To ask the Chancellor of the Duchy of Lancaster if he will make a statement about his policy towards the United States Government exerting extraterritorial controls over United Kingdom firms.

We have asserted on many occasions our rejection of United States claims to extra-territorial jurisdiction which infringe on United Kingdom sovereignty.

I thank the Minister for his reply, but I should have liked a fuller explanation of the way in which he thinks that this policy will affect the £2 billion trade deficit in the information technology industry in the United Kingdom. Given the damaging effects that it is having on not only my constituents but on others thoughout the country, does he agree that the time is right to ensure that United States law does not apply here? Will he take steps to do something about it?

Briefly, please.

Does the Minister agree with The Daily Telegraph that this amounts to "RAM-shackle protectionism"?

I do not think that it has any effect on the trade deficit, although I should be interested to hear any case that the hon. Lady could draw to my attention. The problem with the United States' extra-territorial claims is that they carry, latent within them, a threat to cut off supplies to United Kingdom manufacturers if they do not conform to certain requirements of the extra-territorial provisions. If anything, it could be argued loosely that it has a beneficial effect on our trade rather than otherwise.

Does my hon. Friend agree that the right way forward in this complex matter is to strengthen COCOM? How does he propose to deal with the problem, particularly as post-1992 some members of the European Community will not be members of COCOM?

I do not entirely agree with my hon. Friend. If the opposite of strengthening is weakening, I would say that COCOM needs to be relaxed rather than strengthened. One of the problems with COCOM is that it is too comprehensive, pays little regard to obsolescence and the list of items included thereon is far too long.

Is not the Government's attitude towards the American Government over this matter spineless? British companies and individuals faced with prosecution under American law, which does not apply in the United Kingdom, are put in a difficult position. One of my constituents cannot leave the country for fear of threat of prosecution from the American Government, but the British Government are not prepared to do anything to refute the allegation or to support him.

The hon. Gentleman is entirely wrong. There is no compulsion on British firms to accord with the provisions of the extra-territorial legislation in the United States. Any British company that wants to resist it will receive the fullest support of my Department.

Is the Minister aware that the equipment that is being caught by these regulations is not necessarily state of the art stuff? It is equipment that he and I use in our offices. He must be aware that a growing number of British companies must go through the rigmarale of filling in forms to satisfy the United States Department of Commerce, which is having an increasingly corrosive effect on relations between the United States and its allies. Is it not time that his Department did something more positive? I suggest that the Minister might consider using some of the provisions of the Protection of Trading Interests Act 1980 to signal to the United States that this country is not prepared to accept extra-territorial laws, which are affecting British companies and damaging British trade.

The British Government have made absolutely no concessions to the United States' extra-territorial provisions. If a British firm feels that its commercial interests are best served by acceding to the provisions, that is a matter for it. If it wishes to enlist our support in resisting them, we should be very glad to offer it. The United Kingdom does not accept the provisions and has always rejected them. The form filling to which the hon. Gentleman referred is in no sense a statutory obligation. It is purely a matter of convenience which some firms adopt to speed up their internal auditing processes.

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

In the first quarter of 1988 there was an estimated deficit on trade in manufacturers of £2·9 billion.

When does the Minister expect the Government to get trade in manufactured goods back to the surplus that they inherited from the previous Labour Government?

I refer the hon. Gentleman to the answer that I gave him on 13 January. In case he has forgotten what it was, I recommended that he ask his constituents and, if he thought it advisable, that he reproach them—

Answer the question.

that he reproach them for their propensity to buy foreign imports—

When do the Government hope to get back in surplus? Answer the question.

I shall answer the question at some length, because I attach importance to it.

I do hope not.

I am divided between my wish to accede to your desire, Mr. Speaker, and the vociferous requests by the hon. Member for Falkirk, West (Mr. Canavan).

Order. Perhaps the balance could be in my favour today.

All sectors of finished manufactures are in equilibrium, except consumer goods.

Does my hon. Friend agree that two problems face manufacturing industries and the balance at present? First, it seems that the Government, for some unknown reason, wish to keep the pound higher than it conceivably should be, which is dangerous for manufacturing industry. Secondly, when there is a monopolies and mergers problem, which we all have in manufacturing industry, the Government must look to 1992 and not stop companies such as Cadbury and Rowntree, which may like to merge, when others are not stopped from approaching them. Do we not have to look at this as a matter of urgency, and not in some cosy, quiet way?

I have great respect for my hon. Friend's judgment, but I do not necessarily extend it to his judgment of so-called real exchange rate values. The three strongest manufacturing exporters in the world—Japan, Germany and Switzerland—have the three strongest currencies.

Why does the Minister not try to help resolve the dreadful balance of payments problem and save his own job at the same time by clamping down much more firmly on the unfair competition from Turkish yarn and textiles, which is beginning to threaten the fragile recovery of our textile industry and is already causing redundancies in textile firms in the north-west of England?

The industry, which is co-operating with my officials, is preparing an anti-dumping case. The hon. Gentleman will be interested to hear that the figures for the first quarter of this year show that imports of Turkish acrylic yarn are down by 75 per cent.

