, but when I do I shall report to the House on the Government's conclusions on it.

Hon. Members are interested in what the Secretary of State has said, but there are bleak times ahead for small and medium-sized businesses. It has already been pointed out that English Estates operates about 5,000 small and medium-sized businesses around the country, with a value in excess of £400 million. Will the Secretary of State give a clear commitment that English Estates will not be privatised and that, when he receives the consultant's report, he will consult widely with people who have been assisted and people who, in future, will look to English Estates to help small businesses with a technology base?

I do not believe that there are bleak times ahead for small and medium-sized businesses in this country. The future holds great prospects, provided that the hon. Gentleman and his colleagues are kept out of office.

My right hon. Friend will be aware of the considerable success of English Estates in my constituency, the only county in the United Kingdom that is a development area under the Rural Development Commission. Might an alternative be for English Estates to divest itself of its property on the market and start all over again in areas where private enterprise is still not always providing the nursery units that are essential to the Government's policy of self-employment? The Government have achieved a tremendous record in start-up businesses and self-employment—the largest number in the history of the country.

The function that English Estates has performed so valuably has been to provide factory space, both large and small, managed and unmanaged, in areas where the economic situation was so unfortunate that the private sector was not prepared to do that. However, that situation has changed in many parts of the country, but not in all. We now want to see how best the large capital that is employed by English Estates can be deployed for the benefit of the nation as a whole.

Cars (Import And Export)


To ask the Secretary of State for Trade and Industry how many cars were imported into the United Kingdom in 1988; and how many were exported.

A total of 1·357 million cars were imported and 261,000 exported in the period under review.

Does the Minister agree that those figures are appalling and that they are 27 per cent. worse than when the Government took office? When will the Government get tough, in the same way as the Governments of France, Italy and the USA, against the Japanese imports that pour into this country? Why do we give subsidies to Nissan and allow Toyota to come here to Derby to steal the skilled labour force at Rolls-Royce—[HON. MEMBERS: "No."] Of course that happens, that is why Toyota came—to take the skilled labour force at Rolls-Royce. Why do the Government have a policy of selling off Austin Rover at rock bottom prices to British Aerospace and of using the car industry for the profits of their friends? Why can we not have the same sort of restrictions that we have for farming? Why will the Government invest in and protect farming, but not do the same for manufacturing industry?

The Labour party, in power between 1974 and 1979, presided over a massive increase in import penetration of cars into this country from 27·9 per cent. to 56·3 per cent. Under the Conservative Government, import penetration has stayed around the 56 or 57 per cent. mark. The Government's policies have seen a remarkable influx of inward investment by three leading Japanese car producers and we are on target for a major expansion of car production in this country. We may well see it expand in this decade from 1·3 million cars to around 2 million cars. That is the best answer of all to the hon. Gentleman's question. Our economic policies are working and Conservative Members welcome the new investment from Japanese companies because they have skills and jobs to offer us.

To what extent does my hon. Friend estimate that the decline in the British car industry was due to the actions of the trade unions, which refused to accept new industrial practices and favoured restrictive practices, go-slows and strikes? To what extent does he think that the Japanese decided to invest in this country because we have a Government who believe in private enterprise and the open market?

My hon. Friend is absolutely right. However, the trade unions were aided and abetted in their destructive policies in the 1970s by wrongful Government policies as well, which gave exactly the wrong signals to the car industry. The 1980s have proved much better and we now have a firm base of sounder industrial relations as a result of the new labour relations law, which has proved attractive to inward investors.

Does not the Minister accept that the consumer faces a problem nowadays because the brand names no longer state clearly whether the cars are made in Britain? Nissan cars are made in Newcastle, Peugeot in Coventry and Ford cars are possibly made in Spain or in West Germany. Will he encourage the manufacturers that wish to promote British goods to put the necessary stickers on their windscreens?

I thought that the right hon. Gentleman and his party—whatever it may be called—welcomed the integration of the European market. It has long been the case that various manufacturers that assemble in the United Kingdom also import components for their cars, and sometimes whole vehicles. It makes sense for a company such as Ford to choose where to produce in the European Community. We obviously welcome more investment from that company and expansion of the car lines that it thinks are best suited for this country.

