(By Order) Order for consideration, as amended, read.
To be considered on Monday 6 November.
[Lords] (By Order)
Order for Second Reading read.
To be read a second time on Monday 6 November.
Miss Lestor : Is the hon. Gentleman aware that there is great concern in the Caribbean about the effects of 1992 on bananas, sugar and other commodities? As 1992 comes closer every day, would it not be a good idea for a Minister to visit the Caribbean to discuss some of these matters face to face so that people there know where they stand?
Mr. Redwood : I should be delighted to be invited to visit the Caribbean in due course. My hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs will be visiting some of the islands next week, and my right hon. Friend the Minister for Overseas Development will be leading a delegation to the Miami conference at the end of the month, where they will discuss a number of issues with other countries.
On the hon. Lady's spcific point, the British position is that the Lome negotiations should continue so that a satisfactory outcome can be achieved for the banana producers in the ACP regions, and that will be the Government's prime aim in our conversations with our EC partners. We wish to ensure that after 1992 those interests are safeguarded in the wider European market.
Ms. Abbott : Is the Minister aware that the economies of many of those countries, especially in the eastern Caribbean, will face collapse if there is not a constructive and successful end to the negotiations? Will the Minister
Column 302give an assurance that the Government are committed to ensuring that, come 1992, those islands' interests will be absolutely safeguarded?
Mr. Redwood : I give the hon. Lady the assurance that the British Government will do all in our power to put the case of the islands forcefully. We are well aware of the importance of bananas and other such commodities to their economies. There are already many areas in which the Government are offering help, and we give a great deal of aid to the Caribbean. The hon. Lady may wish to know that we give the highest per capita aid for any region in the world to the Caribbean area because of our strong interest in and concern for the Caribbean islands.
2. Mr. Andrew F. Bennett : To ask the Secretary of State for Trade and Industry what discussions he has had with United Kingdom defence manufacturers about developing alternative non-military products, in the light of any possible reduction in demand for weapons.
Mr. Bennett : Does the Minister accept that many of our traditional industries have suffered because they have failed to recognise changing markets in the world? Is it not clear that if the east-west disarmament talks are successful, and there is also a reduction in regional conflict, the world's arms markets will be reduced? Does he agree that in those circumstances, it is only commonsense for the Government to discuss with arms manufacturers ways in which they can look for new products and new markets so as to secure the jobs of those who work for them without continuing to be purveyors of death to the world?
Mr. Hogg : The hon. Gentleman is, perhaps, slightly less than candid with the House. The prime motive behind his question is his long-standing commitment to slash defence expenditure. For example, the House might like to know that in July 1983, long before Mr. Gorbachev began his present policies, the hon. Gentleman was seen to be voting against the Defence Estimates. His question exposes the Labour party's long-standing hostility to a credible defence policy.
Sir Peter Emery : Does my hon. Friend realise that nothing in his reply applies to me? As the science and technology committee of the North Atlantic Assembly travelled across Russia in September, it discovered that there was a major move within the Russian nation to reverse the current ratio of 60 per cent. scientific and technological research to 40 per cent. civilian. Is my hon. Friend aware that one of the major difficulties in achieving that is getting industry to bring it about in a five to seven- year period? Would not discussions along the lines suggested by the hon. Member for Denton and Reddish (Mr. Bennett) therefore have quite a degree of success for the benefit of our industry, irrespective of the defence aspect?
Mr. Hogg : My hon. Friend is a great deal more persuasive than the hon. Member for Denton and Reddish (Mr. Bennett) because his credentials are so much better. The plain truth is, however, that it is for the defence companies to assess where their markets lie. We are seeing
Column 303an encouraging move in the direction outlined by my hon. Friend--by Racal and Marconi, for example--but we are not in the business of driving people where they do not want to go.
Dr. Bray : The Minister has been giving singularly stupid replies. Far from making good the cuts in defence research and development that they have made over the past three years--amounting, in real terms, to some 10 per cent.--the Government have added to the problem by cutting their support of civil industrial innovation by 11 per cent. Furthermore, research and development expenditure in 1988-89 was some £40 million below what the estimate provided, so the Government have even cut back on their own plans of just one year before.
Is the Minister not aware that all of that is having disastrous effects, particularly on the profit expectations of the electronics industry? No fewer than five defence contractors, including Ferranti, have been up for sale. Does the Minister not want any British manufacturing industry to survive?
Mr. Hogg : That is a singularly silly question, coming from the hon. Gentleman. He must find his party's defence policy extremely disquieting. The Labour party conference committed itself to defence cuts of approxiamately £5 billion, which means a reduction of some 30 per cent. in conventional defence spending. Just think of the unemployment consequences of that!
