If she will make a statement on the availability and price of ultra-low-sulphur diesel at urban and rural retail sites. [35973]

I expect the availability of ultra-low-sulphur diesel fuel to increase following the changes in the relative levels of excise duty between that fuel and conventional diesel that were announced in the Budget recently. The price at which the product is sold is a matter for the retailers.

The new incentive in the Budget for drivers to use ultra-low-sulphur diesel fuel should have been good news. Is my hon. Friend aware that there was less rejoicing in my constituency than there might have been because the fuel is not available for sale anywhere in East Lothian? I understand that virtually all of it is imported and that very little gets as far as Scotland. Will my hon. Friend take the oil companies firmly by the throat at the earliest opportunity and tell them to stop discriminating against consumers in rural areas in general, and Scotland in particular, and to ensure that this excellent product is available on forecourts throughout the country?

I welcome my hon. Friend's question. Ultra-low-sulphur diesel is known as city diesel fuel and is available from supermarkets—the main retailers at the moment—in towns and cities. I accept what my hon. Friend says about rural areas. If the differential is not a sufficient incentive to produce a positive bias in favour of providing the fuel, I shall push the matter further. I know that the Scottish Office recently undertook a study of rural petrol stations, and the report is expected in May. Let us hope that that is another means of taking the measure forward in Scotland as well, since it will have a positive environmental impact.

When she last met the chairman of the Low Pay Commission. [35975]

My right hon. Friend the President of the Board of Trade last met Professor George Bain, chairman of the Low Pay Commission, on 11 February 1998.

Is my hon. Friend aware that, in my constituency, there are 4,500 families on family credit, and that throughout the east midlands, no fewer than 87,000 people are working for a rate of £2.50 an hour or less? Is he further aware that the national minimum wage will work to improve the welfare of those families? Does he agree that any softening of the line on the national minimum wage from the Leader of the Opposition—even if not from the shadow Secretary of State, the right hon. Member for Wokingham (Mr. Redwood)—is welcome, even though, coming from the party which abolished the wages councils, it will be regarded with incredulity?

My hon. Friend is absolutely right. One of the main reasons why the activities of the Low Pay Commission are so welcome is that they give us an opportunity to implement what is a major manifesto promise at an early stage. It is interesting that, since the weekend, the former Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood), has remained silent for once. He has not yet given a commitment to support his right hon. Friend the Leader of the Opposition by ditching his opposition to the minimum wage and accepting that now, without any doubt, the policy is overwhelmingly supported throughout Britain—and seemingly also within the Conservative party.

Before the Minister begins his normal high-pitched tirade, may I say that I have always felt that a minimum wage is no bad thing in terms of protecting the least able in our society? Why does he not accept the model which exists in the United States, about which the Prime Minister has repeatedly spoken with much affection? In the United States of America, the national minimum wage varies by region, and people are exempt on grounds of youth or if they work in certain industries, such as tourism. What does the chairman of the Low Pay Commission have to say about what the minimum wage should be in Northern Ireland, as compared with the south-east of the United Kingdom?

I will do a deal with the hon. Gentleman: if he does not mention my accent, I will not mention his hair.

It's not his hair.

My hon. Friend says from a sedentary position, "It's not his hair," but I would not be so cruel as to suggest that. The hon. Gentleman is trying hard to defend the indefensible, but the British people want the national minimum wage to meet the needs of the low paid. That is why the Low Pay Commission will make its recommendations by the end of May and why, soon afterwards, the Government will implement the national minimum wage.

Every time Conservative Members identified a difficulty with the minimum wage in Committee, the Minister of State referred the matter to the Low Pay Commission. Will he now defer consideration of the Bill in Committee in another place until the Low Pay Commission has reported next month, when it will be clear to everyone whether, as usual, he has been rolled over and has had to accept a compromise figure of, for example, £3.60 per hour?

I am a difficult person to roll over—although once I start rolling, it is hard to stop me. The answer to the hon. Gentleman's question is no. We have made it clear that, in implementing the Low Pay Commission's recommendations, we will return to the House with secondary legislation, which will be subject to the affirmative resolution procedure—at each stage, the House can debate and take a view on implementation of the minimum wage.

If she will make a statement on the impact of the Chancellor's Budget measures on the competitiveness of British companies. [35977]

The Budget will have a positive impact on the competitiveness of British companies. Business needs economic stability, which my right hon. Friend the Chancellor made a key theme of his Budget statement. The Budget also contained a number of practical measures to promote competitiveness through long-term investment and enterprise, such as further cuts in corporation tax rates, the abolition of advance corporation tax and the reform of capital gains tax. The Budget will also encourage work and create a fairer society.

I recognise the challenges that British business faces as a result of the high value of the pound, but does my right hon. Friend agree that the clear differences between the Government and an opportunistic and inconsistent Opposition are shown in their respective approaches to the issue? The Opposition are proposing short-term panic measures, with little economic rationale or consistency, whereas the Government have, in the Budget, reduced corporate tax, reformed the tax system and cut regulatory burdens, all of which will improve the long-term competitiveness and success of British business.

My hon. Friend is entirely right. She identifies a major theme of the Chancellor's approach and of the policies that he has already implemented. Unlike the Conservative party, we do not merely talk about the long-term national interest; we act to secure it.

There has been much concentration on the problems that exporting companies face as a result of the current value of the pound, but have the Government considered the problems of companies that are competing against imported products, which are now obviously much cheaper? Such companies find themselves at an extreme disadvantage.

