House of Commons Hansard Debates for 23 Jan 1991

Mr. Leigh : Yes. My hon. Friend is right to draw attention to the lacuna in the present law, in that the Trade Descriptions Act 1968 does not cover real property. We know this and intend to take action. We also intend to take action on the Estate Agents Act 1979. [ Hon. Members :-- "When?"] We have had to wait for time in the legislative programme, but, as I have said, my hon. Friend the Member for Coventry, South-West is bringing forward a Bill in the next few weeks which should cover the problem.

Mr. Nigel Griffiths : I know that the House will want to join me in wishing the hon. Member for Coventry, South-West (Mr. Butcher) a speedy recovery from his illness.

Will the Minister tell the House why he has failed to give house buyers the protection that was promised in the Government's press statement on 19 June 1990 and which a Minister pledged to implement by the 1st of this month? Why is that protection not in place now nor likely to be in place for some months to come?

Mr. Leigh : The hon. Gentleman may be confused as between our determination to bring in primary legislation to amend the Trade Descriptions Act 1968 and secondary legislation under an order to amend the Estate Agents Act

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1979. On the first of these, we must take our place in the legislative queue ; on the second, the hon. Gentleman should wait and see.

Mr. Dunn : My hon. Friend should be congratulated on the answers that he has given to the House. Will he agree with me that, while it is necessary to say "caveat emptor", or "buyer beware", to anyone buying a good or service, the steps that my hon. Friend has outlined should be brought forward at the earliest opportunity to protect young people, who, as first-time buyers, may take estate agents' details at face value and be deluded into buying a property which is suspect in some way?

Mr. Leigh : My hon. Friend is quite right to draw attention to these matters. The Bill promoted by my hon. Friend the Member for Coventry, South -West has not been published, but we agree with its aims, in so far as we know what they are, and hope that the Bill will become law.

Manufacturing Output

10. Mr. McFall : To ask the Secretary of State for Trade and Industry what plans he has to boost manufacturing output.

Mr. Leigh : The Government promote continued growth of manufacturing industry with policies such as reducing rates of tax on profits, privatisation, deregulation, elimination of restrictive practices, trade union reform and negotiations to reduce trade barriers through the general agreement on tariffs and trade and in the European Community. In addition, my Department continues to operate a range of schemes to improve business performance under the enterprise initiative.

Mr. McFall : As manufacturing production has gone down by a staggering £2.5 billion in the past three months, 23,000 manufacturing workers are on short-time work, redundancies are running at more than 1,500 per week and high interest rates are costing British business £30 billion per year, when will the Government do the decent thing and either own up to their mistakes, overhaul their policy and start helping British industry or shut up shop and let the Labour party get on with the job of reviving British industry?

Mr. Leigh : I assure the hon. Gentleman that we have no intention of shutting up shop, or of letting our industry fall into the tender hands of a party that managed to reduce manufacturing output when it was in power. The hon. Gentleman's list is entirely selective. He ignores the fact that the prospects for British industry have been transformed in the last decade in terms of output, productivity and investment. The cost of a 1 per cent. rise in interest rates, even sustained over a full year, is far less damaging to industry in terms of wage costs than a 1 per cent. rise in inflation. The Government are determined to lick inflation.

Mr. Grylls : Does my hon. Friend agree that this question shows that there is a good deal of ignorance about what Governments can and cannot do? The one thing that Governments certainly cannot do is to boost manufacturing output. However, they can create the right climate. Will my hon. Friend use his influence with the

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Treasury to promote lower corporate and capital taxes for business to encourage it to make the decisions to expand and boost output?

Mr. Leigh : My hon. Friend is right, and he well knows that corporation tax in Britain is among the lowest in the industrialised world. He is also right to say that we cannot simply boost output by increasing subsidies, as suggested by the Labour party ; nor can we increase investment by piling up taxation. Inventiveness and hard work cannot be encouraged by imposing controls. Those are the policies of the Labour party, but they did not work in the past and will not work in the future.

Dr. Moonie : If the Government are not responsible for the mess that industry is in, who is?

Mr. Leigh : Industry is not in a mess. As I have said, the prospects for manufacturing industry have been transformed in the last decade. Output, productivity investment and exports are well above 1980 levels and exports are at a record level. I do not mind repeating that message, because we are proud of it.

Company Profitability

11. Mr. David Nicholson : To ask the Secretary of State for Trade and Industry if he will make a statement on the rise in the profitability of non-North sea industrial and commercial companies during the 1980s.

Mr. Lilley : The profitability of non-North sea industrial and commercial companies recovered strongly during the 1980s and is now back to the levels of the early 1970s. The net real rate of return on capital employed was 8.3 per cent. in 1989, nearly half as high again as in 1979. The restoration of profitability has made possible increased investment in plant, research and development, and training.

