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Oral Answers To Questions

Volume 281: debated on Wednesday 17 July 1996

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Trade And Industry

Commercial Debt


To ask the President of the Board of Trade what representations he has received on a statutory right of interest on late payment of commercial debt. [36065]


To ask the President of the Board of Trade what representations he has received on a statutory right of interest on late payment of commercial debt. [36075]

I announced to the House on 11 January 1996 that I was seeking representations to inform a review of the case for introducing a statutory right to interest. More than 100 submissions were received. The resulting analysis has been placed in the Library.

Is my hon. Friend aware that many small businesses in my constituency are concerned about late payments by large companies and other organisations? When I talk to local business organisations, such as the chamber of commerce, the industrial association and the business association, there are mixed views on whether a statutory right of interest is appropriate. What is the Government's policy on that?

Few hon. Members have more experience than I of the issue of late payment to small firms, and I know how important it is to them. I understand the confusion about a statutory right to interest, but no magic bullet or cure will automatically result. Some facts must be appreciated. Companies, both large and small, can charge interest for late payment. However, any company that will not pay must still be taken to court and go through the due processes. A statutory right to interest is not the easy solution.

I echo the concerns of my hon. Friend the Member for Eastbourne (Mr. Waterson). Does my hon. Friend the Minister agree that there are dangers in a statutory right of interest, especially for small and medium-sized enterprises? Have the Government done research to discover the views of SMEs?

The submission that has been laid in the Library shows that eight out of nine of the small firms organisations that have made representations came out against a statutory right to interest. The one that supported it is, I understand, the smallest of those organisations. I have not taken that as the be-all and end-all. Various surveys have been carried out, such as those by the Institute of Directors, on the moneys owed by and to small businesses, and by the university of Bradford. Both concluded that small businesses receive more credit than they give. An effective pointer emerges from that: small businesses that carry out effective credit management control stand a 38 per cent. better chance of receiving their money than those that do not.

If the Minister does not have much experience, the Deputy Prime Minister does. What is the Deputy Prime Minister's advice?

My right hon. Friend the Deputy Prime Minister's advice was quite simple. He said that, when a company could not pay because of cash flow difficulties, it should contact the creditors, reach an arrangement and thereby enable the company to get over its difficulties rather than walking away and not paying.

The House should not be surprised by the Minister's complacency, given that the Government pay their own bills late and have a Deputy Prime Minister who boasts about stringing along his creditors. In fact, that right hon. Gentleman is actually blaming small firms for under-performing and the recession. What does the Minister say about the survey conducted by the Forum of Private Business, which found that 95 per cent. of firms supported the Labour party's proposals for a statutory right of interest? What about the findings of the surveys conducted by Lloyds bank and Business Pages? Given the Government's small majority, the Minister should heed the fact that a quarter of his Back Benchers support the Labour party's policy for a statutory right to interest on late payment.

The hon. Lady asked three questions. As soon as I was appointed as Minister with responsibility for small firms, I asked for a review of the Government's policy on payment. Although that showed that we had a good record, my right hon. Friend the Prime Minister decided that that policy should be further monitored and toughened. That is exactly what will happen. The results will be out in the autumn. I thank the hon. Lady for her support of that particular campaign.

I admire the hon. Lady's loyalty in supporting the Leader of the Opposition's policy on statutory right of interest. That policy was made on the hoof before the results of the consultation were known, and simply shows that Labour wants to tell business what to do, whereas we want to consult business.

Is my hon. Friend aware that I have always opposed a statutory right to interest, as suggested in the question, because I believe that it would be a danger to a large number of small businesses and not be much help to many others? I am, however, a strong supporter of the proposals in his document on tackling late payment. They include a recommendation for a statement of payment practice in the directors' report. I realise that the consultation period is still running, but it represents the way to improve matters.

My right hon. Friend is very experienced concerning the small firms sector. We are endeavouring to change the culture. We have required companies to state their payment policy in their annual reports. We are consulting now on the point made by my right hon. Friend about companies publishing their payment practice in their reports. The Government are leading by example by getting every Department to sign up to the prompt payment code. The Lord Chancellor is conducting a review to ensure that the civil enforcement agencies operate more efficiently. A change of culture is the way forward and that is the direction in which we are pushing.

Rechar Funding


To ask the President of the Board of Trade what representations he has received recently concerning Rechar funding; and if he will make a statement. [36066]

My Department received five representations. I announced additional allocations to Rechar and other European structural funds community initiatives to the House on 3 July.

As you know, Madam Speaker, I have been to see the Minister this morning at his pre-meeting, along with the hon. Member for Eastbourne (Mr. Waterson) and various other hon. Members. I must say that it was something of a damp squib, and that we did not rehearse this question.

In the past, the coalfield communities have felt that the Rechar moneys were ripped off by the Government because of the problem of additionality. Can we ensure that the moneys that are to be available to four areas for community initiatives as a result of recent decisions will be distributed in such a way that the coalfield communities get their fair whack? Has everything been done by the Government to ensure that the total amount for the initiatives is distributed fairly, including a fair element for the coalfield communities?