We take account of all aspects of the impact of the level of sterling. The hon. Gentleman will know that we believe that we should strive to make the exchange rate not only stable but competitive. He will also be aware that it is not easy in the short term for Governments to influence these things. It is right, however, to take measures to create long-term stability, and that is what we are doing.

Will my right hon. Friend initiate discussions not only in her Department and with the Chancellor, but in Cabinet, about the strength of sterling, which has become Britain's primary economic problem? Does she recall that between 1979 and 1981, when the pound became a petrol currency, 2 million jobs in manufacturing industry were lost as a result of its overvaluation? Moreover, between 1989 and 1992, the pound was valued in the exchange rate mechanism at DM2.95, which was not competitive and produced a second recession. Now that the pound is valued at DM3, Britain is again not competitive. That is a vital problem—we cannot achieve economic stability when sterling is at this level.

I understand my hon. Friend's concern, and he is entirely right to draw attention to the Conservative party's record. Manufacturing output has risen, on the latest figures, despite the difficulties that he identifies.

Has the President of the Board of Trade now read the Budget documentation, which shows that the corporation tax changes will cost British business £4.6 billion more—not a cut, but an increase—over the lifetime of this Parliament? Has she seen that the national insurance changes mean a big increase in the cost of employing anyone other than those on low pay? Does she not realise that that is taxation by stealth, and taxation of jobs? Does she not see that it is taking money away from companies that desperately need it for research and development and for investment for more jobs at a time of unprecedented pressure on manufacturing?

I take the right hon. Gentleman's point about companies needing money for investment and research, which is why the Government are taking steps to give them incentives to support both investment and research and development, which is more than the previous Government did.

My right hon. Friend will know how widely British businesses, and especially those who are engaged in innovation and investment with universities, have welcomed many of the measures in the Budget. Will she continue the pressure from her Department to get a deal similar to the overseas development deal, whereby if individuals or companies put money into university research they get a partnership, in the form of a tax bonus or some tax back, that will encourage the vital growth of innovation that links private sector business with our excellent university research capacity?

I know that my hon. Friend plays a huge role in promoting British manufacturing and research and development. He will be aware of the many steps that the Government are taking to encourage industry, and people in the science and engineering base in universities and beyond, to work together, including the announcement of the university challenge programme in the Budget. I entirely share the view that that is important and will promote Britain's long-term competitiveness. I assure him that we shall continue to act in that way.

What assessment she has made of the impact of the value of sterling on the competitiveness of United Kingdom exports. [35978]

The Government understand the difficulties that exporters face as a result of the level of sterling, but competitiveness depends on a range of factors. The Budget introduced several measures to create a tax system that promotes entrepreneurship and long-term investment. My Department is working in partnership with business to address other issues central to the competitiveness of British industry.

Is the President of the Board of Trade aware that many hon. Members will have received a briefing today from the aluminium industry, representing companies such as Alcan in Banbury, which says:

"Many exporting companies are now at or beyond the point of zero margin, a situation compounded by the fact that some traditional Far East markets have disappeared completely. Increases in interest rates continue to exacerbate the situation"?

Order. The latest report from the Modernisation Committee allows hon. Members to quote, so the hon. Gentleman is perfectly in order.

I am sorry that Labour Members are so apathetic about what is happening in Birmingham and what its chamber of commerce reports: that while the pound stays so strong, exporting companies in Birmingham and the west midlands will remain on the brink of recession. What do the Government intend to do to ensure that this country is not driven into recession because of the Chancellor's unwillingness to take any action on the level of the pound?

I listened with care to the hon. Gentleman and, of course, I have considerable contacts, though I have not seen the Alcan report to which he referred. Of course we understand the concerns expressed in many parts of the country, although, as I pointed out, manufacturing output has just risen again. It is interesting that he and other Conservative Members express such concern about the level of sterling and its impact on manufacturers. Where was he when, under the previous Government, sterling reached levels that it has not yet reached today when the then Chancellor was shadowing the deutschmark? Where was he when interest rates rose to 15 per cent.? Clearly, he was not on the Opposition Benches.

I wonder whether we can get to know exactly what the Tory policy is on the pound. They seem to be gradually coming round to the view that they want a weak pound. I would like to know from my right hon. Friend what are the values of a weak pound. The Tories devalued after black Wednesday, 16 September 1992, when they lost £10 billion in an afternoon, and never went near a betting shop. The Chancellor of the Exchequer sent for a radio to find out what was happening outside on the stock exchange. The Prime Minister locked himself in the lavatory. I do not want to go back to those days. Will my right hon. Friend say what are the values of a weak, devalued, Tory pound?

My hon. Friend makes some powerful points with his customary verve. I feel entirely unable to answer on behalf of the Conservative party. We gave the right hon. Member for Wokingham (Mr. Redwood) the opportunity in a debate only a few days ago to say what the Conservatives' policy was and what they proposed should happen. I had the distinct impression, from what he did not say, that their policy was to put up taxes, which he is perhaps unwilling to admit. We are well aware that the Conservative party had no answer for these issues in government any more than it has in opposition. As I am sure my hon. Friend knows, 70 per cent. of the increase in the value of sterling, about which Conservative Members now complain, took place under their Government before the general election.

