Mr. Bradley : As the deficit with West Germany has grown by over £6 billion since 1979 and now accounts for about half the total deficit, will the Minister acknowledge that he has a problem? Does he recognise that it is his responsibility and will he do something about it? When he acts to close the gap, will he develop an industrial strategy based on British rather than foreign industry?
Mr. Redwood : Many good things are happening. The Labour party never looks at the invisible account, yet we export services and earn a great deal of money from investments abroad. Do Labour Members realise that we earn more from invisible credits than from total exports of manufactured goods? Do they realise that exports were up by 15 per cent. in the last quarter of 1989 compared with 1988? Do they agree that the strategy that we have developed of a firm approach to fiscal policy and allowing enterprise to get on with the job is working? Have Labour Members seen the latest export surveys which show that exports are going well? Do they realise that their strategy would cause considerable distress?
Mr. Teddy Taylor : Will the Minister at least accept that trade with West Germany has become a trade disaster area? The deficit is twice as large as the one with Japan, which is now a much more open market. Would it not do more good for British trade if, instead of spending a great deal of money on posters telling us that the internal market has arrived, the Minister considered the many examples that have been sent to him of how the Germans restrict imports for wholly bogus and non-tariff reasons?
Mr. Redwood : The Government are dedicated to completing the 1992 programme. We are especially keen to remove barriers to trade in invisibles to complement the good work being done in the manufacturing sector to remove such barriers. If my hon. Friend wishes to send
Column 248more details of restraints on trade that are against the EEC treaty and against Government policy, I and my right hon. Friend will pursue the matter with vigour.
Mr. Kirkwood : In the New York speech the Secretary of State acknowledged that every trading nation had something to gain from lifting trade barriers. However, on textiles he seemed to leave the initiative in the hands of the American negotiators in terms of the current GATT round. It would be interesting to hear the American view of the current textiles position in the GATT round. Will the Secretary of State give an undertaking that he will not begin to dismantle the framework of the multi-fibre arrangement until the United Kingdom textiles industry obtains copper- bottomed guarantees of new export opportunities to new trading countries?
Mr. Ridley : I am grateful for the hon. Gentleman's interest in my speech. I note his liberal attitude to trade liberalisation. The position of the United States Administration is in one respect similar to that of the European Community. It is that the trade in textiles should in due course be returned to the GATT and that a considerable transitional period will be necessary. There is most dispute about what the interim regime should be. The Americans want global quotas, a solution which is unattractive to the other trading partners. The negotiations will be about a system of safeguards and the length of the transitional period. There is agreement that in due course, after a proper transitional period, textiles should return to a more free trading atmosphere.
Mr. Bowis : Was not one theme of my right hon. Friend's excellent speech the opportunities for world trade and prosperity that come from the single market, the Uruguay round and the changes in eastern Europe? Was not a second theme of his speech the dangers of protectionism? Does he agree that that is a great danger to world trade and prosperity from whichever side of the Atlantic it comes?
Mr. Ridley : Both points are correct, but I sought to make a third point--that freedom to invest freely in those countries is an important way for both partners in the transaction to prosper. I criticised the United States tendency to restrict inward investment, but I am sure that the Administration there will ensure that those tendencies are resisted.
Mr. Gordon Brown : In that wide-ranging speech in New York, why did not the Secretary of State explain that Britain has the worst inflation, the highest interest rates and one of the worst trade deficits of our major competitors? Will he now confirm not only that mortgage rises have put 400,000 families into mortgage arrears of two months or more, but that the latest figures from the Lord Chancellor show that there has been a 46 per cent. increase in small business liquidations over the last
Column 249quarter? As Secretary of State for Industry, will he press the Chancellor for a Budget for industry that will help to bring interest rates down?
Mr. Ridley : There are two reasons why I did not make those points in America. First, it is not my habit to knock my country from abroad. Secondly, the particular copy with which the hon. Gentleman suggests I should knock it is inaccurate and untrue. The hon. Gentleman is always in the business of measuring the gross, not the net. If he examines the net survival of small businesses, he will find that it is very much better than under the Labour Government. If he also examines the total of the mortgage sector, he will find the same.
Mr. Beaumont-Dark : Does my right hon. Friend agree that one problem may be that, because of the two Germanys' headlong rush to merge, the deutschmark will weaken, and Germany will become even more competitive than at present with its £46 billion trade balance? Does my right hon. Friend have anything in mind to make sure that our manufacturers are not more disadvantaged than they are already?