I thank the hon. Gentleman for coming along to my meeting. I was particularly grateful to him for telling me that he was coming via Mr. Matthew Parris. I am sure that he will find that my answer is more beneficial as a result of that meeting. I was able to tell him, for example, that his constituency will also benefit from Resider. I hope that a decision on that will be made by the Commission within a few days.

On Rechar, I hope that the hon. Gentleman will accept that the additional allocation of money that became due exceeded the expectations of the Coalfield Communities Campaign. Its representatives wrote to me asking me to ensure that they received at least 18 million ecu; I was able to announce recently that they will receive 20 million ecu. I am keen that Rechar 2 funds should be spent expeditiously and effectively. I am sure that we will try to do that in the hon. Gentleman's constituency as well as in other newly qualifying areas.

Is my right hon. Friend aware that the Barlestone and Osbaston community association project for a new sports hall in my constituency has been effectively stopped because of a change of criteria in the Rechar 2 rules, which exclude recreational projects? Does he agree that, although the current criteria help former coalfield communities in many ways, the failure to include projects for recreation should perhaps be considered again, and would he care to look into that matter if I write to him?

I can do better than that. I am in the business of offering meetings, and I would be delighted to offer my hon. Friend a meeting to discuss it.

National Minimum Wage


To ask the President of the Board of Trade what assessment he has made of the impact on the number of UK jobs of the introduction of a national minimum wage at a level of £4 an hour. [36067]

The President of the Board of Trade and Secretary of State for Trade and Industry
(Mr. Ian Lang)

Officials in my Department estimate that a national minimum wage set at £4 an hour, and with only half restoration of pay differentials, could result in the loss of 1 million jobs.

Has my right hon. Friend been able to do any calculations on the basis of documents produced by the Labour party before the last general election, which included a calculation of how minimum wages should be set and said that they would start at half average earnings and move to two thirds? Can he confirm that, on today's high wages, created by the Conservative Government, that would be £4.46 to start and £5.54 in the full Parliament? Can he confirm that in America, whose example is often quoted by Opposition Members, real earnings per hour for the minimum wage are about £2.30?

My hon. Friend is absolutely right to draw attention to the dangers of the minimum wage. A minimum wage would be ratcheted up in the way that he implies and, obviously, the higher it went the more jobs would be lost. It would not only be jobs lost; it would be company profits hit and inflation stirred up. That was the view of a study by Kleinwort Benson. Similarly adverse findings resulted from studies by the Organisation for Economic Co-operation and Development and the International Monetary Fund and appeared in the EC White Paper "Growth, Competitiveness, Employment".

Even with the increase proposed for the current year, the minimum wage in the United States would be about £3. That bears no comparison to the territory that the Labour party is in.

Is it not the height of hypocrisy for there to be such strenuous opposition to a national minimum wage from Tory Members, who usually have at least one outside interest and, in many cases, have a host of directorships?

If poverty wages are to be maintained, how will people be able to take out private insurance along the lines described in the leaked document from the Treasury? That leaked document demonstrates what a nightmare it would be if this Tory Government were re-elected.

It is not just the Tory party that opposes a minimum wage; the Confederation of British Industry, the Institute of Directors, the chambers of commerce, industry, small businesses, the engineering industry and the clothing retailers' industry oppose it. As the hon. Gentleman is in the business of talking about hypocrisy, he might reflect on the fact that the bottom 10 per cent. of the work force have enjoyed an increase in take-home pay under this Government of £27 a week in real terms whereas, when the Labour party was in government, that bottom 10 per cent. suffered a reduction of £1.

Is my right hon. Friend aware that Unison, which acts as a sponsor of some Opposition Members, has called for a national minimum wage of £6 an hour? Would that not mean that even more people would be unemployed, and is it not immoral for Members of the House to vote for the unemployment of their constituents? Does that not demonstrate that new Labour means new danger?

My hon. Friend is absolutely right, and those who are most vulnerable, who are least skilled, would lose their jobs first. The undoubted consequence of this policy of the Labour party, like so many of its other policies, would be an increase in unemployment and inflation and a loss of competitiveness.

The President knows full well that Labour has not set a figure for a minimum wage. Does he accept, however, that, in a report published yesterday, the OECD stated that a minimum wage would not cause job losses for women, young people or the unskilled? Does he further accept that the Employment Policy Institute has said that a minimum wage would not cause job losses? Does he accept that a New Jersey survey shows that increasing the minimum wage takes people out of unemployment by removing them from the poverty trap? If, in the face of that overwhelming evidence, the right hon. Gentleman does not accept the facts, will he tell us the lowest pay that he would expect people to work for—and the lowest wage that he would work for himself?

I do not accept the hon. Gentleman's so-called facts. All the evidence from all the studies that we have seen points in the other direction. Only today, the CBI produced its manifesto in which it points out the dangers of a national minimum wage. Unemployment among youngsters, the most vulnerable category, in countries with a national minimum wage is running at 25 per cent. in Belgium, at 27 per cent. in France and at 42 per cent. in Spain. That should make the hon. Gentleman realise the real dangers that a national minimum wage would bring to young people.