As a Member who at the time publicly opposed the policy of shadowing the deutschmark and joining the exchange rate mechanism, may I ask the right hon. Lady if she would have a quiet word with her esteemed colleague the Chancellor of the Exchequer and explain to him, as I tried to do in the early days of this Parliament, that if control of fiscal policy is separated from that of monetary policy by putting fiscal policy under elected politicians and monetary policy under appointees, whether economists or bankers, the invariable and inevitable result must be higher interest rates and lower taxes than would otherwise be the case? The ultimate price for that is paid in manufacturing and unemployment levels.

I respect the hon. Gentleman's record in drawing those concerns to the attention of his colleagues, but he talked of record interest rate levels. We are not remotely near the levels—

Not yet.

Not yet? We are at less than half the level of interest rates under the previous Government. On whether such a course inevitably leads to lower taxes, I have too much respect for the hon. Gentleman's ability and experience not to know that he is perfectly aware that fiscal measures can encompass more than taxation. Indeed, I recall that, over many years, he has called for fiscal measures to tighten public expenditure. I believe that not even he is complaining about the tightness of public expenditure or the management of the fiscal stance under this Government.

The value of the pound is rather high and is undoubtedly causing difficulties, not least in the west midlands, and my right hon. Friend will no doubt take that very much into consideration, but do the Government need any lectures from the Conservative party, during whose 18 years in office 2.5 million manufacturing jobs were lost, not least in the west midlands? Surely they are the last people to lecture us on job losses.

My hon. Friend is right. The difficulties in the west midlands under the previous Government, of which he rightly reminds us, arose as a result of deliberate Government policy in seeking to drive up the level of sterling and keep it high. We saw exchange rates, interest rates and job losses then that we are not seeing today.

The Government tell us that they are creating a stable and competitive exchange rate. [HON. MEMBERS: "What's your policy?"] I will tell hon. Members our policy: promote savings, do not tax them. That is what the Government need to do at the moment. Yet so far under the Labour Government sterling has risen by 11 per cent. against the deutschmark and by more against other important European and Asian currencies. The pound is clearly uncompetitive at those levels, as any industrialist will tell the right hon Lady. So will she tell us what today's policy is? Is it to make the pound stable at those uncompetitive levels or does she wish to make it competitive by getting it down from those levels? How does she intend to do either? The truth is that it is out of control and the Government are destroying manufacturing as a result.

I find it extraordinary that the right hon. Gentleman has the gall to carry on like that when he knows perfectly well that he was a member of a Government who drove interest rates to levels twice those that we see now and saw sterling, as a deliberate act of Government policy, at levels above those that we see now. Yes, our policy is to promote long-term stability and to have in that long term a stable but competitive pound. Long-term interest rates, as a result of what the Government are doing, are lower than short-term interest rates. That is a clear sign that we are going in the right direction. The record of the Conservative party on these matters is absolutely catastrophic and it is extraordinary that it has the gall to raise it.

What measures her Department has taken to encourage small and medium-sized companies to expand their export business. [35979]

My noble Friend the Minister for Trade, the Minister of State, Foreign and Commonwealth Office—my hon. Friend the Member for Leeds, Central (Mr. Fatchett)—and I launched, on 25 March, a new package of measures to help smaller companies to export. These included export explorer, aimed at helping new and inexperienced exporters to break into European markets, and a new internet-based service for matching overseas customers with British suppliers.

Does my hon. Friend agree that those measures show that her Department is working in partnership with business to influence competitiveness, unlike the previous Government, who constantly failed to listen to business and rode roughshod over its concerns?

Yes, of course I agree with my hon. Friend. I thank him for his remarks. We wanted to add to the many excellent small and medium-sized firms that have a good export record new firms which could benefit from some targeted assistance. The proposals have gone down extremely well. We are determined to pursue them. We believe that they will add to the competitiveness of the United Kingdom.

Given that small and medium-sized companies are sensitive to movements in the pound, does the Minister recognise that in fact Governments do have some influence on the pound—first by giving a guide to the market that there is a measured timetable for entry into the single currency and, secondly, by indicating that if there is a single monetary policy, whether within the United Kingdom or within the European Union, greater emphasis needs to be put on management of the fiscal balance, especially incentives to save? That is available to Her Majesty's Government.

I note what the hon. Gentleman has to say. Of course, he was a Minister—indeed, a Minister at the Department of Trade and Industry—in the previous Government. He was equally responsible for the record of the previous Government, who went from boom to bust and then back again. What the hon. Gentleman has just espoused is clearly not the position of his Front-Bench colleagues. That is presumably why he left the Front-Bench team. May I again say, as my right hon. Friend the President of the Board of Trade has said, that we are planning for the long term. What small firms want to know above all is where they will be not only tomorrow but in the next six months. That is what his Government failed to do and we are determined to deliver it.

Do not small and medium-sized firms increasingly want to be involved in the export business and to employ more people? One of their worries is that, as a result of the previous Government's record, we are not able to go into the single European currency. They are worried about what will happen when the euro is introduced and we are not able fully to influence exchange rates because we are outside it.

My hon. Friend makes some good points. The previous Government's astonishing lack of preparation let down British businesses. This Administration have gone in, picked up the pieces, and made sure that we put practical measures in place. What is important is that we concentrate on our small and medium enterprises and provide them with a targeted focus. It was the Conservatives' failure on small businesses that drove them to vote for this Government last May.