Mr. Ridley : I think that the deutschmark has strengthened on the latest news, although I am not in the business of forecasting what will happen in view of the events described by my hon. Friend. Policy on eastern Europe is not particularly relevant to the value of the pound in relation to the deutschmark. I am confident that British exports will maintain their good record and their good showing whatever happens in East Germany.
3. Ms. Short : To ask the Secretary of State for Trade and Industry if he will make a statement on the United Kingdom's balance of trade in manufactures in 1989 with (a) the USSR, (b) East Germany, (c) Poland, (d) Czechoslovakia and (e) Romania.
Mr. Redwood : The hon. Lady will be delighted to know that in 1989 the United Kingdom had a surplus of more than £100 million with the five countries mentioned in her question, comprising a good surplus with the USSR and deficits with the other four.
Ms. Short : Will the Minister confirm that the Select Committee on Trade and Industry said that Britain was lagging behind the countries of western Europe in its trade with eastern Europe because at that time we were importing more than we were exporting, reflecting the mess that the Government have made of our balance of payments overall? Is it not time that the Government took action to implement the Select Committee's recommendations on trade with eastern Europe, given the current massive and important changes that are taking place there?
Mr. Redwood : The hon. Lady has asked the wrong question. She obviously wanted to get a different answer. Had she asked about Hungary and Bulgaria, she would have heard about surpluses. I have just arrived back from Czechoslovakia where I led a delegation of eight British business men to encourage more British trade. The Government will take all reasonable steps to encourage British businesses to take advantage of the many new
Column 250opportunities in eastern Europe. I urge more British business men to visit eastern Europe to follow up the advances that many are making in those countries.
Dr. Hampson : The whole House will praise my hon. Friend for the efforts that he has begun to put into trade with eastern Europe. In the process of expanding our connections, does the Department have any mechanism or unit for ensuring more secondment of people from the academic and industrial sectors here who can go over there to encourage those countries to look towards us and our processes, especially in distribution and marketing?
Mr. Redwood : Yes, 25 people in the Department of Trade and Industry specialise in eastern Europe trade matters. Together with those in the Foreign Office, they are working on the distribution of know-how moneys from our know-how funds to strengthen such links for the reason that my hon. Friend so rightly described.
Mr. Darling : Will the Secretary of State discuss junk bonds with the chairman? The Parliamentary Under-Secretary of State for Corporate Affairs said last November that junkiness was in the eye of the beholder, but does not the Secretary of State know that the chairman of the Monopolies and Mergers Commission has expressed concern about the matter and hinted in the clearest possible terms that he would like it to be referred to him for investigation? Will the Secretary of State agree to such an investigation? If he does not, the public will begin to think that the Government are prepared to condone, if not encourage, the sort of tacky behaviour that we see on the other side of the Atlantic.
Mr. Ridley : No, Sir. I do not believe that issues of corporate financing are ones for the Monopolies and Mergers Commission. They may be for the stock exchange, or even the Bank of England, to consider, but not the MMC. Only if there were a merger involving a highly leveraged bid, together with other factors that affected the national interest, would my policy be to refer the matter to the MMC. I agree with my hon. Friend the Minister that junkiness is in the eye of the beholder.
Mr. Forman : When my right hon. Friend meets the chairman of the stock exchange, will he urge him to make faster progress towards the so- called paperless transactions for share dealings as it is clear that the interests of the small investor would be greatly assisted if progress were more rapid?
Mr. Ridley : The stock exchange is making pretty fast progress with the Taurus system. When we see the full details, we shall ensure that it contains no conditions that will interfere with the interests of the smaller investor. I agree with my hon. Friend that the sooner we get the system up and running, the better.
5. Mr. Andrew F. Bennett : To ask the Secretary of State for Trade and Industry if he has anything to add to his answer to the hon. Member for Denton and Reddish, of 17 January 1990, Official Report, columns 280-81 about encouraging defence contractors to look for alternative work.
The Minister for Industry (Mr. Douglas Hogg) : Yet again, no, Sir. As I stated on the two previous occasions when the hon. Gentleman raised this point, it is my firm view that such decisions are best left to those best equipped to take them--business men.
Mr. Bennett : I am glad that the Minister remembers his outbursts on the two previous occasions. Has he had the chance to read the speech that the Foreign Secretary made two days later, when he said that turning swords into ploughshares was a cliche , but that turning tanks into tractors was the politics that the Government were involved in? Is the Foreign Secretary more interested in protecting British industry and converting our arms industry into peaceful use than are Ministers at the Department of Trade and Industry? When will the Minister take notice of the more sensible members of the Government?
