No. 3) Bill-- [Lords]
Read a Second time, and committed.
That the proceedings of 7th December 1989 on consideration of the Bromley London Borough Council (Crystal Palace) Bill be null and void.-- [The Chairman of Ways and Means.]
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Nicholas Ridley) : As already announced, a consultant's study is looking at a variety of aspects of English Estates' activities.
Mr. Cunliffe : Given that his father was a founder director of the enterprise as long ago as 1936, does the Secretary of State accept that there must be some remorse and resentment because the Government may dismantle the corporation in the near future when the consultant's report is produced? Will the Secretary of State make a statement on that? About 5,000 factory units provide a large amount of employment in areas such as the north-west that are experiencing industrial decline. At 1989 prices, since the last year of the Labour Government--1979--the north-west has suffered to the tune of about £180 million through lost regional selective assistance and regional development grants.
Mr. Ridley : I shall take the hon. Gentleman's points in the reverse order. First, 1979 was a bleak time indeed for the north-west and the regions, but the situation has greatly improved since we have had 10 years of sound Conservative Government. I am grateful for the hon. Gentleman's acknowledgement of that. Secondly, I have no intention of dismantling English Estates. It might be of value to use the large amount of capital that is invested in factories in more productive directions in future, but that will not affect the factories themselves. Thirdly, I am
Column 274extremely grateful to the hon. Gentleman for the tribute that he paid to my father for responding to the needs of the time when he assisted in setting up English Estates. I, too, intend to respond to the needs of the time in the most helpful way possible.
Mr. Trotter : My right hon. Friend will be aware that the headquarters of English Estates is on Tyneside. May I draw his attention to the considerable part that English Estates has paid in the success story of the transformation of industry and commerce in the north-east? In particular, I commend the quality of management of English Estates. We should retain that asset in future.
Mr. Ridley : I am grateful to my hon. Friend. I agree that the cradle of English Estates' birth was in the north-east, and its activities there have been immensely beneficial to that region. Needs and requirements change at all times, and it is correct that we should look at how best to help the regions, particularly through the vehicle of English Estates and, if necessary, make changes. I have not received the consultant's report, but when I do I shall report to the House on the Government's conclusions on it.
Mr. Caborn : Hon. Members are interested in what the Secretary of State has said, but there are bleak times ahead for small and medium-sized businesses. It has already been pointed out that English Estates operates about 5,000 small and medium-sized businesses around the country, with a value in excess of £400 million. Will the Secretary of State give a clear commitment that English Estates will not be privatised and that, when he receives the consultant's report, he will consult widely with people who have been assisted and people who, in future, will look to English Estates to help small businesses with a technology base?
Mr. Ridley : I do not believe that there are bleak times ahead for small and medium-sized businesses in this country. The future holds great prospects, provided that the hon. Gentleman and his colleagues are kept out of office.
Mr. Barry Field : My right hon. Friend will be aware of the considerable success of English Estates in my constituency, the only county in the United Kingdom that is a development area under the Rural Development Commission. Might an alternative be for English Estates to divest itself of its property on the market and start all over again in areas where private enterprise is still not always providing the nursery units that are essential to the Government's policy of self-employment? The Government have achieved a tremendous record in start-up businesses and self-employment--the largest number in the history of the country.
Mr. Ridley : The function that English Estates has performed so valuably has been to provide factory space, both large and small, managed and unmanaged, in areas where the economic situation was so unfortunate that the private sector was not prepared to do that. However, that situation has changed in many parts of the country, but not in all. We now want to see how best the large capital that is employed by English Estates can be deployed for the benefit of the nation as a whole.
Mr. Ashton : Does the Minister agree that those figures are appalling and that they are 27 per cent. worse than when the Government took office? When will the Government get tough, in the same way as the Governments of France, Italy and the USA, against the Japanese imports that pour into this country? Why do we give subsidies to Nissan and allow Toyota to come here to Derby to steal the skilled labour force at Rolls-Royce-- [ Hon. Members :-- "No."] Of course that happens, that is why Toyota came--to take the skilled labour force at Rolls-Royce. Why do the Government have a policy of selling off Austin Rover at rock bottom prices to British Aerospace and of using the car industry for the profits of their friends? Why can we not have the same sort of restrictions that we have for farming? Why will the Government invest in and protect farming, but not do the same for manufacturing industry?
