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Oral Answers To Questions

Volume 201: debated on Wednesday 15 January 1992

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Trade And Industry

Inward Investors


To ask the Secretary of State for Trade and Industry if he will make a statement on the impact of the Maastricht agreement on the relative attractiveness of the United Kingdom and other European countries to inward investors.

The Secretary of State for Trade and Industry and President of the Board of Trade
(Mr. Peter Lilley)

The United Kingdom is already the number one destination for foreign investment in the Community. The fact that we shall not have burdensome employment legislation imposed on us by Maastricht may make this country more attractive still for foreign investors.

Does my right hon. Friend agree with Commissioner Delors that the absence of a social chapter makes Britain by far the most attractive place for overseas investment within the European Community? Will he guarantee that if Commissioner Delors and his friends seek to impose a social chapter using other headings the Government will challenge their legal right to do so?

I entirely agree with President Delors that the exclusion of that aspect from the full Maastricht settlement would make Britain a paradise for inward investment, and I have had that message communicated to all trade attaches in our embassies throughout the world. We shall, of course, resist any attempt to introduce such legislation by other means. Legally, it will be harder for anyone to do so now that the separate protocol to which we are not party provides, for those who wish it, the opportunity to introduce such legislation.

Does the Secretary of State agree that one of the most successful recipients of inward investment has been and can continue to be the financial services sector? Does he agree with the chairman of that industry, Sir Patrick Sheehy, that to opt out of the single currency would be a foolish measure? Does he agree with Sir Patrick that the United Kingdom can retain its pre-eminent role in Europe in the financial services sector only if it subscribes enthusiastically to the principle of a single currency?

We shall have to consider that decision if and when the time comes, and we have a right in this House to do so. We should, however, recollect that one of the reasons for the strength of the City of London is that it has consistently followed a very open policy, which is not always followed on the continent and elsewhere. That is what has made us so attractive. Uniformity of policy throughout Europe would have prevented us from building up the strength of the City of London.

My right hon. Friend will remember that when the Government came to power the country was suffering from the problems of being hopelessly non-competitive. If a Government who embraced the social charter were returned from the Opposition parties, would we not soon be back in those waters and simply become an industrial desert?

That is, indeed, the risk that British industry foresaw, which is why it urged us to do what we did. That is also why it so much welcomed the successful outcome of the Maastricht agreement on those lines. It is pretty clear that Labour believes that it cannot get a majority for those policies domestically and therefore wants to achieve a situation in which they can be imposed on us by a majority of continental countries. I thought it particularly strange that the Labour party should label its new policy, "Made in Britain", when its strategy is to ensure that British policy is made on the continent.

Will the Secretary of State stop looking for scapegoats for Maastricht'? He boasts about inward investment, but is he not aware that following the last slump under this Government, between 1979–81, investment in manufacturing industry was so slow that the capacity is now hardly any higher than it was 12 years ago? Investment is falling back rapidly and all forecasts show that unless the Government's policies are changed there will be 4 million unemployed by the year 2000.

That is absolutely incorrect, and I take it that the hon. Gentleman is dissociating himself from Labour Front Bench policy on the Maastricht settlement. Comparing this point in the economic cycle with the same point 10 years ago, during that period manufacturing output has risen by a quarter, manufacturing investment by a third, manufacturing productivity by a half and manufacturing exports by three quarters.

Telephone Charges


To ask the Secretary of State for Trade and Industry whether he will make a statement on the effectiveness of the system for regulating telephone charges since 1984.

The Government have set up an effective system of regulation. During the period of controlled prices, those that are under the regulator's eye have fallen by 27 per cent. in real terms. The three-minute cheap rate for local calls is now cheaper in cash terms than it was in 1981. That is effective Conservative regulation in action.

Will my hon. Friend confirm that 96 per cent. of phone boxes now work and that phone call charges have been cut faster in this country than in any other country, thanks to the Government's privatisation policy? Will he ensure that there is more competition in both phone and postal services, and will he bear in mind the excellent postal service provided in my constituency by Document Interlink Ltd?

My hon. Friend is right that this country has the best regulatory system for reducing real phone charges. He is also right to say that regulations improve the quality of service. Not only do a greater proportion of phone boxes work, but there are more boxes today than there were before we introduced the privatised control system. My hon. Friend may like to know that my right hon. Friend the Secretary of State today set out in a speech the importance of improving and strengthening competition in a range of postal services. I am well aware of my hon. Friend's constituency interest as I visited that company and know how good it is.

Will the Minister recognise that some of the benefits that he announced this afternoon are the result of cross-subsidy from the dirty, sleazy pornographic phone calls that he and his colleagues have encouraged for some time? Will he today resist the introduction of the 75p per minute further added value services now suggested?