Is my hon. Friend aware that the other day one of the biggest hosiery manufacturers in Leicester equipped itself with Italian knitting machines? When purchases of that magnitude go abroad, does my hon. Friend look into the reason why, and if not, does he not think that in future large acquisitions of such foreign machinery should be monitored?

I do not find that objectionable. I regret that we do not make knitting machines in this country that are acceptable to the firm in my hon. Friend's constituency. As I told the hon. Member for Falkirk, West (Mr. Canavan), we are in equilibrium on capital goods, exports and imports. If those machines are used to manufacture finished products that will be exported and sold, all the better, I say.

Mr. Roger Stott. Sorry, Mr. Austin Mitchell.

Thank you, Mr. Speaker. That shows the benefit of appearing on television so frequently.

Does the Minister realise that his complacent answer amounted to saying that we are in balance except for the deficit in manufactured trade? Does he not realise the horrendous effect of the 18 per cent. rise of the pound sterling in real terms since the end of 1986, which will be disastrous for manufacturing industry? To illustrate that, may I ask him whether, in his view, the deficit in manufactured trade—in the first quarter it was running at£11·5 billion per annum compared to a surplus in 1978 of £.5·5 billion, updated to 1987 values, which is a turnaround of £17 billion in manufactured trade—represents a loss of 750,000 jobs, 1 million jobs or 12·5 million jobs?

The figures that I gave the hon. Gentleman are up to date. They are for the first quarter of this year, when the exchange rate factor applied in the manufacturing sector. The only sector in which we are in deficit is consumer goods.

To ask the Chancellor of the Duchy of Lancaster if he will make a statement on his recent visits to the northern region.

I have made two recent visits to the northern region. On 13 April I attended the first Action for Cities roadshow in Newcastle. This was well attended by local business men, who demonstrated their commitment to the regeneration of the inner cities by making many specific offers of assistance. On 15 April I visited Teesside and saw some very encouraging signs that the regional economy is steadily improving and that regional pride and self-confidence are returning.

As unemployment in the assisted and intermediate areas of the region and in my constituency has fallen by 3 percentage points in the past 12 to 18 months, will my right hon. and learned Friend make a further statement on the industry in the region and the way in which it is picking up and creating jobs?

At my hon. Friend's invitation, on 15 April I visited two successful companies in Stockton, and I cut the first sod of a factory site for a third company. I saw why the regional economy is improving. My hon. Friend might have added that job vacancies in the region doubled during 1987. The best survey of his local economy came from the Teesside chamber of commerce. It surveyed its members and discovered that 68 per cent. had increased sales in the first quarter of 1988, 62 per cent. reported increases in home orders, 45 per cent. had increased their work force compared with three months ago, 92 per cent. expect their work force to increase or stay the same in the next 12 months, 87 per cent expect to improve turnover in the next three months, and 84 per cent. expect to increase productivity. The Teesside economy is getting off its sick bed and becoming a healthy economy again.

On his trip to the northern region, was the Minister made aware of the critical shortage of factory space, especially of units over 10,000 sq ft? Will he tell the House what the Government are doing to rectify that critical shortage, which threatens to choke off the upswing in the northern economy about which he has been talking?

I congratulate the hon. Gentleman finding a cause for gloom out of so much good news.

It is a serious problem.

It is a serious problem, because there has been a rapid increase in the demand for new factory space by businesses that want to open in the North-east. The hon. Gentleman is right in saying that demand is now outstripping supply. He knows the provisions that we made to English Estates and the assisted areas across the country. The time is now ripe for the private sector to provide factory buildings in the north-east as well. I assure the hon. Gentleman that, with demand and the state of the local economy being so high, it is obvious that private sector development of factories in that region is about to burgeon as well.

Does my right hon. and learned Friend agree that the northern region depends heavily on foreign investment? It has more to lose than probably any other English region from political barriers being erected to commercially judged takeovers.

I agree with my hon. Friend. The north-east has been found to be an attractive place to invest by the Japanese and by the first Korean investors, as well as by many European and American investors. Those foreign investors are welcome to put their money into the development of industry within these shores.

Can the Minister confirm that the integrated operations development programmes submitted to his Department have been passed to the Commission in Brussels? To date, the local authorities which have submitted those programmes have not received any word from his Department. Can he inform the House of the scale and timetable of article 15 of the structural fund? What is his Department's position? The structural programmes are for three to five years, but, we believe, the article 15 money is for only one year.

I believe that most of the integrated submissions have been made, but I shall let the hon. Gentleman know exactly which have now been made. No doubt he is most interested in the submission affecting his area. I know that the Birmingham submission has been made, and I believe that most of the others have also been made. With regard to article 15, we have accepted the local authority claims, but we are not taking a view. It is a matter between the local authorities and the Commission. Again, I shall write to the hon. Gentleman giving him the precise position on that.

To ask the Chancellor of the Duchy of Lancaster what recent representations he has received on the United Kingdom's spending on research and development.