The Minister needs to face reality and understand that even her best-intended efforts are failing, because the Government are making it increasingly difficult for small firms to expand their exports. Has she had time to look at the NatWest quarterly survey, which shows that more small firms expect to cut employment in the first quarter of 1998 than to increase it? Has she read this week's Office World survey, which shows that the performance of small firms has slowed at a record rate during the last quarter; that small firms have experienced a reduction in turnover on a scale not seen since the survey began in 1994; that manufacturing is down by 15 per cent.; that 60 per cent. of companies report no growth or a decline in orders; and that Labour's support has fallen to its lowest level since November 1994? Is it not obvious that the honeymoon between small businesses and the Labour party is now over and that the Government are proving disastrous for small businesses?

I noticed that, in the list of purported facts the hon. Lady quotes, she did not mention the Office World survey figure that showed that the party that enjoyed the greatest support among small businesses was the Labour party—she seems to have forgotten that. Can that be the reason why, not so long ago, the hon. Lady told The Sunday Times that the Conservative party had lost the small business vote and that, because the Conservatives had got it wrong last time, people would be seeing few policies from her? The Labour party is absolutely determined to help small and medium businesses, which is why we have taken all the measures we have.

If she will make a statement on progress towards implementing a national minimum wage. [35980]

The Government are making excellent progress towards introducing a statutory national minimum wage for the first time in the United Kingdom during this Session of Parliament. The National Minimum Wage Bill had its Second Reading in another place on Monday 23 March.

I thank my hon. Friend for that statement. Does he accept that the national minimum wage is widely welcomed in Stroud, especially by those decent businesses that aim to pay a fair wage, in marked contrast to those rogue employers who exploit their employees? Does he also accept that those decent businesses find their natural home in the Labour party, unlike those rogues and exploiters who gain solace only in the Conservative party?

I thank my hon. Friend for those comments and congratulate him and my hon. Friend the Member for High Peak (Mr. Levitt), who have campaigned long and hard for the introduction of a national minimum wage. In the south-west, 90,000 people earn less than £2.50; and in the constituency of my hon. Friend the Member for Stroud (Mr. Drew), 1,300 families are so poor at the end of the week because of low pay that they have to rely on in-work benefits to survive. That is why at the last election the British people, in droves, supported the Labour party pledge to introduce, as a matter of urgency, a national minimum wage. I repeat the question asked of the Conservative Front Benchers: why have they not, in connection with any of the questions asked about low pay, come to the Dispatch Box and supported their own leader's decision to do a U-turn and support the national minimum wage?

Does the Minister expect the national minimum wage to increase jobs or reduce them?

The national minimum wage, set at a proper level, will be a job creator, not a job loser. During the period in which the national minimum wage was introduced and uprated, the United States has created more than 11 million new jobs. There is no evidence whatever that an appropriately set minimum wage will cost jobs, but it will give low-paid workers an opportunity to purchase goods and services that they cannot currently afford. Does the hon. Gentleman know of any country in the world where a national minimum wage for hairdressers has stopped that country's people having a haircut? It is absolute nonsense to suggest that people will lose out by the introduction of a national minimum wage.

What steps her Department is taking to promote co-operation between employers and employees in the workplace. [35983]

The Government are committed to decent, minimum standards of employment for all, underpinned by partnership at work. That is the best route to competitiveness.

I thank the Minister for that reply. Does he agree that recent initiatives by large employers such as British Aerospace and Tesco to improve workplace co-operation show that the present Government, unlike the Conservative party, are in touch with the needs of British business?

My hon. Friend is absolutely right. I join her in congratulating businesses on those initiatives. I also congratulate my hon. Friend because I understand that, this morning, her daughter Kim had a baby girl of 6 lb 9 oz. As a grandfather, I should like to congratulate my hon. Friend, and I shall send her a bottle of best Californian red, called Redwood. It is very drinkable, unlike the right hon. Member for Wokingham (Mr. Redwood), who is not very eatable.

In the context of the Minister's last remark, does he recall the Labour party manifesto pledge that trade union recognition would be a legal right where a majority of the relevant work force voted in favour? I am sure that the whole House would be grateful if he would take the opportunity to define for us what he means by "relevant".

We gave a commitment at the general election, and we will honour it. Discussions taking place between the Trades Union Congress and the Confederation of British Industry will produce, in the first half of this year, a White Paper, leading to legislation to introduce recognition in the workplace. That measure will be a major achievement in co-operation between both sides of industry.

Does my hon. Friend agree that one of the surest ways of ending co-operation and partnership is to facilitate derecognition of trade unions? Therefore, will he do all that he can in the forthcoming weeks to ensure that firms with very few employees will still be able to enjoy the full fruits of trade union membership?

The Government's policy is clear. We want to ensure that, in the workplace, individuals have the right, not only to join a union, but to enjoy the opportunities for that union to represent them in the workplace. The "Fairness at Work" White Paper will provide an opportunity to make it clear how that fits into the Government's strategy and policy on trade unions. It is also true that we want to encourage, throughout industry, partnership arrangements that bring workers, trade unions and employers together, to develop their enterprise and make it successful. My hon. Friend can rest assured, therefore, that the Government support and promote the interests of people in the workplace, and the idea that those interests should be represented by trade unions.

Given that, this week, on a visit to an employment centre in Penryn in Cornwall, the Education and Employment Select Committee found that there were virtually no jobs on offer at a rate of more than £3.50 an hour, does the Minister accept that, unless the minimum wage is set at a much lower figure than that, in areas such as Cornwall there will not be so many employees in the workplace?