Mr. Nicholson : I thank my right hon. Friend for that reply. Does he agree that that achievement has been brought about largely by the massive improvement in productivity in the past decade, which for manufacturing has been better than that of any of our competitors? Does he also agree that the 45 per cent. improvement in business investment during the first three years of this Parliament bodes well for future profits? Will he confirm that a recent survey by 3i shows that 80 per cent. of the 750 largest companies thought that they were in better shape to prosper now than they were in the 1980s?

Mr. Lilley : My hon. Friend is absolutely right. Productivity rose by half in the past decade, which was faster than the position in any other major country in the world, including Japan. Profitability is the key to success, and the restoration of productivity leads companies to spend more on investment, research and development, and training.

Mr. Campbell-Savours : Would not the profitability of car manufacturers increase if they could sell more vehicles in Japan? What is the position? Is a British manufacturer of cars allowed to sell motor vehicles in Japan directly through a distributing agent to the public or does the British manufacturer have to go through a trading company, in the same way as Nissan at present has to go through one in the United Kingdom?

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Mr. Lilley : Our exports in total to Japan have nearly doubled in the past three years. That includes a rapid rise in exports of motor cars, not least by the Rover company whose share of total imports of cars into Japan has risen significantly in the past five years and is rising at least as fast as that of other manufacturers. By and large, they are free to use whichever distribution channel they wish. There is a proposal by the Japanese Government to refer sole agencies to their anti-trust procedures. Last week I protested to them that they should not take that course, unless they also refer restrictive distributive practices by domestic manufacturers.

Aerospace Products

12. Mr. Colvin : To ask the Secretary of State for Trade and Industry what was the value of exports of aerospace products to the United States of America for the last full year for which figures are available.

Mr. Sainsbury : Aerospace products are included in a number of trade classifications. It is estimated, however, that the value of aerospace exports to the USA in 1989 was about £1.5 billion.

Mr. Colvin : Those exports far exceed imports, which shows the value of the aerospace industry to this country's balance of payments. Is my hon. Friend aware that aerospace products are usually priced in dollars, that the value of the pound against the dollar is currently unrealistically high and locked into the exchange rate mechanism, and that British aerospace companies therefore have the alternative either of selling products at a loss or of exporting manufacturing jobs? Is he aware that tens of thousands of jobs are at stake to dollar countries, such as the United States of America and Canada? The German Government have a Government-funded insurance scheme to cover exchange rate contingencies. Will my hon. Friend undertake to investigate that scheme and consider introducing a similar scheme in this country?

Mr. Sainsbury : I join my hon. Friend in paying tribute to an industry which in the past decade of Conservative government has doubled both productivity and turnover in real terms. In addition, it has trebled its exports--an achievement to which we should all pay tribute. As my hon. Friend will know, the dollar weakness affects all other currencies, not just the pound sterling. He referred to a particular German scheme. We are very keen that our industries should be able to compete on a level playing field, although that is perhaps not quite the right metaphor for the aerospace industry. My hon. Friend may be aware that there are doubts about whether the scheme to which he referred is permissible under GATT rules and I understand that it is the subject of a formal complaint to the GATT subsidies code panel.

Mr. Cryer : Everyone hopes that hostilities in the Gulf will end quickly. Will the Minister therefore confirm that the long-term viability of the aerospace industry depends on the development of civil projects and that we should not depend on military expenditure solely, to the exclusion of virtually all other projects in the United Kingdom? Will the Minister express a sympathetic view to any approaches from the industry to support civilian ventures in the same way and to the same massive extent as the Government pours money into military ventures?

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Mr. Sainsbury : I assure the hon. Member that we by no means depend on military aviation. We have had a number of notable successes in civil aviation. For example, GEC was awarded a contract to supply fly-by-wire systems for the Boeing 707 ; Rolls-Royce is taking a market share in the United States. The United States airline, America West, has signed an agreement with Airbus Industrie for the purchase of A320s. The civil aerospace industry is doing extremely well and I hope that it will continue to do so.

Telecommunications

13. Mr. Butler : To ask the Secretary of State for Trade and Industry if he will make a statement on progress in liberalising the telecommunications market.

Mr. Lilley : The Government have taken steps to introduce competition in all sectors of telecommunications. We now have the two largest cellular telephone networks in the world, the first telepoint services, and we are leading the world in the introduction of personal communications networks. Since British Telecom was privatised, quality of service has increased dramatically, prices have fallen by over 20 per cent. in real terms, and Mercury Communications has become established as a serious competitor. I made further proposals in the duopoly review for liberalisation to increase competition and choice for the consumer.

Mr. Butler : I welcome the additional competition and liberalisation in this country. Will my right hon. Friend now apply himself to overcoming the trade barriers to our manufacturers in Europe and Japan?