Mr. Devlin : Does my hon. Friend agree that the many defence contractors in the north of England will be extremely wary of any Government who tell them which products they should be making and which they should be getting out of? Does he agree that defence manufacturers throughout the north and, indeed, the whole country will be very anxious about the future if Labour ever came to power and cut defence by £5 billion?
Mr. Hogg : Indeed, and I can be more specific than my hon. Friend. I have a list of six substantial defence contractors in the constituency of the hon. Member for Denton and Reddish--Reemploy Limited, Thorn EMI, Oldham Crompton Batteries, Rotunda Limited, Robert McArd Limited and Denton Containers, to mention only the largest. I imagine that employees in those companies will be extremely alarmed by the views of the hon. Member who purports to represent them.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Nicholas Ridley) : I intend to maintain close contact with all my European Community counterparts, and a whole range of matters will be discussed.
Mr. Michie : When the Secretary of State meets his EC counterparts, will he be communicating the views of the Prime Minister or those of the deputy Prime Minister on Britain's entry into the exchange rate mechanism of the European monetary system?
Mr. Neil Hamilton : I do not think that my right hon. Friend has any counterpart in the European Community--he is unique. [ Hon. Members :-- "Hear, hear."] I mean that in a nice way. When my right hon. Friend meets his colleagues in the European Community, does he discuss with them the Labour party's plans for an industrial investment bank to make dud investments with unlimited supplies of subsidy from taxpayers in this country, and does he think that those plans would meet with the European Commission's approval?
Mr. Ridley : As always, my hon. Friend is right in all that he has said. The industrial development bank proposed by the Labour party would, I am convinced, be entirely against the spirit of the single market and the state aid rules of the Community. Indeed, now that we have an efficient industry which is not subsidised, one of the greatest disabilites of British industry is caused by the behaviour of European countries which continue to subsidise their industries, distorting the competition and costing British firms jobs when they do not win contracts. The policy of competitive subsidisation to which the Labour party tends to seek to return would spell absolute disaster for the health of British industry.
Mr. Ron Brown : Although, for obvious reasons, I disagree with the EEC, will the Secretary of State make it clear to his counterparts in Europe that he and the Government believe that it is in the public interest that public ownership of Ferranti should be supported, preferably with workers' control? Is not that an extension of democracy for which he and others must argue?
Mr. Ridley : As I said in reply to my hon. Friend the Member for Tatton (Mr. Hamilton), nationalised industries in competitive environments which make losses and then recoup them from the taxpayer are a great device for avoiding fair competition. That device, which the hon. Gentleman advocates, is costing us jobs and orders and is damaging the British economy.
Mr. Grylls : Will my right hon. Friend take every opportunity to reinforce the message to our EEC partners that the British Government take a dim view of the social charter put forward by the EEC, that British business on the whole regards it as a disaster, that Britain has created 2.5 million additional jobs in the past 10 years by deregulating and operating free markets and that we do not intend to reverse that trend?
Mr. Ridley : I entirely agree with my hon. Friend, but I could not do nearly as well as he and my right hon. Friend the Secretary of State for Employment did when they attended the relevant council. My right hon. Friend's rebuttal of the principles of the social charter won the argument but, I am afraid, not the vote.
Mr. Gould : Where does the Secretary of State stand on the vexed question of our membership of the exchange rate mechanism? I hope that he will not hide his light under a bushel. Why can he not tell us whether he agrees with the Prime Minister that, "You cannot buck the markets" or whether he supports the view of the deputy Prime Minister, the Foreign Secretary, the former Chancellor of
Column 305the Exchequer and the CBI that we should join straight away? Could it be that, as on so many other issues, the Secretary of State for Trade and Industry shies away from responsibility and has no view whatever?
Mr. Gow : Will my right hon. Friend cause to be translated into many languages the transcript of our right hon. Friend the Prime Minister's interview with Mr. Brian Walden on Sunday? Will he then cause it to be circulated to everyone in Europe, particularly those involved in the ERM?
Mr. Ridley : I shall be happy to bring that suggestion to my right hon. Friend's attention, but I must point out that I have some responsibility in the matter. Until broadcasting is liberalised in the Community, the transcript may not reach all the parts thereof.
The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth) : Following the decision that responsibility for the statistical series with which the Department of Trade and Industry was previously concerned should transfer to the Central Statistical Office, British Business magazine lost much of its market and was no longer viable.
I understand that the CSO is about to launch a series of business bulletins containing most of the new data previously published in British Business.
