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Mr. Newton : I am grateful to my hon. Friend also for his example of the success of measures similar to those that we intend to press ahead in Sunderland. I have no doubt that it was knowledge of those experiences that led to the experience that I recounted, of being pressed very hard in Sunderland to ensure that nothing was done to impede the implementation and success of that enterprise zone.

Mr. Charles Kennedy (Ross, Cromarty and Skye) : Will the Minister be a little more forthcoming about his reference to the Commission? It became clear from his statement that the Sunderland enterprise zone, which required Commission consent, could be called into question. Is he saying that in all the to-ing and fro-ing with the Commission, it has said that, if the Department of Trade and Industry pursued the bids, it would pull the plug on the enterprise zone?

Mr. Newton : To be precise, when I saw Commissioner Brittan in Brussels, as part of our process of evaluating the bids and deciding what to do, it was made clear that the Commission could not rule out reopening the question of the enterprise zone, which it said it saw as related to the Sunderland package.

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Honda (Investment)

4.37 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins) : With permission, Mr. Speaker, I would like to make a statement on a major Japanese inward investment project in the motor sector by Honda. Since shortly after its return to full private ownership last year, Rover has been discussing with Honda how best to strengthen each other's position in Europe. One element in those discussions has been Honda's site at Swindon, which has already been developed for engine manufacture. I am sure that the whole House will join me in welcoming today's announcement that Honda is to extend that facility to full manufacture of cars for the European market. The new plant will add some 1,300 jobs to Honda's existing work force at Swindon, as well as providing additional opportunities for Rover Group's own Swindon facility, from which it will source pressings. The project will involve additional investment of around £300 million, and no financial assistance has been requested.

The plant is scheduled to commence manufacture at the end of 1991, with a limited volume of Honda cars. That will be in direct substitution for imports from Japan. One year later, a full range of production operations will start, with output rising rapidly to 100, 000 cars per annum in 1994 ; that will include cars built for Rover. Rover will continue to build cars for Honda at Longbridge. Honda has indicated its wish to achieve the maximum commercially feasible level of local content throughout the project and it is its firm intention to reach an 80 per cent. level within 18 months of the start of full commercial operations.

The companies have now decided to cement their partnership through significant minority cross-shareholdings between Honda's United Kingdom manufacturing company and Rover Group. They believe that that will have important commercial benefits for both companies. We see it as a vote of confidence by Honda in the United Kingdom and in the Rover Group, and a tribute to the efforts of Rover's management and work force in restructuring that company to meet the exacting standards of today's market place.

We are confident that today's announcement amounts to a further step in the renaissance of the United Kingdom motor industry, ensuring that it will play a significant role in the European market of the 1990s. I commend it to the House.

Mr. John Garrett (Norwich, South) : Does the Minister agree that we would not have has this modest statement but for the bitter pill of the preceding one? The Department of Trade and Industry has contributed absolutely nothing to the deal.

Will he confirm that the cross-shareholding between Rover and Honda UK is 20 per cent? Why has the Minister not told the House that that is what it is? How could that be fair to Rover? What valuation would that place on Rover?

Is the Minister aware that we welcome Japanese inward investment so long as it is complementary to our indigenous manufacturing capacity and not destructive of it? In that regard, what are the implications of the agreement for Rover Group's employment at Longbridge

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and at Cowley and, in particular, for the collaborative ventures that the two companies have already entered into on the R8, R9 and Rover 8000 model? Will those ventures still go ahead, or will they be overtaken by today's announcement? What does the Minister expect the impact to be on the output and employment prospects of other car manufacturers in Britain?

When the Minister speaks of 80 per cent. local content, I assume that he means European Economic Community content. Could he tell us what the British percentage content will be? Will it include such key components as transmission and electronics? Will research, development and design be carried out at Swindon or back at the headquarters in Japan?

What sign is there that France, Italy and Spain will be willing to remove their obstacles to Japanese car imports from Britain without further undertakings? What is his response to their argument that the British motor manufacture industry is becoming a Japanese offshore island?

In view of the so-called renaissance of the British motor industry to which the Minister referred, when does he expect us to have a trade surplus in motor vehicles? For how much longer will there be a British-owned motor manufacturing industry?