It is about time the Labour party told us what its national minimum wage would be. Why do not Labour Members come clean and defend the policy in which they pretend to believe?

Small Firms


To ask the President of the Board of Trade how many small businesses currently operate in the United Kingdom; and what was the equivalent figure in 1979. [36071]

Provisional estimates show there were 3.7 million businesses with fewer than 50 employees at the end of 1994, the most recent year for which statistics are available. Comparable estimates for 1979 show that there were then only 2.4 million such businesses.

Given the success of small businesses in increasing their share of national output since 1979, which must be a tribute to the Government's policies, does my right hon. Friend agree that more of them should exploit the business links network so as to develop and grow? Can that network be used to encourage small businesses to keep in touch with schools and colleges, thereby enabling them to understand better the whole business of wealth creation?

My hon. Friend is absolutely right. The business links network has more than 230 outlets operating around the country and was designed specifically with the interests of small and medium-sized enterprises in mind, to give them access to the skills, advice and assistance, in a one-stop shop, that they would not otherwise be able to obtain. My hon. Friend is also right to emphasise the importance of education and training. The operation of business links in conjunction with the work of the training and enterprise councils and further education colleges underlines the importance of training and the benefits that it can bring to small businesses.

Although hon. Members on both sides of the House will welcome the growth in the number of small businesses, does the Minister share my concern that too many of them are still failing? In particular, will he comment on the latest figures from Dun and Bradstreet showing a 10.8 per cent. increase in the number of failed businesses in the south-west of England in the first half of this year, compared with a national decrease? Recovery may be gaining pace in some areas, but will the right hon. Gentleman acknowledge that it is still patchy?

I hope that the hon. Gentleman will welcome the fact that the number of insolvencies and bankruptcies is falling. Moreover, the number of company start-ups, estimated by the banks last year at 400,000, is estimated by them this year to be over 500,000. There is undoubtedly a growing momentum in economic activity; I am encouraged by the continued improvement in the survival rate of small businesses.

Does my right hon. Friend recognise that the horticulture industry comprises more than its fair share of small and medium-sized enterprises, and that they do a remarkable job for the food industry? Does he also recognise that the industry is concerned about the impact of some EU directives on small businesses? Will he assure me and anyone else in whose constituency the horticulture industry operates that he will continue to do all that he possibly can to ensure that small businesses in this important sector are given the treatment that they deserve?

I am happy to give my hon. Friend that assurance. The horticultural sector was prominent in a trade mission that I took to Japan earlier this year to seek to gain business in the massive£10 billion Japanese horticultural market. I share my hon. Friend's concern that small businesses, like all other businesses, should not be overburdened by EU directives and regulations. It is the Government's purpose to minimise the impact of such burdens on businesses.

Is the Minister aware that the big businesses that he shut down, called coal mines, are not being replaced by small businesses in his enterprise zones because of bureaucracy in the Coal Authority and English Partnerships? Does he realise that they have been wrangling over different sites for 10 months, and that the business men who want to come into areas like Manton Wood and many of my hon. Friends' constituencies cannot get agreement on the land because those agencies insist on selling the land as a package instead of in small parcels? The quangos 'which the Secretary of State set up and his policy of shutting down coal mines have created a great bottleneck.

Clearly, agreement must take place in negotiations on specific cases. I understand that, in that case, the price for the land has not yet been agreed, but the Government offices in the area and all the Government agencies, including business links and the training and enterprise councils, are designed to smooth the path of small businesses and encourage the establishment of new economic activity. They have been very successful in that.

In the specific case to which the hon. Gentleman refers, there is clearly a continuing problem. If he would write to me with more details on it, I should be happy to follow it up for him.

As a deregulator like me, my right hon. Friend will realise that 8,101 new statutory instruments have been created in the House in the past two years, and the cost to small industry has been £8.75 billion. Does he agree that, if we could reduce the number of rules and regulations emanating from all Departments, including his, it would help small industry a great deal more than anything else?

I am grateful to my hon. Friend for confirming that he and I share an ambition to deregulate. Many of the regulations passed have been consolidating regulations designed to reduce the overall number. My hon. Friend will welcome the Government's deregulatory record for small businesses—for example, single notification for tax and national insurance, new rights and enforcement actions, streamlined development controls and the draft Industrial Tribunals Bill, designed to reduce the costs and burdens of negotiating industrial disputes.

What assessment has the right hon. Gentleman made of the impact on small businesses of lifting or abolishing the letter monopoly, as consumers will probably have to pay VAT on postage for letters handled by private couriers?

The Government are considering the possible need to lift the monopoly on the Royal Mail in circumstances in which a strike is designed to undermine the delivery of mail and thus harm the public interest and damage the economy. The dispute is a matter for the unions and the Post Office to resolve, but the Government will deal with the public interest and act as appropriate.

I hope that my right hon. Friend will consider lifting the Post Office monopoly if there are further postal strikes. Is he aware of firms such as Document Interlink in my constituency, which can help small firms with urgent letter deliveries in such circumstances?