Does my hon. Friend accept that over the years many of us have fought the importation of cars, especially from the Japanese, who would not allow our exports into their country? However, if we continue with what looks like happening now, when the Ford workers here are demanding a 14 per cent. increase, compared with the Ford workers in West Germany who have accepted 3 per cent. with much greater productivity, many of us who have said that we should not allow car imports must recognise that the British people have a right to buy cars and that if the Ford workers in the United Kingdom will not work, the British people should still be able to buy cars that might mean more imports and lost British jobs.

My hon. Friend speaks from experience. He is right that it is in the hands of Ford managers and workers to set the right level of pay in relation to output and productivity. I hope that they can settle on a good level of pay, which reflects the underlying improvement in productivity. That is the way to protect and expand jobs and to give the customer a good deal.

How does the Minister square his previous comments on the supposed recovery of the British car industry with the trade deficit in automotive products of £6·5 billion for the first 11 months of this year? Does he accept that the principal cause is that cars such as Vauxhalls and Fords are stuffed with components made in Europe? Is he prepared to open talks with companies such as Ford and Vauxhall and to insist that they increase the sourcing of components from the United Kingdom?

I want companies here to make the best commercial decisions. That is the way to secure jobs and a good package for the costomer. The hon. Gentleman should note that several major investments in British components manufacturing have been announced as a result of our success in attracting assemblers and new car production. The important point about the 1980s is that import penetration did not rise, but the total market expanded. That is why we have imported more cars. People are better off under a Conservative Government and they choose to use their purchasing power to buy new cars.

Does my hon. Friend agree that it is extraordinary and appalling that Opposition Members do nothing but criticise and knock the car industry although there is good news on the horizon? Was not the only contribution that we ever had from that lot, the £400 million investment in Dundee being stopped by their paymasters in the Transport and General Workers Union? Is it not the case that, as a result of inward investment by Japanese car manufacturers, there will be a massive increase in car exports from Britain in coming years? Does my hon. Friend agree that there is now a serious threat from eastern Europe and that we must ensure that the economic and industrial conditions here remain attractive to those who wish to invest in this country?

That was a long question and it leads to a long answer, which is problem.

I agree with my hon. Friend that the trade unions have a role to play in helping, rather than hindering, inward investment in Britain. I agree that the industry should remain competitive. I am not surprised at the attitude of the Labour party. It belongs to the wining and dining school where wining is spelt with an "h". It believes that it should issue lunchtime directives to car companies. When it tried that policy in Government, it met with disaster.

Washing Machines


To ask the Secretary of State for Trade and Industry if he will estimate the percentage of the home market of washing machines supplied by imports.

Imports of washing machines are estimated to be 38 per cent. of home market sales by value in 1988—the latest full year for which figures are available.

During the past 10 years have not the Government presided over the decimation of the electrical manufacturing industry in Britain? Are they proud of the fact that the British public have to rely on foreign goods to clean their dirty linen? When will they take action to bring manufacturing of electrical goods back to Britain and allow the British public to do their washing in British washing machines? When the trade figures are published on Friday, will the Minister ponder that we have a massive import bill, while thousands of unemployed men and women are desperate to work to produce much-needed electrical goods, which would reduce the import bill?

I am pleased to say that most British people still wash their dirty washing in British machines rather than machines imported from overseas. There were high imports in the 1970s. The Government have a sound and firm economic policy that will allow companies to compete and to manufacture the things that people wish to buy. Naturally, I wish the washing machine industry and other British industries every success.

Does my hon. Friend agree that the only way in which British manufacturing can compete is by producing better goods than those produced by overseas competition? Does he share my delight that the consumer magazine Which? has judged a British washing machine, the Hotpoint 800 series, as joint best value and best buy? For once, it is clear that we can fight back with the right type of goods at the right price.

I am delighted to hear that news and I hope that my hon. Friend's message has been heard more widely, beyond the House.

British Steel


To ask the Secretary of State for Trade and Industry what representations he has received about his use of the golden share in British Steel.


To ask the Secretary of State for Trade and Industry what representations he has received about his use of the golden share in British Steel.