The hon. Gentleman knows that that allegation is untrue, but I am glad that he accepts that the quality of service has improved and that there have been improvements in the pricing of a number of British Telecom services. Bearing in mind the hon. Gentleman's interventions and today's debates in the House, he may like to know that there has been yet further strengthening of the regulatory system in relation to the services to which he objects. I assure him that there is a common interest across the Floor of the House in seeing that nasty services of that kind are not allowed on the BT network.

Will my hon. Friend confirm that nearly half of the top 500 companies in the European Community are British, led by British Telecom?

My hon. Friend is right—United Kingdom firms have done extremely well in the list of top companies in Europe. That came as no surprise to us, as we know how good the business climate in this country has been in recent years with the success of deregulation and low taxation and the attractiveness of Britain as a home of inward investment. My hon. Friend is right to say that BT is one of the leading companies and has made an important contribution to our economy.

Why is the Minister so selective and defensive in his choice of statistics? Why will he not accept responsibility for the rise in telecommunication charges above inflation during the 13 years of the Government's misrule? Why does he not give the hon. Member for Bolton, North-East (Mr. Thurnham) a copy of last month's Department of Employment gazette, which shows that the rise in telecommunication charges during the past year has been 7 per cent. while the retail prices index has risen by less than 4 per cent? Is it not true that too many people have phone bills that are too high? Why has the Secretary of State failed effectively to tackle those problems and to take action against the excessive profits and unacceptable boardroom pay rises and perks?

The hon. Gentleman's question was as excessively lengthy as the price increases under Labour, with the nationalised industry in the 1970s, were excessively great—far greater than any under the regulatory regime set out by this Government. The hon. Gentleman should also know that the average residential bill has been falling. Of course, the extent of the fall depends on the use made of the service and on the balance between rental and call charges. Nevertheless, the average bill, assuming equal use, has been falling.



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

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

The European Commission's approval of the programmes for RECHAR grants for British coalfield areas is overdue.

Is the Secretary of State for the Environment mistaken in pointing out that the Government's position on RECHAR has become untenable?

For a start, the so-called leaked document in question dates from last July. Discussions do take place within this Government—we are not so Stalinist as Labour's national executive committee in these matters.

Secondly, our position is clear: we will not allow the House of Commons to lose its control of public spending. Labour Members may be interested in devolving power to the nomenklatura of Brussels—we are not.

The Cannock Chase area badly needs these funds, not just in my constituency but in surrounding constituencies. Is my hon. Friend aware that we hold entirely responsible for this delay the former Labour Member of Parliament and now Commissioner in Brussels, Bruce Millan, who is playing a fairly despicable party political game? Will my hon. Friend do everything he possibly can firmly to nail the blame on Bruce Millan for the delay in these funds coming to the coalfield areas?

I find it difficult to understand Mr. Millan's position. On his own admission he is dissatisfied with additionality procedures in other countries—for instance, in Italy, the Netherlands and France—but, uniquely, he picks on this country, despite the fact that the structural funds have doubled and we are not receiving any benefit. Why is that? I understand that Mr. Millan is a socialist; could he be making a party political point? Is he an honourable man?

These funds have been administered in this way since 1975. When Mr. Millan was Secretary of State for Scotland he administered them in exactly the same way as that for which he criticises us. What is he trying to do?

The Minister himself was making a party political point in his reply. Will he come back to the question asked by my hon. Friend the Member for Edinburgh, South (Mr. Griffiths)? The Department of the Environment says that the Government's position is untenable. Is the Minister aware that France, Germany and Spain have carried out their undertakings under the agreement? Does he not realise that his party is being slaughtered in Scotland? We are job-hungry in Scotland and we need this money. Why does the hon. Gentleman not agree that the position is untenable and reach an agreement to bring the money to the areas which need it?

I agree with the hon. Gentleman to this extent—that the coal mining areas need this money. If Mr. Millan releases the money, every last penny of it will go to the coalfield areas. I have said that Mr. Millan is an honourable man—[Interruption.]—and I am sure that Mr. Millan wants the money to go to those areas. We pay in £300 million more to the European Commission than we receive back. The ball is now in the Commission's court. These moneys are genuinely additional. All that Mr. Millan has to do is to release the money and it will be spent.

Is it not outrageous that coalfield areas such as Nottinghamshire which have been waiting nearly two years for this money are still denied it because of the party political games played by the former Cabinet Minister and now Labour Commissioner Millan? Will my hon. Friend make sure that he or his officials contact the office of Commissioner Millan today and demand that the money be freed so that it can be well spent in areas such as the one that I represent?

