Mr. Teddy Taylor : Is my hon. Friend aware of the very real concern for the safety of the investing public if foreign financial intermediaries can operate in this country without qualifying under the Securities and Investments Board or FIMBRA? Can he assure the investing public in Britain that any financial intermediary operating in the United Kingdom will have to meet the high qualifications and standards of FIMBRA?
Mr. Maude : Certainly. As I indicated, under the directive which covers unit trusts and collective investment schemes it will be essential for those products to be marketed in a country subject to the marketing rules of that country. There can therefore be no question of intermediaries, no matter where they are based, selling those products in the United Kingdom being subject to anything other than the United Kingdom rules.
There is a further directive which affects investment services more generally. As I understand it--it is still in an early stage of negotiation --it will have the same broad division, so that services being promoted in one country will be subject to the conduct of business rules for that country.
Ms. Armstrong : Does the Minister recognise that there is still a great difference between regions in terms of economic prosperity and deveopment and that, in some regions, there is almost over-capacity, whereas in others we are desperately looking for ways in which we can become self-sufficient? Self-sufficiency demands productive industries, research and development and skill-based industries. What does the Minister intend to do to ensure that we have that base from which we can then properly grow?
Mr. Newton : I certainly recognise that there are still substantial differences between regions, but those regions that have had a particularly difficult time are now showing signs of a very strong revival. It is, of course, right that they should have the appropriate economic and industrial
Column 300base, but the mix of that base will be different from that upon which they have traditionally depended, because the world has changed. In the case of the hon. Lady's region, the north- east, it seems to me that what is happening--notably but by no means only as a result of the arrival of Nissan--is generating exactly the sort of new skill base through its effects on training, for example, that we want to see.
Mr. Andy Stewart : Did my right hon. Friend read The Independent on Monday where he would have seen, listed constituency by constituency, the drop in unemployment? If he did, he would see that Sherwood, my constituency, was second from the bottom. That is due to an unprecedented reduction in manpower in the mining industry. We do not yet qualify for Government or EEC aid. Will he reconsider advising the EEC that we need such aid in the constituency of Sherwood? Better still, would he care to visit my constituency at the earliest possible opportunity to see what can be done about improving our prospects?
Mr. Newton : I did read the tables in The Independent on Monday and they were indeed interesting. Although I did not visit my hon. Friend's constituency yesterday, I visited Leicester and Nottingham and discussed a numbr of those problems with Nottingham city council and Nottinghamshire county council. I am very much aware of the problems being created by the decline of mining employment and the British Government have indicated their support for some of the proposals put forward in respect of the point raised by my hon. Friend.
Mr. James Lamond : Does the Minister recognise that certain industries are heavily concentrated in some regions, such as textiles in the north-west? Now that the textile industry is facing difficulties once again, does the right hon. Gentleman have any special measures that he intends to put into operation--such as additional finance to Inward, the development agency in the north-west--to enable any temporary difficulties which may arise because of the decline of certain industries to be overcome?
Mr. Newton : I have no specific additional measures in mind of the sort that the hon. Gentleman suggested. As I said in the main answer, there is a range of measures--including regional selective assistance--designed to encourage the development of new industries in the regions. Our record in attracting and encouraging new inward investment in all parts of the country is already considerable. We shall seek to build further on that.
Mr. Conway : Will my right hon. Friend take it from a former board member of the North of England Development Council that any colleague in this place who visits the assisted areas will see a marked improvement on the days when the Labour Government were implementing their broad-brush policies? Since the Government introduced their policy of targeting help, which is designed to create employment, there has been a vast improvement, as Labour Members well know.
Mr. Newton : I agree with my hon. Friend. As I have said in answering earlier questions, I have been visiting some of the regions. There is no doubt that the sense of confidence and optimism is far greater than it was even a year or two ago.
Mr. Caborn : Is the Minister aware of the report on the regional impact of the single market of 1992 which has been produced by the department of applied economics at the University of Cambridge? One of the conclusions reads :
"Regional policy needs to be significantly strengthened if 1992 is not to be disastrous for the regions".
The report's conclusions have been endorsed by the regional policy director of the Community. Is the Minister telling the House that we are leaving regional policy in 1992 to market forces?
