House of Commons Hansard Debates for 1 May 1991

Mr. John Greenway : Will my hon. Friend assure the rural communities in North Yorkshire that the availability of a strong network of village post office counters will remain a key feature of the Government plans for the Post Office, as will universal delivery at a common price of the royal mail throughout the United Kingdom? The excellent service provided by rural village post offices is greatly valued by my constituents, and we ought to do what we can to keep it.

Mr. Leigh : I entirely agree with my hon. Friend. I live in a rural area myself and I find the service provided absolutely excellent. My post and, indeed, my red boxes are delivered on time.

Manufacturing (West Midlands)

11. Mr. Corbett : To ask the Secretary of State for Trade and Industry what plans he has to assist manufacturing output in the west midlands.

Mr. Redwood : The hon. Gentleman asks about the policies of the Department of Trade and Industry. They were recently set out by my right hon. Friend the Secretary of State on the question of helping manufacturing industry. [Interruption.] I thought that we were on Question 11.

Mr. Speaker : Correct. Is the Minister not answering Question 11?

Mr. Redwood : I am answering Question 11.

My right hon. Friend the Secretary of State set out the policies for supporting and helping manufacturing industry. The west midlands is a region which did extremely well in the 1980s, reaching record levels of output, investment and productivity. Our policies of promoting inward investment and assisting business and our budget for business will facilitate that progress in the 1990s.

Mr. Corbett : That confusing reply will send shivers down the spine of most manufacturers in Birmingham and the west midlands. Does not the Minister know or care that manufacturing investment is set to fall by 17 per cent. this year and that, since 1980, 370,000 jobs in the manufacturing sector in the west midlands have gone? Does he not realise that, in this second recession, the car industry in particular in the west midlands is being crippled? When will he start doing something to assist the manufacturing sector, on which we rely for our economic success?

Mr. Redwood : That was a confusing question. The hon. Gentleman does not seem to recognise the great achievements of the 1980s or the fact that investment

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reached record levels by the end of that decade. The adjustment downwards in investment still leaves it well above the level of the 1970s, when the Labour party had a chance to do something for manufacturing industry but let it down so badly. All the Government's economic policies are geared to creating the conditions in which enterprise can flourish. Healthy industry depends on competitive markets, low taxation, the attraction of inward investment and the proposals set out by my right hon. Friend in his statement yesterday, which clearly showed all that the Government are doing through the DTI to assist manufacturing industry. The hon. Gentleman should look at the facts and see that many overseas countries and companies are now investing here, because they know that the climate is good for manufacturing investment.

Mr. Sayeed : When my hon. Friend has met manufacturers in the west midlands and elsewhere, has he found that they understand that, during the past decade under a Conservative Government, manufacturing investment and output increased by 20 per cent., manufacturing productivity by 60 per cent. and manufacturing profitability by 250 per cent?

Mr. Redwood : What my hon. Friend says about the success of the nation as a whole is right. If Opposition Members claim to speak for the west midlands, they should start to recognise how much success there was in that region in the 1980s, and how that success will continue in the 1990s if we stick to the right policies for manufacturing industry. The fact that so many firms are investing in the area--only the other day Brose announced a major investment in car-related supplies--shows that international investors know something that the Labour party does not know : that Britain is getting it right and will be a major manufacturing centre in the 1990s.

Manufacturers (Trade Balance)

12. Mr. McAvoy : To ask the Secretary of State for Trade and Industry what was the trade balance in manufactured goods in (a) Germany and (b) Britain in 1990.

Mr. Sainsbury : The United Kingdom had a deficit of £13.7 billion. Germany had a surplus of £60.2 billion.

Mr. McAvoy : Will the Minister admit that these figures emphasise the true state of the British economy? Does he realise that our trade in manufactured goods shows a performance worse than that of any other industrialised country, with the exception of the United States, since 1979? In the face of declining investment, a fall in output, and major problems for British exporters, when will this "do nothing" Department of Trade and Industry do something?