Mr. Redwood : The Labour party, in power between 1974 and 1979, presided over a massive increase in import penetration of cars into this country from 27.9 per cent. to 56.3 per cent. Under the Conservative Government, import penetration has stayed around the 56 or 57 per cent. mark. The Government's policies have seen a remarkable influx of inward investment by three leading Japanese car producers and we are on target for a major expansion of car production in this country. We may well see it expand in this decade from 1.3 million cars to around 2 million cars. That is the best answer of all to the hon. Gentleman's question. Our economic policies are working and Conservative Members welcome the new investment from Japanese companies because they have skills and jobs to offer us.
Mr. John Townend : To what extent does my hon. Friend estimate that the decline in the British car industry was due to the actions of the trade unions, which refused to accept new industrial practices and favoured restrictive practices, go-slows and strikes? To what extent does he think that the Japanese decided to invest in this country because we have a Government who believe in private enterprise and the open market?
Mr. Redwood : My hon. Friend is absolutely right. However, the trade unions were aided and abetted in their destructive policies in the 1970s by wrongful Government policies as well, which gave exactly the wrong signals to the car industry. The 1980s have proved much better and we now have a firm base of sounder industrial relations as a result of the new labour relations law, which has proved attractive to inward investors.
Sir David Steel : Does not the Minister accept that the consumer faces a problem nowadays because the brand names no longer state clearly whether the cars are made in Britain? Nissan cars are made in Newcastle, Peugeot in Coventry and Ford cars are possibly made in Spain or in
Column 276West Germany. Will he encourage the manufacturers that wish to promote British goods to put the necessary stickers on their windscreens?
Mr. Redwood : I thought that the right hon. Gentleman and his party- -whatever it may be called--welcomed the integration of the European market. It has long been the case that various manufacturers that assemble in the United Kingdom also import components for their cars, and sometimes whole vehicles. It makes sense for a company such as Ford to choose where to produce in the European Community. We obviously welcome more investment from that company and expansion of the car lines that it thinks are best suited for this country.
Mr. Beaumont-Dark : Does my hon. Friend accept that over the years many of us have fought the importation of cars, especially from the Japanese, who would not allow our exports into their country? However, if we continue with what looks like happening now, when the Ford workers here are demanding a 14 per cent. increase, compared with the Ford workers in West Germany who have accepted 3 per cent. with much greater productivity, many of us who have said that we should not allow car imports must recognise that the British people have a right to buy cars and that if the Ford workers in the United Kingdom will not work, the British people should still be able to buy cars that might mean more imports and lost British jobs.
Mr. Redwood : My hon. Friend speaks from experience. He is right that it is in the hands of Ford managers and workers to set the right level of pay in relation to output and productivity. I hope that they can settle on a good level of pay, which reflects the underlying improvement in productivity. That is the way to protect and expand jobs and to give the customer a good deal.
Mr. Henderson : How does the Minister square his previous comments on the supposed recovery of the British car industry with the trade deficit in automotive products of £6.5 billion for the first 11 months of this year? Does he accept that the principal cause is that cars such as Vauxhalls and Fords are stuffed with components made in Europe? Is he prepared to open talks with companies such as Ford and Vauxhall and to insist that they increase the sourcing of components from the United Kingdom?
Mr. Redwood : I want companies here to make the best commercial decisions. That is the way to secure jobs and a good package for the costomer. The hon. Gentleman should note that several major investments in British components manufacturing have been announced as a result of our success in attracting assemblers and new car production. The important point about the 1980s is that import penetration did not rise, but the total market expanded. That is why we have imported more cars. People are better off under a Conservative Government and they choose to use their purchasing power to buy new cars.
