The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley) : Last year 414,000 cars were exported from the United Kingdom compared with 339,000 cars in the previous year. That represents an increase of 22 per cent.
Mr. Wardle : Does not the recent export success of the automotive industry point the way for other manufacturers to follow, by switching more capacity from home to export markets? Is not it likely that by the mid- 1990s car assembly in the United Kingdom will be well over 2 million vehicles? Would not the greatest threat to that success story be a recurrence of inflation or, worse still, a reversion to Labour's interventionist policies?
Mr. Lilley : My hon. Friend is right on all counts. In the first four months of this year exports of cars were 101 per cent. up on those of the previous year. That is certainly an example to other industries. With regard to future developments, it is marvellous news that the decline in the car industry that went on for so long under the Labour Government has now been reversed, and we expect to be net exporters by the end of the year.
Mr. Hoyle : What representations has the Secretary of State, or the Chancellor of the Exchequer had from the motor industry about the state of the home market? Does not the right hon. Gentleman realise that sales are down and the car industry is facing real difficulties as a result? That is all because of the Government's economic policy, especially on interest charges and the rest. When will the right hon. Gentleman press his colleagues to help the motor industry to establish itself at home as well as overseas?
Mr. Lilley : The Chancellor of the Exchequer and I met the leaders of the car industry, and naturally, they were concerned about the decline in domestic demand for cars, but I could congratulate them on their good achievement in diverting production into exports, so that production in this country has been running at record levels.
Mr. Madel : Can my right hon. Friend say whether he is satisfied that all European Community countries are playing by the same rules on what is allowed to attract overseas investment into the EC motor industry? Is he satisfied that the German Government are playing by the same rules in attracting investment in what was East Germany? Will he ask Sir Leon Brittan, as the competition Commissioner, to consider the matter?
Mr. Lilley : We keep that matter under constant review, especially with regard to the East German issue, which I shall take up, as my hon. Friend asks. It is important for us that British manufactured cars of Japanese marques are given free access throughout the Community. We are absolutely adamant that they shall have free circulation throughout the Community-- [Interruption.] --despite the apparent resistance of the hon. Member for Newham, North-West (Mr. Banks).
The Minister for Trade (Mr. Tim Sainsbury) : The index of manufacturing output in the first quarter of 1991 was 113.4. This was 1 per cent. lower than the previous quarter, but 17 per cent. higher than the average for 1980.
Mr. Wilson : Is the Minister aware that 100,000 manufacturing jobs in Britain are dependent on ICI? Is he aware that 4,000 people, including many of my constituents, are directly employed by ICI, and that last year Hanson spent £34 million on research, while ICI spent £500 million? Is the Minister aware of any other European Government who would stand idly by while the fate of such a company was determined by the rules of the casino?
Mr. Knox : Does my hon. Friend agree that it is a matter of great concern that manufacturing output has risen by only 3 per cent. since March 1973--18 years ago? Will he confirm that in the 18 years prior to that date manufacturing output rose by about 70 per cent? How does he account for the poor performance in recent years?
Mr. Sainsbury : I cannot agree with my hon. Friend that performance has been poor in recent years. Indeed, the performance of manufacturing industry during the 1980s was outstanding compared with its rather dismal performance during the 1970s. Manufacturing output in the first quarter of this year was 17 per cent. higher than in 1980 and productivity was 56 per cent. higher. That is commendable.
Mr. Beith : Is it the Department's view, as well as that of the Prime Minister, that small manufacturing firms are getting a raw deal from the banks? If so, why is the Minister's Department not taking the initiative by
Column 261referring the matter to the Monopolies and Mergers Commission, instead of simply bringing in bank chairmen for a chat?
Mr. Cran : Is my hon. Friend aware that Britain's biggest manufacturing company, British Aerospace, is based in my constituency? In view of the tripe that we sometimes hear from the Opposition on the subject of manufacturing, will my hon. Friend explain to them why British Aerospace had a record year last year in terms of profits which amounted to £376 million, a record year in terms of turnover with new orders amounting to £10.8 billion, and why this year's order book is also at the record level of £11.8 billion?