Mr. Atkins : It really is extraordinary that, when I come to the House and make a statement that is wonderful good news for the motor industry and for Swindon in particular, all that the hon. Member for Norwich, South (Mr. Garrett) can do is make snide remarks about colonisation--[ Hon. Members :-- "Answer the questions."] I will come to the questions that the hon. Gentleman posed. It is right and proper, however, that my hon. Friends and I should record our disgust at the way in which this particular announcement of good news has been approached by the Opposition.

I remind the House, in case the Opposition are unaware of it, that this announcement represents the third major inward investment coup in the motor sector of the United Kingdom. It follows on from Nissan and Toyota--now we have Honda. That means that about £1.8 billion of investment in the United Kingdom has created about 8,250 jobs directly, and at least as many again in the supply industry. All that the hon. Member for Norwich, South can do is complain about that. He calls that "modest". I do not call it modest ; I call it a substantial contribution to our economy and deservedly so. The hon. Gentleman asked a number of questions, first about the 80 per cent. content. The 80 per cent. content will be British content obviously, as that is what we committed ourselves to in the past. We anticipate that that will be the case again. [Interruption.] Built within the EEC. That 80 per cent. is deemed to be British, built within the EEC. The hon. Gentleman knows full well that that was the case with Nissan--80 per cent. was made in Britain within the EEC. [Interruption.] It is quite straightforward. There is no question or argument about it.

The hon. Gentleman asked about cross-shareholding. The details of the agreement are not yet available, as they are commercially confidential, but we anticipate that the hon. Gentleman's figure will probably be about right. It will be a cross-shareholding-- [Interruption.] The hon. Gentleman posed a question and I am seeking to answer

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it. He suggested that there was a cross- shareholding of 20 per cent. We do not know the final details yet, but that sort of figure will probably be the end result. I hope that the hon. Gentleman will accept that in the spirit that it is rendered. The terms of the agreement will obviously be confidential until such time as the companies concerned announce them. That is right and proper, since Rover Group is now in the private sector.

The hon. Gentleman asked about jobs at Longbridge. We understand from Rover Group that, as a result of the agreement, there is unlikely to be any effect upon jobs at Longbridge. The hon. Gentleman also asked about Cowley. He will be aware that, within the corporate plan of Rover Group, it has said that Cowley is one of those areas that is being looked at. Nothing changes as a result of the agreement that is being negotiated between Honda and Rover Group.

I believe that I have covered the questions asked by the hon. Gentleman. I hope that he will appreciate that my hon. Friends will take an entirely different view from his of this excellent news.

Mr. Norman Tebbit (Chingford) : Will my hon. Friend agree that it was virtually inconceivable before 1979 that Great Britain would have been chosen by what is probably the world's leading motor manufacturing company as the site for its investment in the EEC? I might add that it also would have been inconceivable before we joined the EEC. Is my hon. Friend not as shocked as I am that the sole reaction from Opposition Members is to try to show that, in some way, it is discreditable that a foreign company should be investing large sums in British industry and bringing jobs to Britain? I find that deplorable. Does my hon. Friend share that feeling?

Mr. Atkins : My right hon. Friend, speaking with the authority of his former position within the Department of Trade and Industry, knows exactly how important this deal is in relation to the past, present and future of the motor industry. I suspect, as he has pointed out, that many people within the country, particularly in the area of Swindon where the constituency of my hon. Friend the Member for Swindon (Mr. Coombs) is so beneficially affected, will take note of the churlish attitude of the Opposition in the way in which they have responded to the excellent news.

Mr. Andrew Smith (Oxford, East) : The Minister called this good news, but is it good news for Cowley? Is it not disgraceful that his statement and the company handout at the Cowley plant this afternoon made no reference to Cowley? Does he not understand that Cowley workers will ask the same question as I do--what implications does the agreement hold for Cowley? What is its future in this? Why put the investment and plant 25 miles down the road at Swindon when there is a perfectly good plant at Cowley with an excellent record of productivity, quality and industrial relations?

Does the company not owe it to the workers at Cowley and the Government to spell out what the agreement means to those workers? Will the 100,000 vehicles be in addition to Rover production, in which case surely they will be competing with them, or is the reality that those vehicles will displace production from other centres, most notably Cowley? Unless I hear some contradictory statement from the Minister, the conclusion at Cowley will be that his doom-laden words spell its death sentence.