Mr. Riddick : Does my hon. Friend agree that it is extraordinary and appalling that Opposition Members do nothing but criticise and knock the car industry although there is good news on the horizon? Was not the only contribution that we ever had from that lot, the £400 million investment in Dundee being stopped by their paymasters in the Transport and General Workers Union?
Column 277Is it not the case that, as a result of inward investment by Japanese car manufacturers, there will be a massive increase in car exports from Britain in coming years? Does my hon. Friend agree that there is now a serious threat from eastern Europe and that we must ensure that the economic and industrial conditions here remain attractive to those who wish to invest in this country?
Mr. Redwood : I agree with my hon. Friend that the trade unions have a role to play in helping, rather than hindering, inward investment in Britain. I agree that the industry should remain competitive. I am not surprised at the attitude of the Labour party. It belongs to the wining and dining school where wining is spelt with an "h". It believes that it should issue lunchtime directives to car companies. When it tried that policy in Government, it met with disaster.
Mr. Graham : During the past 10 years have not the Government presided over the decimation of the electrical manufacturing industry in Britain? Are they proud of the fact that the British public have to rely on foreign goods to clean their dirty linen? When will they take action to bring manufacturing of electrical goods back to Britain and allow the British public to do their washing in British washing machines? When the trade figures are published on Friday, will the Minister ponder that we have a massive import bill, while thousands of unemployed men and women are desperate to work to produce much-needed electrical goods, which would reduce the import bill?
Mr. Redwood : I am pleased to say that most British people still wash their dirty washing in British machines rather than machines imported from overseas. There were high imports in the 1970s. The Government have a sound and firm economic policy that will allow companies to compete and to manufacture the things that people wish to buy. Naturally, I wish the washing machine industry and other British industries every success.
Mr. Roger King : Does my hon. Friend agree that the only way in which British manufacturing can compete is by producing better goods than those produced by overseas competition? Does he share my delight that the consumer magazine Which? has judged a British washing machine, the Hotpoint 800 series, as joint best value and best buy? For once, it is clear that we can fight back with the right type of goods at the right price.
Mrs. Ewing : Does the Secretary of State accept that the golden share was introduced to protect vital national interests? In the Scottish context, that means the preservation of the Scottish steel industries. Is he aware that British Steel is starving Ravenscraig and its associated works of investment and that, without that investment, any paper guarantees given are worse than useless? Therefore, will he make representations to British Steel to ensure that investment is forthcoming in the Scottish steel industry?
Mr. Ridley : The purpose of the golden share in British Steel was to protect an industry, which had been badly damaged by a long period of public ownership, for a limited time against unwelcome takeovers when it emerged into the private sector. The circumstances where it would have been appropriate to use that golden share have not arisen. The golden share is not available for the purposes suggested by the hon. Lady. It was made clear at the time, and I make it clear again, that the Government had no intention of using that golden share for any purpose other than that for which it was first introduced.
Mr. Sillars : Is the Secretary of State aware that we are concerned that, in a privatised British Steel, the Scottish plants might be subject to unwelcome elimination? Although British Steel lied in the first instance, it has now confessed that, along with the Davy Corporation, it is storing a second-hand Japanese plate mill at Lackenby. Although the right hon. Gentleman might say that he has no responsibility as the golden share owner, does he accept that he has responsibility as the Secretary of State for Trade and Industry? Therefore, will he press upon British Steel that, should it go for a single-plate strategy, it should be at Motherwell and not at Lackenby?
Mr. Ridley : I understand that the chairman of British Steel recently reaffirmed that the company statement of 3 December 1987 on the future of the Scottish plants still stands. There is no way in which I can intervene--it would be quite wrong of me to seek to do so--on where plate capacity is located or what happens to a particular plant.
Mr Batiste : Does my right hon. Friend agree that the concept of the golden share is alien to the work of the stock market? It depresses the value of shareholders' investment and it could have extremely damaging effects on the pension funds that are largely invested in the companies concerned. Will my right hon. Friend confirm that the Government have no plans to extend the use of the golden share and that, unlike the Labour party, they will never extend the golden share into the private sector?