Mr. Sainsbury : I congratulate my hon. Friend on praising the performance of a particular British firm, because all too often we hear nothing from the Labour party but the running down and denigrating of industry and complaints about its performance. Perhaps the reasons for the success of British Aerospace, to which my hon. Friend referred, are related to its increases in productivity during the 1980s, to which I referred in reply to my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox).
Mr. Gordon Brown : Does the Minister now accept that, in addition to all the other problems that British manufacturing industry faces, any possible takeover of ICI will have huge consequences because every year ICI spends 17 times as much on research and development as the Hanson Trust? Will the Minister now stop evading the question and make the Conservative party's view clear? Is it opposed to a hostile Hanson takeover of ICI?
Mr. Sainsbury : The hon. Gentleman is for once jumping to conclusions instead of rattling off statistics. Perhaps he should have regard to the Government's legal responsibilities and wait until something happens that could give rise to a reference.
The Minister for Corporate Affairs (Mr. John Redwood) : The Government have received a policy document from the Confederation of British Industry, "Competing in the new Europe". That document would be important to the training and education of Opposition Members. It makes it very clear that the policies of the 1970s pursued by the Labour party, of intervention and massive investment in things that went wrong, are the last thing that this country now needs to carry on the revival of its manufacturing industry.
Mr. Shaw : Does my hon. Friend not find it incredible that people are still looking back to the 1960s and 1970s when drafting political policy documents? Does he agree that considerable research has now established that it is competition within the economy that creates winning
Column 262businesses, and that a policy of picking industrial winners is like going into a sweet shop and picking sweets from large jars containing many sweets of different colours, in that one does not always get the colour that one expects? Does my hon. Friend agree that that is a ludicrous policy?
Mr. Redwood : My hon. Friend makes his point extremely well. The Labour party lost thousands of millions of pounds when it had the chance of steering the country's industrial policy. It was a disaster, with lost jobs, lost opportunities and large amounts of lost money. British Leyland-- Rover alone lost £2,750 million and there were massive losses in the steel industry. That has been reversed by privatisation and by policies based on competition and sensible Government support for business. My right hon. Friend the Secretary of State has set that policy out well in his speeches. Opposition Members should take up their training in industry by reading them.
Mr. James Lamond : Will the Minister look a little closer to the present day--from 1979 to 1990? He will find that more than 300,000 manufacturing jobs have been lost in the north-west of England alone and that another 74,000 jobs will be lost this year. If he is picking winners, why does he not do something about the multi-fibre arrangement to try to protect jobs in the textile industry?
Mr. Redwood : The hon. Gentleman has not been listening to the argument. The Government are not trying to pick winners ; that is industry's job. The Government are creating a climate and framework in which industry can flourish. Many thousands of new jobs have been created in the 1980s. Naturally, there has been industrial change because technologies, products and customer requirements change, but it is the Government's policies and not those of the Labour party, that will continue the manufacturing revival of the 1980s into the 1990s.
Mr. Nicholas Winterton : Does my hon. Friend agree that ICI has proved to be an industrial winner for this country and that its future is important for its 53,000 workers and the 4,700 who work for its pharmaceutical division in my constituency? Will he assure me that all aspects of the national interest will be taken into account if a hostile bid is made for that strategically important company by Hanson plc?
Mr. Redwood : I am sure that my hon. Friend will speak eloquently, should there be any action of the kind that he describes. I assure him that my right hon. Friend the Secretary of State, with his competition responsibilities, will consider all representations, should the need arise, and respond in the right way, given the powers of the European Community and the British Government.
Ms. Mowlam : The Minister has just stated that the Government are interested in setting the climate for businesses to flourish. I am sure that he would include in that small businesses. On "The Parliament Programme" at 12 o'clock he said, "The DTI has arranged"--
Ms. Mowlam : Excuse me, Mr. Speaker. The Minister said that the DTI had arranged meetings throughout the country with banks and small businesses to facilitate the discussion of problems that small businesses are facing with the current bank rate. Several small businesses that
Column 263are concerned about the difficulties have contacted me. I wanted to inform them where the meetings were being held, so I contacted DTI regional offices, but they had no record of the meetings. I contacted the Bank of England regional offices, but of those only one office organises such meetings on a day-to-day basis. The Association of British Chambers of Commerce, the Forum of Private Business and other voluntary organisations have no record of the meetings. Will the Minister tell us where they are to be held, because small businesses want to know?