Does the Secretary of State accept that the golden share was introduced to protect vital national interests? In the Scottish context, that means the preservation of the Scottish steel industries. Is he aware that British Steel is starving Ravenscraig and its associated works of investment and that, without that investment, any paper guarantees given are worse than useless? Therefore, will he make representations to British Steel to ensure that investment is forthcoming in the Scottish steel industry?

The purpose of the golden share in British Steel was to protect an industry, which had been badly damaged by a long period of public ownership, for a limited time against unwelcome takeovers when it emerged into the private sector. The circumstances where it would have been appropriate to use that golden share have not arisen. The golden share is not available for the purposes suggested by the hon. Lady. It was made clear at the time, and I make it clear again, that the Government had no intention of using that golden share for any purpose other than that for which it was first introduced.

Is the Secretary of State aware that we are concerned that, in a privatised British Steel, the Scottish plants might be subject to unwelcome elimination? Although British Steel lied in the first instance, it has now confessed that, along with the Davy Corporation, it is storing a second-hand Japanese plate mill at Lackenby. Although the right hon. Gentleman might say that he has no responsibility as the golden share owner, does he accept that he has responsibility as the Secretary of State for Trade and Industry? Therefore, will he press upon British Steel that, should it go for a single-plate strategy, it should be at Motherwell and not at Lackenby?

I understand that the chairman of British Steel recently reaffirmed that the company statement of 3 December 1987 on the future of the Scottish plants still stands. There is no way in which I can intervene—it would be quite wrong of me to seek to do so—on where plate capacity is located or what happens to a particular plant.

Does my right hon. Friend agree that the concept of the golden share is alien to the work of the stock market? It depresses the value of shareholders' investment and it could have extremely damaging effects on the pension funds that are largely invested in the companies concerned. Will my right hon. Friend confirm that the Government have no plans to extend the use of the golden share and that, unlike the Labour party, they will never extend the golden share into the private sector?

I have come to agree with my hon. Friend even more strongly since the publication of the Labour party policy review, which states:

"The Golden Share already establishes the principle of separating voting rights from the other incidents of equity ownership".
That means that the Labour party thought it had a precedent for telling companies what to do and for overriding the interests of the share owners, without compensation, in the interests of pursuing policies that have been seen to fail in eastern Europe.

Will my right hon. Friend pass on the congratulations of my hon. Friends to the management of British Steel on making it profitable at long last? It is now one of the most profitable steel manufacturers in western Europe. Under no circumstances should it turn itself back into a charitable institution as suggested by the Scottish Nationalists, the hon. Members for Moray (Mrs. Ewing) and for Glasgow, Govan (Mr. Sillars).

I shall pass on the comments of my hon. Friend, who paid tribute to the management of British Steel for turning it into one of the most successful and profitable companies in the world since it was freed from the shackles of public ownership. I reaffirm that the Government have no intention of doing anything that might prevent that highly successful British company from conquering world markets.

Now that the Government have so recklessly handed over to Brussels the right to decide—to veto or approve—transfrontier mergers and takeover bids, will not the golden share now take on added importance as our one remaining defence against unwelcome takeover bids that are against the national interest?

Neither of the right hon. Gentleman's propositions is true. First, the Commission has power, and has been using it under articles 85 and 86, to clear or not clear mergers without reference to the United Kingdom authorities on monopolies and mergers. The total confusion about that matter has been brought to an end. Secondly, the golden share in British Steel has only a relatively short time to run, after which it expires. British Steel will defend and protect itself by the excellence of its economic performance—a concept unheard of by the right hon. Gentleman.

Does my right hon. Friend agree that the privatisation of British Steel made all the shares golden shares, and they have been profitable? Compared to the other steel industries throughout the European Community, British Steel's record, once the dead hand of Government was taken away, has been one of enterprise. We can congratulate it on its excellent progress.

I agree with my hon. Friend that the only share in British Steel that is not golden is the one held by the Government.

Is the Secretary of State aware that the undertakings given by British Steel about the steel industry in Scotland have to be read carefully? Will he do as the Secretary of State for Scotland has recently done and ask British Steel to explain its plans in Scotland? Is he aware that the trade gap last year and the increased plans for motor car production in the United Kingdom point to a continuing need for steel in the future? It would help greatly if the Secretary of State asked British Steel to update its commitments in that sector.