Mr. Newton : I am not saying any such thing. We have a substantial range of measures and we shall continue to press them vigorously. There are undoubtedly implications for the regions in 1992. For example, they will need to have good transport links with the markets of Europe, and my right hon. Friend the Secretary of State for Transport is actively pursuing that aspect.
Mr. Batiste : Does my right hon. Friend agree that the best way to stimulate the economies of the regions is through the creation of genuinely local enterprise cultures, and that the most effective way of starting those cultures in areas of high unemployment where the economy is dominated by local authorities is for the authorities to put out to genuine tender as many of their services as possible?
Mr. Newton : I am sure that that approach could make a contribution. Also important is the work of local enterprise agencies, in many of which local authorities play an important part. I welcome the growing number of private sector initiatives which are directed at producing exactly the sort of culture that my hon. Friend rightly advocates.
7. Ms. Quin : To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the prospects for British engineering, in the light of the proposals to complete the European internal market in 1992.
Mr. Newton : The creation of the single European market is opening up opportunities for all sectors of United Kingdom industry, including engineering. Our "Europe Open for Business" campaign is designed to assist firms of all kinds to take advantage of those opportunities.
Ms. Quin : Given the importance of engineering to areas such as the north-east, and the enormous trade deficit in manufactured goods between the United Kingdom and the rest of the EEC, will the Government take every measure to ensure that British engineering derives some advantage from 1992? Or will engineering be allowed to go the way of so many other older industries, especially those in the north-east at this time?
Mr. Newton : There is no question of our allowing the engineering industry, or any other, to go into decline for want of anything that the Government can do to help it to have a competitive and viable future. The range of our policies has greatly contributed to an overall increase in the competitiveness of British industry, and the engineering industry, amongst others, is gaining from that.
Column 302not been based on the marvellous training schemes that we have introduced? People have been given new skills that can lead towards meaningful jobs. We no longer have the stupid overmanning that was to be found under the Labour Government. Is it not a fact that industry now delivers goods on time, of the the right quality, at competitive prices, with good after-sales service?
Mr. Newton : There are problems of skill shortages in that and other industries, including the construction industry. The proposals put forward by my right hon. Friend the Secretary of State for Employment earlier this week are directed at precisely such problems.
Mr. Bowis : Does my right hon. Friend agree that for engineering firms to do well in 1992 and beyond there is a great need for more young people to come into engineering? Will he encourage firms to keep close to the world of education--schools, colleges and higher education--so that, in particular, more women come into the industry and more poeple take joint courses in engineering and modern languages?
Mr. Newton : Yes, those are among the objectives of the industry education compacts, which we are taking a number of steps to encourage, and very much in line with the proposals that my right hon. Friend the Secretary of State for Employment brought forward a couple of days ago.
Mr. Henderson : How does the Minister explain the deterioration in the trade gap with the EEC in engineering products from £350 million in 1979 to a deficit of £2 billion in 1988? What specific steps will he take to prevent a further deterioration by 1992 and beyond?
Mr. Newton : I attribute much of that problem to the economic policies that were pursued prior to 1979, and I expect there to be continuing advantage to the engineering industry, as to others, from the policies that have been pursued since then.
Mr. Riddick : Does my right hon. Friend agree that the prospects for British engineering will be further improved with the privatisation of British Steel? With a privatised steel industry, we can expect prices to be stabilised, or even reduced, as the industry becomes more efficient and competitive.
Mr. Hughes : Is not the true state of affairs that Britain's share of world trade has dropped from 9.1 per cent. in 1979 to 7.9 per cent. in the first quarter of this year? Whatever twisted logic the Minister may use, he cannot disguise his failure. What does he intend to do to improve British competitiveness?
Mr. Clark : I do not need twisted logic, because the hon. Gentleman circulated the text of the supplementary question that he has just declaimed fairly widely. It begins "Dear Bob" and is headed "Your question 11 tomorrow." It is signed by the hon. Member for Norwich, South (Mr. Garrett), and says exactly what the hon. Member for Aberdeen, North (Mr. Hughes) should do. I tried to get hold of the hon. Gentleman to help him with his figures because I did not think that the House would consider that a fall from 8.1 to 7.9 per cent. was of seismic proportions. The hon. Gentleman will be glad to know that the figure has now gone up from 7.9 to 8.2 per cent.