Mr. Redwood : My right hon. Friend the Secretary of State asked the regional offices to arrange such meetings and they will take place. The hon. Lady should tell the interested companies to get in touch with DTI regional offices, which are there to serve the business community. The meetings will do just that--they will provide a forum for an exchange of views between the banks, the DTI and other interested parties.
Sir Robert McCrindle : Although it is not the Government's job to pick industrial winners--clearly that is correct--does the Minister agree that banks that are exerting undue pressure on small businesses during the current recession may be acting to their own disadvantage because among the small businesses that face difficulties today there may be the industrial winners of tomorrow? In the discussions will Ministers draw to the attention of the joint stock banks the desirability of thinking carefully before exerting the squeeze on small businesses that appears to be happening now?
Mr. Redwood : Naturally, the banks should think of their long-term business interests, but it is for individual banks to assess the risks of each case. The Government expect to see interest rates falling on average for the corporate sector as base rates fall. If special circumstances exist in some cases, there may be a risk-premium charge. My hon. Friend is also right that it would not be desirable for banks to make life so difficult for many companies that there is not a large volume of corporate business for them in future.
4. Mr. Skinner : To ask the Secretary of State for Trade and Industry whether he will meet representatives of the work force of Reeve Burgess to discuss the setting up of a co-operative for the manufacture of coaches in the constituency of Bolsover.
The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh) : I have no plans at present to meet representatives of the work force of Reeve Burgess to discuss the setting up of a co-operative.
Mr. Skinner : The Minister should be ashamed of himself. Reeve Burgess is a company which manufactures buses and coaches. It is a winner, with profits of £60,000 again this April. The chances are that in May its profits will be roughly that amount. Orders are still coming in. That factory would continue, were it not for the Government's inflationary policy and asset stripping by Plaxton. If the Government can find money to bale out Rover and British Aerospace and to take those companies' troubles off their hands, they have a duty to find the money
Column 264for the 180 workers at Reeve Burgess so that they can keep their 100-year-old factory going. Will the Minister pull his finger out and get something done?
Mr. Leigh : Although the closure is regretted, it is part of a rationalisation of bus manufacturing capacity by the parent company, Plaxton. Production is to be transferred to its parent plant at Scarborough. I notice that the hon. Gentleman's original question laid great stress on the need to set up a co-operative to deal with that problem. Has he forgotten the lessons of co-operatives in the 1970s? Scottish Daily News ate its way through £1.2 million of taxpayers' money, Kirkby Manufacturing and Engineering ate its way through £4.2 million of public money, and Meriden ate its way through £15 million of public money. I hope that Opposition Front-Bench Members will take this opportunity to say that they reject the neanderthal political thinking represented by Bolsover man, which represents the concepts of the 1970s on co-operatives and Bennery in all its guises.
Mr. Dickens : Yes, indeed, Mr. Speaker. I am delighted that my hon. Friend the Minister has reminded the House that, under the Labour Government, millions of pounds of taxpayers' money was given to co- operatives and never repaid. Does my hon. Friend agree that it is far better to leave those matters to the private sector than to sink taxpayers' money into co-operatives?
Mr. Leigh : My hon. Friend is absolutely right. I am still waiting to hear whether the hon. Member for Dunfermline, East (Mr. Brown) will use this opportunity to say that he rejects the failed policies of the 1970s. Those policies have failed before and will fail again.