There is another hon. Member who disagrees with his leader. The hon. Gentleman wants to introduce wage cuts in the workplace. The Low Pay Commission has visited every region in the United Kingdom—Scotland, Northern Ireland, Wales and the south-west—has taken evidence and, at the end of May, will set out its recommendations. Hon. Members can rest assured that, when the commission produces those recommendations, I believe that British employers will accept them overwhelmingly and will move quickly to implement a successful national minimum wage.

If she will make a statement on her Department's policy towards encouraging research and development in British companies. [35984]

The Government recognise, and publicly acknowledge, the importance of encouraging research and development as an absolutely vital component of innovation and improved competitiveness.

What responses has my hon. Friend received, first, from industry and, secondly, from universities regarding research and development? The previous Government decimated the west midlands. Several hon. Members led deputations to former Tory Ministers to discuss that matter, but we received no response. As a result, some highly paid engineers in the west midlands became shelf-stackers at Sainsbury's.

I am grateful to my hon. Friend for that question. From day one, we have worked to strengthen investment in United Kingdom research and development and to build a partnership with industry and academia. We have invested in measures such as the joint research equipment initiative. We have pushed forward the foresight link awards, and my right hon. Friend the Chancellor announced the university challenge in the Budget. Those measures have been welcomed by industry and by universities as a way of turning the corner and reversing the cuts in research and development that were made by the previous Administration.

How does the Minister believe that raising the employers' national insurance contribution rate from 10 per cent. to 12.2 per cent., as announced in the Budget, will help companies that are engaged in research and development?

I am amazed by Opposition Members: they suffer from permanent amnesia. The Conservative Government cut research and development. Their figures show that there was a 6 per cent. reduction in Government spending on R and D and a 3 per cent. reduction in business spending on R and D under the previous Administration. Our measures will strengthen industry. We will encourage business to look to the longer term and to invest in research as a means of achieving a long-term future. Our fiscal measures go some way to underpinning that, which is why they were warmly welcomed.

What steps she is taking to ensure that publicity is given to the dangers to pre-school children of burns and scalds in the kitchen. [35985]

On 24 February, the Department of Trade and Industry launched its safety awareness campaign to alert parents to the hazard of burns and scalds in the home. Some 3,500 pre-school children are injured and end up in hospital every year as a result of such accidents. The campaign involved distributing 2 million safety leaflets and screening four television advertisements to illustrate the hazards.

I thank my hon. Friend for launching that campaign. I know that he shares my concern about the safety of small children. He is undoubtedly aware that some of the nastiest accidents occur when small children pull pans off cookers. Is my hon. Friend also aware that it is possible to buy pan guards to stop that happening? However, those pan guards are sold as separate add-ons of which most people are totally unaware. Will my hon. Friend ask manufacturers to include integral pan guards in new cooker designs or attempt to get pan guards accepted as a British standard? Does he agree that manufacturers should accept more responsibility for the safety of their products?

The House, and indeed the country, will be grateful to my hon. Friend for highlighting that specific problem and drawing it to the attention of parents, grandparents and others who are responsible for children in the kitchen. I shall certainly ensure that my hon. Friend's concerns are reflected in the Government's policy and are communicated firmly to all those responsible for manufacturing and distributing cookers.

Does the Minister accept that, if he spent a little less time writing questions for his hon. Friends to ask, he might be able to write better answers for himself?

I would have found the hon. Gentleman much more convincing if I had not seen the hon. Member for Buckingham (Mr. Bercow) pass him a note at the beginning of Question Time prompting him to ask that ridiculous question.

Some of the nastiest burns arise from firework accidents. Has my hon. Friend any plans to build on the highly effective campaign—

Order. I am sorry—we have not moved to the bonfire; we are still in the kitchen.

If she will make a statement on her Department's policy towards encouraging innovation in British companies. [35987]

Innovation is the key to competitiveness, and businesses need to innovate if they are to succeed.

Does my hon. Friend agree that, despite the previous Administration's wilful neglect of our science base, we none the less continue with important work in the scientific field? Does he also agree that British firms have traditionally been rather poor at innovation, with good ideas being sold abroad in order to get the innovation on to the market? Will he assure the House that much of the red tape introduced by the Conservatives for grant qualification purposes will be swept away by the Government, in order to give an incentive to our firms to get the products that we so splendidly discover and develop on to the market in good time?

My hon. Friend has for all his years in the House championed the cause of manufacturing and engineering. Not only will we remove barriers; we will positively promote innovation. That is why we are promoting the millennium products initiative and the foresight link initiative. Across the road in Horseguards parade there is an exhibition, Powerhouse::UK, which sets out the innovative products and processes that will lead us through to the 21st century. There are innovations in engineering, biotechnology and communications. It is a showhouse of what can be achieved with positive support.

Clearly, the Government are strongly of the view that innovation and research and development are essential to the future success and competitiveness of British manufacturing industry. Is it not true, however, that to innovate and to undertake research and development requires money? Frequently, manufacturing industry needs to borrow money to undertake innovation, research and development. Currently, the level of interest rates in the United Kingdom is not particularly helpful to the future success of manufacturing industry or its competitiveness. What measures can the Board of Trade take to mitigate the effects of the high level of interest rates, to ensure that what the House wants—the success of manufacturing industry—can be fully achieved?