Column 279"The Golden Share already establishes the principle of separating voting rights from the other incidents of equity ownership". That means that the Labour party thought it had a precedent for telling companies what to do and for overriding the interests of the share owners, without compensation, in the interests of pursuing policies that have been seen to fail in eastern Europe.
Mr. Favell : Will my right hon. Friend pass on the congratulations of my hon. Friends to the management of British Steel on making it profitable at long last? It is now one of the most profitable steel manufacturers in western Europe. Under no circumstances should it turn itself back into a charitable institution as suggested by the Scottish Nationalists, the hon. Members for Moray (Mrs. Ewing) and for Glasgow, Govan (Mr. Sillars).
Mr. Ridley : I shall pass on the comments of my hon. Friend, who paid tribute to the management of British Steel for turning it into one of the most successful and profitable companies in the world since it was freed from the shackles of public ownership. I reaffirm that the Government have no intention of doing anything that might prevent that highly successful British company from conquering world markets.
Mr. Shore : Now that the Government have so recklessly handed over to Brussels the right to decide--to veto or approve--transfrontier mergers and takeover bids, will not the golden share now take on added importance as our one remaining defence against unwelcome takeover bids that are against the national interest?
Mr. Ridley : Neither of the right hon. Gentleman's propositions is true. First, the Commission has power, and has been using it under articles 85 and 86, to clear or not clear mergers without reference to the United Kingdom authorities on monopolies and mergers. The total confusion about that matter has been brought to an end. Secondly, the golden share in British Steel has only a relatively short time to run, after which it expires. British Steel will defend and protect itself by the excellence of its economic performance--a concept unheard of by the right hon. Gentleman.
Mr. Ian Bruce : Does my right hon. Friend agree that the privatisation of British Steel made all the shares golden shares, and they have been profitable? Compared to the other steel industries throughout the European Community, British Steel's record, once the dead hand of Government was taken away, has been one of enterprise. We can congratulate it on its excellent progress.
Dr. Bray : Is the Secretary of State aware that the undertakings given by British Steel about the steel industry in Scotland have to be read carefully? Will he do as the Secretary of State for Scotland has recently done and ask British Steel to explain its plans in Scotland? Is he aware that the trade gap last year and the increased plans for motor car production in the United Kingdom point to a continuing need for steel in the future? It would help greatly if the Secretary of State asked British Steel to update its commitments in that sector.
Mr. Ridley : The hon. Gentleman has seen a policy by which British Steel was nudged, asked, interfered with, intervened in, pushed, pressed and generally mucked about by Government over 20 years with disastrous results. That policy was replaced by one through which the Government privatised it and allowed it to get on with running its own business, and it has subsequently shown itself to be one of the most successful steel companies in the world. I do not understand why the hon. Gentleman wants to return to the policies of eastern Europe, which is what he is advocating.
Mr. Gordon Brown : Will the Secretary of State confirm that all respectable forecasts for world and European demand for steel in the 1990s confirm that there is a viable future for the steel industry in Scotland, England and Wales? Will he confirm that not only has he received representations about the golden share--he has received them from me--but that the trade Minister of the day in 1988 said that the purpose of the golden share--the Secretary of State has set up more golden shares than any other Minister--was to prevent takeovers and the rundown of British Steel capacity? Therefore, will he join me and his colleague the Secretary of State for Scotland in supporting the detailed plans for new investment in Scottish steel? Will he assure the House that normal regional grants will be available to prevent another great industry from being run down?
Mr. Ridley : The point that I want to get across to the hon. Gentleman is that British Steel is now a highly successful corporation. I wish to allow it to take decisions about where to invest and how to plan its business. I believe, with great humility, that British Steel knows the answers to those questions much better than I do and, I suspect, than even the hon. Gentleman does. That is why he should join me in encouraging British Steel to do what it believes to be right, in its commercial interests. I should not for one moment go further than that. The British Steel special share is time limited.