Ministers of this Department receive representations regularly on all aspects of Britain"s research and development activities, including spending, from a variety of interested individuals and organisations.

Why does this country spend the lowest proportion of GDP on research and development of all our major competitors? Will not our balance of payments continue to deteriorate unless something is done about that? What do the Government intend to do to ensure increased spending on research and development?

The hon. Gentleman has raised two points. He referred to the performance and spending from the private sector and industry, and to the level of spending sponsored by public funds. I shall answer his questions very clearly. If we consider Government-funded research and development as a percentage of GDP in 1985, we find that the figure for the United Kingdom is 1·3 per cent. for France 1·5 per cent., for West Germany 1·1 per cent., for Japan at 0·5 per cent., and for the United States 1·3 per cent. We compare quite favourably with the middle ground of the leading industrial nations.

However, the hon. Gentleman has a point when he refers to the performance of our industry in matching its competitors in other parts of the world. We are significantly below the international average in that respect. Given that the private sector and industry are now making excellent profits, we should ensure that they are doing their job and increasing the proportion of spending on research and development.

My hon. Friend will be aware from the reports made by our science attaché in Washington that the United States has recently allocated $200 million to research into the human genome. What representations has my hon. Friend received from our scientific community on that subject? What importance do the Government attach to it, and how much are we proposing to spend on it?

No representations on that subject have come to my office from our scientific community. I suspect that in the first instance those representations might go to another Department as the sponsoring Department. However, I shall examine the position to discover whether representations have been made to another Department and write to my hon. Friend.

Is the Minister not aware that a paper on the support for the international project to map the human genome has been submitted to and considered by the advisory council on science and technology? Is there no liaison between Government Departments on these matters? Is he aware that it is a very important programme which has technological applications, and applications in the treatment of disease and perhaps, most important of all, in basic research? Will he confirm that there is no danger of funds being diverted from the basic research budget to make up the deficiencies in support for industrial research from the Minister's Department?

As I explained very clearly, there are different sponsoring Departments for different types of research. In the final analysis, bids from different Departments will, of course, eventually go through to the advisory council on science and technology, and if they are of major importance they may go to a sub-committee chaired by my right hon. Friend the Prime Minister, which also considers those issues. Any major enabling technology or technique of that nature will receive the fullest consideration.

rose —

Order. We are making very slow progress today. I ask the House for brief questions and we will then receive shorter answers.

To ask the Chancellor of the Duchy of Lancaster what progress he has made in examining the possibilities of using outside agencies to deliver some of the business support services currently provided by his Department.

All the consultancy initiatives within the enterprise initiative are administered by outside agencies. Discussions are in hand with the chambers of commerce and other bodies about the delivery of some of the services to exporters. Good progress is being made.

I thank my right hon. and learned Friend for his reply. Are there other encouraging signs that the process can be taken further and faster on the basis that advice provided by the private sector can be provided more effectively and flexibly? Will he confirm that the Department of Trade and Industry would receive much better value for taxpayers' money by spending it in that way rather than keeping work in-house?

I agree with my hon. Friend, and that is why the consultancy advice under the enterprise initiative will be given by private sector consultancies. I am glad to say that the number of applications for consultancies means that we are well on target for the 1,000 consultancies a month that we forecast in the White Paper in January. All that consultancy advice will be given by good quality specialists in their respective fields drawn from the private sector.

Does the Minister accept the European Court of Auditors' criticism of the way in which his Department administers consultancy grants in the regions? Will he introduce competitive practices in consultancy and marketing grants to enable small firms to survive in the region against large national accountancy firms?

The report from the European Court of Auditors, which I confess I have not yet studied, will refer to past consultancies which, no doubt, were made available under the business improvement scheme under the auspices of the European Community. No one has had any chance yet to audit the progress that we are making under the enterprise initiative scheme. We are seeking to ensure cost effectiveness, and I am sure that we are achieving that. The response from companies that are seeking consultancy shows that we are providing a service that is welcomed by industry.

To ask the Chancellor of the Duchy of Lancaster what are the figures for manufacturing investment in the west midlands for the years 1983 and 1987.

Regional investment data for 1987 are not yet available. Net capital expenditure, at 1980 prices, by manufacturing industry in the west midlands in 1983 and 1986 was £489 million and £603 million respectively.

Does my hon. Friend agree that those excellent figures show that the west midlands manufacturing industry has been enabled to increase its productivity by 7 per cent. last year, to increase market share and thereby to increase employment in the industry? Will he confirm that any further improvements in competitiveness depend crucially on further improvements in productivity, which depend on wage settlements reflecting increasing productivity, but not exceeding it?

My hon. Friend has made the case exactly.

Is not the figure that really matters the assets per worker in factories in the west midlands, which is still at a historically low level in real terms, because companies in the west midlands prefer to take the wealth that workers create in short-term profits rather than invest for the future? Is that not the real reason why under this Government the west midlands and the rest of the country are becoming the warehouse of the world, instead of what used to be known as the workshop of the world?