Mr. Lilley : Since my visit the known value of contracts won by British companies in Kuwait has risen from about £70 million to at least £181 million. The Kuwaiti British Fire Group has signed an agreement with the Kuwait Oil company to survey the damage to the Sabriyah oilfield. The Government have continued to support the City's proposals for the administration of compensation claims.
resource-consuming, earth-polluting, cancer-giving 700 plus oil fires in Kuwait, are not small British firms disadvantaged in relation to their American counterparts by not getting the financial guarantees that the Americans enjoy?
Mr. Lilley : Certainly not. We have done all that we can to put large companies in touch with small companies with innovative ideas, and to put those ideas directly to the Kuwaiti authorities. The Americans are jealous of our actions to ensure that British companies have a lead in getting business in Kuwait, and there have been complaints in the American press that the American Government have not been as helpful as we have in this
Column 265matter. We have received many thanks and much support from British industry for the upfront way in which we have approached the issue.
Mr. Bill Walker : Will my right hon. Friend confirm that, because of the unique experience gained in the North sea, British companies are in a strong position to exploit the opportunities that exist today in Kuwait? Will he also confirm that the British are held in high regard in Kuwait and it is the combination of those two factors that are making the Americans envious?
Mr. Lilley : My hon. Friend is absolutely right. It is good news that the Kuwaiti British Fire Group, which I think includes Scottish interests as well as those from the rest of the United Kingdom, has won the contract, which could lead to extensive work in Kuwait. I pay tribute to it for its efforts on that front.
12. Mr. Geoffrey Robinson : To ask the Secretary of State for Trade and Industry when he next plans to meet representatives of the Machine Tools Technologies Association to discuss the recession in industry.
Mr. Redwood : My noble Friend the industry Minister has recently invited the Machine Tools Technologies Association to a meeting. I hope that it will take up that offer. I am sure that there is much to talk about.
Mr. Buckley : When the Minister meets the MTTA, will he take into account its 1991 spring report in which it expresses fears about the Government's tough, monetary policy, which has thrown an unnecessary burden onto the manufacture of machine tools? That will have an effect on the future upturn that may take place in British industry. Will that mean that the British machine tools industry will be incapable of meeting the demand? Will the Secretary of State take into account the number of changes in the Department of Trade and Industry which mean that manufacturing industry has no great influence on or interest in the Government's attitude?
Mr. Redwood : The Government are most interested in the future performance of manufacturing industry and give it every sensible support to achieve good performance. I have the report to which, I think, the hon. Gentleman referred. I am pleased to see that it says that in 1990 exports reached 50 per cent. of total production, which shows how much more competitive the industry is now than it was some years ago. It goes on to say that British machine tool technology leads the world in many important sectors and lists a series of important spares in which it does so. The Government welcome that and will give the industry support. The Minister for Trade met the industry's association at the end of last year to encourage the industry to export more. That is the sort of support that we shall continue to give the industry.
Mr. Geoffrey Robinson : Is the Minister aware of the other report of the Machine Tools Technologies Association on industrial trends, which shows that we are investing less in manufacturing and machine tools than we
Column 266were in 1979, that the manufacturing base is being eroded and that orders for that industry are decreasing faster than at any time since the second world war? At its meeting with the Government, the industry's association will want to know what positive steps the Government will take to help the industry. Will the Minister tell the House now?
Mr. Redwood : As I have already mentioned, the Government are keen to help the industry with the promotion of exports, which is its biggest sales sector and is, I believe, extremely competitive. The value of industrial advice from a former chief executive of Meriden is not so sure. Naturally, the MTTA will discuss a wide range of issues with my noble Friend the Minister for Industry, who will do whatever he can within our policies to provide the necessary assistance. We are not returning to backing winners because that would mean backing the wrong ones and, losing a lot of money for the taxpayer, which would make the economy worse, not better.
Mr. Burt : Bearing in mind that today there are more jobs in manufacturing in Britain than in France and Italy, does my hon. Friend agree that talk of our manufacturing industry's decline and death is premature? Will he and other Ministers in the Department do their best to ensure, both by rhetoric and conduct, that people who work in manufacturing industry believe that they and their companies are as important to the Government as anyone who works in the City?