5. Mr. Andrew F. Bennett : To ask the Secretary of State for Trade and Industry if he has any plans to help the defence sector of manufacturing industry to seek alternative products in view of the military implications of developments in eastern Europe.
Does the Minister accept that the major problem in Britain is that more than 500,000 people are employed in the defence industry which, in the past three years, has earned the country an average £1 billion in foreign exchange? Does he accept that if the defence talks and the changes taking place in eastern Europe continue, our defence manufacturers will have to look for alternative products? The Government should be assisting them in that and encouraging them to look for peaceful collaboration in eastern Europe.
Column 281Mr. Hogg : The hon. Gentleman is at least persistent : he asked precisely the same question on 1 November 1989. That suggests that he is running out of ideas and in need of early retirement.
The motive behind the question has absolutely nothing to do with industrial strategy. The Labour party is up to its old tricks of cutting defence expenditure but trying to make it sound respectable. If anyone doubts that, he should bear in mind the fact that the hon. Member for Denton and Reddish (Mr. Bennett) is a long-standing unilateralist who prides himself on having voted against the Defence Estimates long before the relaxation in international tension.
Mr. Mans : Does my hon. Friend agree that the defence industries have a good record of diversifying into other commercial products, and that that diversification is being held up only by damaging strikes of the sort from which British Aerospace is suffering at Preston near my constituency?
"A Labour government will therefore consult unions and employers about the establishment of an Arms Conversion Agency which, within Labour's national industrial strategy, could take on the special role of providing new industries and new jobs."
That is the sort of central economic strategy and planning that eastern European countries are throwing away with contempt.
Mr. Hoyle : Will the Minister return to the peaceful developments in eastern Europe and confirm that since 1979 our trade with almost every country in eastern Europe has gone into deficit? This flatfooted Government have been left at the starting line while the West Germans, the Japanese and most of our other competitors have been building up trade with eastern Europe. What will the Government do about that?
Mr. Hogg : Let us focus on the real issue ; let us not waste our time with red herrings of the sort advanced by the hon. Gentleman. The Opposition say that they are better at industry than the major companies which have been doing so well in the defence sector. That is rubbish. There may be a case for adjusting markets and seeking new products, but that is a matter for the companies concerned, not for Opposition Members.
Mr. David Shaw : Does my hon. Friend agree that the United Kingdom defence industry has been a major success over the years and that that is one reason why democracy is breaking out all over eastern Europe? Does he agree that defence is a legitimate purpose for any country, and that British defence exports have helped to support the defence capabilities of many countries? Does he further agree that 500,000 jobs in the industry would be jeopardised if Labour came to power and implemented the proposals in the question of the hon. Member for Denton and Reddish (Mr. Bennett)?
Mr. Hogg : It is much worse than that. The Labour party conference committed itself to a reduction of £5 billion in defence spending, or a 30 per cent. reduction in Britain's conventional defence capacity. That would lead to massive unemployment.
Ms. Quin : Does the Minister recall the Prime Minister saying that Mr. Gorbachev was a man whom she could do business with? Given that, is it not very disappointing that the Department of Trade and Industry seems to have been so unsuccessful in taking advantage of the new industrial opportunities in the large market of 420 million people in eastern Europe and the Soviet Union? Is not the Government's policy one of unilateral industrial disarmament, and are they not failing to take advantage of the new market that is on offer?
Mr. Hogg : I am sorry that the hon. Lady, who I always thought was a rather respectable character when it came to the point, should be speaking in terms of unilateral disarmament of any kind. I clearly remember what my right hon. Friend the Prime Minister said about Mr. Gorbachev, and I have no doubt that the relaxation in international tension is due, at least in part, to what the Prime Minister has done in that connection. I also remember what the Prime Minister said about the dangers of relaxing our defensive capacity until we see how this matter will end.