My hon. Friend is quite right. There is another point: the additionality test is to ensure that the moneys are spent only because of the grant. Clearly, the moneys are not being spent, because Mr. Millan is holding up their distribution. What clearer laboratory or litmus test could there be to show that our methods are genuinely additional? I repeat that Mr. Millan has had his day in court. These moneys are genuinely additional and we await his decision. We want these moneys to go to the coal mining areas, many of which are represented by Labour Members. I hope that they will take the opportunity to ask Mr. Millan to release these moneys for the benefit of their areas.

Does the Minister accept that although some of us may have a disagreement with Bruce Millan, we have known him for many years and we know that he has always been, and is, punctilious in the exercise of his duties? He could certainly teach the hon. Gentleman how to master legislation. I have complete confidence in Mr. Millan's analysis of the situation. When will the Government own up to their responsibilities and release the money to areas such as Fife which need it?

The hon. Gentleman is quite right. When Mr. Millan was Secretary of State he was punctilious in operating a system that he now condemns. The House is entitled to ask why that was so. For the sake of the hon. Gentleman's constituency and areas such as the constituency of my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth), these moneys must be released. Some £109 million is being held up. We made it absolutely clear to Mr. Millan and the Commission that we were prepared to be flexible and to listen to any representations. At the end of the day, however, we must ensure that the House retains control of public expenditure. That is the reality of the dispute. Hon. Members must address that problem. Opposition Members may wish to make party political points, but do they want to lose control of public spending?

On a point of order, Mr. Speaker. In view of the Minister's unsatisfactory reply and the slur on Bruce Millan, I shall have to raise the matter on the Adjournment.

Inward Investors


To ask the Secretary of State for Trade and Industry whether he will make a statement on the impact of the Maastricht agreement on the attractiveness of the United Kingdom to inward investors from the United States.

The United Kingdom has for many years been the preferred location for United States investment in Europe. The Maastricht agreement will help us to maintain that privileged position.

Is my right hon. Friend aware that my constituents fully recognise the enormous benefits of inward investment from the United States and elsewhere, from which my constituency has benefited greatly? Business men in my constituency believe that the Maastricht agreement set exactly the right tone for business in the 1990s. Does my right hon. Friend welcome the splendid announcement of a multi-million pound investment in my constituency this week by Smith Kline Beecham?

I am happy to welcome that investment, and I imagine that it owes much to the climate and environment that the Government have created and which might have been threatened by an alternative settlement at Maastricht such as the Opposition would have supported and implemented if they were ever elected. That is why we shall continue to pursue our policies. Our success in attracting more investment from the United States than has been attracted by all the countries of western Europe put together is proof that we have created a more attractive climate for investment than anywhere else in Europe.

Which aspect of this industrial investment paradise does the Secretary of State think is most attractive to inward investors? Is it that they will not be bothered by maximum working hours or minimum wages, or is it just that the trade union movement in this country has been crippled by repressive legislation over the past 12 years?

We have carried out surveys to determine what aspects of the environment in this country are most attractive to inward investors. They are, first, the reforms of industrial relations which have created harmonious working practices, all of which were opposed and many of which would be reversed by a Labour Government. Secondly, this country has a lower burden of tax than many of our European partners, but the Opposition are determined to reverse that. The third reason is the end of nationalisation and the introduction of privatisation, which is being opposed by the Labour party. Finally, inward investors find attractive the measures that we have taken to improve training and skills, almost every one of which has been opposed by Labour.

Will my right hon. Friend ensure that the message goes out from British trade missions throughout the United States to American firms contemplating investing in Britain that we operate an open free market economy with low taxation and that we have no intention of introducing unnecessary social costs which would make business less competitive? Will my right hon. Friend ensure that that message is made known throughout the American business community?

I am sure that the whole House will wish to join me in congratulating my hon. Friend on the recognition of his distinction, not least in defending the business and small business communities in this country. I entirely endorse what he said: we need to maintain a liberal, open, free market society. That is what attracts investment from abroad and makes it profitable for domestic industry to invest as well.

Order. We are making rather slow progress today. I now propose to move on more rapidly, and would ask for brief questions and answers, please.

Industrial Policy


To ask the Secretary of State for Trade and Industry when he will next meet representatives of the north-east regional CBI to discuss industrial policy.

Ministers and officials of my Department keep in touch with the CBI on a wide range of business matters. I shall be visiting the north-east again on 19 February.

Business failures are now running at 57 per cent. in the north-east and 65 per cent. nationally. Will the Secretary of State admit that the Government have made a right mess of the economy and of businesses of the north-east?

The north-east has been transformed for the better, not least by the flow of inward investment and the diversification that has taken place. I am surprised that the hon. Gentleman runs his region down instead of talking up its successes. Nissan is to employ 4,000 people by August 1992 and Fujitsu is creating 1,500 extra jobs. The Department of Trade and Industry alone has spent £1·5 billion in the past 10 years in the hon. Gentleman's region, the success of which is shown by the success of local businesses and industry. The hon. Gentleman should pay tribute to them.