Mr. Clark : Further to that point of order, Mr. Speaker. The hon. Gentleman is presumably not aware that he shares both Christian name and surname with my hon. Friend the Member for Harrow, West (Mr. Hughes). Due to over-profligacy, I assume, in circulating the text, it was sent to everyone who carries his name--or was it?
Mr. Beaumont-Dark : Does my hon. Friend agree that one of the great problems that we face in world trade is the fact that the pound continues to go higher? If the pound is allowed to continue its rise against the currencies of our competitor countries, is it not possible that we may return to the position of 1979 to 1981, which would be hugely damaging to manufacturing industry? [Hon. Members :-- "Hear, hear."]
Mr. Clark : My hon. Friend has his view, which seems to be widely shared by Opposition Members. The paradox is that Opposition Members and others declare simultaneously that the balance of payments deficit will lead to a sterling crisis, by which I assume they mean that the value of sterling will fall, not rise. That paradox may benefit from the attention of Lady Antonia Fraser's think tank.
Mr. John Garrett : Will the Minister confirm that the Chancellor's Autumn Statement forecast that this year British non-oil exports would increase by less than the growth in world trade and that we would continue to lose our market share? What representations have he or his colleagues made to the Chancellor about his policy of forcing up interest rates and thus further damaging our international competitiveness in manufacturing?
Mr. Clark : Industry is largely united in its view that it prefers increased interest rates to increased inflation. I did not know that my right hon. Friend had forecast that in his Autumn Statement, but I draw to his and to the hon.
Column 304Gentleman's attention the fact that, as I told the hon. Member for Aberdeen, North, in the first six months of this year our share increased from 7.9 to 8.2 per cent.
Mr. Atkins : It is for Rolls-Royce and British Aerospace to determine jointly which pattern of international collaboration they wish to explore and we will support them in that endeavour. Following a visit that I made recently to Washington, where I met Dr. Graham, the President's science adviser at the White House, I am pleased to tell the House that avenues have been established for the companies to pursue discussions with their American counterparts.
Mr. Jack : In welcoming my hon. Friend's positive statement about future developments in respect of HOTOL, may I ask him to confirm that the only real future for the project depends upon putting together international consortia with a vested interest in launching satellites? While he encourages that development, will he ensure that the companies participating in the materials development, technology and avionics associated with the project have sufficient encouragement from his Department to continue the work? We must not allow the project to wither on the vine.
Mr. Atkins : My hon. Friend is right. I can do no better than quote from a recent report in the United States by a group of people from the United States and other nations. It concluded that it was "economically and technologically impossible for any single country or company to develop an HSCT aircraft."
Collaboration must be the order of the day.
Mr. Wood : Bearing in mind that HOTOL holds the prospect of a reduction by a factor of four in the cost of satellite launches, which would benefit broadcasters, telecommunications networks and defence departments, is it not extremely important that the industries involved should co-operate internationally in this venture?
Mr. Atkins : As my hon. Friend knows, it will cost many billions of pounds to develop HOTOL. The early stages of such activity will require relatively small sums of about £2 million to £3 million a year, which it is well within the capability of the companies involved to provide. My hon. Friend is right to say that this is an innovative project that deserves consideration, and we are doing just that.
10. Mr. Cran : To ask the Chancellor of the Duchy of Lancaster if he will report on the progress being made with his Department's review of support schemes for exporters ; and when he expects the review to be completed.
Column 305under the aegis of his Department, if for no other reason than that, although companies appreciate the service, they have complained about the variability and quality of the service that they receive?
Mr. Clark : I have heard no complaints, but I hope that my hon. Friend will let me know if he does. Of course, it is open to companies to use the private sector. As part of the enterprise initiative, we are actively enrolling the private sector in a consultancy role.