Mr Hogg : I am becoming increasingly concerned for the hon. Gentleman, who has posed exactly the same question on three successive occasions. There are two kind explanations for his bizarre behaviour : first, that he has run out of ideas and the Labour party is intellectually bankrupt, which I know to be true ; and, secondly, that he is trying to divert attention from Labour's losing policies--the roof and window tax and the payroll tax. The plain truth is that companies such as British Aerospace and Marconi need no advice from a conversion agency about how to diversify or find new markets.
Mr. Jack : Is my hon. Friend aware of the efforts being made by British Aerospace, through its involvement in Airbus Industrie, to diversify? Is he further aware of the damage being done to that effort by the continuing luddite strike by the engineering unions, supported by Opposition Members? Will he join me in condemning those unions for their inability to agree to a good deal offered by the company?
Mr. Hogg : As I would expect from my hon. Friend, he has made a powerful point. British Aerospace is participating in the Airbus, which is an extremely successful product. The future of Airbus Industrie is threatened by the strikes of the engineering unions. Those strikes are being supported by the Labour party, which is a discreditable activity and one calculated to damage British industry.
Mr. Ashton : Is the Minister aware that the Prime Minister has given her full support to the Parents against Tobacco campaign? It is estimated that at least 50 per cent. of retailers are prepared to sell to children under age, and that as many as 500,000 under-age children are regular smokers of tobacco. What will he do to put pressure on local councils to take up the campaign when they are granting planning permission, or to put pressure on newsagents to refuse to sell tobacco to children under the age of 16? Will he support his Prime Minister by putting pressure on them?
Mr. Forth : The hon. Gentleman has answered his own question. There is an adequate law to protect children against those who seek to sell tobacco to them. The problem is one of enforcement. It is for all hon. Members to take up where appropriate with local authorities and the police the effective enforcement of the existing law, and I am sure that they will, aided by the excellent campaign.
Mr. Ridley : In the light of developments in the EC's relations with Poland, the European Commission has suspended the voluntary restraint arrangement with Poland on leather footwear imports for one year from 1 January 1990. The position will be reviewed before the end of the year.
With regard to Czechoslovakia and Romania, we have asked the European Commission to maintain the voluntary restraint on leather footwear from those countries during 1990. The Commission is considering our request. The United Kingdom does not have voluntary restraint arrangements on footwear with the other east European countries.
Mr. Fry : Is my right hon. Friend aware that any increase in imports of footwear will considerably increase the problems of the British industry? Therefore, will he support the European Commission's renewed initiative to make voluntary restraint arrangements with South Korea and Taiwan? Will he also work towards the reduction or removal of tariff and non-tariff barriers to enable British exporters to sell much more footwear abroad?
Mr. Ridley : My hon. Friend will agree that one thing that we can do to help the Poles in their gallant efforts to improve their economy and their present parlous position is to increase the opportunities for them to trade. It would be churlish to deny them the things that they need most, for example, trading opportunities. My hon. Friend may know that the Community has not yet made up its mind what to do about Korea and Taiwan. The member states of the Community are split 50-50 on whether the Commisson should take action. I hope that my hon. Friend will be content with that answer.
Column 253industry--35 per cent. of the entire employment in that industry--and that two jobs are being lost every hour? Last week in my constituency, Glovese, the leading manufacturers of ladies' boots, closed because of the level of imports. Will he give an undertaking to the House that he will not alter any arrangements without full consultation with the manufacturers and the trade unions?
Mr. Ridley : I cannot give such an undertaking. But employment in Britain is running at 26.5 million, the highest ever, and within that remarkable figure it is inevitable that employment will be gained in some industries and lost in others. The flexible work force in the face of fast- changing trading and industrial conditions is one of the virtues that the hon. Gentleman should be preaching to his constituency because he can see with his own eyes the extraordinary effect on employment that such latitude can have.
Mr. Budgen : I congratulate my right hon. Friend on the Government's policy on the provision of training and aid for eastern Europe, in that they are pointing out to all the advantages of privatisation and of joint ventures, and are not engaging in wasteful schemes involving inter- governmental aid.
Mr. Ridley : I am grateful to my hon. Friend and agree with him. I add to his list private investment in eastern European countries. My hon. Friend the Under-Secretary of State for Corporate Affairs recently returned from Czechoslovakia, and there have been other missions. More are planned for the future, when we shall take British business men to eastern European countries to show them the opportunities for investment there. That is the best way of helping those countries to re-establish their economies.
Mr. Redwood : Imports of manufactured goods from the European Community have risen from £16 billion in 1979 to £52.5 billion in 1989. Exports of manufactured goods to the European Community have virtually trebled over the same period.