Mr. Sainsbury : I am sorry to find the hon. Gentleman joining those of his colleagues who spend their time denigrating the performance of British manufacturing industry. Manufacturing output, manufacturing productivity and manufacturing investment last year were at record levels. Let us look at British manufacturing exports to Germany against British manufacturing imports from that country. Interestingly, the ratio, at 59 per cent., was higher last year than in any year between 1975 and 1979.

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Mr. Quentin Davies : Is it not right that, in 1990, Britain's share of world trade in manufactures increased, for the second year running, after being more or less stable throughout the 1980s and having fallen catastrophically during the previous three decades? Is that not a remarkable sign of a real turnround in the performance and competitiveness of this country's industry?

Mr. Sainsbury : My hon. Friend is quite right to draw attention to the significance of the fact that our manufacturing exports reached a plateau--did not fall, but reached a plateau--in the 1980s after decades of decline. That is a tribute to the increase in productivity to which I have referred--an increase that is essential if our manufacturing industry is to continue to prosper in the 1990s.

Ms. Quin : Will the Minister now admit that the prospects for an improved trade balance are not helped by the fact that his proposed sell- off of the Export Credits Guarantee Department has turned out to be a complete fiasco? Can he tell us why there is no British bidder left for the ECGD? Will he confirm that the Government's lack of commitment to export credits for not-so-easy markets, and in the long term, has caused both bidders and exporters to react with alarm and dismay?

Mr. Sainsbury : I am sorry that the hon. Lady refuses to recognise that the Confederation of British Industry, among others, has welcomed the proposed privatisation of the insurance services group of the Export Credits Guarantee Department. I am sure that the CBI has given this welcome because it realises that a privatised insurance services group will be able to provide a better, more flexible and more responsive service to its customers--British industry.

Mr. Charles Wardle : If the United Kingdom's trade balance in manufactured goods is to compare favourably with Germany's, will it not be necessary, first, for this country to equal Germany's performance in respect of inflation and competitiveness? Is not that precisely what the Government's anti-inflationary policies are designed to achieve? Mr. Sainsbury : My hon. Friend has put his finger on an extremely important point. One of the major factors in the success of German industry since the war is the relatively stable inflationary environment in which it has operated. If we were to return to the policies that are always advocated by the Labour party, we should have again the inflation levels--more than 15 per cent., on average--that characterised that party's last period in government.

National Economic Development Council

13. Mr. Dunnachie : To ask the Secretary of State for Trade and Industry when he will next meet the director general of the National Economic Development Council to discuss the future of British Industry.

Mr. Lilley : My Department has frequent contacts with National Economic Development Organisation officials on a wide range of business matters. I will be chairing the council meeting on 20 May 1991, and I also expect to meet the director general a few days before then.

Mr. Dunnachie : Is the Minister aware that, in the last six months, 100,000 manufacturing jobs have been lost as

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a result of the policies pursued by his Government, and that since 1979 about 2.2 million manufacturing jobs have been lost, again as a result of the policies of his Government? Has he read a recent press report that indicates the depths of the recession that this country is in? When will the Government take the action that is urgently necessary to bring Britain in from the cold, away from recession, and back to a level economy?

Mr. Lilley : Manufacturing output fell under the Labour Government, and it has increased under this Administration. Manufacturing exports are 60 per cent. up in volume terms and our share of world trade has been maintained over the past 10 years, a period in which France, Germany, the United States and Japan have all lost some share of world trade to the newly industrialised countries of the far east.

Mr. Anthony Coombs : Will my right hon. Friend confirm that, last year, manufacturing investment and exports reached an all-time record high, and that a survey undertaken by the West Midlands chamber of commerce showed that no fewer than seven out of 10 firms intend either to maintain or increase investment in training next year? Will he reiterate that it is part of the hypocrisy of the Labour party's attitude towards manufacturing industry that, when it was last in power, manufacturing output fell and profitability sank to an all-time 20-year low?

Mr. Lilley : I entirely agree with my hon. Friend. The latest CBI survey shows the welcome fact that industry expects to maintain spending on research and innovation and to increase spending on training during the recession. These are things that never happened under the Labour Government. Economy

14. Mr. Douglas : To ask the Secretary of State for Trade and Industry what response he will make when he next meets the CBI to its recent report on the state of the economy.