Mr. Cryer : Would not any support scheme for exporters, which is vital in view of our massive balance of payments and trade deficit, be subject to Commission interference? Is it not particularly important that there should be export schemes to assist manufacturing industry in view of the £11 billion deficit with other EEC countries? Are not our membership of the EEC and high interest rates forced up by the Chancellor of the Exchequer sounding a death knell for yet more jobs in manufacturing industry, over and above the 2 million already destroyed by the Tory Government since 1979?
Mr. Clark : Straight export subsidies, as the hon. Gentleman knows, are banned under article 16 of the GATT and article 9 of the subsidies code. I admit that there is a grey area within the European Community and practices there. Right hon. and hon. Members must weigh and this is reflected in their correspondence--the relative advantages that their constituents can sometimes derive from Community grants as producers against the threats and dangers to which they may be subjected from their Community competitors, who also benefit from them.
Mr. Ian Bruce : Will my hon. Friend comment on the way that his Department works with the Foreign and Commonwealth Office in supporting the efforts of British embassies? Does he agree that simple measures to monitor what is needed in export markets are often more cost-effective than grand dinners and soirees, where most of the money is spent rather than on practical measures?
Mr. Clark : My hon. Friend is right in his implication that the bulk of the £100 million a year spent on export promotion is disposed of by the Foreign and Commonwealth Office. The relative merits of entertaining and hard fact finding depend on one's viewpoint.
Mr. Clark : On every occasion that I visit a foreign capital, I make a point of calling on our commercial section there, and I am impressed by the increasingly rising standards of service, dedication and efficiency of the commercial sections of our posts overseas.
Ms. Short : The Minister will remember the terrible effect on our exports and on manufacturing employment--which is now showing in our balance of payments problems--of the recession following 1979, largely caused by high interest rates. Is he not worried that with the high interest rates that we have now, the prospect of their increasing still higher, and 1992--when, senior British industrialists predict, one in two factories will close--we shall see another mammoth recession unless the Government act on interest rates?
Mr. Clark : It is generally accepted that it is a matter of cause and effect and that at that time high interest rates were a consequence of developments such as high oil prices. At present, we have a fall in oil prices.
Mr. Arnold : Does my hon. Friend consider that it is important that the hotline should bring to the attention of business men the significance of the enterprise initiative and of the many ways in which they can be given assistance in responding to 1992?
Mr. Maude : My hon. Friend is right. There are a number of ways in which help and advice can be given to businesses as they adapt for the changes coming with the completion of the single market. No business in the length and breadth of the United Kingdom will be wholly exempt from the changes, and every one of them needs to look to its laurels to ensure that it is able to take advantage of the opportunities that will be forthcoming.
Mr. Harry Greenway : Is my hon. Friend aware that many businesses all over the world are considering coming to this country as a means of building a bridge into Europe with 1992 in prospect? Is he in favour of that as a means of inspiring more business and more employment in this country, and if so, what is he doing about it?
Mr. Maude : We have always had an open attitude to businesses which seek to establish themselves in this country. We have welcomed that and it has been enormously beneficial to us. It is a process that works both ways. The United Kingdom is now the second largest holder of external assets in the world, second only to Japan. That is a consequence of our having that open attitude to investment flowing both into and out of the United Kingdom.
Mr. Atkins : My right hon. and noble Friend the Secretary of State for Trade and Industry and I last met representatives of Airbus Industrie at a meeting of Airbus Ministers from the four partner countries held on 17 November 1988.
Column 307December, will he support the view that the financial director should be a British subject, in the interests of British Aerospace and the British people?
Mr. Hoyle : Has the Minister discussed with Airbus Industrie the disappointment over the fact that British Airways went to Boeing in America rather than to Europe and that it is now the only major national carrier not using the European Airbus to any great extent? That disappointment is felt even when taking into account the Airbus orders that it inherited from British Caledonian.
Mr. Atkins : No, not on 737s, but on a variety of the aircraft that have been purchased. In an industry that is as collaborative as the aerospace industry, a wide variety of British companies are already involved in a wide variety of Boeing aircraft, not least, for example, Shorts and Rolls-Royce. The hon. Gentleman's point is well taken.
Mr. Bill Walker : When my hon. Friend next meets the members of Airbus Industrie, will he draw to their attention the way in which Britain has brought about financial discipline in the market place by requiring companies to show clearly how they operate and how they are funded? That is important because Airbus Industrie, which is an essential part of European aircraft collaboration, must be seen in the United Kingdom and elsewhere as a company whose accounts can be noted and accounted for.