I note what my hon. Friend says. As was made clear last week, we are consulting on the implications of taking that step.

Is the Secretary of State aware of the concern expressed by those who chair business links about what they call their bad relationship with his Department? As that was a Labour idea, does it not show that the Government make as big a hash of implementing our ideas as they do of their own? Does he recognise that even a working business link programme can only do so much to help small businesses if the economy is not well run and growing? Does not today's leaked Treasury document show that Ministers expect Britain's future standing in the world to decline, just as under their stewardship we have already fallen from 13th to 18th in the world prosperity league?

The right hon. Lady is talking through a hole in her hat, as usual. Our economy is performing better than any comparable economy in Europe. Unemployment is substantially below the European average; new companies are being created; public expenditure is under control; and inflation has been at an all-time low for the longest period for 50 years. This country's economic performance stands comparison with that of any other country in Europe or the Group of Seven nations. It is time that the Opposition acknowledged that, instead of talking Britain down.



To ask the President of the Board of Trade what assessment he has made of the advantages of introducing the draft code of practice for fireworks being drawn up by trading standards officers. [36072]

The draft code of practice produced by the fireworks industry will be considered along with other comments I expect to receive in response to the forthcoming discussion document on firework controls.

I thank the Minister for that answer. As a former health and safety inspector and a mother of two young sons, I am horrified by the increase in firework accidents which has followed the Government's deregulation of import controls since 1994. What plans has the Minister to control specific dangerous fireworks, such as aerial shells, which have already claimed one life, before November this year?

I am concerned about fireworks, especially imported ones, and I am especially concerned about the safety of young people. I am considering the draft industry code of practice and I am anxious to support trading standards officers. I will issue a discussion document shortly and will take account of all the responses, especially from trading standards officers. We will run a strong fireworks safety campaign this year.

I urge my hon. Friend not to be seduced by the sparkle of the hon. Member for Dagenham (Ms Church). Will my hon. Friend consider what real fireworks would be ignited if we imposed a national minimum wage and the social chapter and if we increased taxation and public expenditure under new Labour?

Order. I am sorry, but this question concerns fireworks. The hon. Member for Colchester, North (Mr. Jenkin) was not ingenious enough and we will move on.

Telephones (Fraudulent Charging)


To ask the President of the Board of Trade what assessment he has made of the level of fraudulent charging for international calls to premium rate telephone services available outside the United Kingdom. [36074]

International audiotext services are not billed in the distinctive manner of domestic premium rate services, and are not easily distinguishable by telecoms operators from other international services. I am therefore not aware of any assessments of the amount of fraud arising from international audiotext services.

Did the Minister read an article in the Scottish Sunday Mail a week ago, which documented a number of cases of people who had received large bills for calls to overseas premium rate services that they were adamant they had not made and no one else had access to their telephone lines to make? Does the Minister agree that British Telecom's approach—that those people are all lying or are grievously mistaken—is growing thin? Will the Minister use his influence with British Telecom, through the Office of Telecommunications, to ensure that the company takes seriously the increasing likelihood that serious fraud is being perpetrated?

The hon. Gentleman has raised an article from the Scottish Sunday Mail in June. We have considered it and British Telecom was concerned about the matter. I am not sure that the problem is fraud so much as misuse. Those numbers have been misused because of the failure to use the facility of the bar in equipment in a person's property. We are concerned whether there is genuine abuse of international calls. I am delighted that the International Telemedia Association has been formed and I hope that it works with the Independent Committee for the Supervision of Standards of Telephone Information Services, which is considering premium rate services in this country. If those two organisations compare notes, perhaps the surface operators can devise a set of standards that can be commonly applied.

Notwithstanding that difficulty, can my hon. Friend confirm that British Telecom's price levels have fallen by more than 40 per cent. in real terms since privatisation, which was opposed by the Opposition?

The Labour party sometimes tries to be "with it" on modern information and communication technology. It opposed liberalisation all the way through the 1980s and 1990s, but that is the basis on which we now deliver competitive services. Opposition Members may wish to note that we recently liberalised international telephony, and that has already provoked British Telecom and Mercury to reduce their international call charges. We expect to license many other operators so that this country can be a genuine international hub for telephony and business.

Emerging Technologies


To ask the President of the Board of Trade what plans he has to increase the proportion of gross domestic product devoted to the research and development of emerging technologies in British industry. [36076]

My Department will continue to support innovation, including research and development, and to extol its benefits to British industry with the aim of encouraging investment in it. For this reason, we have conducted the foresight programme, and delivery programmes such as Link, the teaching company scheme, the crusade for biotechnology and the information society initiative, to encourage industry's investment in, and use of, new technologies.

In general, the level of research and development in this country is below that in many of our competitors, including Japan, Germany and the United States. Given the importance of the emerging technologies for the future of our country—particularly in areas such as the Thames valley, where I come from—does the Minister feel that the current level of research and development is disappointing? Does he feel that it is time that the Government did more to help encourage research and development?