The west midlands is an extremely important part of Britain. Many of my hon. Friends who represent constituencies in the area will vouchsafe what we know to be true, which is that many of the workers in the west midlands are doing extremely well and tend to vote Conservative in greater numbers as a result of their prosperity.

Does the Minister recall that in a debate last week of great importance to investment in the west midlands I questioned the assertion of the Chancellor of the Duchy of Lancaster that Rover had recorded record exports last year? Will the Minister ask his right hon. and learned Friend whether he has now confirmed, as my researchers have, that Rover's exports last year of 165,000 cars fell well short of the 200,000 that it exported in 1979? Will he now admit the error to the House and set the record straight?

They were record exports in value, not volume.

To ask the Chancellor of the Duchy of Lancaster when he last met the director general of the Confederation of British Industry; and what matters were discussed.

My last meeting with the director general of the CBI was on 25 January. Our discussions on that occasion were mainly concerned with inner-city issues.

Did my right hon. Friend have an opportunity to discuss with members of the CBI the latest issue of Fortune magazine? If so, did they notice the article entitled, "Britain is Back" about the British economic miracle? While there is no place for complacency, and though it may be that Fortune slightly overstated the case, is not that article further proof that the Government's industrial policies are working, and should not the Opposition accept that fact?

I do not recall any opportunity to discuss the Fortune article, but passing reference may have been made to the praise that we received from the retiring Japanese ambassador about the British economic miracle. I agree with my hon. Friend that we must sustain our achievement, and the CBI takes an optimistic view of the future prospects of British industry in its latest survey. We must continue all the good work, which is now earning such praise from all around the world.

Did the Chancellor of the Duchy of Lancaster take the opportunity to explain to the director general of the CBI the developing mystery of United Kingdom competition policy, whereby takeover bids for companies with golden shares are not referred to the Monopolies and Mergers Commission but the minority holdings of companies without golden shares are referred to the MMC? Is it not the case that competition policy is such that only companies with headquarters in London are afforded any protection?

If there is a certain amount of mystery about our competition policy, it is because not enough Members have read the document that we recently published on mergers policy. It clearly states the criteria that we think ought to be applied. We believe that one should look mainly at the effects of competition on the British economy in protecting the interests of the British consumer. There are also powers taking account of the wider public interest. All those matters are considered consistently and sensibly by the Government on the advice of the director general as well.

When my right hon. and learned Friend next meets the director general of the CBI, will he discuss the view, with which many of us are in sympathy, that if the United Kingdom is the only EEC country to allow hostile bids from outside its shores, there is a risk that we shall become a branch factory economy? Will my right hon. and learned Friend also discuss the view that there should be reciprocity in takeover bids between this country and Switzerland?

I am sure that we are not the only European country allowing bids from outside its shores. Within the European Community we are aiming for free movement of capital, from which I am sure the Community will benefit. As I explained in the exchanges on this subject yesterday, if there is no reciprocity between countries, that factor can he taken into account when considering whether to refer a bid to the Monopolies and Mergers Commission. We are awaiting the director general's advice on the particular case which I know concerns my hon. Friend.

As the Minister referred to the White Paper on mergers policy, I may tell him that it stated:

"As for the suggestion that the competition authorities are too parochial in their approach and should take a wider European or indeed global view of markets, the Government believe the criticism to be based on a misunderstanding."

Is that still the Government's view? If not, and if competition policy is changing, will the Minister ensure that any changes are first notified to the House and do not escape in dribs and drabs of ministerial speeches?

The quotation that the hon. Gentleman gave is entirely accurate, but it deals with a separate point. There are many areas of manufacturing and service industry where, if one looks at the market, it is found to be an international market. In 1992 we shall be looking to a single market within the European Community, so one must consider the impact of competition within that new market. It would be a mistake to confine one's view to the United Kingdom market, which would lead one into examining too much of a microcosm of the whole picture.

Yesterday, the Opposition—or at least the hon. Gentleman—seemed to be taking an extremely parochial view. As I see it, their policy is that no foreigner should be encouraged to invest in this country and that no English man should be encouraged to invest abroad. That is completely out of date and untenable in modern economic conditions.

To ask the Chancellor of the Duchy of Lancaster what tariff is imposed by Japan on United Kingdom sugar confectionery; and if he will make a statement.

The Japanese tariff on United Kingdom sugar confectionery is 35 per cent. We shall be pressing in the Uruguay round of multilateral trade negotiations for it to be reduced. Meanwhile, we are taking appropriate opportunities to tell the Japanese Government that we regard the level of the duty as excessive.

We hear increasingly from the Government Front Bench about the round of discussions, but when will my hon. Friend stop drinking sake with the Japanese ambassador and get to grips with the problem, so that we may enjoy free and fair trade? There should be an opportunity for United Kingdom sugar confectionery and other manufactured goods—particularly, Scotch whisky—to enter the Japanese market.

