House of Commons Hansard Debates for 5 Jun 1991

Mr. Lilley : The hon. Gentleman is mistaken. In Britain, a higher proportion of research and development is financed by the Government than in most other countries and our research and development on civil matters financed by the Government is a slightly higher proportion of GDP than that financed by the Japanese Government. But the most successful research and development is often that carried out by private companies in a competitive environment because it is competition which stimulates innovation and growth and it is on that that we most rely. It is significant that during the last decade, when we returned to a competitive environment, for the first time for more than a century in peace time the British economy grew faster than that of France and Germany.

Sir Anthony Durant : Does my right hon. Friend agree that the CBI's new report "Competing in the New Europe" endorses the Government's policies on inflation, industrial relations and competition?

Mr. Lilley : My hon. Friend is absolutely right. Not only that, but it condemns the Opposition's policies. It says that they are not wanted by industry, and it is right. When I go round the country, the Labour party is condemned because it has no strategy for defeating inflation. The country does not want to return to intervention, subsidies, controls and penal taxation with the trade unions back in the driving seat.

Ms. Quin : Would the Secretary of State care to explain to his European counterparts some of the crazy industrial policy decisions that the Government have taken? For example, can he defend the scandal of the closure of the Sunderland shipyards recently highlighted by "Panorama", the failure to support shipbuilding orders at Appledore shipbuilders in Devon or the failure to allow bidders for Ravenscraig to put forward their proposals? Is it not the case that far from the Opposition running down industry, it is the Government who are intent on closing facilities and turning away orders?

Mr. Lilley : That is absolute nonsense. Most of the policies to which the hon. Lady refers had a European dimension and we were acting within the constraints imposed by the European Commission and European law. I know that the hon. Member for Bolsover (Mr. Skinner) finds that distasteful, but none the less it is a fact. What I do find, and what I found yesterday at the OECD, is

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complete amazement that there still exists one country in Europe with a party which still believes in socialism, and it is not east of the iron curtain, it is there on the Opposition Benches.

Potash

13. Mr. Holt : To ask the Secretary of State for Trade and Industry how much potash by weight or value, at 1990 prices, was imported and exported by this country in each of the past 10 years.

Mr. Sainsbury : The United Kingdom has had a deficit in trade in potash in each of the last 10 years, but the clear trend has been for a reduction in that deficit over the decade. I will arrange for the full information requested to be published in the Official Report.

Mr. Holt : I am grateful to my hon. Friend for that reply. Would not that deficit be made much worse if the only potash mine in Britain, which is in my constituency, were to be closed? Is it not the Government's responsibility to ensure that jobs are maintained by seeking to keep open prosperous businesses? Have not the chances of that mine being kept open been severely weakened by the Secretary of State's crass decision not to allow the Kemira deal with ICI which would have enhanced the job prospects of my constituents and kept open the only potash mine in Britain?

Mr. Sainsbury : As I am sure my hon. Friend knows, no Secretary of State has overruled the recommendation of the Monopolies and Mergers Commission. My hon. Friend has described the company as successful ; I

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congratulate it on its success, and, indeed, on its export achievements. The most effective way of keeping companies going are not Government intervention, subsidies and handouts, but efficient production by efficient companies and successful exporting.

Mr. Graham : Do the Minister and the hon. Member for Langbaurgh (Mr. Holt) realise on what the import of potash, and the success of that company, depend? In my constituency, many people work for Kvaerner Kincaed which produces marine ship engines. The company importing potash cannot have an engine built by any other British company, because Kvaerner Kincaed is the last company in Britain that produces such engines. Why are the Government standing idly by while my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) is in Europe fighting his corner to keep the marine engine industry alive?

Mr. Sainsbury : I must congratulate the hon. Gentleman on the ingenuity with which he has linked the subject of marine engines with that of potash. I am happy to say that, because of the success of the company in the constituency of my hon. Friend the Member for Langbaurgh (Mr. Holt), marine engines often carry British exports of potash abroad, as well as bringing potash imports into this country. The following is the information :

United Kingdom trade in "potash" (ie potassium salts) is predominantly in potassium chloride. Trade in this product is shown in table 1. Trade in other potassium salts is shown in table 2. Values at constant prices are not available. Current price figures have been given in their place.