Recently, the hon. Member for Newbury and I visited a company in his constituency that is at the forefront of technological development, thanks to the revolution that we have created in telecommunications. The Government are doing an enormous amount to stimulate British industry, and the best examples in this country can compare with any in the world.

As I said in the foreword to the recent "Research and Development Scoreboard", there is a long tail of laggards who are not putting enough into research and development. We are trying to get them closer to the science base in our universities and to stimulate them to increase their understanding that research and development and innovation will be crucial to their competitive edge as we go into the next century.

Does my hon. Friend agree that, while the "Research and Development Scoreboard" is useful as the best evidence that is available at present, it is deficient in measuring all the research and development that takes place within the United Kingdom and in providing the basis for effective comparison with other countries? Will he and his Department make efforts to find a way to refine this information so that effective and accurate comparisons can be drawn in the future?

My hon. Friend is absolutely right: this is a hugely complicated area on which to find figures. A lot of out-sourcing of research and development is sometimes not picked up in the figures, and some of the work that is done in our universities is more attributable to companies than to the universities, so it needs to be taken into account. However, overall, I am happy that there is enough relevance in the statistics to show that British industry needs to do more, which is why we have a series of delivery programmes geared to technology foresight, such as Link and the teaching company scheme—and wherever I go around the country I find that they have been successful. We want more participants from industry to come forward and take part.

Does the Minister agree that the United Kingdom is the only major industrial country to reduce the proportion of gross domestic product it invested in research and development between 1991 and 1993? Does he agree with the view expressed by a civil servant in his Department's innovation unit who said that we have been outgunned two to one by our international competitors? Have not the Government created a culture of underfunding and under-investment in the bedrock of our economy: research and development? Instead of passing the blame on to industry for under-investment, will the Minister accept and recognise the failings of the Government in this area?

The proportion of GDP that the United Kingdom has invested in research and development has held up against all the other G7 countries, except France, since the last recession. I am criticising industry where it needs to be criticised. The hon. Gentleman should pay tribute where tribute is due. The Government have introduced a large number of schemes in an attempt to stimulate further interest in research and development.

The Department of Trade and Industry's work in this area is shown by its commitment to a cash-flat budget over the next few years, despite pressures elsewhere in government on budgetary constraints. Last weekend, I spoke with the German Minister—I know the difficulty that he has protecting his budget. He thinks that we are doing rather well, as do the inward investors coming into this country who are contributing to research and development. There is no doubt that the picture here is a good deal brighter than the hon. Gentleman is prepared to admit. By paying tribute to the British companies that are doing well, we may stimulate the others to do better.

Does my hon. Friend agree that, if we are to encourage private industry to invest more in research and development into emerging technologies, we must ensure that we do not heap extra bureaucracy on them, that we deregulate as much as possible and that we do not heap on them the social chapter, the minimum wage and the various other policies that new Labour would introduce? They would be new dangers to companies that are looking to invest more in research and development.

My hon. Friend puts his finger neatly on a key point. The Labour party is keen to introduce regulations, but the economic sectors that are necessary to the country's prosperity are fast-moving, high technology sectors, such as biotechnology, which need a stable regulatory environment and minimum Government intervention. We should not pile upon them social costs that are not necessary to their performance. The atmosphere that we have created in industry—particularly in high technology—through liberalisation has proved an enormous success and a benefit to this country. We want to keep it that way—and to keep the Opposition's hands off it.

Inward Investment


To ask the President of the Board of Trade what plans he has to change the arrangements for attracting inward investment to the United Kingdom. [36077]

The United Kingdom's inward investment record is second to none and the envy of many of our competitors. I was able to announce on 9 July that my Department's Invest in Britain Bureau registered a record number of 477 inward investment decisions into the United Kingdom in 1995–96, creating a record 48,256 new jobs which represents a 30 per cent. increase over last year's record. That is a considerable tribute to our administrative arrangements.

As a former Secretary of State for Scotland, will the President of the Board of Trade pay tribute to the work of Locate in Scotland and to that of local authorities and local enterprise companies in attracting inward investment, such as Exabyte and PM Support Services in Central park in Larbert? In view of reports that the Government are considering centralising arrangements to attract inward investment, will the President of the Board of Trade give an absolute assurance that there will be no reduction in the role and the powers of Locate in Scotland?

I am happy to assure the hon. Gentleman that I have no plans to seek to inhibit the performance of Locate in Scotland. I spent nine years, as Minister responsible for industry and as Secretary of State, helping to build up Locate in Scotland and to secure record inward investment figures. The success of such agencies, coupled with the Government's overall economic performance, has made the United Kingdom an attractive place to locate. We have attracted more than 40 per cent. of both American and Japanese inward investment in the European Union. The Labour party's policies would bring that successful run to an end and start to drive away investors.

Is my right hon. Friend aware of the message that multinational companies in my constituency are sending? They tell me that, although take-home pay in Britain is broadly the same as in other continental countries, the on-costs for business in those countries is four times as great as for multinationals that are trading in Great Britain.