The level of tariffs raised by the Japanese is on average lower than that raised by the European Community. If I may mention chocolate without having to answer a question about Rowntree, I point out to my hon. Friend that the tariff on chocolate has been reduced from 20 to 10 per cent. Our exports of confectionery to Japan amount to more than £4 million per annum, whereas its exports of confectionery to Britain total only £52,000.

Is the Minister aware that we may not be in a position to export any chocolate to Japan shortly unless action is quickly taken on the matters referred to yesterday? We were discussing the possibility of a reference to the Monopolies and Mergers Commission of the Nestle bid for Rowntree, and 42 per cent. of the company's shares were in foreign ownership by the end of the day. Is he also aware that Mr. Kenneth Dixon—

Order. I called the hon. Gentleman on this subject yesterday. This question is about Japan.

I do not see how any of the factors that the hon. Gentleman mentioned will inhibit our exports of chocolate to Japan, which last year amounted to £1·2 million.

To ask the Chancellor of the Duchy of Lancaster what assistance he is giving to the national transputer support centre.

The Sheffield transputer centre is one of six transputer centres supported by the joint Department of Trade and Industry/Science and Engineering Research Council initiative to encourage the wider use of transputers. It is run jointly by the University of Sheffield and the Sheffield City polytechnic. My Department has contributed £635,000 to the transputer initiative.

Does my hon. Friend accept that, because there is a clear benefit to industry, it should be prepared to support these activities and develop the transputer for the market? Does he agree that this is the direction in which we should be moving—a greater role for private sector support?

My hon. Friend will have noticed that in my Department's White Paper and subsequent announcements in the enterprise initiative this is precisely the way in which we want expenditure to move. The closer one gets to the markets, the less need there is for public sector funding, and the converse also applies. We believe that at long last the age of the transputer has arrived. It is showing signs of being a great success and I believe that its incorporation in super-minis, in particular, will bring great benefits in market terms.

To ask the Chancellor of the Duchy of Lancaster what was the value of the leasing industry in (a) 1987 and (b) 1986.

The latest estimate of finance provided by the leasing industry in 1987 is £.3·4 billion at 1980 prices. The corresponding amount in 1986 was £3·1 billion at 1980 prices.

Does my hon. Friend agree that that reply shows the contribution made to the United Kingdom economy by the service sector? Would it be true to say that the service sector in this country—

Stop reading, Fergus.

Order. It is perfectly OK. The hon. Member is glancing at his notes.

Does my hon. Friend agree that the service sector contributes twice as much to the economy in output and three times as much in employment as the manufacturing sector?

My hon. Friend has stolen my thunder. He is quite right.

To ask the Chancellor of the Duchy of Lancaster what further plans his Department has to publicise the implications of the internal market to industry.

The Government are already taking a number of measures to alert business to the single European market and the vital importance of preparing for it now. These include regional conferences, detailed literature, national advertising and a telephone hotline. The single market campaign will run until 1992, but we shall continually assess its exact form in the light of current needs.

Is the Chancellor aware of the recent CBI survey in Scotland, which showed that 34 per cent. of companies did not even know about the introduction of the single market in 1992? What further steps does he propose to take in Scotland, bearing in mind the difficulties that the peripheral areas face in trading because of transport costs? Will he ensure that his Department puts a forceful case to the European Commission for continuing to make available European regional development fund moneys for the Highlands and Islands?

The hon. Gentleman's first point helps make the case for this campaign. When we started in England we found a low level of awareness and understanding among British industry. Already, after the first few weeks of the campaign, there has been a substantial increase in awareness, with more businesses preparing themselves for what they have to do for the changes of 1992. I am sure that my right hon. and learned Friend the Secretary of State for Scotland will mount a similar campaign there.

As for the hon. Gentleman's last point, I assure him that we shall be pressing that case on the European Commission and in our discussions in the Council of Ministers with other member countries.

Does my right hon. and learned Friend agree that for Britain to get the maximum benefit from the internal market we need dynamic British companies? Will he ensure that countries that prevent British companies from making takeover bids are not allowed to launch predatory attacks from a safe base? We have accepted the principle of reciprocity in financial services. Should we not do the same for manufacturing industry? Would it not be a good start to refer the Rowntree bid?

The single market will be of considerable benefit to all the economies of the EC. We are creating a large market of 320 million people, which will attract a lot of inward investment. One of Britain's main aims must be to attract a disproportionate share of that inward investment compared with other countries. That still leaves us looking at individual bids, as I said yesterday on the case raised by my hon. Friend the Member for York (Mr. Gregory). Whether a similar bid could be made in the country from which the investment comes is a relevant factor, but it is only one of the factors that have to be considered once we have the director general's advice.

Will the Chancellor confirm that the reported growth in manufacturing exports to Europe in the last quarter of last year was based upon statistical distortions and that manufacturing exports over the past two quarters have been stagnant, if not, indeed, in decline, confirming that the Government's policies have done nothing to prepare British industry for the single market?