Mr. Atkins : My hon. Friend is correct in his assessment. Obviously, those in the industry know how successful the recent versions of the Airbus have been, particularly in competition with American manufacturers. It is all the more important, therefore, that we ensure that administratively and financially the company has a secure long-term future to offer customers and employees.
Mr. Stott : Further to the point raised by my hon. Friend the Member for Warrington, North (Mr. Hoyle), given the fact that the British taxpayer has paid millions of pounds in launch-aid for the Airbus A320, that many thousands of jobs in British Aerospace depend on future sales of that aircraft, and that British Aerospace has decided to buy the Boeing 737 400 series, which does not have the Rolls-Royce engine, can the Minister quantify what that purchase will mean to the balance of payments?
Mr. Atkins : The hon. Gentleman will not be surprised to know that I cannot do that off the top of my head. However, I emphasise what I said earlier. The aerospace industry is a collaborative industry involving a wide variety of manufacturers, in a wide variety of aspects, whether they be airframe, engines or avionics. In those circumstances, although I was as disappointed as many other people that British Airways felt that it could not buy the A320, the reason behind its decision was that it wanted a range that was not available by the purchase of the A320. That is a commercial matter for a company which is already involved with a variety of British companies in other aspects of Boeing aircraft, not least Rolls-Royce engines on the rest of its fleet.
Mr. Grylls : Further to the good point made by my hon. Friend the Member for Tayside, North (Mr. Walker) about the organisation of Airbus, following the report by Sir Jeffrey Sterling, when will Airbus Industrie be turned into a company that actually has a balance--that would be a step forward--and when will it have a finance director? I understand that it does not have one at present.
Mr. Atkins : In the context of Airbus ministerial meetings, we are working hard to ensure that we can achieve the ideal to which my hon. Friends have drawn the attention of the House. I hope that we can achieve it sooner rather than later.
13. Mr. Michael : To ask the Chancellor of the Duchy of Lancaster what assessment he has made of the impact on the housing market, and on would-be first-time housebuyers in particular, of house price rises during 1988 ; and what proposals he has to regulate estate agents and others involved in that market as a consequence.
Mr. Forth : I am pleased to see that home ownership in 1988 has continued to increase and that the proportion of homes in owner-occupation is at record levels. However, I am aware that some prospective home buyers experienced difficulties during the very active market conditions in July of this year and that the operation of the property transfer systems remains a matter of some public concern. Therefore, I have been conducting a wide-ranging programme of discussions with the leading estate agency bodies and other interested parties to consider the practices of estate agents in the operation of the property transfer system and the possible scope for self-regulation by estate agents.
The Government's interim conclusions on the relevant issues were outlined in a recent speech given by my right hon. Friend the Chancellor of the Duchy of Lancaster. I have placed copies of the text of his speech in the House Library for reference.
Mr. Michael : Does the Minister accept that his tears are meaningless in the context of inactivity and that those who were hurt in the scramble of house prices earlier this year were new and would-be house buyers? Discussions with estate agents do nothing to bring in regulation of the market, which is what the Minister should do as part of the Government's acceptance of their responsibilities.
Mr. Forth : I am not entirely sure what the operation of estate agencies has to do with any difficulties that first-time buyers might have. It is instructive to note that the ratio of average income of first-time house buyers to the average price of houses has scarcely changed over the past 10 years. We should be careful before we rush to any conclusions about regulating a market which, generally speaking, has operated successfully and brought us to a position in which over two thirds of the people of this country are proud owner-occupiers.
Mr. Andrew MacKay : Does my hon. Friend agree that there is a silver lining to the high increases in house prices in the south-east, namely, that market forces are now working? As employers cannot find labour in the south-east, they are seriously considering moving to areas
Column 309where house prices are much lower and labour is more plentiful, which will obviously help employment throughout the country.
Mr. Forth : Yes, I agree with my hon. Friend. He and I know, but I doubt whether Opposition Members will ever learn, that the operation of the market overall and in the longer term is always to the benefit of the people of this country.