The hon. Gentleman, too, has a record of campaigning for manufacturing industry. Of course the interest rates are worrying. However, the information is patchy. A report by the Chartered Institute of Purchasing and Supply this morning states that manufacturers have continued to defy the ravages of a strong pound, so it is not true that all is lost. We will continue to promote innovation and underpin it with fiscal measures.

Does my hon. Friend agree that British innovation has too often led to manufacturing success for other countries? I thank him and his Front-Bench colleagues who have visited Loughborough university in recent months. I issue an invitation to those who have not yet made it to Loughborough to see the excellent innovation work that is going on. Will my hon. Friend join me in congratulating our right hon. Friend the Chancellor of the Exchequer in making available £50 million-worth of innovation money, which I know from my discussions with Loughborough university was greatly welcomed? It will lead to more job creation from small innovative ideas that have worldwide links. Two companies that Ministers have already visited in my constituency have created 150 jobs from two simple ideas. That is how we shall create jobs for this country. I hope that my hon. Friend will join me again in a visit to Loughborough university.

I am grateful to my hon. Friend, and I welcome his invitation. It is good to hear that the university challenge scheme and other such measures are already working through. The initiatives that we are taking will have a positive effect.

Does the Minister recognise that innovation is difficult for companies that face the random effects of the anti-dumping textile levy? A company in my constituency, Strines Textiles, is facing 100 job losses, not innovation, as a result of the levy. Will the Minister give an assurance that the Government will be strongly behind Strines Textiles' fight to get this temporary levy lifted as soon as possible so as to protect jobs in my constituency?

We fought hard and consistently on the measure to which the hon. Gentleman refers and we shall continue to do so to ensure that our industries are not unfairly priced out of the market. We have a consistent line on these matters. We have registered our objections and we shall continue to do so where unfair trading occurs.

What plans she has to consult consumer groups about reforms to consumer credit legislation. [35988]

I issued consultation documents in February and March to, among others, the National Consumer Council, the Consumers Association and the National Association of Citizens Advice Bureaux.

I thank my hon. Friend for that answer. Is he aware that millions of people throughout the country are grateful to the Government for the work that they are doing on consumer protection after 18 years of virtual absence of such protection? Will my hon. Friend comment on what he might have in mind concerning mortgages, especially with regard to non-status lenders?

I am grateful to my hon. Friend for his support for the policies that we are pursuing. As for non-status lenders, we are increasing the financial limits that are governed by the Consumer Credit Act 1974 from £15,000 to £25,000 to ensure that many more people are offered the protection of the Act, including those who may be subject to the worst mis-selling practices of the mortgage companies at the lower end of the market.

The Minister is aware from work that we did together during the previous Parliament on a cross-party campaign of my long-standing involvement in consumer credit issues. Will he confirm that in the reforms that he is talking about there will be a concentration on promoting best practice, and that the Government will ensure that praise is given to those major financial institutions that have managed to promote the use of plain English in documents for consumers while staying within the sometimes necessarily complex provisions of consumer credit legislation?

I am obviously grateful for all the support that we have for plain English and for ensuring that unfair contracts are not allowed to be foisted on consumers. I welcome the action that the Office of Fair Trading took specifically on unfair contracts in respect of one company that was peddling mortgages in a way that was found not to meet the highest standards that the House would expect.

If she will make a statement on the priority her Department attaches to promoting competitiveness in Europe during the British presidency of the European Union. [35989]

European competitiveness is a key DTI priority for the UK presidency, just as it is in our policies within the UK. On 11 March, I addressed a debate in the European Parliament on this issue, and next month, when I chair the Industry Council, we shall be having the first full debate on European competitiveness, including how industry and Government can work together. A particularly important feature of our approach to competitiveness is the improvement and completion of the single market.

Does my right hon. Friend agree that exchange rates largely link to external factors in Europe, Asia and Japan, and that the proportion of exporters that are showing a dip in sales is the same as the proportion that are showing lower input costs in terms of raw materials? Does my right hon. Friend agree that about a third of manufacturers serving the domestic market are in boom? Does she agree also that exporters would be best advised to focus on higher productivity and better product differentiation, and then to focus on the home market? In no circumstances should we expose the wider economy to the risk of inflation because of the short-term pain of some exporters.

My hon. Friend is entirely right to identify that the overall position is much more complicated than the Conservatives seek to pretend. He is also right that our consistent advice to manufacturers and others has been that Britain's long-term competitiveness lies in the pursuit of quality and high added value rather than in simply attempting to compete on price. On all these issues our message has been consistent, and it has been of assistance to people in dealing with the present circumstances with the level of sterling.

What does the President of the Board of Trade consider to be the pound's optimum level against the deutschmark to promote competitiveness?

I do not think that anyone would attempt to answer such a theoretical question. I simply remind the hon. and learned Gentleman that neither sterling nor interest rates are yet at the level that they reached under the previous Government, which was the result of a deliberate act of policy.

May I ask my right hon. Friend a question about competitiveness among Europe's airline operators? Can she give an assurance that British Airways, with its new cut-price operation, will not be allowed to drive existing cut-price airline operators out of business? Clearly, that would not be in the public interest.

I am always cautious about being drawn into comment on competition issues in the House. The Government have not only advocated and pursued a policy of strong and fair competition but will continue to do so.

Sir Teddy Taylor.

Does the Minister agree—

Sir Teddy, I am calling you for Question 18.

It is Question 17.