Mr. Hoyle : Does the Minister agree that those figures are disgraceful? Will the effect of the single European market be to worsen them? Is not this the wrong time to dismantle the functions of the Department of Trade and Industry? Would not that be idiotic? Does the Minister agree that wherever the Secretary of State for Trade and Industry goes, acts of madness follow?
Mr. Redwood : No, I do not agree with that. Nor do I agree that the figures are disgraceful. The figures for exports are good, and we should be proud of the export efforts of a number of English manufacturers. The hon. Gentleman addresses only a quarter of the problem. He refers to visible trade but not to invisible trade, and to imports but not to exports. One must consider the total trade picture. It is about time the Opposition started realising that our trade position has been improving for five months. There is every sign in the latest surveys that exports will continue to improve this year.
Mr. Redwood : My hon. Friend makes the most important point of all so far in this exchange. There will be a major expansion of cars assembled in this country from 1.3 million to 2 million, and, as motor vehicles account for the biggest item in our manufactures deficit, right hon. and hon. Members can immediately calculate that a big change will result from the investment made here by Japanese companies.
Mr. James Lamond : The Minister seemed strangely reluctant to give the House the actual exports figure. Was that because Britain is in considerable deficit with the countries of the European Community? If so, did the Minister hear the Secretary of State a few minutes ago discarding the multi-fibre arrangement, contrary to the sentiments expressed by the Minister in a recent debate? That must result in an even greater loss to our textiles manufacturing industry, causing job losses throughout the country. Does not the Minister want to do something about that?
Mr. Redwood : I have clearly given the figures required by the original question. Of course I accept that a deficit exists with some countries--most notably the Federal Republic of Germany. I also pointed out that the position is improving. The Government believe that open trading and the extension of the 1992 programme is the best way of narrowing the trade gap. I particularly draw the attention of the House to the important role of invisibles in our total trading performance. They will be improved if we can persuade our European partners to keep the 1992 programme on track and on time.
Mr. Ridley : It is the Government's intention to introduce legislation at the earliest opportunity to bring about the changes to ECGD's structure that I announced on 18 December 1989. The aim is to establish the new company to be created from ECGD's insurance services group on 1 April 1991.
Mr. Evans : I thank my right hon. Friend for that information. I agree that the insurance part of the Export Credits Guarantee Department should be privatised, but can he assure the House that the credit on capital goods will be maintained and that it will be possible for companies such as British Aerospace, which exports £150 million worth of goods per week or £6,000 million worth per year, to maintain their 10-year view on exports?
Mr. Ridley : Yes, I made it clear in December that the projects group would not be part of the privatisation but will continue its activities to aid British exports of the kind that my hon. Friend mentioned, including exports by British Aerospace.
Column 255employs many of my constituents, is profitable, that its achievements are a credit to the public sector, and that it has no requirement to be privatised? Can he also confirm that Malcolm Stephens, chief executive of the ECGD, recently made a statement that privatisation of the insurance services group would pave the way for foreign stakes to be taken in the ECGD?
Mr. Morgan : Does not the Secretary of State conclude that it would be a ludicrous irony if in a few years' time a support service for British exports were controlled by a foreign bank or finance house?
Mr. Ridley : I confirm that the Cardiff operation is profitable and held in high respect by its customers. I also confirm that the hon. Gentleman got it totally wrong when quoting the chief executive of the ECGD. I have here statements that he made on radio referring to "the Chief Executive in a press conference alongside Nicholas Ridley".
I remember no such press conference. [Interruption.]
The hon. Gentleman is advocating an illegal action if he is asking me to say that no national other than a British national may acquire a stake in companies in this country. He must recognise that we are members of a European Community which bans discrimination against its other members. The hon. Gentleman should wait and see who puts forward offers when the time comes to privatise the ECGD. If it is not privatised, it will have no future in the European market.
Mr. Bill Walker : Can my right hon. Friend confirm that export credits as they will be operated once reformed will make trade with eastern Europe more viable and possible as a reward for the desires and the declarations about human rights and democracy that have been expressed there? If that is so, can he explain the difference, as seen by the Opposition, between that and our similar programme with South Africa?
Mr. Ridley : The subject of ECGD cover for eastern European states also raises the question of their indebtedness and the risk that it poses for insurance cover. Different countries in eastern Europe have different debt situations, so I cannot answer the question in a general way, but I confirm that we are doing our best to make credit cover available for exports to eastern Europe when the country concerned merits the credit.