When my right hon. Friend meets the CBI in the north-east, will he try to explain away the inconsistency that has occurred in the Labour party? Last week it announced a "Made in Britain" campaign; yet its deputy leader is a Birmingham Member of Parliament who drives a top of the range French Citroen motor car.

I thought that that was interesting news. It shows—we are not allowed to use the word hypocrisy, are we? [HON. MEMBERS: "Yes."] Then it shows the hypocrisy of the Labour party, which claims "Made in Britain" as its slogan while its Members of Parliament drive around in French motor cars and spend most of their time denigrating British industry.

Does the Secretary of State agree that trade and industry in the north-east need good communications and that the existence of direct rail links to the channel tunnel and a much better Al between the north-east and Scotland are extremely important to trade and industry? He has a legitimate voice in governmental discussions. Will he use that voice to get such projects approved?

In many respects, the hon. Gentleman is right. I have to be the voice of industry within the Government, arguing the case for the needs of business, and I do. The Government have given renewed priority to improvements in the infrastructure—in roads and railways and other transport. That shows through in many ways. We have harnessed the private sector. The channel tunnel is entirely privately financed. Had we relied on public sector finance, it would have been another century before we had such an opportunity for British industry, with all the infrastructure back-up that will flow from it.

Mr. Karl Watkin, the chairman and managing director of Crabtree, an engineering company employing 270 people in Gateshead, whom the Secretary of State knows, as he visited the plant last year, was last week voted north-east business man of the year. In his acceptance speech, he said that the Government's economic policy was damaging business in the north-east. Does the Secretary of State dismiss him as a dismal Jimmy, or does he agree with me that Mr. Watkin knows what he is talking about?

I have met Mr. Watkin, and found him a lively and stimulating character. Last time I met him, he said that words attributed to him in the House had not been words that he had uttered. Perhaps the same is true again.

Industrial Development Act 1982


To ask the Secretary of State for Trade and Industry if he will make a statement on the working of the Industrial Development Act 1982; and if he will make a statement.

A description of the way in which the powers conferred by the Industrial Development Act 1982 are exercised is contained in the statutory annual report. This includes details of financial assistance to industry.

Copies of the most recent report for the year ending 31 March are in the Library.

I am well aware of the contents of the report. Is the Minister aware that many of the schemes in the report now appear dated, as do the geographical definitions of the areas that can benefit? For example, in Wales, the micro-electronics scheme has provided only £100,000, for a total of £80 million spent on it. Moreover, selective regional assistance in Wales fell, from £80 million three years ago to only £50 million a year ago. Will the Government please review the workings of the Act and make them more effective?

The Act is already very effective because grants made under it are selective. We spend about £567 million on regional selective assistance in the public expenditure survey round, and I think that most people now accept that it has been more effective than the automatic grants made under the regional development grants system. Wales benefits greatly: about £124 is spent per taxpayer in the assisted areas there, compared with £82 in Scotland and £41 in England.

The hon. Gentleman also referred to the assisted area map. That map will be reviewed, as it is once every Parliament, at the beginning of the next Parliament.

Will my hon. Friend ensure that, in areas of Devon and Cornwall where unemployment reaches levels as high as those in similar areas of Scotland and Wales, similar benefits under the Industrial Development Act 1982 will be available, as they are not at present?

My hon. Friend is wrong—if he does not mind my saying so—in the way in which he phrases his question. Regional selective assistance is equal wherever it is applied for in Great Britain, although the limits for Northern Ireland are higher. A large part of Cornwall is covered by assisted areas. The assisted area map may well change after the general election, but I can assure my hon. Friend that we ensure absolute fairness between assisted areas and that no one area is disadvantaged or advantaged in relation to the others.

Is the Minister aware that, after the general election, the assisted area map will change because the Government will change, and that changes are necessary? For instance, in the county of Northumberland, we have an assisted development area pattern that runs from east to west—to areas such as Ponteland and Darras Hall, a huge executive residential estate which does not want or require industry. The industrial pattern runs from the south-east to the north of the county and the assisted area pattern ought to be changed to reflect the needs of the county as a whole. The industrial pattern in Northumberland runs from the south-east corner to the north—to the area represented by the hon. Member for Berwick-upon-Tweed (Mr. Beith). That pattern needs to be changed now, not after the general election, to reflect the needs of industry and the county.

The European Commission allows assisted areas to cover about 35 per cent. of the population. 'We are up against a ceiling and if we added new areas to the map, we should have to remove other areas. If we are to maintain confidence in the system, there is no point in our mucking around with the map several times in each Parliament. It is much better to have one review and to have it at the beginning of the Parliament, and that is exactly what we shall do. The assisted area map will change not because the Government will change but because circumstances have changed since the last review. We shall ensure that the map is drawn objectively.