You have Question 18. Either you want to put it or you do not.

Question 18. Yes, that is me.

What assessment she has made of the impact on United Kingdom industry of the changes in European Union structural funds being proposed by the Commission. [35991]

The Commission's proposals for the structural funds and for other structural and cohesion policies for the years 2000 to 2006 were published on 18 March.

In thanking the Minister—[Interruption.]

As the hon. Gentleman will be aware, travel-to-work areas are a matter for state aid and assisted area status, not structural funds. He will be glad to hear that we are concerned, as are all member states, to contain the overall costs of structural funds, and that is what we aim to do with the reforms. However, we are disappointed with the draft regulations that have been published by the Commission. Our aim is to have an outcome that is affordable, durable, simpler and more efficient. We are working very hard indeed for an outcome that is fair to the United Kingdom and all its regions.

Is not it true that our negotiations have already secured transitional arrangements until 2004? Does my hon. Friend agree that we should treat with scepticism the views of anyone who still believes, as the hon. Member for Rochford and Southend, East (Sir T. Taylor) does, that joining the Community was a great disaster, and that the Referendum party could really zoom and be very significant indeed?

I agree with my hon. Friend. Our case on transitional periods has already met with some success, but we also want to ensure that those transitional periods are the same length as for objective 1, and we are working hard to achieve that. The Government recognise that our future lies in Europe, our trade is done there, and it is important to the British public and British businesses that we say that and say it loudly.

Will the Minister assure the House today that, in the regional regeneration of which she spoke, rural areas will not lose out to urban areas, particularly in an area such as Yorkshire and Humberside where South Yorkshire is clearly more densely populated than North Yorkshire, but North Yorkshire also deserves a fair whack of the money?

I well understand the hon. Lady's interest and experience in these matters. We are working hard with everyone and we have also had extensive discussions with local authorities. We want the United Kingdom to be represented by a united voice. We want outcomes which lead to flexibility, but also to a proper balance between urban and rural areas. That is essential.

I beg to move,

That this House, mindful of the conclusions of the Scott Report, commends Her Majesty's Government for its efforts to obtain agreement for a European Union Code of Conduct on the arms trade; and urges Her Majesty's Government to ensure that any such code sets high common standards governing arms exports for all Member States, and, in particular, to insist that export guidelines are transparent, unambiguous and pay due regard to human rights.

"Britain helped to give Iraq the machine tools and the technology to wage nuclear and chemical warfare."

I am sorry to interrupt the hon. and learned Gentleman's flow. I agree with his point about parliamentary scrutiny. Does he accept that such scrutiny should also extend to information held by the UN weapons inspectorate in Iraq which, it is understood, has considerable knowledge of the individual companies that have, often in breach of the sanctions policy, exported chemical and biological material and weaponry to Iraq—yet it has maintained silence under the cloak of commercial confidentiality?

I certainly agree with that. The hon. Gentleman and I were both in the House when the Scott report was published and discussed. He will recall that my attitude to these matters is similar to his. Transparency is the best protection against such abuse.

"strengthen the exchange of information relevant to the export of conventional arms with the aim of setting high common standards for arms exports from all EU member states."

"committed to the maintenance of a strong defence industry".

"if the end-use is judged to be legitimate, such as protection of members of the security forces from violence".

The hon. and learned Gentleman called for transparency in these matters. Would that extend to commissions? As he will know, in some arms exports, some 25 per cent. of the value of the export is siphoned off to commissions. That must cause him concern.

I hope that it would cause all hon. Members concern. There are newer Members to whom the hon. Gentleman's point may have been more expressly directed than those present this afternoon. He is absolutely right. Transparency in these matters is essential.

I am not sure whether I have been damned with faint praise or praised with faint damns, but I strongly welcome the motion tabled by the Liberal Democrats. I thank the hon. and learned Member for North-East Fife (Mr. Campbell) for his courtesy in making me aware of one part of his speech to which I otherwise would not have been able to respond.

A firm in my constituency was involved in the sale of weapons of torture, allowing their manufacture to go on in Mexico while the paperwork was done in Britain. How might the Government be able to tackle such a problem?

My hon. Friend raises a genuinely important point. As with the EU code of practice on conventional arms exports, we are trying initially to work towards a European framework for the banning of sales and exports of weapons of torture, but it is our ambition to internationalise those processes. My hon. Friend may be more aware than I am of the state of legal proceedings in the case to which she refers. I do not know what stage it has reached in the Scottish judicial process, but such prosecutions should have the support of the House. We are considering ways of preventing third-country traffic and the use by British firms of offshore activities as a means of avoiding the impact of British legislation. My hon. Friend will probably recognise that there are serious legal difficulties in enacting such a frame of reference, but she raises an important point.

I am delighted that the code of practice has received a positive response from other European Union countries and I congratulate the Government on promoting it. However, certain loopholes have been pointed out by the hon. and learned Member for North-East Fife (Mr. Campbell), among others. Even if the code is signed, will my hon. Friend, together with our European partners, ensure that there will be an on-going process so that those and any future loopholes can be closed?

I am aware of the specific point to which the hon. and learned Member for North-East Fife and my hon. Friend referred, but we do not believe that it is a loophole as we find it acceptable to provide protection for security forces. However, the sale of certain equipment is acceptable only when it does not infringe the more important criterion that the equipment is not used for the purpose of internal repression. We do not believe that internal repression should be permitted to pursue what might be described as legitimate security operations. We take the opposite view—that legitimate security operations should not take place if they involve internal repression. Our national criteria upon which the European code is based allow for no such loopholes. We shall always look at the form of words and the practice to see whether improvements are required, but it is not our view that there is such a loophole.