I always treat trade figures with caution, not least because my hon. Friend the Minister for Trade is considerably more expert on them than I am. Certainly recent trade figures should be treated with caution, because the way in which they are compiled has been changed since the beginning of this year. As the hon. Gentleman knows, the proportion of British trade going into the EC has gone up from about 34 per cent. when we joined the Community to about 50 per cent. now. It is a most important market. It is a fast-growing market and British industry is now extremely competitive and well placed to take advantage of it.

Will not our future success within the internal market in the EC depend on the establishment of standards? What steps is my right hon. and learned Friend taking to ensure that British standards are accepted and adopted within the EEC?

My hon. Friend is right to say that the question of common standards is a matter of the highest priority. As we move towards the completion of the single market we are making a strong input to ensure that British standards are properly acknowledged and are not simply replaced by those of our competitors. We are also seeking the support of British industry in all the detailed work that is required to ensure that acceptable standards are in place so that we can have a genuinely free market by 1992.

Is the Chancellor satisfied that high-volume babble from advertising men is enough to match the much more careful analysis being made by other Governments in conjunction with industry of where their strengths and weaknesses truly lie, and of what advantages and disadvantages they can expect from the internal market? Is there not a worrying sense of dé jà vu about all this? Did we not hear the same hype and complacency in the 1970s and was that not followed by a massive loss of market share to European rivals? Is not the only real difference that on that occasion Lord Stokes at least had enough confidence in his own commercial judgment, even though he turned out to be wrong, to pay for his own full-page advertisements?

I recommend that the hon. Gentleman gets hold of the substantial amount of literature that accompanies our presentation so that he can inform himself better of what the Government are advising British industry on when it comes to the single market. I well remember the hon. Gentleman, when he represented a different constituency, being one of the foremost opponents of our ever entering the EC. I suspect that inwardly he has not changed his opinion since that time. I am surprised that the late Lord Stokes' judgment is called in aid of any of these industrial matters. I have been studying some of the Labour party's advertising campaigns of the 1970s—television campaigns and whole-page advertisements, with leading industrialists and trade unionists urging the country to support the Government in backing price freezes and wage restraints. The difference was that that Government were dreary, second-rate and boring, like their advertisements—

On a point of order, Mr. Speaker. The Chancellor is making a speech.

I rather agree. It does not appear to have much to do with the implications of the internal market.

When my right hon. and learned Friend publicises the implications of the internal market for British industry, I hope that he will make clear the important need to be even more competitive, particularly in manufacturing industry. Is not one way of doing that, both before and after 1992, to ensure a better supply of professional engineers and engineering skills? That is the way forward, so that British firms can compete more effectively with industry overseas. After all, we are producing fewer professional engineers than the Japanese. What are we going to do about that?

I can be brief on this occasion because I strongly agree with my hon. Friend both that we need to be competitive and that we shall find it difficult to remain competitive if we do not encourage the training of sufficient people in engineering skills of the right quality. We shall continue to give that matter close attention.

To ask the Chancellor of the Duchy of Lancaster whether his Department is planning any new initiatives to stimulate the economy in the regions outside the south-east.

My Department's recently announced enterprise initiative includes a range of measures which are designed to take into account the needs of the regions and inner cities. The services provided under the initiative will change over time, as the needs of business change.

Will the Minister confirm that at his various breakfast meetings in the north and the south industrialists have told him of the important link between industrial development and housing provision? Will he make representations to his right hon. Friend the Secretary of State for the Environment on the need to prevent further housing development in the green belt in the south, thus preventing further congestion of the south and helping the north?

North-eastern Labour Members arc ingenious. A moment ago the hon. Member for Durham, North (Mr. Radice) found gloom in the booming state of northern industry—or certainly its rapid expansion—but the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) now wants to change the subject to housing. It is certainly necessary to provide proper housing for the employees of industry in the north-east, and the proposals of my hon. Friend the Minister for Housing and Planning to revive the private sector and encourage private investment in rented accommodation will benefit the north-east as well as other parts of the country.

Is not the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) right? Would not one way of stimulating the economy in regions outside the south-east be to pursue tougher planning policies on industrial, commercial and residential development in the south-east, so that employers looking for more labour would be encouraged to go to areas of high unemployment? Then, perhaps, the housebuilders might be encouraged to go with them.

If I am to be fair, I might apply to my hon. Friend the Member for Beaconsfield (Mr. Smith) the strictures that I applied to the hon. Member for Newcastle upon Tyne, North. The nub of my hon. Friend's question must be directed to my right hon. Friend the Secretary of State for the Environment. As a midlands Member of Parliament and an Industry Minister, I certainly have an interest in prosperity spreading northwards. The sheer pressure of economics—the cost of land and the difficulty of recruiting staff in the south—is helping to stimulate the expansion of the economy in the midlands, the north and the inner cities.

The rest of the country obviously recognises the seriousness of the north-south divide. May I impress that on the Minister in relation to the Channel tunnel project? Will he at least ensure that some of the contractual work, such as the consequential heavy engineering, will go to Scotland, the north-east and the north-west?