The hon. Gentleman has seen a policy by which British Steel was nudged, asked, interfered with, intervened in, pushed, pressed and generally mucked about by Government over 20 years with disastrous results. That policy was replaced by one through which the Government privatised it and allowed it to get on with running its own business, and it has subsequently shown itself to be one of the most successful steel companies in the world. I do not understand why the hon. Gentleman wants to return to the policies of eastern Europe, which is what he is advocating.

Will the Secretary of State confirm that all respectable forecasts for world and European demand for steel in the 1990s confirm that there is a viable future for the steel industry in Scotland, England and Wales? Will he confirm that not only has he received representations about the golden share—he has received them from me—but that the trade Minister of the day in 1988 said that the purpose of the golden share—the Secretary of State has set up more golden shares than any other Minister—was to prevent takeovers and the rundown of British Steel capacity? Therefore, will he join me and his colleague the Secretary of State for Scotland in supporting the detailed plans for new investment in Scottish steel? Will he assure the House that normal regional grants will be available to prevent another great industry from being run down?

The point that I want to get across to the hon. Gentleman is that British Steel is now a highly successful corporation. I wish to allow it to take decisions about where to invest and how to plan its business. I believe, with great humility, that British Steel knows the answers to those questions much better than I do and, I suspect, than even the hon. Gentleman does. That is why he should join me in encouraging British Steel to do what it believes to be right, in its commercial interests. I should not for one moment go further than that. The British Steel special share is time limited.

Manufacturing Industry (Defence Sector)


To ask the Secretary of State for Trade and Industry if he has any plans to help the defence sector of manufacturing industry to seek alternative products in view of the military implications of developments in eastern Europe.

I thank the Minister for that answer, which is a bit of an improvement on his answer last time, when he was extremely glib.

Does the Minister accept that the major problem in Britain is that more than 500,000 people are employed in the defence industry which, in the past three years, has earned the country an average £1 billion in foreign exchange? Does he accept that if the defence talks and the changes taking place in eastern Europe continue, our defence manufacturers will have to look for alternative products? The Government should be assisting them in that and encouraging them to look for peaceful collaboration in eastern Europe.

The hon. Gentleman is at least persistent: he asked precisely the same question on 1 November 1989. That suggests that he is running out of ideas and in need of early retirement.

The motive behind the question has absolutely nothing to do with industrial strategy. The Labour party is up to its old tricks of cutting defence expenditure but trying to make it sound respectable. If anyone doubts that, he should bear in mind the fact that the hon. Member for Denton and Reddish (Mr. Bennett) is a long-standing unilateralist who prides himself on having voted against the Defence Estimates long before the relaxation in international tension.

Does my hon. Friend agree that the defence industries have a good record of diversifying into other commercial products, and that that diversification is being held up only by damaging strikes of the sort from which British Aerospace is suffering at Preston near my constituency?

My hon. Friend is entirely right. The Labour party is committed to a form of central economic planning. Page 88 of its policy review says on the subject:

"A Labour government will therefore consult unions and employers about the establishment of an Arms Conversion Agency which, within Labour's national industrial strategy, could take on the special role of providing new industries and new jobs."
That is the sort of central economic strategy and planning that eastern European countries are throwing away with contempt.

Will the Minister return to the peaceful developments in eastern Europe and confirm that since 1979 our trade with almost every country in eastern Europe has gone into deficit? This flatfooted Government have been left at the starting line while the West Germans, the Japanese and most of our other competitors have been building up trade with eastern Europe. What will the Government do about that?

Let us focus on the real issue; let us not waste our time with red herrings of the sort advanced by the hon. Gentleman. The Opposition say that they are better at industry than the major companies which have been doing so well in the defence sector. That is rubbish. There may be a case for adjusting markets and seeking new products, but that is a matter for the companies concerned, not for Opposition Members.

Does my hon. Friend agree that the United Kingdom defence industry has been a major success over the years and that that is one reason why democracy is breaking out all over eastern Europe? Does he agree that defence is a legitimate purpose for any country, and that British defence exports have helped to support the defence capabilities of many countries? Does he further agree that 500,000 jobs in the industry would be jeopardised if Labour came to power and implemented the proposals in the question of the hon. Member for Denton and Reddish (Mr. Bennett)?