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Table 1                                                         

United Kingdom trade in potassium chloride, 1981-1990<1>        

         Volume  '000 tonnes     Value   £'000s                 

        |exports|Imports|Balance|exports|Imports|Balance        

----------------------------------------------------------------

1981    |91.2   |467.0  |-375.8 |4,671  |28,624 |-23,953        

1982    |76.6   |481.5  |-404.9 |4,733  |27,925 |-23,192        

1983    |145.7  |472.5  |-326.8 |9,288  |30,146 |-20,858        

1984    |96.6   |509.2  |-412.6 |6,522  |34,767 |-28,245        

1985    |78.5   |574.5  |-496.0 |6,371  |41,464 |-35,093        

1986    |94.9   |470.9  |-376.0 |7,293  |34,718 |-27,425        

1987    |327.4  |521.2  |-193.8 |22,799 |34,064 |-11,265        

1988    |434.6  |570.6  |-136.0 |29,595 |38,150 |-8,555         

1989    |367.1  |452.6  |-85.5  |26,695 |33,498 |-6,803         

1990    |384.5  |<3>-   |<3>-   |28,266 |<3>-   |<3>-

Table 2

United Kingdom trade in potassium salts, 1981-1990

Volume '000 tonnes Value £'000s

exports Imports Balance exports Imports Balance

1981 2.1 55.6 53.5 686 6,010 5,324

1982 2.4 58.8 56.4 1,158 7,482 6,324

1983 -- 60.4 -- -- 8,372 --

1984 -- 74.0 -- -- 9,495 --

1985 -- 64.6 -- -- 10,463 --

1986 -- 67.0 -- -- 11,072 --

1987 6.9 63.2 56.3 2,323 11,823 9,500

1988 7.5 84.2 76.7 3,609 14,147 10,538

1989 6.2 68.7 62.5 3,505 15,206 11,701

1990 8.2 102.1 93.9 4,051 17,964 13,913

Covers section 562.31 of the Standard International Trade Classification (SITC).

Covers sections 272.4, 522.64, 523.52, 523.74, 562.32 and 562.39 of the SITC.

Denotes that the figures are not available, since publication could be disclosive of commercially sensitive information. Source : British Geological Survey.

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Imports

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

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

Mr. Lofthouse : Is not that a very complacent answer? There has been a 10 per cent. increase in import penetration since 1979, and currently 50 per cent. of cars, 80 per cent. of videos and 90 per cent. of office equipment are imported. Is the Secretary of State aware that National Power and PowerGen are contemplating importing another 30 million tonnes of coal, which will add £170 million to our balance of payments deficit? Has he no plans to control those imports?

Mr. Lilley : If the hon. Gentleman wishes to control imports, he must first persuade his party to propose that we leave the EC, as the matter is entirely within EC competence.

It so happens that import penetration in the United Kingdom as a proportion of gross domestic product is almost exactly the same as that in Germany, which is not generally held to be an uncompetitive country. I am glad to say that our exports have risen in volume terms by some 60 per cent. over the past decade, which is proof that British industry is competing abroad with increasing success. That is a result of our policy of encouraging competition.

Mr. Andrew MacKay : Does my right hon. Friend agree that, if we really believe in free trade, we should not be unduly worried about import penetration, but should do everything possible to encourage our exports? Is he really satisfied that we have an open market in Japan in all respects?

Mr. Lilley : I am never satisfied. Every time that I meet the Japanese industry Minister, as I did yesterday, I encourage him to open his market further to British goods. Over the past three years, when we have made our campaign to encourage the exporting of goods to Japan a priority, exports have nearly doubled. We are now launching a new campaign, with the support of the Japanese Government, to open up opportunities for British industry on an expanding scale. I am delighted that industry is responding to those opportunities.

Mr. Turner : Will the Secretary of State accept that import penetration is not helped by the obsessive mergers and takeovers with which we are so beset? A company in my constituency, S. Edge and Co., has traded successfully for many years. It has an excellent work force and an excellent product, but, as a result of a takeover, it is having to call in the receiver. What will the Secretary of State do about those 350 jobs?