Investment Location


To ask the Secretary of State for Trade and Industry what representations he has received from business men concerning the impact of the regulatory environment on decisions about location of investment.

Overseas undertakings investing in the United Kingdom often comment favourably on our regulatory regime. It is one of the reasons why the United Kingdom is the preferred location for United States and Japanese undertakings investing in the European Community.

As my hon. Friend has said, our regulatory climate has encouraged a lot of inward investment. How distressed and worried is industry in those regions that we might mistakenly have a Labour Government, which would do so much damage to inward investment?

Many people are asking worried questions about just that point. They do not like the prospect of higher taxation, the minimum wage, the social charter or the Maastricht social clauses. These would put a massive burden on business. It is very important, therefore, that the Conservative Government continue in power to ensure that the climate remains favourable for the attraction of the lion's share of foreign investment into the European Community.

The Minister will not be surprised to learn that my question concerns the regulatory environment of British Steel, in which the Government hold the golden share. Are the Government prepared to exercise their right, as the holders of that share, to ensure that British Steel agrees to implement its promise that it would either stay at Ravenscraig or sell the plant to somebody else?

That question has been answered very fully by my right hon. Friend the Secretary of State for Scotland and by other Ministers, and there is nothing that I want to add. These are commercial decisions and British Steel's actions are within the terms of the guarantees that it has given.

Political Risk Insurance


To ask the Secretary of State for Trade and Industry what steps he intends to take to ensure that British firms are able to obtain political risk insurance with speed and on terms that enable them to compete on equal terms with their international competitors.

The Government have already ensured that competitive political insurance can be provided by the private market, supported where necessary by Export Credits Guarantee Department reinsurance facilities.

Can the Minister tell us how the Government are ensuring the speedy response necessitated by changing circumstances in other parts of the world, particularly areas with which Britain had close links in the past? I am thinking of the current situation in Somalia and of events in eastern Europe. How is the Minister making sure that in the new situation that the Government have created they are able to respond quickly and effectively? Other countries seem to do better.

I take it that the hon. Gentleman is referring to reinsurance provided by the private sector through the recently privatised insurance services group, which was formerly in ECGD but is now in NCM Credit Insurance Ltd. As the hon. Gentleman knows, we have put in place arrangements under which, in the very few markets that the private sector does not accept, reinsurance can be provided through ECGD. There are 200 countries in which the private sector is providing the necessary reinsurance.

Is not it a fact that the principal political risk against which British industry needs insurance is the risk of a Labour Government? In the event of the Labour party coming to power British industry would be overtaxed, over-inflated, over-regulated and overburdened with additional costs such as the minimum wage.

My hon. Friend makes his point very effectively. There is a growing awareness of the disadvantages to employment and industry that a return to the discredited and failed policies of the Labour party would create.

Industrialists (Representations)


To ask the Secretary of State for Trade and Industry what representations he has received from industrialists on Government intervention in the strategic direction and investment in companies.

The CBI report "Competing with the World's Best" rejected the notion that the Government could or should

"be in the business of picking winners, or of engaging in direct intervention in the strategic direction and management of companies".

Does my right hon. Friend mean that British industrialists do not want to go back to national plans, solemn and binding undertakings, high inflation, nationalisation, high taxation and trade union unrest? That, after all, is the Labour party's policy for this country. Is it really true that industrialists do not want to return to such a situation?

My hon. Friend is absolutely right. When I meet industrialists their first question is, "How can we prevent a return to the policies still advocated by the Labour party?" On the specific question of picking winners, they remember all too well the failures of the national enterprise board, which invested in just over 100 companies. Of those, 35 were liquidated or went into receivership, 38 were sold at a loss, and only 29 were sold at a price that returned the initial taxpayers' investment. Industrialists know that that policy was a failure, and they do not want to go back to it.

Is not that the most open admission yet that, despite the honeyed words of the Secretary of State for Scotland, he has done nothing, is doing nothing and will do nothing to intervene in any way to help to save the Ravenscraig plant? The Government will not assist in finding a purchaser. They are refusing adamantly even to investigate thin slab technology. I remind the right hon. Gentleman of the Secretary of State for Scotland's words in a letter to my hon. Friend the Member for Dunfermline, East (Mr. Brown), in which he refused a meeting and stated:

"Ravenscraig shows the folly of political intervention in commercial decisions".
Does not that show that, despite all the promises and pledges, in the past five years the Government have carried out a sorry and tragic charade and have connived at every stage with Black Bob Scholey to sell off the Scottish steel industry?