Mr. Speaker : Mr. Douglas.

Mr. Douglas : No. 14, and in Scotland we measure people from the neck up.

Mr. Lilley : I welcome the CBI's business agenda for the 1990s, "Competing in the New Europe". The CBI is right to set winning the battle against inflation at the top of its agenda.

Mr. Douglas : The Minister will be aware that the CBI is extremely concerned about the fall in the level of investment. That being so, why are the Government allowing the European Commissioner, Bruce Millan, to withhold £100 million which is due to coalfield areas, including my constituency, which have been deprived of funds? How does the Secretary of State hope to change the Commissioner's mind and ensure that the £10 million that is due to the east of Scotland goes to that area, that the matter is settled and that there is a satisfactory interface between the Department and the Treasury? When will he ensure that the coalfield areas get their dues?

Mr. Lilley : I had a useful meeting recently with Commissioner Millan to discuss this issue. Many

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misunderstandings were clarified. I hope that, before long, the money will be released. I am glad to have the powerful support of the hon. Gentleman.

Mr. Teddy Taylor : Will my right hon. Friend discuss with the CBI the new uncertainty that is facing industry as a result of United Kingdom laws being suspended or amended because of appeals that these laws conflict with Euro-laws on everything from lotteries to Sunday trading? As the guardian of industry and commerce, will my right hon. Friend take steps today to advise shopkeepers and the owners of supermarkets on whether they are entitled in the Government's views to open their premises on Sundays? Will he take steps also to advise local authorities whether it is the Government's view that they have powers to implement the Sunday trading legislation that has been approved by Parliament?

Mr. Lilley : I understand that yesterday's decision related only to whether local authorities should give undertakings to the court when seeking injunctions to prohibit Sunday trading. If that is right, the decision would not appear to cast doubt upon Mr. Justice Hoffmann's decision last year that the Shops Act 1950 was not incompatible with the treaty of Rome. The decision represents no change in the underlying law.

Mr. Austin Mitchell : When the Secretary of State next meets the CBI will he tell its representatives that they are right to be gloomy about the state of the economy, given that all the factors that produced the Lawson revival in the 1980s--from the credit bubble to the effect of oil on the balance of payments and the devaluation of 1986--were one-offs that cannot recur? Will he tell them also that the future of the economy under this Government is permafrost unless we get a competitive exchange rate and low interest rates? The Government cannot expand the economy without regenerating inflation and widening the balance of payments gap. That will be the position until we have a change of Government.

Mr. Lilley : The hon. Gentleman's views are certainly not those of the CBI. I advise him and other Opposition Members to read the CBI's "Business Agenda for the 1990s", which says :

"It will certainly be important that the United Kingdom does not retrace the steps that have been taken to advantage over the past decade."

One of the aims of the CBI has been

"to remind the 25 per cent. of the Electorate at the next General Election who were under 18 in 1974 how much has been achieved in the last decade. For it is all too easy to forget what the situation was like in the late 1970s, industrial disputes, apparently regarded as inevitable".

The CBI does not want to return to that, but the Labour party's new proposals commit us to doing so.

Sir Robert McCrindle : Following his welcome attempt yesterday to redefine the role of his Department, will the Secretary of State say in more detail what he meant by "encouragement to innovation"? In so far as that might have to follow the increase in Government-sponsored research and development, will he tell the House whether the appropriate funds are available for that purpose?

Mr. Lilley : Commercial research and development undertaken by companies is best encouraged by a competitive environment. We shall encourage that. However, research and investment at a pure, pre-competitive level need and receive Government support.

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We spend some £3 billion on civil research and development. That is more than the Japanese Government spend proportionately for the size of our economy. We are introducing encouragements for industry to exploit the potential that that gives, to encourage small and medium firms to get more involved in research and development, particularly with the science base in universities, and to change the climate in the City and industry to encourage innovation.