Mr. Lilley : If a merger or takeover reduces competition, we can take action to prevent that under our mergers and competition policy. However, it would be wrong to protect every company from the prospect of managerial change or increased competition as a result of takeover.

Mr. Grylls : Does my right hon. Friend agree that almost all the Labour party's policies would make British

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firms less competitive in this market and, therefore, make import penetration even worse? Will he continue to warn the British public about that danger?

Mr. Lilley : My hon. Friend is absolutely right. It is no coincidence that the only period since the war, in a complete economic cycle, when there has been virtually no growth in productivity outside the oil industry and in non-oil GDP was during the previous Labour Government. That should be contrasted with the success of the 1980s when for the first time in a peacetime decade for a century, Britain outstripped France and Germany.

Single European Market

15. Mr. Cohen : To ask the Secretary of State for Trade and Industry if he will make a statement on the preparedness of British industry for the completion of the single European market.

Mr. Sainsbury : British industry is well informed about the single European market. Many firms are taking positive steps to meet the opportunities and challenges that it is bringing.

Mr. Cohen : Will the Minister admit that his Department is no thoroughbred when it comes to informing British companies about the single market? A recent survey showed that only 8 per cent. of those companies have any idea of what will happen to them when the starting stalls are opened. Is that not another reason why the Tories should be sent off to the knackers yard?

Mr. Sainsbury : I congratulate the hon. Gentleman on including an appropriate series of analogies such as thoroughbreds on this day. I do not know whether he is aware of what will happen shortly after 3.45 pm. I am happy to say that our surveys show that there is 98 per cent. awareness in British industry of the single market as a result of our highly successful and appreciated advertising campaign. Over 50 per cent. of firms have said that they have taken, are taking or intend to take action to meet the changes brought about by the single market.

Mr. Teddy Taylor : What advice are the Government giving to the Japanese-owned British car manufacturers as to how they can take advantage of the single market, bearing in mind that, as the Minister knows, discussions are taking place now about the fact that the production of the Japanese-owned firms will be included within a collective EEC import quota? Does he appreciate that, instead of encouraging free trade, it will discourage any Japanese industrialists from investing in Britain?

Mr. Sainsbury : I am happy to say that one Japanese

company--Nissan--is exporting over 80 per cent. of its production. As my right hon. Friend the Secretary of State said earlier, we have made it clear that there is no doubt that Japanese-marked cars produced in Britain should be freely traded in the Community in the same way as cars produced by United States-owned firms.

Dr. Moonie : Given the critical importance of British Steel to British manufacturing industry's competitive position, why are the Government steadfastedly refusing to allow the House to debate the issue? Does the Minister accept that the Government hold a special share in British Steel and guarantees from that company? Given that

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Ravenscraig is profitable and that there were other potential bidders for that part of British Steel, will the Minister call in that company and ask the Office of Fair Trading to investigate the position?

Mr. Sainsbury : I am somewhat surprised that the hon. Gentleman thinks that a debate on the steel industry is so urgent when it is not a subject chosen for debate this very day by Her Majesty's Opposition. The hon. Gentleman should recognise that it is important that British industry should have available competitive and efficient supplies of steel. I feel that I hardly need remind the hon. Gentleman of how much more competitive and efficient the British steel industry has become since privatisation.

Mr. Oppenheim : Does not my hon. Friend consider discriminatory and extremely dangerous the proposals made by the European Commission to count cars with a high European content made in Britain in Japanese-owned factories as Japanese and therefore not to allow them to be sold freely in Europe? Is not it the case that European and especially British consumers have been ripped off for far too long by import barriers which have been lobbied for by inefficient, subsidised and protected European manufacturers such as Fiat and Renault? Is not it about time that such companies put their own houses in order rather than expecting the British consumer to foot the bill for them?

Mr. Sainsbury : I hope that my hon. Friend will recognise from what I and my right hon. Friend the Secretary of State have said that there is no possibility of what he suggested about Japanese-marked cars made in Britain happening. We cannot anticipate what the European Commission will finally propose in that regard, but I repeat what I said earlier--as far as we are concerned, Japanese-marked cars made in Britain must be allowed to trade freely throughout the Community.