My right hon. Friend the Secretary of State for Scotland made our position on that matter clear yesterday. What was not made clear then was the Opposition's position. When questioned on the radio, they admitted that their policy was to talk about the issue. When pressed and asked, "What if British Steel refuses to change its policy after talking?" the Opposition gave no indication of what they would do. I offer the Opposition Front-Bench spokesman an opportunity now to say what they would do. Would they renationalise British Steel, intervene in British Steel, subsidise British Steel or just talk about it?

Manufacturing Output


To ask the Secretary of State for Trade and Industry what representations he has recently received about manufacturing output.

I have received the recent excellent report by the CBI's manufacturing advisory group which showed that there has been a transformation in manufacturing performance during the 1980s.

Has the Minister no shame about the fact that his Government have committed industrial genocide against Scottish manufacturing? Is he aware that, in addition to what is happening at Ravenscraig, the Paisley postcode area lost 76 per cent. of its manufacturing jobs between 1979 and 1989 and that a further 3,600 redundancies have been announced since then? Does he agree with the Prime Minister who told me in a letter this week that even that does not justify a special economic initiative or does he agree with local industry which is crying out for a partnership with Government to take Britain out of recession?

As the hon. Gentleman well knows, we are in the midst of a world recession. Even in the engine rooms of the world's manufacturing market place, such as Japan and the United States, output is falling. The first important point, however, is that compared with the same point on the economic cycle 10 years ago, manufacturing volume is up three quarters, productivity is up half and output is up one third. The second point is what I call the "two Ks" point. If one is in the midst of a worldwide tempest of economic recession, whom does one want on the bridge—my right hon. Friends the Prime Minister and the Foreign Secretary or their shadows, the two Ks?

Will my hon. Friend remind Opposition Members that under this Government manufacturing output has increased by a quarter whereas it fell under the last Labour Government? Will he also remind them that we now have a surplus on steel products of £1 billion per year compared with a deficit of £1 billion per year under Labour? If the Opposition spokesman, the hon. Member for Dunfermline, East (Mr. Brown), has the guts and really cares about Ravenscraig, will my hon. Friend ask him to stand up now and commit a future Labour Government to keeping Ravenscraig open?

We shall wait to see whether the hon. Gentleman does precisely that. My hon. Friend is right to point to the transformation of British industry. For proof of that, one need only read the CBI's report which, among other things, stated that recent years have seen

"a transformation of Britain's manufacturing base … there is now a solid base on which to build. The performance of UK manufacturing over the last decade shows what can be achieved … Companies based in Britain are able to compete sucessfully in some of the toughtest technology-intensive markets in the world"
That is what this issue is about—making British industry competitive, and that is what we have done.

Industrial Policy


To ask the Secretary of State for Trade and Industry when he will next meet representatives of the west midlands regional CBI to discuss industrial policy.

I shall be visiting a number of companies in the west midlands in March.

Does the Secretary of State accept that urgent action is needed in the west midlands if we are to halt the worst fall in manufacturing investment in history? What are the Government doing about the investment gap, the technology gap, the skills gap and the regional gap in the west midlands? I will tell the Minister what his Government have done; by their policies they have turned the west midlands from a productive landscape into an industrial desert.

That is not the view of local industrial leaders as expressed in an article in The Economist this month. It quotes the Confederation of British Industry in the west midlands as talking of

"the tremendous potential for the medium and long-term future of the region".
It talks of Chris Tillett, a Birmingham-based economist, saying that
"the 1990s 'will be the decade of the resurgence of manufacturing regions'. Sir David Lees, chairman of … GKN, says there are 'great opportunities ahead'. David Boole of Jaguar Cars describes the medium-term as 'healthier than for a long time'."
Some Opposition Members have been talking down the region. Indeed, we recently saw that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has taken actions to run down the region and its potential. We believe that its potential is enomous and we have every confidence that the people of the west midlands will achieve that potential under our policies.

May I take the opportunity to thank my right hon. Friend for accepting my invitation to address Wolverhampton chamber of commerce at its annual dinner, where he will meet many members of the west midlands region of the CBI? When he comes, will he take the opportunity to listen to them—the business men on the ground—rather than to the hon. Member for Wolverhampton, South-East (Mr. Turner)? If things are as bad as the hon. Gentleman says, will my right hon. Friend ask the business men why the west midlands has managed to attract so much investment in manufacturing from abroad, why foreign countries have chosen to locate in the United Kingdom and whether they believe that those people would stay if they had to experience the burden of heavy taxation, job losses and days lost in strikes that would occur with the return of a Labour Government?

I am very much looking forward to meeting my hon. Friend's constituents on that occasion. She is right in saying that the west midlands has benefited from a vast increase both in the amount and the share of inward investment into this country. Ten years ago only 6 per cent. of inward investment went to the west midlands. [Interruption.] I am responding to the supplementary from my hon. Friend. Now 24 per cent. of inward investment goes to the west midlands. I very much hope that the hon. Member for Wolverhampton, South-East (Mr. Turner), as well as my hon. Friend, will welcome the fact that whereas in 1979, 4 million working days were lost in the west midlands, recently days lost total little more than 100,000 a year.