My hon. Friend is absolutely right. That is one of the reasons why we should not accept the social chapter and sign on for it—as the Labour party would. It is significant that, last year, in addition to the successful inward investment decision by Siemens to locate in the United Kingdom, 57 companies—more than one a week—decided to relocate from Germany to the United Kingdom. That is a measure of our competitiveness.

Manufacturing Industry


To ask the President of the Board of Trade when he next plans to meet his European Union counterparts to discuss measures to strengthen manufacturing industry. [36078]

The Parliamentary Under-Secretary of State for Trade and Industry
(Mr. Phillip Oppenheim)

My colleagues and I meet our European Union counterparts regularly to discuss a wide range of industrial issues.

When the Minister next visits Europe, will he reassure his European counterparts that the recent welcome deal with LG in Newport in south Wales was well within the European Union's rules for regional aid? Will he tell the Conservative candidate for Newport, West, Peter Clarke, that he is out of order to claim that the money that the Government gave to support the company's relocation to south Wales was a waste? Will he disown that Conservative candidate here and now?

If the hon. Gentleman will listen for a second, I will tell him that we now have a major inflow of inward investment—in stark contrast with the 1970s, when multinationals fell over themselves to move production away from Britain—because British manufacturing productivity growth since 1979 has been the fastest of any major industrial country. Our social costs are low also. That means that Britain is not a low wage haven for inward investors, but a low cost haven. That is why the company has come to south Wales and why unemployment in the hon. Gentleman's constituency has fallen to 7 per cent. I thought that he would welcome that fact instead of try to make irrelevant, cheap and silly party political points.

Following the Government's great success in opening up the telecommunications market in the European Union, and now their efforts to open up the energy market, is it not time that we considered the possibility of extending the single market to cover the defence industries? If we did, would not all member states gain greatly from increased competition and reduced procurement costs? Since we have—judged by the volume of our defence exports—the most successful defence industry in the Union, would not we gain disproportionately in terms of the industrial and employment benefits of such a move?

One reason why we have the most successful defence industry in Europe is that, during the past 15 years, we took the hard decisions that allowed our industry to become efficient and productive. Indeed, we are already going down the route of more shared projects with other European countries.

My hon. Friend mentioned telecommunications and energy, in respect of which we were at the forefront of liberalisation and yet were opposed at every turn by the Opposition. Now, apparently, the Opposition have decided that they are great liberalisers, which shows that Labour's policy formation cycle is, first, to oppose our policies and, secondly, when it sees that they work, rather shamefacedly and slyly to adopt them.

How will privatising the road network help manufacturing? How will manufacturers be helped by having to pay profits to private companies? Surely it will add to the cost. Is this the real Tory manifesto for the next election?

I am sorry, but because of the gabble from the Opposition Benches and the animal noises—not that I dislike animals—I missed the first part of the hon. Lady's question.

How will road privatisation help manufacturing? Surely a toll on travel costs will simply put profits into the hands of private owners and do nothing to help manufacturing.

Apart from the fact that there are absolutely no plans to privatise the road network, I should have thought that the hon. Lady's question would have been better addressed to the Department of Transport.

When my hon. Friend meets his European counterparts to discuss manufacturing, will he point out to them and, indeed, to the House today that, since 1981, our manufactured exports have expanded faster than those of France, Germany or Japan? Does not that demonstrate clearly that we have the right policies?

My hon. Friend is absolutely right. Not only manufactured exports have done well since 1979. In the 1980s and 1990s, we had the fastest growth of manufacturing productivity of any developed country. Our manufacturing output growth, which was negative under the last Labour Government—manufacturing output fell under the last Labour Government—has increased in line with the average for Europe for the first time since the war. I believe that that shows that we have transformed our manufacturing industry from being a laggard to being at least as good as the average and, in some cases, as good as the best.

On strengthening the position of manufacturing industry in Europe, is the Minister aware that this country's electricity generating equipment is some of the finest in the world; that, in general, our electricity supply industry is among the most efficient and cost effective in the world; and that it is hungry to compete in lucrative markets such as Germany and France, where currently it is excluded by the protectionist attitudes of those Governments? If he is aware of that, why did the Government sign up on 20 June to a miserably inadequate deal to open up a small part of the electricity supply market in Europe? In so doing, the Government limited severely the possibility to create new jobs for British workers in this burgeoning sector. Was it part of some shabby trade-off to secure the beef deal?

The hon. Gentleman attributes more conspiratorial motives to the Conservatives than we are capable of—[HON. MEMBERS: "Oh!"]—and significantly more than Opposition Members are capable of. His question is rather interesting, because it shows that the much-touted slogan new Labour, new danger is not always right. This is a classic example of new Labour, no danger. Unfortunately, the hon. Gentleman is totally out of line with the rest of his hon. Friends. He says—[Interruption.] May I ask Opposition Members to listen for just one minute? The hon. Gentleman says that we have the most efficient electricity generation in Europe. Does the hon. Member for Bolsover (Mr. Skinner) agree with that? I do not know. We have the most efficient electricity generation in Europe because, over the past 10 years, we made the difficult decision to move to gas. Gas is cleaner and cheaper, yet virtually every Opposition Member opposed that move. I do not understand how the hon. Gentleman can argue for more energy liberalisation in Europe, when only three weeks ago he was flinging out press releases right, left and centre opposing European liberalisation of postal systems. Where is the consistency in that?