Mr. Canavan : In view of the importance of the steel industry to Scottish employment and to the entire Scottish economy, will the Secretary of State draw the chairman's attention to the need to locate a new steel plate mill in Scotland? That is necessary not just for the Dalziel works, but for Ravenscraig and for the whole future of steel making in Scotland. Does the Secretary of State accept any
Column 256responsibility for the future of the Scottish steel industry, or was privatisation merely a means of abrogating all Government responsibility?
Mr. Ridley : Investment by the steel industry is entirely a matter for the steel industry to decide. The point of investment in the steel industry or in any other industry is to ensure the most efficient production and for no other reason.
Mr. Holt : Does my right hon. Friend agree that privatisation of the British steel industry in my constituency and elsewhere on Teesside has done much for the economic regeneration of the area and is one of the outstanding achievements of the Government in the past few years? Is he aware that continuation of that policy with the privatisation of the Tees and Hartlepool port authority would be most welcome?
Mr. Ridley : I join my hon. Friend in welcoming the remarkable industrial transformation on Teesside. I should also point to the large increase in British industrial production in the past few years. I believe that both are connected with the policy of letting industry make its own investment decisions.
Ms. Quin : Given that the overall level of British steel production is still less than half that of West Germany, and given that our share of the continental market is very small, does not the Secretary of State see a great possibility for the expansion of British Steel? In the context of 1992, would not that safeguard the health of all the plants in the United Kingdom? Will he use his influence--or perhaps even his golden share--to secure such expansion?
Mr. Ridley : I am not sure that the golden share would be of use for that purpose, but I agree with the hon. Lady, and pay tribute to her for striking an optimistic note for once. I will do all that I can to ensure that British Steel has opportunities throughout the world--and in the Community--to increase its sales and its share of the market. We are fortunate in having persuaded the Americans to agree to end the voluntary restraint agreement in, I believe, three years' time, which will give British Steel big opportunities in the United States. It will also give that excellent company further opportunities to increase its market share in Europe.
Mr. Ridley : In 1989 United Kingdom exports to Latin America were almost £1.2 billion. At the end of 1987, the last year for which figures are available, the level of United Kingdom direct investment in the region was almost £3 billion.
Mr. Arnold : Should not we bear in mind that the combined economies of Latin America are far greater than those of Africa, the middle east and the Indian sub-continent put together? Should not we be putting more effort into our exports to Latin America, and perhaps expanding the medium-term export finance cover, particularly for Brazil and Argentina?
Column 257Mr. Ridley : I hope that the opportunities around the world for both trade and investment will be exploited by British industry to an ever greater degree. I agree that Latin America remains an important market. Medium-term cover is available within an overall exposure limit for some of those countries, including Mexico, Chile, Colombia and Venezuela, which will present plenty of opportunities for our business men to export to them, at least.
Mr. Ron Brown : The Government are allegedly committed to perestroika and glasnost. Which of the countries that the Secretary of State mentioned is supposedly a democracy, and how does he justify trade with any Latin American country that is not a democracy? Such trade is clearly an abuse of people's rights, when they know that--
Mr. Ridley : Only in the past two weeks, the president of Mexico and the president-elect of Brazil have been in London. They are both democratically elected. Many other countries in South America are also democracies. I believe that we should treat them with all the respect that is due to democratic countries, and seek to trade with them to the maximum extent.
Mr. Nicholas Winterton : I understand that my right hon. Friend met the president-elect of Brazil when the latter visited the United Kingdom recently. My right hon. Friend has said that he is in favour of British manufacturing industry. What steps did he take to urge the Brazilian Government to reduce the huge tariffs that they impose against British exports, particularly textiles and clothing? Does he agree that British manufacturing industry should have a level playing field on which to operate, and what does he intend to do about that?
Mr. Ridley : I will tell the hon. Gentleman what I have done. I raised my hon. Friend's points with the president-elect of Brazil, who gave me a fulsome undertaking that Brazil would play a full and forward part in the Uruguay round to reduce tariffs and protective devices of all kinds. He agreed with my hon. Friend's policy on free trade, which is also my policy- -that we should clear away such restrictions--and I believe that Brazil will be very helpful in the forthcoming discussions.
12. Mr. Snape : To ask the Secretary of State for Trade and Industry what response he will be making to the report produced for the European Commission by the university of Louvain with respect to its assessment of the United Kingdom's technological standards ; and if he will make a statement.
Mr. Douglas Hogg : The hon. Gentleman misunderstands the nature of the report. The Government are well aware of the challenge of 1992, and we have policies in place to help firms in all regions to rise to it.