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Mr. Atkins : The hon. Gentleman makes comments about Cowley as he is entitled to do as it falls within his constituency, but he will recognise that this agreement has been carried out between two independent companies about what they see is best for their future. It is something for them to decide. We have been party to the agreement of intent between Honda and the Rover Group. That is why we are involved. There is no link between what is proposed here and the future of Cowley south.

The hon. Gentleman is being mischievous. I do not think that he is serving his constituents' interests by taking the attitude that he does, but perhaps it is because his attitude towards cars is summed up by his question to my right hon. Friend the Secretary of State for Transport earlier this week, when he suggested that the relentless increase in car use was something to be deplored. I find that an astonishing remark to come from that hon. Gentleman.

Mr. Andrew Smith : What I said, Mr. Speaker, wasthat--

Mr. Speaker : Order.

Mr. Simon Coombs (Swindon) : Is my hon. Friend aware that Honda is already a valued member of the industrial community of Swindon and that today's news will be warmly welcomed in the town? Will he pay tribute to the current work force of Honda in Swindon and the work force of the Rover Group plant at Stratton in Swindon? It is clearly as a result of their efforts that the company has made the decision which my hon. Friend has announced this afternoon.

Will my hon. Friend make representations to his other hon. Friends in the Departments of Transport, Employment and Environment so that today's good news is not spoiled by difficulties of transport infrastructure--because clearly there will be major movements of goods in and out of the plant in the future--the provision of visas for foreign nationals whose jobs will bring them to Honda in the future and of the need to train the work force in a town with an unemployment rate of less than 3.5 per cent.? Will he speak to his hon. Friends at the Department of Environment, because we do not need planning holdups when we try to put this good news into practice? Can my hon. Friend confirm that 80 per cent. local content must, under the rules of the European Commission, be European local content--

Mr. Bryan Gould (Dagenham) : He said British.

Mr. Coombs : --and will he make sure that as much as possible of that local sourcing will be United Kingdom-based?

Mr. Atkins : My hon. Friend, as always, speaks strongly for his constituents' interests, and he is right to draw attention to the fact that it is largely because of the work, commitment and enthusiasm of his constituents and those working within the Swindon operation that Honda has decided to expand in this area. I shall certainly pursue, as I know he will, the points he made about my hon. Friends in other Departments, who have interests in relation to Swindon's infrastructure.

As for local content, I shall clarify the position so that the House knows exactly what it is. I shall state it as categorically as I can. The 80 per cent. local content

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required by our agreement is within the EEC, but will be British-based. We shall encourage British component companies and Honda to utilise--

Mr. Gould : That is not what the hon. Gentleman said.

Mr. Atkins : That is exactly what I said.

Mr. Gould : No, it is not.

Mr. Atkins : In which case, I apologise if there has been a misunderstanding. If it was on my part, as I made the comment, I shall withdraw it unreservedly. It is crucial to make clear that it is 80 per cent. EEC content and we shall endeavour to ensure that that 80 per cent. will be British. In view of what the hon. Member for Norwich, South (Mr. Garrett) said about the colonisation of the motor industry by Japan, it is worth putting on the record the fact that it is Honda's intention, as it has been that of many other companies investing in the motor industry in this country, that that content shall be as British as possible.

Mr. Bob Cryer (Bradford, South) : The Opposition always welcome jobs in manufacturing, in view of the 2 million jobs which have gone since 1979 under the present Tory Government. Will there be a continuing and developing design and development input from the United Kingdom into this plant, or has the hon. Gentleman merely announced a screwdriver assembly job? I am pleased that the Minister has clarified the confusion and stated that the local content means EEC-wide, not United Kingdom-based.

Since the hon. Gentleman intends to help United Kingdom manufacturers, how will he help a firm such as Hepworth and Grandage, the biggest piston manufacturer in the United Kingdom, to ensure that it has an opportunity to supply pistons to this new assembly plant and maintain and improve its excellent production capacity? Are the Japanese able to invest heavily in design and development and so be extremely successful in industrial manufacturing because they put their investment into goods and services which people want, instead of investing, as this country does, in nuclear weapons and defence expenditure?