Mr. Roberts : Will the Minister admit that British Business, which was an information exercise by the Department of Trade and Industry, was cancelled as part of the Secretary of State's policy to turn the Department into a Trappist order? It is similar to the Secretary of State being barred from the Conservative party conference so that he could not make a speech about the £20 billion trade deficit. Will the Minister give an undertaking on behalf of himself and the Secretary of State that when the Chancellor increases taxes, which would be against the policies of the Secretary of State, he and his hon. Friend will both resign?
Mr. Forth : My right hon. Friend the Secretary of State may be saintly, but I hope that he will not become a Trappist. The hon. Member for Bootle (Mr. Roberts) did not listen to my answer, which was very straightforward. There has been a perfectly sensible reordering of activities within Government, with the result that figures which were previously available through the vehicle of British Business will now be available in an alternative way. There is nothing particularly sinister or difficult about that.
Mr. Marlow : How would British business, which has been publicised quite frequently by the publication British Business, be affected by the social charter or, as it has been called, the strikers' charter which some Greek lady is trying to impose on Britain?
Mr. Forth : I share my hon. Friend's concern, but I believe that our right hon. Friend the Secretary of State for Employment has done a magnificent job so far in drawing to the attention of the people of this country and of Europe the patent shortcomings of the social charter. I am sure that all Conservative Members will continue to do that so that people may be clear in their minds that the kind of principles enshrined in the social charter will damage employment throughout the European Community and also the Community's competitive trading position in the world. That is why we are against it and that is why we shall continue to be against it.
Mr. Austin Mitchell : Putting the Department of Trade and Industry in the charge of the hon. Gentleman, his right hon. Friend the Secretary of State and the collection of freebooting free-marketeers sitting alongside him at a time when all our competitor countries are engaged in close collusion between industry and government is an act equivalent to putting King Herod in charge of a day nursery. Is not the particular act of vandalism in closing down British Business symptomatic of an approach which will send British industry naked into the Euro/chamber?
Mr. Forth : Even allowing for the hon. Gentleman's tendency to hyperbole, that was a bit over the top. We are talking about a publication which, excellent though it was, was attracting only about 5,000 subscribers towards the end of its life.
Mr. Forth : One could hardly say that that made it a major British institution. Nor, however excellent it may have been, was it the main or only vehicle of communication between the Government and business. I can reassure the hon. Gentleman that the figures which created most interest in the business community will be available in very much the same format through Central Statistical Office publications which will fully replace what is no longer available through British Business.
5. Mr. Stern : To ask the Secretary of State for Trade and Industry if he has received any representations on the creation of near monopolies resulting from the takeover and break-up of United Kingdom industrial groups by Bermuda-based companies.
Mr. Redwood : I presume that this is a reference to the bid by Pembridge Investments, a Bermuda-registered company, for DRG. I and the Director General of Fair Trading have received various representations from hon. Members and others about it. The director general is still considering the bid before giving his advice.
Mr. Stern : My hon. Friend's assumption is quite correct. Does he not agree that there is room for concern when the only basis for a bid is the subsequent break-up of a group, with the resulting sale forming virtually the creation of a monopoly of several parts of the group? If that is the case, will my hon. Friend reassure me that the potential monopoly is taken into account while the bid is continuing rather than waiting until he is presented with a fait accompli?
Column 307the matter and he is right to make representations in any way possible. Were there to be a subsequent sale of an asset after a bid had been successful, that itself would be subject to investigation by the competition authorities and to any advice that the director general might see fit to give my right hon. Friend. I cannot give any further information about the current bid. My right hon. Friend will make his judgment on the basis of all the representations and submissions in the light of the director general's advice.
Ms. Primarolo : Will the Minister declare his opposition to this type of junk bond funding of the destruction of British companies, of which DRG is the latest victim? He is quite right to say that in Bristol the takeover of that company will result in the loss of thousands of jobs in the engineering industry--not just in DRG but in associated companies. Is it not time for the Government to step in and say once and for all that junk bonds and high leverage bids against thriving British companies are not to be permitted?
Mr. Redwood : Junkiness is in the eye of the beholder. The Government believe that these decisions are best made by shareholders and bankers, who have to make important judgments on behalf of the companies in which they are investors or which they are financing. The Government's competition and monopoly policy is clear and consistent. It was last stated in the blue paper on mergers, and was restated subsequently by my right hon. Friend the Secretary of State in a speech and by myself in a speech to the House on the BAT-Hoylake bid. I recommend that the hon. Lady reads the statement of Government policy, which is clear and gives shareholders and bankers the powers and opportunities that they need to make the right decisions on behalf of the companies in which they invest.