It is much worse than that. The Labour party conference committed itself to a reduction of £5 billion in defence spending, or a 30 per cent. reduction in Britain's conventional defence capacity. That would lead to massive unemployment.

Does the Minister recall the Prime Minister saying that Mr. Gorbachev was a man whom she could do business with? Given that, is it not very disappointing that the Department of Trade and Industry seems to have been so unsuccessful in taking advantage of the new industrial opportunities in the large market of 420 million people in eastern Europe and the Soviet Union? Is not the Government's policy one of unilateral industrial disarmament, and are they not failing to take advantage of the new market that is on offer?

I am sorry that the hon. Lady, who I always thought was a rather respectable character when it came to the point, should be speaking in terms of unilateral disarmament of any kind. I clearly remember what my right hon. Friend the Prime Minister said about Mr. Gorbachev, and I have no doubt that the relaxation in international tension is due, at least in part, to what the Prime Minister has done in that connection. I also remember what the Prime Minister said about the dangers of relaxing our defensive capacity until we see how this matter will end.

Will my hon. Friend examine the speed at which his Department issues defence export licences? Delays in issuing those licences are a brake on successful export industries, notably in my constituency. Does he agree that the best thing for our defence export industries and especially for the Property Services Agency, which is being privatised, would be to allow them to compete internationally for the excellent defence-related services that they provide?

I am concerned at my hon. Friend's suggestion that there is unreasonable delay in the DTI over issuing licences. If my hon. Friend has specific points, I should be pleased to hear them. I hope that he will give me or my colleagues the details of the complaints.

We are making slow progress today. If we had briefer supplementary questions we might get briefer answers and could make more progress.

Northern Development Company


To ask the Secretary of State for Trade and Industry what grant he proposes to offer to the Northern Development Company in 1990–91.

I know that hon. Members will enjoy this. As I told the House on 6 December in answer to my hon. Friend the Member for Tynemouth (Mr. Trotter), I expect to announce the level of grant in March.

Does the Minister accept that his answer has more twists in it than the Lambton worm? We do not have a development agency in our region. We have built one ourselves using the resources of local people. We need another £2·5 million over the next three years to promote the second industrial revolution in the region. We want to do it for ourselves, but the Government will not give us the money. The Minister should spare us the lectures and put the cheque in the post.

The hon. Gentleman is an engaging character, but in two respects he does himself no credit. First, as he has not told us about the very substantial increase in DTI funding for the Northern Development Company over the past few years, I shall do so, In 1981–82 funding of the NDC was £230,000. In 1989–90, inclusive of core funding, it is £1·182 million, which is a fivefold increase.

Secondly, unemployment in the hon. Gentleman's region has fallen by 3 percentage points during the past 12 months. The hon. Gentleman might have mentioned that.

Does my hon. Friend acknowledge the self-support provided by the region to the Northern Development Company and the funding provided by local firms and local authorities? May I remind him of the development corporation's success story, and ask him to support it on a longer-term basis? I point out to my hon. Friend the difficulties of budgeting for only one year at a time, and ask for his support for the suggestion that there should be a three-year finance programme.

Finally, may I ask my right hon. Friend to recognise the excellent support—

Order. I asked for briefer questions, and the hon. Gentleman has asked at least three.

My hon. Friend deserves some good news, and that is what he shall get. As to the rolling programme to which he refers, he will know that on 2 October 1989, I wrote to the regional development organisations accepting the proposal for a three-year funding programme which meets precisely the point that my hon. Friend so eloquently put.

Manufactured Goods


To ask the Secretary of State for Trade and Industry what was the increase in import penetration of manufactured goods from 1979 until the most recent date for which figures are available.

Import penetration in manufacturing industry rose from 27 per cent. in 1979 to 36 per cent. in the year ending March 1989.

Is it not a disgraceful record for the Government of the world's first industrial power to turn the manufacturing trade surplus of £1 billion achieved under the previous Labour Government into a £20 billion deficit this year? Although the service sector is important, the Government must understand that we cannot rely on it alone. We should follow the example set by the Germans and Japanese, who plan for, support and invest in their manufacturing industries. Why have the Government failed so abysmally?