Mr. Atkins : The hon. Gentleman, as usual, has covered a wide variety of questions in his remarks. Research and development is a matter for the companies to decide. They have indicated that they will manufacture cars in Britain which will be exported abroad or used within the domestic market. We have no indications, and would not expect any, to suggest that the company concerned, along with the other two major manufacturers from Japan which invest in this country--Toyota and Nissan--will do the same. The decisions must be made by the companies, which we anticipate will be as successful now as in the past.

Sir Hal Miller (Bromsgrove) : Does my hon. Friend agree that this project should be warmly welcomed for the contribution it will make to our balance of payments deficit, running at £6 billion per annum ; that, with this investment, we can once again look forward to building 2 million cars a year in this country ; and that the cross-shareholdings represent an outside investment in the Rover Group which is a tribute to what that company has achieved and an assurance that Rover will continue to make cars for Honda? What better endorsement could we wish for?

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Mr. Atkins : My hon. Friend, with his considerable authority as chairman of the all-party committee, sums up the matter succinctly. I can do no better than add my support to that.

Mr. John Hughes (Coventry, North-East) : How can the Minister fail to understand the mistrust of the House when it is aware that deals have been done--in fact, cooked--to get over the cash flow problems of British Aerospace? Will this deal allow Honda to exploit the research and design centre at Coventry? Will it pose a threat to jobs at Coventry, as it has to other companies such as Royal Enfield, which lost 1,200 jobs from a similar deal?

Mr. Atkins : I think that the hon. Gentleman is missing the point. This is an investment for the motor industry ; as he has heard from my statement, the matter is one between Honda and the Rover Group, and does not involve anyone else other than, to a limited extent, British Aerospace, which owns Rover Group. As the hon. Gentleman should be aware, this matter relates specifically to the motor industry.

Mr. Robert Hayward (Kingswood) : Does not my hon. Friend agree that the greater threat to Cowley south stems, as he indicated, from a quote in column 673 of last Monday's Hansard, in which the hon. Member for Oxford, East (Mr. Smith) said :

"Does he accept that the way to tackle the"--[ Official Report, 10 July 1989 ; Vol. 156, c. 673]--

Mr. Andrew Smith : On a point of order, Mr. Speaker. This does not relate to the statement.

Mr. Speaker : I hope that we can stick to the subject of the statement, not go on to other issues.

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Mr. Hayward : Is there any threat to any other part of the Rover plant, including Oxford and Longbridge, as a result of my hon. Friend's statement?

Mr. Atkins : Largely, these matters are for those at the Rover Group and Honda. Broadly speaking, we do not anticipate that there will be any deleterious effects on those parts of the Rover Group, as presently constituted.

Mr. Tam Dalyell (Linlithgow) : Does the Minister's phrase "local content" include transmission and electronics?

Mr. Atkins : "Local content" refers to any aspect of components which go into a motor vehicle.

Mr. Tim Smith (Beaconsfield) : Can my hon. Friend confirm that, between 1974 and 1979, the proportion of motor cars imported into the United Kingdom doubled, since when the proportion has remained static, and that, with the announcement of these three major investments by the Japanese, there is now every prospect of reducing that proportion? Is not today's announcement the best possible news for UK Ltd.?

Mr. Atkins : Yes, Sir.


Mr. Speaker : With the leave of the House, I will put together the two motions relating to statutory instruments.


That the Black Country Development Corporation (Vesting of Land) (British Railways Board) Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.

That the Black Country Development Corporation (Vesting of Land) (Central Electricity Generating Board) Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. Alan Howarth.]

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Points of Order

4.58 pm

Mr. D. N. Campbell-Savours (Workington) : On a point of order, Mr. Speaker. You were in the Chair today when a number of us were trying to catch your eye during questions to the Leader of the House. Is it not time that the Government recognised that if you, in your wisdom, feel that you must curtail our rights as Back Benchers to ask the Leader of the House about matters relating to next week's business the Government should curtail their practice of making statements on Thursday? [ Hon. Members :-- "Hear, hear."] Our rights are being directly interfered with.