Given that 100 companies are going under every week in the west midlands and that 1,000 companies are going under in England, Scotland and Wales, will the Secretary of State apologise to business and to the unemployed for the false promise throughout 1991 of a recovery which never materalised? Will he explain why he and the Chancellor have ruled out a manufacturing investment incentive as demanded by the CBI and other organisations? Will he explain why he is cutting the industry budget even as manufacturing investment and employment are falling and are predicted to fall further throughout 1992? Will he tell us how many thousands more people will lose their jobs while the Prime Minister tries to hang on to his?

The hon. Gentleman—a Scottish Member—refused to take the opportunity to tell us what he would do about his Scottish problem at Ravenscraig, but he has views about the west midlands. What the west midlands would like to know is whether he will now do what he has not already done, that is, repudiate the motion of the TUC to reject alien investment—as it describes Japanese investment—in this country. The west midlands, like the rest of the country, welcomes investment into the country. People there want to see more of it and they wonder why the Labour party will not repudiate measures which are designed to repel that investment.

Does my right hon. Friend accept that when he next meets representatives of the west midlands CBI or any other CBI—the north-west is my area—they are likely to raise the fact that the most powerful economies of the world, especially Germany and Japan are based on a substantial manufacturing base? Therefore, will he use all the influence of his Department to expand the shrinking manufacturing base of Britain? Manufacturing industry produces the only non-inflationary substantial economic growth—growth that is so necessary for Britain.

I entirely agree with the importance that my hon. Friend attaches to manufacturing. We cannot have a successful economy without a vigorous manufacturing sector. However, I refer him to the recent report on our manufacturing performance produced by the CBI entitled "Competing with the World's Best". It refers to the resurgence of manufacturing during the 1980s and the mistaken but widespread belief that manufacturing is still shrinking. Of course, it was shrinking when Labour policies applied and afflicted the manufacturing sector more than anything else. Manufacturing suffered from poorer industrial relations as a result of Labour's union policies, from nationalisation and from a lack of incentives. We will build up all the policies that have reversed that. We will bring about a resurgence of manufacturing. That is what we want to achieve in the 1990s.

Gatt Uruguay Round


To ask the Secretary of State for Trade and Industry if he will make a statement on the negotiations over the Uruguay round of the general agreement on tariffs and trade.

The Director General of the GATT, Mr. Dunkel, issued a draft final agreement for the Uruguay round of multilateral trade negotiations on 20 December. Initial responses were given at a meeting on 13 January. There will now be a further, final, round of intensive negotiations, with the aim of concluding the round within the next few weeks.

Bearing in mind the importance of the conclusion of the Uruguay round of the GATT to many industries in Britain and to third-world economies, what does my right hon. Friend see as the prospects for overcoming the obstructionism of the socialist Government of France to a successful outcome?

I entirely agree that a successful outcome is important to not only the British and European economies but the economies of the developing world. The European Community has made clear its commitment to reaching an early agreement. It is true that several countries have problems with the agricultural part of the round, but those problems will have to be resolved. I emphasise that the Community has made it clear that it is ready to continue and to complete the negotiations according to the work plan laid down by Mr. Dunkel.

Has the Minister received representations from the British Textile Confederation? It simply states that present proposals are unacceptable because they do not retain a fair and equitable trading system. Will he press that where commitments are made to open markets for textile products, a proper verification procedure must be established? If not, thousands more textile jobs will be lost in the United Kingdom.

Not only have I received representations from the Apparel, Knitting and Textiles Alliance, but my right hon. Friend and I have had most useful discussions with it. I am glad to say that we were broadly in agreement on our approach to the round. The AKT welcomed features in the proposed text such as the improved protection of intellectual property rights—very important to the textile trade—more rapid and effective procedures for settling trade disputes and improved rules on anti-dumping subsidies and safeguards. Those features are all welcome to the textile trade.

Will my right hon. Friends ensure that they maintain a robust position in the final round of the GATT? It is most important to our textile industry that we reach a satisfactory conclusion. We need to preserve the jobs that we have. We have massive investment at present and we want to see it continue.

I can assure my hon. Friend that we shall continue to attach the greatest importance to achieving improved rules and disciplines, as we have throughout, along with better market openings, both of which are of importance to our textile industry, which wants lower tariffs on woollen textiles in the United States of America, where it already has a substantial export trade but where there is great further potential. We shall continue to press to achieve that objective for the benefit of that industry.