The hon. Gentleman does not appreciate that although our commitment to the European Economic Community means rising import penetration, it means also an increasing proportion of exports. Both have risen because of increasing European and worldwide trading. Six Community countries have a higher import penetration than the United Kingdom, but that does not mean that those countries or Britain have weak economies. It means instead that we are benefiting from a more open and competitive market, that our customers have greater choice, and that British businesses have more discretion in whether to produce for the home or export markets. The important point is that unemployment has fallen dramatically and is well below the EC average—it is particularly low in the hon. Gentleman's constituency. Living standards have reached new records, and consumers have unprecedented choice.

Will my hon. Friend remind the Opposition that manufacturing exports have increased by 40 per cent. since 1986, whereas manufacturing output fell under the previous Labour Government, as did our share of exports? Does my hon. Friend agree that protectionism is no way to make British industry more efficient and competitive? Will he commit himself to dismantling the pernicious gentlemen's agreement that limits car imports, and so put timely pressure on the unions at Ford?

My hon. Friend is right to say that the open trading system offers more prosperity than restrictions—as the events unfolding daily in eastern Europe show. Car imports are a matter for EC deliberation and not specifically for the British Government, and they will be debated within the Community's Councils.

The Minister will be aware that one way of overcoming high import penetration is to assist British regional development in areas where unemployment is high and incomes are low—such as my own. Will he study the example of the Bretons, who tackled the problem very successfully? They enjoy a thriving export business, but only on the basis of a regional development fund and agency.

Our policies have been much more successful in reducing unemployment than those of many other European countries. It is well below the EC average as a consequence of our open market and competitive policies. As the hon. Gentleman knows, we already have a regional policy. The main contributors to improved prosperity are an open trading system and sound economic policies that allow rapid growth of the sort seen in this country in recent years.

Will my hon. Friend give more help to smaller companies, many of which could win exports if given greater encouragement through the British Overseas Trade Board and the commercial departments of British embassies? Will he also examine the potential of eastern Europe, and ascertain whether our commercial departments there could be expanded to help British exporters, as it is difficult to export to the East at present?

I am grateful to my hon. Friend for raising this important subject. There are a number of initiatives to encourage exports. The DTI has an export initiative for smaller companies, which should get in touch with regional offices if they would like help.

I and my right hon. and hon. Friends are active in taking companies and industrialists to see the opportunities in eastern Europe. Extensive briefing is available from our embassies and from the DTI in London and the regional offices. There are enormous opportunities in eastern Europe for British business, and we would welcome companies taking up our offer of advice and help here and in the embassies abroad.

Information Technology


To ask the Secretary of State for Trade and Industry what is the current balance of trade in information technology with Japan.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs
(Mr. Eric Forth)

According to the latest figures available from the business statistics office, the United Kingdom had a trade deficit with Japan in manufactured products of the electronics and information technology sector of £1·8 billion in 1987 and, provisionally, £2·2 billion in 1988.

Why is a major competitor like Japan ahead in production, and why are we, who are often in the forefront in invention, lagging behind? The Government appear to be unable to resolve that major problem. Is the Minister aware that there is a major deficit with Japan, much of it in high-technology goods? Does not that require urgent action by the Government and why do they not get on with it?

The hon. Gentleman highlights the important phenomenon that all the major OECD countries, except Japan, have a trade deficit in information technology. The sad truth is that most countries are unable to compete with Japan and certain other countries in that sector, partly because the Japanese have been very successful in identifying the sector and promoting it. Our export performance, which, as my hon. Friends have pointed out, is excellent, is across a wide range of goods. I see no incompatibility between our excellent performance across the range and the Japanese specialising, for example, in information technology.

Does my hon. Friend share my disturbance at the deficit with Japan? Will he note that in my constituency several companies in this sector are selling successfully into the Japanese market, which seems to show that what companies need most is not Government assistance but being based in Esher?

I congratulate my hon. Friend on the fact that companies in his constituency are capable of developing and making products in this sector which can be exported everywhere, including Japan. There are many such cases throughout the United Kingdom. I see no reason why, with a liberal economic regime and liberal Government policies, a low tax base and a skilled and trained work force, companies should not be able to compete in the sector and export throughout the world, including Japan.

Will the Minister try to answer the question posed by my hon. Friend the Member for Ealing, Southall (Mr. Bidwell)? What does his Department intend to do about the problem other than beating its breast and sitting on its hands?