Mr. Key : Will my hon. Friend examine the speed at which his Department issues defence export licences? Delays in issuing those licences are a brake on successful export industries, notably in my constituency. Does he agree that the best thing for our defence export industries and especially for the Property Services Agency, which is being privatised, would be to allow them to compete internationally for the excellent defence -related services that they provide?
Mr. Hogg : I am concerned at my hon. Friend's suggestion that there is unreasonable delay in the DTI over issuing licences. If my hon. Friend has specific points, I should be pleased to hear them. I hope that he will give me or my colleagues the details of the complaints.
Mr. Douglas Hogg rose --
Mr. Hogg : I know that hon. Members will enjoy this. As I told the House on 6 December in answer to my hon. Friend the Member for Tynemouth (Mr. Trotter), I expect to announce the level of grant in March.
Mr. Cousins : Does the Minister accept that his answer has more twists in it than the Lambton worm? We do not have a development agency in our region. We have built one ourselves using the resources of local people. We need another £2.5 million over the next three years to promote the second industrial revolution in the region. We want to do it for ourselves, but the Government will not give us the money. The Minister should spare us the lectures and put the cheque in the post.
Column 283First, as he has not told us about the very substantial increase in DTI funding for the Northern Development Company over the past few years, I shall do so, In 1981-82 funding of the NDC was £230,000. In 1989-90, inclusive of core funding, it is £1.182 million, which is a fivefold increase.
Secondly, unemployment in the hon. Gentleman's region has fallen by 3 percentage points during the past 12 months. The hon. Gentleman might have mentioned that.
Mr. Trotter : Does my hon. Friend acknowledge the self-support provided by the region to the Northern Development Company and the funding provided by local firms and local authorities? May I remind him of the development corporation's success story, and ask him to support it on a longer-term basis? I point out to my hon. Friend the difficulties of budgeting for only one year at a time, and ask for his support for the suggestion that there should be a three-year finance programme.
Finally, may I ask my right hon. Friend to recognise the excellent support- -
Mr. Hogg : My hon. Friend deserves some good news, and that is what he shall get. As to the rolling programme to which he refers, he will know that on 2 October 1989, I wrote to the regional development organisations accepting the proposal for a three-year funding programme which meets precisely the point that my hon. Friend so eloquently put.
7. Mr. Soley : To ask the Secretary of State for Trade and Industry what was the increase in import penetration of manufactured goods from 1979 until the most recent date for which figures are available.
Mr. Soley : Is it not a disgraceful record for the Government of the world's first industrial power to turn the manufacturing trade surplus of £1 billion achieved under the previous Labour Government into a £20 billion deficit this year? Although the service sector is important, the Government must understand that we cannot rely on it alone. We should follow the example set by the Germans and Japanese, who plan for, support and invest in their manufacturing industries. Why have the Government failed so abysmally?
Mr. Redwood : The hon. Gentleman does not appreciate that although our commitment to the European Economic Community means rising import penetration, it means also an increasing proportion of exports. Both have risen because of increasing European and worldwide trading. Six Community countries have a higher import penetration than the United Kingdom, but that does not mean that those countries or Britain have weak economies. It means instead that we are benefiting from a more open and competitive market, that our customers have greater choice, and that British businesses have more discretion in whether to produce for the home or export markets. The important point is that unemployment has fallen
Column 284dramatically and is well below the EC average--it is particularly low in the hon. Gentleman's constituency. Living standards have reached new records, and consumers have unprecedented choice.
Mr. Oppenheim : Will my hon. Friend remind the Opposition that manufacturing exports have increased by 40 per cent. since 1986, whereas manufacturing output fell under the previous Labour Government, as did our share of exports? Does my hon. Friend agree that protectionism is no way to make British industry more efficient and competitive? Will he commit himself to dismantling the pernicious gentlemen's agreement that limits car imports, and so put timely pressure on the unions at Ford?
Mr. Redwood : My hon. Friend is right to say that the open trading system offers more prosperity than restrictions--as the events unfolding daily in eastern Europe show. Car imports are a matter for EC deliberation and not specifically for the British Government, and they will be debated within the Community's Councils.