As I understand it, quite an amount of work from the Channel tunnel project is going to the assisted areas, although it is not for the Government to place that work. I believe that the economy of the north has a great deal to gain from the Channel tunnel and improved communications with the continent. The recent actions of the National Union of Seamen underline the need for the rapid completion of the Channel tunnel, and we all hope that it is being dug even more quickly while present events continue.

To ask the Chancellor of the Duchy of Lancaster what were the total number of rental and leased cars in (a) 1987 and (b) 1986.

Estimates by the British Vehicle Rental and Leasing Association suggest that the population of rental and leasing cars was more than a million in 1987, a substantial rise on the figure of 889,000 in 1986.

Does my hon. Friend agree that that answer reflects the wider success of the car industry, which recorded an 8 per cent. growth in new car sales in the last financial year? Will he join me in congratulating fleet hire companies such as PHH in my constituency on their contribution to cost-effective vehicle use in British industry?

I am delighted to associate myself with my hon. Friend's compliment to PHH. Firms such as PHH, which is one of the market leaders, are rightly well-regarded for the service that they provide and for their contribution to small and large company profitability. My hon. Friend is right in his assessment of the figures, they are yet another indication of the success of the Government's economic policies.

Is the Minister aware that one or two of these cars are almost certainly rented or leased by employees at the Girvan factory of Rowntree-Mackintosh in my constituency? I share the view that the proposed takeover of that company should be referred to the Monopolies and Mergers Commission. As so many hon. Members on both sides of the House are saying that, surely the Minister must be getting the message.

I do not think that that has a lot to do with rental and leasing.

To ask the Chancellor of the Duchy of Lancaster what representations he has received on the workings of the Financial Services Act.

My Department has received a large number of inquiries and comments about the Financial Services Act in the 18 months since Royal Assent.

I thank the Minister for his answer. Will he tell the House how many hundreds, if not thousands, of firms are operating under the Act with only interim authorisation? Given the recent scandal of EYAS Securities, which had to be prevented from trading only a few days after the Act came into operation, what steps is he taking to ensure that the consumer is properly protected?

It is true that at the moment quite a number of firms are operating with provisional approval. However, even those that have interim authorisation will be subject to much more effective regulation than hitherto. They will be required to observe conduct of business rules which give better protection to investors than that currently available.

Does my right hon. and learned Friend agree that it is highly regrettable that the Financial Services Act does not contain any provisions which would frustrate the attempt by a Swiss company to take over a company such as Rowntree, bearing in mind that the share structure of that company is such that the vital voting shares can be held only by those whom the company agrees can hold them, and that this would militate seriously against any company being able to take over Nestle, which might by that time have swallowed up Rowntree? Is he aware, furthermore, that Rowntree is a very old company established in 1725 and is vital to the industry in York and the surrounding areas?

By one means or another I am being subjected to a number of questions about the state of Swiss law. Personally, I do not approve of the state of Swiss law, and if I were Swiss I would improve it and make sure that Swiss management was exposed to the same commercial pressures as our own. The fact that it is not, as I have said, in some circumstances can be relevant when considering a merger application. However, we have to consider the wider public interest. I know of the concern in my hon. Friend's constituency in Yorkshire, and I can assure him that we will be confirming this as quickly as possible when we have the advice of the Director General of Fair Trading.

Following the closure of IDB last year and Afcor Investments a week and a half ago both—events that I predicted last year would happen, as investors drew my attention to their loss of hundreds of thousands of pounds in over-the-counter shares—is it not quite clear that many fraudsters and swindlers operate in the over-the-counter market? Is it not about time that the Government intervened to protect the public by making the investor protection legislation work? People cannot continue losing money on that scale.

I do not know whether that was another notable figure confessing to the use of soothsayers, but the hon. Gentleman was obviously very prescient if he gave that advice to his constituents. He is making a case for the provisions of the Financial Services Act, and I can assure him that they will provide much more stringent protection for the private investor in this country in future. Certainly we are determined to ensure that they do that.

To ask the Chancellor of the Duchy of Lancaster what measures his Department is planning to improve the competitiveness of British industry.

Improving competitiveness is primarily a matter for industry itself. Through the enterprise initiative my Department already offers a comprehensive range of practical advice and assistance on which firms can draw. This will be revised from time to time as the needs of business change.

Is the Minister aware of the damage that the rising exchange rate can do to Britain's industrial competitiveness? As the Chancellor of the Exchequer has said that he does not believe that the rate can be sustained, will the Chancellor of the Duchy of Lancaster tell us when he thinks it will begin to fall? Will the Minister tell the House when he will support industry instead of the City speculators?

I do not intend to make any predictions about future exchange rates, and I advise the hon. Gentleman to seek the no doubt expensive advice of those who study the currency markets, who might try to guide him. These matters are not completely under the control of the Finance Minister of any single country. We play our part in seeking to achieve reasonably stable exchange rates and to eliminate unnecessary speculative short-term changes, but in the end it is the markets that determine the level of exchange rates. It is up to British industry to respond by improving its competitiveness in the face of whatever pressures it faces in the market place.