Will the Minister go further and give assurances that, however desperate the European negotiators are to achieve a GATT agreement, nothing will be done to sell out the interests of British textiles and clothing? Secondly, if the GATT round collapses, will he give an assurance that contingency arrangements will be made by the British Government to ensure that the multi-fibre arrangement continues and that everything is done to defend employment and the trading position of the British textile industry?

I can assure the hon. Member that there is no question of selling out any section of British industry because it is greatly to the advantage of British industry and the British economy that there should be a satisfactory outcome to the present Uruguay round.

Machine Tool Industry


To ask the Secretary of State for Trade and Industry what new incentive to manufacturers he intends to introduce to stimulate the home machine tool industry.

The Government can best help industry—including the machine tool industry—by providing a stable economic framework and low inflation.

Is my hon. Friend aware of the dire state of the many east midlands machine tool companies? Is he aware of the real problems over on-going research? Will he consider some way to enable those firms to fund the costs of developing and bringing into use new and competitive machinery long before their existing equipment is out of date?

The Government spend about £3 billion a year on research and development, which is a higher proportion of gross domestic product than Japan spends, but I hear what my hon. Friend says. If there is a perceived market failure, we are prepared to act, as I have already shown by pointing out how much we spend. We found that a previous scheme, which was designed to help the machine tool industry—the small engineering investment scheme—was distorting business decisions. Normally the best way forward is to create a stable environment and to cut corporation tax so that businesses can make their own investment decisions, rather than to distort those investment decisions.

Industrial Policy


To ask the Secretary of State for Trade and Industry when he next plans to meet representatives of the Association of British Chambers of Commerce to discuss industrial policy.

From time to time I meet representatives of the Association of British Chambers of Commerce, or of individual chambers of commerce, to discuss industrial and trade policy.

Is the Minister aware that after two years of deep recession, 200,000 companies have gone under? As Britain entered 1992 with falling investment, rising unemployment, with the highest number of bankruptcies in western Europe, will the Government finally admit that manufacturing matters, and implement an industrial policy which will lift the United Kingdom from the bottom of the manufacturing league table?

The House will be interested to hear from another Scottish Labour Member of Parliament who will not tell us about the Labour party's policy on Ravenscraig. I made clear in my answer to my hon. Friend the Member for Macclesfield (Mr. Winterton) the importance that we attach to manufacturing and the success, which was acknowledged by the CBI, in bringing about the resurgence and renaissance in manufacturing. The fact is that manufacturing output fell under Labour. It is now up a quarter on what it was 10 years ago, investments are up a third, productivity is up by a half and exports are up by three quarters. We shall build upon that achievement in the 1990s.

Export Credits Guarantee Department


To ask the Secretary of State for Trade and Industry what representations he has received about Export Credits Guarantee Department premium rates and the relative rates of the United Kingdom's principal industrial competitors.

First, may I thank my right hon. Friend for the courtesy which he showed in receiving a delegation from GEC Alsthom in my constituency? May I also thank him for agreeing to visit Rugby and Kenilworth? Is my hon. Friend aware of the growing concern among industrialists about the high premium rates of the Export Credits Guarantee Department, especially when compared with those of our overseas competitors? Is he further aware that many industrialists believe that those high premium rates will cost us business and jobs? Therefore, will my right hon. Friend meet with his opposite number in the Treasury to agree a much lower figure for the premium rates of ECGD?

I assure my hon. Friend that I very much look forward to visiting his constituency and to meeting some of the industrialists whose interests he energetically represents.

On the rates charged by the ECGD, my hon. Friend will be aware that it is necessary to strike a balance between the national interest in providing ECGD cover for capital goods exports and the interest of the taxpayer that that should not prove to be too expensive. My hon. Friend will be aware that as a result of the debt crisis, over the past few years the ECGD has accumulated a deficit of more than £4 billion which is, of course, a deficit that falls to the taxpayer.

Devon And Cornwall Development Company


To ask the Secretary of State for Trade and Industry what support his Department has given to the Devon and Cornwall development company.

The Department has provided no financial support for the DCDC. However, my regional director has worked closely with it in its efforts to bring together the public and private sector throughout Devon and Cornwall.

The Minister should realise that it says everything that the Government should put in no financial support for the Devon and Cornwall development company. Many involved with its setting up feel deeply unhappy that they were misled when it was set up because the Government encouraged them and they believed that they would get direct financial support. Given the current job losses in the country, will the Government reconsider their appalling position?

The hon. Gentleman is wrong. This says nothing about the Government's industrial strategy, because although the Government give nothing to the DCDC, they give more than £500,000 to the Devon and Cornwall development bureau, the inward investment bureau. The hon. Gentleman is also mistaken because he has ignored the fact that in the past three years alone, £10 million of Department of Trade and Industry money has gone to the assisted area in west Cornwall. We are fully committed to reinvigorating the economy of west Cornwall.