Will my hon. Friend confirm that, for the first time in history, Germany is exporting manufacturing capacity not only to this country, but to other parts of the world, including the Pacific rim—

In fact, it applies to North America and South America. The reason is the substantial social costs that Germany must bear. Those costs are very damaging to its industry. Does its experience teach us any lessons?

I will do my best to answer.

My hon. Friend is right. After decades during which the productivity, efficiency and competitiveness gap between us and Germany widened, during the 1980s and 1990s we have managed to close no less than three quarters of that: gap, which is a tribute to the efforts of British manufacturing. It is a shame that Opposition Members sometimes do not recognise the enormous progress made by British industry since 1979.


To ask the President of the Board of Trade what additional measures he plans to encourage manufacturing industries; and if he will make a statement. [36080]

Manufacturing is served best by a stable economic environment with low inflation and historically low interest rates. Manufacturing output has risen by 8 per cent. since the beginning of the recovery, and is expected to continue to grow this year and next.

Should not the Minister read recent reports rather than lecture Opposition Members and expect them to listen to him? Does not the most recent report of the Office for National Statistics show that factory production is stagnating? Is it not also true that, according to a Government-backed report, poor productivity, low levels of innovation and even lower levels of investment are now threatening the competitiveness of the west midlands?

The hon. Gentleman is right, to the extent that we must not be complacent about our manufacturing performance. I would not claim for one minute that we are yet as good at manufacturing as the best in the world; what I will say is that, since 1979, we have made significant progress in narrowing the gap that widened so dramatically under the last Labour Government, when our manufacturing output fell and our manufacturing productivity growth was lower than that of any other major industrialised country.

Is not one of the factors that encourage manufacturing industry in this country the Government's hacking away at red tape? Does not that compare very favourably with what is happening on the continent, where red tape is growing like a triffid—particularly given the requirements of the social chapter, which Opposition Members would like to impose on this country?

I entirely agree. Although Opposition Members often speak the language of free and open markets nowadays—supposedly—in practice they are still old-fashioned interventionists and protectionists. Most of them are, anyway. That is manifested by the Labour party's dishonest minimum wage policy. It is doubly dishonest. It pretends to the less well-off that there is some easy, cost-free way of raising their wages without increasing their productivity, and it does not have the guts or the honesty to tell the low paid at what level it would set the minimum wage. Nor do we know how many of those low paid people would be not low paid, but not paid at all.

Insurance Market


To ask the President of the Board of Trade when he last met the council of Lloyd's to discuss the operation of the insurance market. [36081]

I last met the chairman of Lloyd's on 2 July.

In his conversations with Lloyd's, has the Minister taken the opportunity to discuss its concerns about its inability to cover some of the effects of global warming, particularly storm and flood damage in the American east? Will he discuss those matters with the Secretary of State for the Environment, who is busy telling us that he is saving the world's ecology while Britain's great insurance centre seems to expect that it will be unable to cover a recurrence of the disasters in 1987 to 1992 that caused some of the problems that it is busy trying to unravel?

Lloyd's has a well-deserved reputation for specialist cover provision, and its international business has always been innovative and usually well able to cope with unusual demands. That is not to say that every specific cover policy is necessarily commercial or that it must be able to cover every incident that arises. Those are matters for Lloyd's. I will be happy to take them up when I next meet the chairman, but they are essentially for the commercial judgment of Lloyd's, which has, by and large, a pre-eminent reputation in providing such cover internationally.

Fifty-one Lloyd's names were Members of Parliament. One was a Labour Member and 50 were Tory. The one Labour Member got out and did not lose a penny. The 50 Tories who stayed in lost their shirts. What does that tell us about who best knows the City and who can best run the country? I thank the hon. Gentleman for that sedentary intervention. The cheque is in the post.

The Minister has referred to the deserved reputation of Lloyd's, but was it not obscene that £88,000 million was lost between 1988 and 1992, which caused many a name severe hardship? Is it not right, however, that the Equitas plan proposed by Lloyd's should be given fair wind and support, and that, on the back of its success, we should have proper independent regulation of Lloyd's so that the obscene losses of the past cannot be repeated? In that context, and in the context of friendship and amity, if the Government wish to introduce an independent regulatory framework between now and the general election, the Opposition would give it a sympathetic examination.

I am sure that the hon. Gentleman will join me in welcoming the fact that Lloyd's has recently announced a return to significant profits. That will benefit people who continued as names. Their judgment in so doing is, in many cases, to be commended. They will benefit from that revival in fortunes which, sadly, the hon. Gentleman will not, so it is open to question whose was the better judgment.

This is an important point. I appreciate what the hon. Gentleman says. It is in the interests of policyholders worldwide, of our capital markets' security and of the confidence not just of people who put up risk capital in insurance markets, but of other financial markets, that the reconstruction and renewal programme goes through. Like the hon. Gentleman, I am delighted that, this week, some 95 per cent. of names appear to have supported it. Although my interest in the matter is principally towards policyholders rather than the names, it is undoubtedly good news that Lloyd's appears to be on the right track. I hope that we, like Lloyd's, can look forward to a healthy future.