Mr. Gordon Brown : Will the right hon. Gentleman answer the central question and face the consequences of the recession in terms of lost jobs and lost capacity, when 10,000 jobs are going every week and 2, 500 companies are going bankrupt every month? Does he agree with the central finding of the CBI survey that was issued yesterday? Unless something is done, 50 per cent. of companies expect to cut investment in the next four months and 45 per cent. of companies--nearly one half expect to lay off workers. How many more months of redundancies and closures will it take before the "do nothing" Department of Trade and Industry begins to act, or has the Conservative party become, as it was in the 1920s and 1930s, the party of recession and unemployment?

Mr. Lilley : The key finding in the CBI's report was that the balance of companies expecting further decline was down sharply, from 51 to 17 per cent. As for investment spending, the key fact is that industry is maintaining spending on innovation and new products and processes and increasing it on training. I should have thought that the hon. Gentleman would welcome that. My speech looked forward to the future in the 1990s, building on the success of the 1980s. The hon. Gentleman wants to take us back to the 1960s and 1970s. The trouble is that Opposition Front-Bench Members all belong to the "Let's turn back" group.

Single European Market

15. Mr. Viggers : To ask the Secretary of State for Trade and Industry if he will make a statement on progress on the creation of the single European market.

Mr. Sainsbury : Good progress has been made towards the creation of the single market. Of the 282 measures set out in the 1985 Commission White Paper, "Completing the Internal Market", 197 measures have now been agreed by the Council of Ministers.

Mr. Viggers : Can my hon. Friend confirm that the Conservative party, which originally took this country into the European Economic Community, to its great benefit, and despite the sullen and unhelpful attitude of the Labour party of the time--and some peripheral sniping--is now on target to complete requisite legislation for the single European market by December 1992?

Mr. Sainsbury : I am happy to do so. The Government have consistently been in the lead in implementing directives in domestic law. Occasionally--perhaps even at this moment--the Danes have been slightly ahead of us, but we have an excellent record and are well on target to creating the single market, which will be of great benefit to British industry.

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Trade Indemnity

17. Mr. Ernie Ross : To ask the Secretary of State for Trade and Industry when he next plans to meet representatives of Trade Indemnity to discuss the number of business bankruptcies.

Mr. Sainsbury : Neither I nor my right hon. Friend has any plans to hold such a meeting.

Mr. Ross : Has the Minister read the recent Trade Indemnity report, which showed that business failures rose by 90 per cent. in the third quarter of 1990 and predicted that those figures will remain the same through much of next year? Is he aware that 24,442 firms failed in 1990? How does he propose to deal with that catastrophic failure in businesses?

Mr. Sainsbury : I draw the hon. Member's attention to the fact that the figures from Trade Indemnity are not comprehensive, as they relate only to the businesses where Trade Indemnity has a liability. I also draw his attention to the fact that, although insolvencies are always a matter of regret, the percentage of the total stock of businesses that encountered insolvency in 1990 was in no way out of line with the experience of the 1980s. A dynamic economy will always feature a high turnover of firms.

Mr. Batiste : Does my hon. Friend agree that, if there has been a record number of new company start-ups over a long time, there is bound, in a recession, to be a record number of bankruptcies? What matters is that British industry is able to compete effectively in the increasingly competitive environment that will exist in Europe post-1992 and to sell its goods on quality, not just on price.

Mr. Sainsbury : My hon. Friend is entirely right. In 1990 there were one third more businesses and, therefore, in a dynamic economy, there will inevitably be more bankruptcies. What is necessary for success is a high degree of productivity and innovation. That is what the Government's policies are encouraging.

Imports

18. Mr. McKelvey : To ask the Secretary of State for Trade and Industry what plans he has to reduce import penetration.

Mr. Sainsbury : The Department's policies aim to foster the competitiveness of British industry.

Mr. McKelvey : All to our loss in Kilmarnock. Is the Minister not aware that, since 1979, there has been a massive one third increase in import penetration? The import penetration on office equipment and processing data is colossal at 95 per cent. The import penetration on machine tools is huge at 52 per cent. and that for clothing, textiles and footware is 40 per cent. The Minister must tell me what to tell my constituents of Kilmarnock. How can they have some hope for the future when their economy is based on industry?

Mr. Sainsbury : I am glad to note that the latest figures show export volume up 3 per cent. and import volume down 2 per cent. on the equivalent quarter last year.

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