Will my right hon. and learned Friend disregard any strictures from the Opposition Benches about competitiveness, since the Opposition have the most heavily over-manned Front Bench that has ever been seen in this Chamber, to the extent that their own workers and slaves on the Back Benches cannot even make contributions?

I think that it is the first manifestation of the new industrial strategy that this large Front Bench team is meant to be working on. No doubt it will wish to apply to British industry principles that are similar to the ones that it applied in the past.

How will the competitiveness of British industry be improved if Rowntree is taken over by Nestle? Will the Chancellor of the Duchy of Lancaster ensure that this matter is referred to the Monopolies and Mergers Commission?

I can make no more comments on this bid than I have made in the last two days. Heaven forbid that I should ever be repetitive in this Chamber, so the hon. Gentleman knows what I said to him yesterday. To expose the management of companies to all the competitive pressures of the market place, which include vulnerability to acquisition by those who believe that they can improve the performance of a company, helps to raise the performance of the economy as a whole. We have to determine whether that is the major factor in this case, where the public interest lies and whether there is any case for referring it to the MMC. We shall do this once we have received the advice of the director general upon it.

Is my right hon. and learned Friend aware that, due to the success of the Government's policies, there is a shortage of factory space in the north of England? What efforts is he making with the private sector to encourage factory building, which is bound to increase, and thereby improve, the competitiveness of British industry?

We have ensured that English Estates has more resources available to it this year to help the assisted areas. I agree with my hon. Friend that we are now looking to the private sector to meet that demand. One aspect of the improvement of the economy in the north-west is that rents for accommodation are likely to rise because more profitable firms can afford to pay higher rents. That, in turn, will stimulate further development. We must do everything that we can to encourage that development, and the Government will take whatever steps they can towards that end.

To ask the Chancellor of the Duchy of Lancaster when he expects next to discuss matters relating to the structure of the European regional development fund with other European Community Ministers; and if he will make a statement.

The next Foreign Affairs Council, on 24 and 25 May, which my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs will attend, is due to discuss the Commission's proposal for a new framework regulation for all the Community's structural funds, with a view to its adoption.

We shall be concerned to ensure that the European regional development fund continues to make its important contribution to British regional development.

I thank the Minister for his reply On 24 and 25 May, will he and his Department make every possible effort to ensure that the British Government's representatives at those meetings maintain the pressure that the Euro-MP, Winnie Ewing, the local authorities, the Highlands and Islands Development Board and parliamentary representatives in this House from the Highlands and Islands of Scotland have exerted over the past few months to ensure that our access to and eligibility for support from the ERDF, which is crucial to our part of the country, is retained?

The hon. Gentleman will know that recently I had the pleasure of receiving a delegation from the Highlands and Islands. I was pleased to be able to tell the delegation, as I can now tell the House, that I am happy to follow the lead taken by my right hon. and learned Friend the Secretary of State for Scotland in supporting most strongly the Highlands and Islands bid for its fair share of the ERDF. We shall continue to fight our corner as strongly as we can.

In addition to safeguarding ERDF funds from the Common Market, when the Minister is in communication with the Common Market will he tell it that imports of yarn from Turkey are damaging areas in Yorkshire and Humberside, such as Bradford in my constituency, that they have caused the loss of jobs and short-time working in the textile spinning industry, and that the safeguard clause, which is a pretty weak one, negotiated by this Government should be brought into operation as a matter of urgency?

If the hon. Gentleman had been here earlier this afternoon he would have heard my hon. Friend the Minister for Trade give a definitive answer about a reduction in Turkish yarn imports. Since the hon. Gentleman himself knows as much about the European Parliament as most, I suggest that he takes it up there as well.

To ask the Chancellor of the Duchy of Lancaster what is the current level of British investment in South Africa.

Information on the level of United Kingdom direct investment in South Africa is derived from a triennial inquiry conducted by my Department. Based on the latest available results, the book value of United Kingdom direct investment in South Africa, including oil, banking and insurance, was £2,725 million at the end of 1984. Information on portfolio investment by country is not available.

Is not the real figure three or four times that? Despite February's draconian banning of trade unions and other opposition forces, and despite the show trials of Moses Mayekiso, the head of the second largest trade union, and others in South Africa, is not the real reason why the Government refuse to take economic action against the apartheid regime the level of British investment there and the profits from South Africa for British firms, which make donations to the Tory party? Does that not mean more to the Minister and to the Government than the suffering of millions of black workers and their families in South Africa under the detestable regime?

I am glad to act as a foil to the hon. Gentleman for one of his favourite star turns in the House. I submit meekly to his familiar diatribe. Encouraging trade with and maintaining current investment already in South Africa will, we believe, help to protect the jobs of the majority of people in that country.

Later —

On a point of order, Mr. Speaker. It will have been within your hearing that in answer to a question the Minister for Trade referred to the so-called European Parliament. May I have your assurance that permission will not be given to Ministers to avoid accountability in this Parliament by referring to that useless talking shop in Strasbourg?

I hear it described variously as the European Parliament or the European Assembly.