A number of my colleagues were called--I accept that you work these matters out scrupulously fairly--and a number of people wanted to raise issues today relating to next week's business, particularly as we are approaching the end of the Session. We were prevented from doing so because you felt the Government had to be given time for this statement. I understand that the next business is important, but all business which comes on to the Floor of the House of Commons is important. It is quite wrong that we should be prevented from raising issues. A number of my colleagues were here, and I know that they are all equally concerned.

Mr. James Lamond (Oldham, Central and Royton) : Further to that point of order, Mr. Speaker--

Mr. Speaker : Well, it does delay matters.

Mr. Lamond : This offence is compounded by the fact that the second statement concerned a matter with which the Government have told us they had nothing to do. Good news or not, one wonders whether it was necessary to make a statement of that length on a Thursday about a matter in which the Government are not concerned.

Mr. Max Madden (Bradford, West) : Further to that point of order--

Mr. Bob Cryer (Bradford, South) : Further to that point of order--

Mr. Speaker : Order. Perhaps it would be easier if I dealt with this matter. I am the first to appreciate the importance of business questions because they enable hon. Members who have not been called during the week to put a question to the Leader of the House. However, I also have to judge business questions against business which will come before the House later. The whole House knows that today we have an important debate before us, to which a great many

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right hon. and hon. Members want to make a contribution. I am sorry that I had to curtail business questions, but I did manage to call the hon. Member for Bradford, South (Mr. Cryer) during the statement, and I also called the hon. Member for Bradford, West (Mr. Madden) during business questions--so what is the validity of this point of order?

Mr. Cryer : I am grateful for the opportunity to raise a point of order--not because I was not called, but because several other hon. Members were not.

I suggest that you, Mr. Speaker, suggest to the Government when they approach you about statements that they should organise them on days other than Thursday. Of course, sometimes we want statements and the Government are rather parsimonious about making them, which makes us suspicious of their reasons for making two on a Thursday. As you know, every Thursday 50 or 60 hon. Members seek to catch you eye to raise matters of interest. I know that you realise that business questions are an important tradition and an opportunity to raise a matter on the Floor of the House, so I hope that you will bear that in mind when the Government apply to make a statement.

Mr. Madden : Further to that point of order, Mr. Speaker. In addition to what my hon. Friends have said, I suggest with the greatest respect that it is a dangerous innovation for you to limit business questions. I was grateful to be called, but if the Government believe that you will adopt this line, that will encourage them to table a number of statements which, in effect, will enable them to veto business questions. That would veto the rights of Back Benchers and the time available to them in a dangerous and unacceptable way.

Mr. Bowen Wells (Hertford and Stortford) : On a point of order, Mr. Speaker.

Mr. Speaker : Does it help? The hon. Member was also called, and he is also hoping to be called in the next debate.

Mr. Wells : I wanted to be helpful, Mr. Speaker. I thought that you would like me to observe that those who complain most are those whom you most frequently call.

Mr. Speaker : That is helpful.

I say to the hon. Member for Bradford, West (Mr. Madden) that it is certainly not an innovation to curtail business questions. It is probably true that I have allowed them to go on rather longer during my speakership than did some of my predecessors, for the very reasons that hon. Members will appreciate, but that cannot happen every time. I am sorry that I had to curtail them today.

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China and Hong Kong

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Heathcoat-Amory.]

Mr. Speaker : Before I call on the Foreign Secretary, I must tell the House again that 36 right hon. and hon. Members wish to participate in the debate. Sadly, because of the late start, they will not all be called. I intend to limit speeches between 7 pm and 9 pm to 10 minutes, and if those who are called before 7 will bear that limit in mind, many more of their colleagues will be able to participate.

5.4 pm

The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe) : Mr. Speaker, last Wednesday I reported to the Houseon my visit to Hong Kong. The exchanges which followed that statement reflected the very deep concern felt by all hon. Members about the future of the territory in the wake of the recent horrific events in Peking. Very important questions are at issue here, and it is right that they should be fully aired in this House. The Government accordingly welcome this opportunity for further debate.

The House has before it the report on Hong Kong of the Select Committee on Foreign Affairs. I should like to take this opportunity to thank the Committee for its report. The Government's formal response will issue in due course. The House will share my view that that report addresses our concerns, and those of the people of Hong Kong, seriously and comprehensively.