Mr. Lilley : I have just visited Japan, where I had talks with the trade Minister, aimed at liberalising trade. In particular, I encouraged him to take the big ticket items where Japan has a tendency to favour American rather than British imports.

We have sought liberalisation in other markets. We believe that one of the fruits of the liberalisation of our markets is that our manufacturers and telecommunications companies will be better placed to participate in those markets when they catch up with us, as they are beginning to do.

Mr. Simon Coombs : Does my right hon. Friend accept that the liberalisation of the telecommunications market that he proposes, and which I welcome, will nevertheless have a substantial--perhaps dramatic--impact on some existing and future players in that market? In that context, is he considering the use of techniques such as computer modelling to ascertain what the effect is likely to be? Such an exercise would help us to judge what his proposals should be.

Mr. Lilley : The duopoly review that I presented was a joint initiative with Sir Bryan Carsberg, Director-General of Oftel. His organisation has carried out the sort of modelling that my hon. Friend suggested to consider the impact of various regulatory and deregulatory proposals. We have endeavoured to take into account that line of reasoning.

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Accounting and Auditing Practices

14. Mr. Cousins : To ask the Secretary of State for Trade and Industry if he will review accounting and auditing practices in the United Kingdom.

Mr. Redwood : The Companies Act 1989 made important changes in the law on company accounts, including improvements to the enforcement of accounting standards. It also provided a new regulatory framework for company auditors. The new Financial Reporting Council, Accounting Standards Board and Financial Reporting Review Panel have been established. Arrangements are in hand to strengthen and widen representation on the Auditing Practices Board. I shall be taking a close interest in how those changes work in practice.

Mr. Cousins : Is the Minister aware that his amazing smugness and complacency about the likely effect of the Companies Act 1989 flies in the face of experience? Is not the wide talk of profits for companies now largely fiction and a matter of opinion, with figures being massaged by standard accountancy techniques? Is the Minister further aware that such a state of affairs is not in the interests of the accountancy profession, the companies concerned or the reputation of Britain as an industrial centre?

Mr. Redwood : The hon. Gentleman and his hon. Friend the Member for Great Grimsby (Mr. Mitchell) have tabled 436 questions on accountancy in the past two years, but they seem to have learnt nothing about the enormous strides that the profession is taking in improving the regulatory framework. They have not understood the important provisions in the Companies Act 1989 which began the debate. Rarely have so many questions been asked by so few hon. Members to try to do damage to one profession. I wish that the Opposition would lay off the profession, because their intention is malevolent. If they did that, they would recognise that the profession has extremely high standards and that, wherever those standards might lapse, disciplinary and regulatory action is being taken.

Mr. David Shaw : Is my hon. Friend aware that United Kingdom accounting and auditing practices are the envy of much of the world, especially in eastern Europe where many British accounting firms now have offices doing a considerable amount of work? Is my hon. Friend also aware that the Companies Act 1989, which his Department brought into being, has set up a substantial

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regulatory framework to ensure that our accounting profession stays at the top compared with the rest of the world? Can my hon. Friend give any reason to explain why the Opposition continue to knock the United Kingdom accountancy profession?

Mr. Redwood : My hon. Friend is quite right. The hon. Member did not need to table 436 very expensive and time-consuming questions in order to grasp the main point--that British accountants are doing extremely well in many world markets. My hon. Friend is also right to draw attention to eastern Europe where British accountants' skills are highly prized and where they have been spearheading export efforts in the service industries. I wish I could explain the reason for this persistent campaign by Opposition Members, but they will have to speak for themselves.

Shipbuilding

16. Mr. Salmond asked the Secretary of State for Trade and Industry what is his current estimate of the capacity of, and employment in, the United Kingdom shipbuilding industry.

Mr. Leigh : Around 28,000 are employed in shipbuilding in the United Kingdom, of whom about 6,500 are in merchant shipbuilding. Merchant shipbuilding capacity is 205,000 compensated gross tonnes. Comparable figures are not available for warshipbuilding.

Mr. Salmond : Will the Minister come clean with the House and admit that the Government's policy proposals under the seventh directive will accelerate the decline in the shipbuilding industry? Can he point to even one policy measure from this Government which will arrest and reverse that decline rather than making the industry's problems worse?

Mr. Leigh : Contrary to what the hon. Gentleman says, it is in the interests of the United Kingdom shipbuilding industry for subsidies to be reduced. That is why we argued for a reduction in the intervention funding and why it has been agreed to reduce it from 20 per cent. to 13 per cent. for large ships and to 9 per cent. for small ships. That reduction is in the interests of the United Kingdom because we have led the way in restructuring European shipbuilding. It will be particularly helpful to warshipbuilding yards such as Cammell Laird and Swan Hunter.

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