A moment ago I told the House what it is appropriate to do: we shall continue to provide an invigorating economic climate in which companies are free to make their decisions about investment, to develop their products and to seek the most effective markets for them. I hope that the Government will not propose a latter-day interventionist policy of the sort which people throughout eastern Europe have realised, belatedly but welcomely, is a total failure. We hope to continue the excellent trend of policies that we have established over the past 10 years to liberate our industries and give them every opportunity to continue to succeed.

House Of Fraser


To ask the Secretary of State for Trade and Industry what representations he has received regarding publication of the report on House of Fraser.

I have received a number of representations, the great majority of which are in favour of my publishing the inspectors' report into the affairs of House of Fraser Holdings plc. I will do so as soon as possible.

It is five years since the alleged irregularities and fraud took place, and 18 months since the previous Secretary of State received the report. Nothing can be done about alleged wrongful transfers of assets because of the previous Secretary of State's decision not to refer the issue to the Monopolies and Mergers Commission. Does my right hon. Friend accept that it is almost an insult to open government and justice not to publish the report and not to tell people exactly what went on?

As I have already told my hon. Friend, I will publish the report at the earliest moment consistent with the even-handed administration of justice.

How early is the earliest possible moment? Is the Secretary of State aware that many of us who knew little about the matter until we saw television programmes have been shocked at what has been happening? Is it not time that not only the House but the entire population had a proper report of what happened in that case?

How early is as soon as possible? It is as soon as I can do so. The hon. Gentleman should reserve judgment until it is possible to publish the report, which I have already said I will do as soon as that is appropriate in the light of possible proceedings.

North Devon Manufacturers Association


To ask the Secretary of State for Trade and Industry what assistance he is giving to the North Devon Manufacturers Association.

Through my south-west regional office, which maintains excellent relations with the North Devon Manufacturers Association, my Department has supported and will continue to support events sponsored by the association whenever possible.

Will my hon. Friend accept my thanks and congratulations on the good work of his Department in sponsoring a genuine multinational, locally based collection of industries, which is leading the way in skills training, information technology and happy co-existence to provide a good basis for prosperity in north Devon?

I accept my hon. Friend's comments. Our efforts have been very successful. I recently studied the unemployment figures for the Barnstaple and Ilfracombe travel-to-work area and for Bideford, and then contrasted the figures for November 1984 with those for November 1989. In November 1984, the respective figures for Barnstaple and Ilfracombe and for Bideford were 14·7 per cent. and 17·2 per cent. In November 1989, the figures were 6·7 per cent. and 8·1 per cent. That is a dramatic improvement.

What representations has the Minister received from employers in Devon about the difficulties that might face their employees should they be forced into short-time working? Is the Minister aware that, as a result of changes in Government regulations, if an employee earns more than £43 a week on short-time working he is prevented from claiming unemployment benefit for the days that he is not employed?

Will the hon. Gentleman urgently investigate the impact of the regulations in Devon and elsewhere? Will he ensure that the Secretary of State for Social Security changes the regulations soon so that they do not force short-time workers to be penalised in that way?

I am sorry to disappoint the hon. Gentleman, but none of the members of the North Devon Manufacturers Association has made representations to that effect. However, they are pleased with the substantial improvements to the infrastructure in north Devon and, in particular, the large sums of money that the Government are spending on improving road links—for example, the £109 million spent on the north Devon link road.



To ask the Secretary of State for Trade and Industry if he will make a statement on the actions he is taking to improve the levels of British exports.

One year ago today my noble Friend Lord Young of Graffham launched a package of measures offering a wide range of help, advice and support to firms at each stage of the exporting process. Staff in the embassies and regional offices are always available to give information and advice.

I am encouraged to note that the volume of non-oil exports in the three months to November 1989 was 13 per cent. higher than a year earlier.

My right hon. Friend's news is much appreciated. He will no doubt recognise the importance of the 20 per cent. increase in exports last year, and he is to be congratulated on his recent announcement on the Export Credits Guarantee Department. Is he aware of the importance of the export credits guarantee to the north-west of England? Can he give us a timetable for the implementation of his plans?