Recession

16. Mr. Austin Mitchell : To ask the Secretary of State for Trade and Industry when he next plans to meet representatives of the Confederation of British Industry to discuss the recession in industry in the United Kingdom.

Mr. Lilley : Ministers and officials of my Department keep in touch with the CBI on a wide range of business matters. I next expect to meet representatives of the CBI on 14 June 1991.

Mr. Mitchell : I bet that the CBI is looking forward to an empty ministerial car drawing up outside its offices and the entire DTI team getting out. When the Secretary of State meets the CBI, will he tell it that 3,200 jobs have been lost every working day since the Prime Minister took office, that 4,000 jobs a week have been lost in manufacturing and that 40,000 viable companies are predicted to go bust this year? Will he also tell the CBI that the Chancellor's prophecy that recovery was just around the corner was last used by President Hoover in the United States in 1930 and that there can be no recovery until the Chancellor gets interest rates down substantially in order to jolt manufacturing out of the spiral of decline?

Mr. Lilley : The hon. Gentleman is clearly brushing up his green credentials by recycling old jokes. I acknowledge that there is concern about the depth of the recession, but I know that industry believes that our first priority must be

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to get inflation down. In its meetings with me, the CBI has made it clear that it supports the priority that we give to that objective and that it has no intention of urging us to withdraw from the exchange rate mechanism. It is also confident that, as industry recovers from the recession we shall see a renewed, strong growth during the 1990s such as that which it praised us for achieving during the 1980s.

Mr. Forman : When my right hon. Friend meets representatives of the CBI, will he take the opportunity to remind its members of the Government's positive record in creating the framework for inward investment? Will he draw to their attention especially our success in securing about three fifths of American inward investment in the Community and about two fifths of Japanese investment in recent years? Will he also draw to their attention the contribution that that can make to pulling us out of the recession?

Mr. Lilley : I shall certainly do that. This country's success in attracting inward investment from all over the world demonstrates that we have created the most attractive environment anywhere in Europe for industry, especially manufacturing industry. That is why the most recent figures produced by the Japanese show that about half of all Japanese investment in Europe comes to this country and that we attract more Japanese investment than the whole of Asia.

Mr. Gordon Brown : Given today's latest figures which show that there has been a 97 per cent. rise in small business failures in the south and a 115 per cent. rise in business failures in the midlands, and given the latest forecast that up to 1,000 businesses every week could go under, will the Secretary of State, in addition to any talks that he will have with the banks, now speak up for the needs of the businesses of Britain? Will he urge the banks to bring down interest rates of 16, 17 and 18 per cent. as a matter of immediacy, or is he abandoning the small businesses of Britain just as quickly as the Government have abandoned the unemployed?

Mr. Lilley : I shall certainly ask the Director General of Fair Trading to investigate any anti-competitive practices in which I have received evidence that the banks are indulging, whether the evidence results from the inquiries of my right hon. Friend the Chancellor of the Exchequer or otherwise. I have received no evidence and no evidence has been submitted by the hon. Gentleman to me or to the Director General. [Interruption.] There have been allegations, but first we must establish the facts. That is what my right hon. Friend the Chancellor of the Exchequer and the Bank of England are doing. Only in the light of facts can decisions be taken.

I am aware of the deep anxiety among small businesses about various practices of which they accuse the banks. That is why I asked my regional offices to initiate a series of meetings--the first of which took place three weeks ago in the west midlands--between banks and businesses at which businesses could put directly to the banks the changes that they wish to see.

Mr. Robert Banks : Does my right hon. Friend agree, first, that one feature of the British economy is its slowness to respond to a stimulus and, secondly, that confidence is a major factor in pulling the economy out of recession? Therefore, does not he think it prudent that we reduce interest rates as soon as that can conceivably be achieved?

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Mr. Lilley : Of course I agree with my hon. Friend on that. I accept the point that he makes. However, he will agree that the anxiety expressed by the Labour party about the level of interest rates is full of crocodile tears because it has declared that its policy would be to increase Government borrowing, which would drive up interest rates, increase inflation and give greater pain to small businesses than anything that they have suffered in the past.

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