Mr. Barry Field : My hon. Friend will be aware that Sea Containers is a Bermuda-registered company. It announced today that it will be selling its Isle of Wight ferries. My hon. Friend will be further aware that in May I wrote to the then Chancellor of the Duchy of Lancaster my right hon. Friend the Member for Braintree (Mr. Newton) about a possible bid for the Isle of Wight ferries. I regard it as a considerable injustice, as do my constituents, that British Rail's board of management sold those ferries in the only privatisation in which employees were not allowed to purchase shares in their own company--an incredible reward for many years of loyal strike-free service to the Isle of Wight. Will my hon. Friend keep a weather eye on the sale of the Isle of Wight ferry routes, which are so essential to us, to ensure that this time a United Kingdom-registered company can purchase them and that the employees will have the opportunity of sharing in the wealth that they create?
Mr. Redwood : Like my hon. Friend the Member for Bristol, North-West (Mr. Stern), my hon. Friend the Member for the Isle of Wight (Mr. Field) is a good constituency Member of Parliament. I know that he has taken a strong interest in the Isle of Wight ferry service because he rightly wants a first-class service for his constituents. I understand that officials at the Office of Fair Trading are making preliminary inquiries into ferry services for the Isle of Wight under the competition legislation. Anyone who has views on the subject should write to the director general, as I believe that my hon.
Column 308Friend has done. Any possible buyer of the ferry services, which according to press reports today are on the market, will be considered in the usual way by the competition authorities, who will make their advice available to my right hon. Friend the Secretary of State.
Mr. Stott : Is the Minister saying that the Government do not have a view about high leverage junk bond bids against succesful British companies? He will be aware of the problem that this method has caused BAT Industries recently. The leveraged bid for DRG is causing the problems referred to by my hon. Friend the Member for Bristol, South (Ms. Primarolo). Is he saying that the Government do not have a view, when successful British companies are being attacked by companies formed offshore in Bermuda with the sole purpose of breaking up British companies and making money for individuals rather than shareholders?
Mr. Redwood : The hon. Gentleman cannot have listened to my previous reply. The Government have an extremely clear mergers policy, which has been stated on several occasions, and I recommend that the hon. Gentleman reads it. The aim of merger policy is to ensure that the public interest is not damaged. Public and private interests most usually diverge, but not uniquely, where competition is adversely affected by the proposed merger. All considerations can be taken into account by the director general, who gives his advice on any particular bid in the usual way. The question whether people should borrow to buy things is largely a matter for them, for shareholders and for bankers. Where will the hon. Gentleman stop in his investigations into people borrowing to buy things? Does he believe, for instance, that borrowing to buy certain kinds of houses is wrong, which seemed to be what the hon. Member for Dagenham (Mr. Gould) was saying in the Walden interview?
Mr. Nicholas Winterton : Is my hon. Friend saying that there is no national interest in this? How does he define national or public interest? Is it correct for people based overseas, who can remit profits overseas, to take over and break up British companies which are of great value to the economy merely to make money for a few people and not for the general public, bearing in mind that most such companies are owned by institutions rather than the public in general? We must have a national industrial strategy.
Mr. Redwood : My hon. Friend should take note that the central point of Government policy is to allow shareholders to decide in most cases. They are the proper people to make those decisions and there is no overwhelming evidence to suggest that they are bad at making them. Shareholders should be allowed to make up their own minds. By all means if there are major matters of importance, draw them to the attention of shareholders, the company and the institutions concerned, perhaps through the press and in the normal way. In most cases it is right that people should be free to buy or to sell their assets as they see fit. The public interest is defined in various ways, depending upon the situation, and the director general will give the necessary advice to my right hon. Friend.
Several Hon. Members rose --
Mr. Butler : Does my hon. Friend agree that to supply a good, well- trained engineering profession for the future we need to raise the status of that profession perhaps to the same level as it is on the continent?
Mr. Hogg : Yes, I do. My hon. Friend has raised a serious and important issue, not least because engineers are tending to move out of that profession into other occupations. Having read the 1989 survey by the Engineering Council, I am glad to say that I see considerable grounds for optimism, partly in terms of increased remuneration for engineers, partly because of satisfaction with the profession and because of the increasing number of chief executives who are qualified engineers.
Mr. Grocott : Can the Minister confirm that, under this Government, the status and image of engineering, notably in the west midlands, has become associated with building rubble and empty sites where there were previously thriving engineering concerns? Can the Minister give the latest Government estimate of when the number of engineering apprenticeships will reach the level that it was when the Government came to office?