I am glad that my hon. Friend recognises the remarkable export performance of British industry in the past year. It represents a remarkable gain in our share of exports, to which the whole House will wish to pay tribute.

On the ECGD, my announcement before Christmas will have the effect of giving added impetus to the credit insurance industry in the long term by making sure that credit insurance will be available to our exporters within and without the Community. It will be necessary for legislation to be introduced, but I cannot estimate when it will be introduced. Apart from that difficulty, the Government will proceed with urgently required plans for the future of the ECGD as soon as possible.

What would be the impact on unemployment nationally if the Government's export promotion allowed the balance of payments to trade in surplus?

I could not be expected to answer that off the top of my head. The balance of payments includes the capital account, which produces a large amount of inward investment—about £1·5 billion from Japan alone last year—and which in turn is a major contributor to United Kingdom employment. The calculation that the hon. Gentleman seeks is somewhat wider than he would like to acknowledge.

Does my right hon. Friend agree that exports will increase in the years to come as the significant investment in manufacturing, domestic and foreign, comes on stream? Does he further agree that this is a sign of great confidence in our economy, and that if Opposition Members truly wished to support their constituents and their jobs, they would welcome that inward investment instead of carping about it, as they often do?

My hon. Friend is right. In addition to the 13 per cent. volume increase in exports in the past 12 months, export order books have been showing a distinctly healthy trend, even in the past few months. British exports in the future will embarrass Opposition Members because they never like to hear good news.

Will the Secretary of State confirm that we have not only the biggest trade deficit of all our European competitors but the highest interest rate and the worst inflation, and that that is hitting exporters? What will he do to prevent Britain from becoming the only country in Europe, in the run-up to 1992, according to CBI figures, in which manufacturing investment this year is falling?

I would not accuse the hon. Gentleman, in the words of the hon. Member for Kirkcaldy (Dr. Moonie), of being sufficiently clever to sit on his hands and beat his breast at the same time, but he was attempting to do something very similar in that supplementary question. Investment is keeping up extremely well and, in addition to the list of factors that he suggested, we have the lowest taxation on industrial payroll companies. Why does he wish to add a 0·5 per cent. payroll levy, which would raise a further £1 billion from British industry, thus severely debilitating it at a time when he says British industry needs help not hindrance?

Is my right hon. Friend aware that we must increase our manufacturing exports and that, to achieve it, the Government cannot ignore the need for a strategy for manufacturing industry? Is he further aware that unless we increase our manufacturing exports, our balance of trade deficit will continue, and there will be ongoing pressure on the pound, which will contribute to inflation and the country's economic problems?

We have a strategy for manufacturing industry, and that is to let companies get on with the job without interfering with them. I suspect that that played a large part in the highly successful performance of British exports to which I referred.

Regional Assistance


To ask the Secretary of State for Trade and Industry what is his estimate of the value of grants paid by his Department in pursuit of regional assistance plans during 1989; and what was the level of such assistance in real terms during 1979.

In 1989 expenditure on regional assistance in England totalled £326·6 million; in 1979 the figure was £297·6 million. Expressed in terms of 1989 prices, the expenditure in 1979 was £594 million.

Does the Minister deny that the combined total from regional assistance and regional development grants was £1,130 million in 1979 and £470 million last year? Given the enormous increase in economic and environmental needs, does the Minister realise that that is an example of negligence and irresponsibility?

The hon. Gentleman has failed to analyse the component elements of the figures. We have discontinued regional development grant, and quite right too, because it was an automatic grant which took no account of the jobs created, or of need. We are relying on regional selective assistance, which is based on need, jobs created and economic viability. That is the way forward.

Sawmilling Industry


To ask the Secretary of State for Industry what representation he has received about overcapacity in the sawmilling industry.

Apart from the points that my hon. Friend raised in his recent correspondence with my Department, I am not aware of having received any other representations about overcapacity in sawmilling.

In view of my hon. Friend's answers to my question and to the preceding one, what assurance can he give the House that regional selective assistance will not lead to displacement and overcapacity? Does he agree that such commercial decisions are best left to the market?

My hon. Friend illustrates the value of having moved away from regional development grants to regional selective assistance. When considering applications for regional selective assistance, one can take into account displacement in employment opportunities and overcapacity in existing plants. That was not the case with regional development grants.