National Minimum Wage


To ask the President of the Board of Trade what representations he has received on the impact of a national minimum wage of £4 on employment in small businesses. [36082]

I have received representations from numerous organisations, including the Institute of Directors, the Confederation of British Industry, the British Clothing Industry Association, the Engineering Employers Federation and the British Chambers of Commerce, all of which have said that companies, including many small firms, would be severely hit by a minimum wage.

A recent report said that small firms would
"come under pressure to survive".

Does my right hon. Friend accept that, in the constituency of Hastings and Rye, the tourism and rest home sectors are two of the principal industries? Does he agree that, if a national minimum wage were introduced into those two sectors, British holiday makers would go abroad rather than spend money in the United Kingdom, because tourism would be uncompetitive, and rest homes would have to put up prices, which would go straight on to public spending and hence to higher taxation? Is not that another example of new Labour being new danger?

My hon. Friend is right. In an answer to an earlier question, I mentioned the estimate that 1 million jobs would be lost with a national minimum wage of £4 an hour. A recent survey estimated that about 128,000 of those jobs would be lost in the south-east of England.

Is the President of the Board of Trade aware that it is not the minimum wage that is affecting business and small business today? He must know that half the competitive advantage that we got by a massive devaluation of our currency has already been frittered away and that our productivity is slipping away as well. What is he doing about that? That is what matters to the British economy, not the red herring of the national minimum wage.

The hon. Gentleman may call it a red herring, but perhaps he would like to tell his right hon. and hon. Friends on the Labour Front Bench that it is. They are planning to introduce a national minimum wage that would destroy jobs and competitiveness. The Confederation of British Industry has estimated that the cost to industry of a minimum wage of £4.25 an hour would be £5.7 billion. That would destroy jobs and profitability and undermine the record export and good manufacturing figures that we have achieved without a minimum wage.

Does my right hon. Friend agree that, if the European experience is anything to go by, young people are one of the groups who would suffer most from the introduction of a national minimum wage? Is not the reality that a national minimum wage would simply price young people out of a job? Is not that why it should be strongly resisted by the Government?

My hon. Friend is right. That is one reason why countries on the continent of Europe that have a national minimum wage also have almost twice the level of youth unemployment that we have.



To ask the President of the Board of Trade what steps he is taking to boost demand for products made by the United Kingdom steel industry. [36083]

My Department is working with the steel industry to ensure that it is well placed to deliver the best quality and range of steel products required to meet demand from users at home and abroad.

Since this is the last time that the right hon. Gentleman will answer for steel before he jumps off the Titanic into the lucrative boardroom nirvana reserved for ex-Ministers, may I place on record the fact that he has courteously received Opposition steel delegations to discuss the steel industry? So, will he finally join me in congratulating Allied Wire and Steel and British Steel on setting up a European works council under the social chapter?

Since it is a time for pleasantries, I congratulate the hon. Gentleman on the publication of his book today. I notice that it marks yet another step in his movement towards a Front-Bench position, which he so desires. I should warn him, however, having read the press release about his book, that he may be harming rather than helping his chances because it contains more policy commitments than all the Labour policy documents put together.

Will my right hon. Friend concede that, although the steel and manufacturing industries are important to this country, they are but sectional interests? This afternoon's questions show that the Labour party is constantly looking for special support from the taxpayer, and special concessions to various sections of the economy that it favours. If that is going to be the way, there will be a financial crisis if we ever have the misfortune of Labour forming a Government.

take my hon. Friend's point, but part of Government's role is to assist our industry to compete effectively at home and abroad.

Research Industry


To ask the President of the Board of Trade how much the United Kingdom spent on research and development per capita in the last year for which figures are available. [36084]

In 1994, the latest year for which figures are available, the amount spent by the United Kingdom on gross expenditure on research and development—GERD—per capita was £251.60.

As one who—admittedly many years ago now—was involved in research and development, and noting the Minister's answer to Question 10, I should like to know whether the Minister accepts that our expenditure on research and development has not kept pace with the other G7 countries, which is probably why we have dropped from 13th to 18th place in the prosperity league. Will the Minister assure the House that there is no point in having short-term gimmicks? We need long-term investment in research and development—otherwise we will finish up as a screwdriver nation.

Business investment levels in research and development have been rising year on year, but I accept that, in terms of the "Research and Development Scoreboard", they are at a lower level of intensity than those of some of our main competitors. We are urging business to do more. I should clarify that the science base—which is the budget of the Office of Science and Technology and the research budget of the Higher Education Funding Council—has risen by more than 10 per cent. over the past 10 years, which is a remarkable achievement in view of other budgetary pressures. The science base is, therefore, healthy. We are now attempting to attract more private sector capital to add to our own expenditure, as was recently shown by the foresight challenge awards, in which £30 million of Government money brought in £62 million in private sector money.