Mr. Redwood : I agree. I, too, was proud to work in manufacturing industry for a period and I know what an important contribution it makes to our wealth generation. My hon. Friend is right to say that there are many manufacturing success stories of which we should be proud. My right hon. Friend the Secretary of State talked about the revival of the motor industry in answer to an earlier question. The machine tools industry is doing great things in changing its design, pattern of sales and products. That is true of many other manufacturing industries, and we intend to create the conditions in which that revival can take place.
These trade associations are important in respect of exports, but does my hon. Friend agree that if they are to prosper abroad it would have been more encouraging for British industry if the new Moscow trade centre had been built by a British firm, not a French one? Does he think that the French or the Germans would have allowed their trade centres in Moscow to be built by the British? I think not. That is one of the reasons why they are more successful than we are : they support their people while we sometimes throw ours to the wolves.
Column 267Mr. Redwood : It is also necessary to submit the lowest bid to win competitions. I am sure that my hon. Friend the Minister for Trade would have been delighted if the lower bid had come from a British company and I will ensure that he writes to my hon. Friend about any other matters that may be relevant in this case.
Mr. Henderson : The machine tool industry will be pleased to know that the Minister has read its recent report, but has he read yesterday's announcement that new orders in that industry are down 46 per cent. in the first quarter of this year compared with last year? Does he accept that the machine tool industry is an accurate barometer of what is happening in the rest of the economy? If so, does he agree that this is yet more damning evidence of the industrial damage being done to this country?
Mr. Redwood : Manufacturing investment was very high in the 1980s, particularly in the latter years of that decade. Of course the hon. Gentleman is right : there was some decline in orders at the beginning of this year, for domestic purposes, because the economy is weak at the moment, as he well knows. That is why I stress the importance of export markets accounting now for more than half the sales of the industry. We can give considerable support for that effort, and as the recovery gets under way in the United Kingdom domestic orders will of course increase.
Mr. Leigh : The Post Office's letter monopoly is a privilege, not a right. While we keep the options under review, we have no present plans to alter the scope of the letter monopoly, although in the event of a cessation or serious disruption to the letter service we would consider suspending it. The Government remain fully committed to the existence of a nationwide letter service with an affordable, uniform tariff structure, available to everyone, including those in rural areas.
Mr. Brown : When my hon. Friend gets back to his office at the DTI will he open his top drawer in which, when serving as a PPS to his predecessor, I recall leaving a copy of a document published by the No Turning Back group, entitled "Choice and Responsibility"? It was co- authored by my hon. Friend and myself and by a large number of our other colleagues last July. I commend to my hon. Friend the words on page 14, where we wrote :
"The Post Office monopoly can no longer be justified."
Mr. Leigh : As we have an entirely open mind on this matter I can announce today that I am happy to read any pamphlets on this issue, even those written by myself. More than that it might be unwise to say. My hon. Friend might conclude--I would not, but he might--that it is a misfortune of political life that a Back Bencher can say exactly what he wants although people do not always listen to him, while people always listen to a Minister, so he cannot say exactly what he wants to.
I have a book on my desk in the DTI to which I occasionally refer when I am given an idle moment. It was written in the 14th century and entitled "The Cloud of
Column 268Unknowing"--that represents the reactionary fog in which the Opposition move. They are not prepared to look at anything or to reform anything. What is, has to be, for now and for ever more. I am the Minister responsible for consumer affairs, and I am prepared to consider competition and value for consumers with an open mind.
Mr. Hain : I welcome the Minister's statement that he intends to retain the letter monopoly and I remind some of his hon. Friends who are keen to lift it that if they did so, cream-skimming would result and private operators would be willing to deliver only profitable inter-city routes. Conservative Members who advocate lifting the monopoly would find that services in rural areas would cause tariffs to rise to 80p a letter. The letter services to rural areas would be desperately hit and many Members thus affected would lose their seats as a result.
Mr. Leigh : I fear that the hon. Gentleman did not listen to my original answer, in which I said that the Government are absolutely committed to a uniform tariff structure, even in rural areas. We are also committed to choice and value for money in the Post Office, but we do not rule out that in certain circumstances competition may well increase choice and be to the benefit of the consumer.