8. Mr. Cran : To ask the Secretary of State for Trade and Industry what plans he has to implement the recommendations put forward in the Kemp report on status option for the Export Credits Guarantee Department.
Mr. Ridley : The interdepartmental working group of officials formed to consult interested parties and to advise Ministers on the Kemp review of status options for ECGD has just submitted its report to me. No decisions have yet been taken.
Mr. Cran : Would my right hon. Friend like to take this opportunity to reject the doomwatch notions of those who suggest that the Government are merely using this review to cut dramatically finance for projects business on the premise that only large companies benefit from it? Does my right hon. Friend agree that this is bunkum, particularly against the background of a recent northern engineering industries' report which suggests that a recent Indian order benefited 2,600 small United Kingdom companies?
Mr. Hoyle : Will the right hon. Gentleman take into account the fact that the Kemp report asks the Government to take a large-scale risk while introducing private investment into the insurance by ECGD of safe countries? Surely that must be wrong and surely state agencies should be allowed more flexibility to operate so that they can take large risks and benefit from taking the easier option as well?
Mr. Ridley : The Export Credits Guarantee Department does two things. There is the projects group and the insurance services group. It is suggested by Kemp that they should have different futures and that they should go in different directions. It is important to discuss one or the other of those suggestions but we cannot discuss them both at once.
Mr. Page : Does my right hon. Friend accept that the best support he can give British industry on overseas projects and sales is to create a worldwide international level playing field? Will my right hon. Friend work towards that goal? While doing so, will he support the present ECGD aid and trade provisions that are consistent with competition until he achieves that goal of fair international competition?
Mr. Ridley : I agree about the objective which my hon. Friend describes. Our objective in the European single market is to create just that. As for projects outside Europe, it is difficult to align the different forms of aid and credit subsidies that different countries put together. There is no consensus on how they should be constructed. This is a most difficult matter on which to get a playing field without any bumps.
Mr. Mitchell : Will the Minister bear in mind that, measured in terms of unit labour costs, the competitiveness of British industry declined by 9 per cent. in the first quarter of this year? Since the Conservative party came to office it has declined by 21 per cent.--a worse record than for any other country. As it is now official Government policy to crucify British industry with high interest rates, why does not the hon. Gentleman take a leaf out of Government policy in other Departments and simply abolish all figures on competitiveness and anything that is inconvenient on the ground that the situation will get so bad in the next two years, he will have to do that?
As for competitiveness, yesterday my right hon. Friend the Chancellor of the Exchequer, in his singularly powerful speech, spelt out the fundamental and remarkable
Column 311transformation in the British economy since the Conservative party came to power 10 years ago. We will not be lectured by the Labour party on questions of competitiveness. Two good reasons for that will suffice for the moment : first, competitiveness declined between 1974 and 1979 by 25 per cent. ; and, secondly, inflation touched 27 per cent. when Labour was in office.
Mr. Charles Wardle : Will not industrial competitiveness suffer if the claim by the Confederation of Shipbuilding and Engineering Unions for a 35-hour week prevails, because every hour worked over 35 will incur overtime rates, thereby pushing up the cost of goods sold?
Mr. Hogg : I agree, but it is much worse than that. Anyone who has the misfortune to study the Labour party's review will find on page 21, for example, a commitment to a payroll tax. One merely has to contemplate the consequences of that on British competitiveness.
Mrs. Maureen Hicks : Is it not a competitive reality on which jobs depend that the country cannot afford engineering employees to have a shorter working week than employees in West Germany or in many other European countries as long as productivity in Germany is so much higher than ours?
Mr. John Garrett : Does the Minister agree that our loss of competitiveness has meant that the share of imports of manufactured goods in our home market has risen from a quarter to a third in the past decade? Does that not show that we are so uncompetitive that we cannot even compete in our home market? Would the cut by the hon. Gentleman's Department of 30 per cent. in support for industrial research and development have anything to do with that?
Mr. Hogg : Here is another hon. Gentleman who was not paying much attention to my right hon. Friend the Chancellor of the Exchequer yesterday when he drew careful lessons from the strength of growth, especially in investment and output, since the Conservative Government came to power. However, as the hon. Gentleman has got to his feet, may I ask him what he supposes that a substantial increase in national insurance contributions will do to competitiveness? In case he has not read that proposal, it is to be found on page 33 of his miserable policy review.
10. Mr. Franks : To ask the Secretary of State for Trade and Industry what representations he has received concerning the Monopolies and Mergers Commission report on credit cards ; and if he will make a statement.