I am glad that my hon. Friend has reached this point. Does he believe that the EU code, when it is fully operational, will prevent Britain from selling arms to Turkey? After all, we provide 10 per cent. of Turkey's armaments. Does my hon. Friend accept that the Turkish army is waging a civil war against the Kurdish people in eastern Turkey and that the most appalling violations of human rights are taking place using equipment manufactured and sold by Britain and almost every other EU country? Does he accept that an arms embargo on Turkey would have a dramatic effect on improving human rights there?

Neither the national code nor the European code introduces the concept of arms embargoes. As my hon. Friend will be aware, arms embargoes apply to certain countries. For example, the United Nations Security Council recently announced a global ban on arms sales to the former Yugoslavia.

I, too, congratulate the hon. and learned Member for North-East Fife (Mr. Campbell) on raising this matter. I hope that he will forgive me if I do not follow him down every avenue, but I shall agree with him later in my speech on loopholes in the European code of conduct.

"EU member states are committed to the maintenance of a strong defence industry which is a strategic part of their industrial base as well as their defence effort. They recognise that defence exports can contribute to international stability by strengthening bilateral and collective defence relationships in accordance with the inherent right of self defence recognised by the UN Charter."

"The Government said in its election manifesto: 'We support a strong UK defence industry, which is a strategic part of our industrial base as well as our defence effort."'

"believes in a strong defence against the new security challenges that face this country and its Allies in the post-Cold War world".

"one underlying reality is that a strong defence will continue to require a strong defence industry."

"This country derives great benefits from a healthy defence industry—not only from being able to meet most of the equipment requirements of our own armed forces from domestic sources, but also from the wider industrial benefits including the economic and employment advantages that derive from the export of defence equipment."

"However, it is widely recognised that the defence industries of Europe must restructure if they are to meet the fiercely competitive challenge posed by the very large corporations that have already formed as a result of a series of mergers of US defence contractors. The impact of this process on the UK defence industry is yet to be seen, but our defence industry is highly competitive and is in a strong position to play a leading role in the restructuring process."

"companies active in servicing defence needs … to exploit potential new opportunities for their products and technologies in the UK and overseas military and civil markets."

Is the hon. Gentleman saying that the Government should not fight terrorism, or is he saying that, if they do, they should have no recourse to international law? In either case, the Government disagree fundamentally with the position of Her Majesty's Opposition.

Of course I am not saying that; I am saying exactly the opposite. I entirely agree that, in many instances, it is necessary to sell such arms. As the hon. and learned Member for North-East Fife pointed out, many countries have traditionally used that as an excuse, and will continue to do so. However, there is no instrument in the draft code of conduct to enforce the code, as such. Contrary to what the Minister says, it does not represent a step forward in terms of enforcement from the EU common criteria agreed in Luxembourg and Lisbon. The final statement that

"non-adherence should not preclude countries from receiving arms"

In debating the international arms trade, it is important not to engage in sterile discussions about profit and loss statements, balance sheets and technicalities. We should consider not the recipients of arms—the military—but the civilians—the ordinary women, men and children who are most touched by the arms trade. Some 84 per cent. of all casualties are civilians, and they are the people on whom I should like the debate to focus.

Should annual reports cover just strategic arms exports or should they cover all arms exports? Furthermore, in examining such annual reports, should we not assess the whole cost of arms, including public investment in research and matters such as export credits and offsets, because the absence of such costs makes arms and defence appear much cheaper than they are?

I welcome my hon. Friend's intervention. Annual reports should be comprehensive, but I am sure that the Minister will respond to that. Perhaps we should look at those matters in more detail. I should like to see such reports and a register of arms being debated in the House, but Parliament should at least be notified of proposed exports to sensitive countries. As we have heard, that happens in Sweden and it does not seem to cause much difficulty in the parliamentary process there. Perhaps the matter could be investigated under freedom of information proposals.

I start by congratulating my hon. and learned Friend the Member for North-East Fife (Mr. Campbell) on the characteristically lucid and precise way in which he opened the debate on a subject which, for too many years, has been dark and shadowy in terms of parliamentary scrutiny. I agree entirely with him that we can and must recognise the change in attitude on the part of the British Government on the issues since the change in regime last May.

"so plainly inapposite as to be incapable of being sustained by serious argument."

"misleading to anyone who does not know the substance of the decision."

"answers to PQs, in both Houses of Parliament, failed to inform Parliament of the current state of Government policy … This failure was deliberate and was an inevitable result of the agreement between the three junior Ministers"

"is not simply a part of the game … played for the benefit of and under unexpressed rules understood by the Parliamentary players. The answers are also an important medium by which information about government and its activities is made available to the public. It is to be noticed that the respects in which the answers to the PQs about Government policy on defence exports to Iraq were inadequate and misleading were also respects in which some of the letters written in response to correspondence from members of the public were inadequate and misleading."

"In the circumstances, the Government statements made in 1989 and 1990 about policy on defence exports to Iraq consistently failed … to comply with the standard set by paragraph 27 of the Questions of Procedure for Ministers and, more important, failed to discharge the obligations imposed by the constitutional principle of Ministerial accountability."