Mr. Harris : Despite the veiled attack by my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown), will the Minister accept the congratulations of most hon. Members from rural areas on getting the balance absolutely right on this difficult issue and for stressing the importance of a uniform tariff for the mail? By not ruling out the possibility of competition my hon. Friend has struck exactly the right balance.
Mr. Leigh : I visited Mr. Van Miert, the Commissioner responsible for consumer protection, on 17 May. We discussed matters arising from differences between the regulation of fire safety of furniture in the United Kingdom and the Commission's proposals for a directive on the fire behaviour of upholstered furniture. My Department has just received confirmation of a decision taken by the Commission not to proceed with the proposed directive on the fire behaviour of upholstered furniture pending research into the feasibility of suitable test methods.
Mr. Illsley : I am grateful to the Minister for his answer and for the information that the directive has been postponed. In view of continuing research, will he ensure that when the directive comes back for consideration, United Kingdom law on the safety of furniture is not weakened by the acceptance of lower standards? Will he especially ensure that the regulations contain a water-soak test on the permanence of chemical finishes to upholstery materials? Will he also ensure that ignition resistance and fire spread levels are equal to those set out in United Kingdom legislation?
Column 269Mr. Leigh : I am grateful to the hon. Gentleman for his question. There was absolute cross-party agreement on this issue. We were determined firmly to take up this matter with the Commission. We said that we had the strongest standards in Europe and that we had imposed them with cross-party support and would not accept any directive which lowered them. It is a victory for both sides of the House and for the fire service and the industry involved that the directive has been postponed. We shall make it clear to the Commission in the two or three years grace that when the directive is reintroduced it must be based on our excellent standards.
Mr. Conway : Will my hon. Friend pay tribute to the British furniture industry for its co-operation in the implementation of the regulations, especially with regard to clear labelling which, of course, enables consumers to see exactly what they are buying? As Britain and Ireland are the only two member states to have such regulations, will my hon. Friend assure consumers and the House that we shall continue to press to make sure that such regulations apply throughout the European Community?
Mr. Leigh : I am grateful to my hon. Friend. Plainly, when we receive the directive we must ensure that it is based on our standards. It is vital for the industry and for consumer safety that there is no question of any dangerous foam-filled furniture being imported. Our trading standard officers can stop such furniture coming in and there is no question of a legal challenge to our very high standards.
Mr. Nigel Griffiths : Does the Minister realise that his failure to champion and secure tougher measures on foam safety means that many furniture manufacturing jobs and companies are at risk and that hundreds of thousands of foam-filled items of furniture can be imported? The matter can be challenged in the European Court and we should have had a settlement by now. Why have we not secured an effective and tough directive?
Mr. Leigh : Not for the first time the hon. Gentleman, who shadows me, appears to have devised his question before he heard my answer. I have made it clear that the Commission has withdrawn its directive. We cannot force the Commission to impose a directive now on our European competitors based on our high standards. All we can do is what we have achieved. We have prevented the Commission from introducing a directive which would have lowered those standards. Therefore, I repeat that the Commission's decision to withdraw the directive is a victory for both sides of the House. I am sorry that the hon. Gentleman has sought to make a party-political point out of the matter.
Mrs. Peacock : I welcome my hon. Friend's comments on the furniture industry, but will he confirm to the House that in that industry he includes those in Britain who manufacture beds? Will he ensure that their high standards are maintained and not watered down by Europe? Will he also ensure that any goods that are not up to those high standards are rejected at our ports?
Mr. Lilley : I met representatives of the Commission at the ministerial meeting of the Organisation for Economic Co-operation and Development in Paris yesterday and we discussed various issues related to trade and industry.
Mr. Cummings : Has the Minister recently considered the vast differences between the aid given to respective countries within the EC for research and development? Is it not rather foolish for us to be out of step with our competitors? Does he agree with the Prime Minister's constituent, Mr. Bill Abbotts, whose machine tool company is having real problems because of the Government's economic policies, that there really is nothing wrong with the country, only with its daft policies?