We are all conscious of Britain's historic responsibility for Hong Kong's future, and of our obligation to act with vigour and determination in fulfilment of that responsibility. We have never sought to shirk that obligation. Indeed, we were guided by it when first we took the decision to enter into negotiations with the Chinese about the future of Hong Kong.

By treaty, 92 per cent. of the area of Hong Kong reverts to China in 1997. The remaining 8 per cent. could never be viable on its own. After 18 months of tough negotiation, it became clear that the Chinese Government were not willing to contemplate the continuation of British administration beyond 1996, so we set ourselves the task--with the support of the people of Hong Kong--of securing alternative arrangements which would maintain the stability and prosperity of Hong Kong and the freedoms and way of life of its people.

The agreement that we reached--the Joint Declaration--was widely recognised at the time, in Hong Kong, in this House and around the world, as the very best that could be arrived at in the circumstances. It was not an agreement imposed on Hong Kong, but one which the Executive and Legislative Councils were each able firmly to commend to the people of the territory. Under it, Hong Kong will have its own Government comprising Hong Kong people, not people brought in from China ; the Socialist system and Socialist policies will not be imposed on Hong Kong from China ; nor will Hong Kong pay taxes to China. Hong Kong's capitalist system and its way of life will continue, with all its human rights and freedoms, its laws and its legal system, its own freely convertible currency, its financial markets, its free port. None of that will change.

Hong Kong will conduct its own relations with other countries on matters such as trade, culture and civil aviation, and be able to conclude agreements on those

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subjects. It will continue to participate in international organisations as it does today. Entry into Hong Kong from China will continue to be regulated as at present, so that Hong Kong will not be flooded by immigrants from the mainland. By contrast, Hong Kong people will remain free to come and go as they please. Public order will be the responsibility of the Government of Hong Kong, as it is today. It is plainly provided that any Chinese military forces stationed in Hong Kong will not interfere in internal matters. I shall have more to say about that in a moment.

The Joint Declaration was--and is--a good agreement, and the people of Hong Kong continue so to regard it. That was confirmed by the Office of the Members of the Executive and Legislative Councils in the statement which it circulated to Members of this House on 16 June. Indeed it described it as a "triumph of diplomacy". The declaration is accepted on all sides as the basis for all that now needs to be done to rebuild confidence in Hong Kong and, in particular, to strengthen the Basic Law in which the provisions of the declaration are to be given legal effect.

I do not in any way seek to minimise the anxieties of Hong Kong people about the future. It was precisely to address those anxieties honestly and directly that I took the earliest possible opportunity to visit the territory after the events of 3 and 4 June. The Joint Declaration is, as I said during that visit, a text for the bad times as well as for the good. Events in China have not invalidated it, nor altered the assumptions on which it was based--on the contrary. What is lacking today, and what must be restored, is confidence--and confidence that China will honour the agreement after 1997. That confidence has been gravely shaken. It certainly cannot be restored overnight. It will take time and effort. That is why China's attitude in the coming months and years will be of such crucial importance. China has reiterated her own commitment to the Joint Declaration, and we welcome that, but more--much more--will be needed to regain the trust of people in Hong Kong. There must be concrete steps to provide reassurance to the people of Hong Kong--steps that will need to be continued and reinforced over the months and years ahead. Once again, there are signs that the Chinese Government realise this. They must now act accordingly.

Mr. Bowen Wells (Hertford and Stortford) : Can my right hon. and learned Friend confirm that the Joint Declaration, and the treaty registered by it in the United Nations, for the first time gives a treaty base--recognised and signed by China--for the future of Hong Kong?

Sir Geoffrey Howe : My hon. Friend is absolutely right, but I hope that he and the House will forgive me if I do not give way as I customarily do. I have had the opportunity to answer questions on this matter for three and a half hours in the House, and to answer my hon. Friend in the Select Committee for about six hours. If I am allowed to continue my speech I shall come to what the Select Committee said.

As we have always recognised, and as the Select Committee said in terms,

"it is not possible to provide absolute guarantees for Hong Kong's future".

One feature has always been identified as providing some real assurance in that respect. That is the natural self-interest of China itself. It plainly must be in the interests of the Chinese Government--any Chinese

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