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House of Commons
Wednesday 27 November 1991
The House met at half-past Two o'clock
PRAYERS
[Mr. Speaker-- in the Chair ]
PRIVATE BUSINESS
City of Edinburgh District Council Order Confirmation Bill
Mr. Secretary Lang presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to City of Edinburgh District Council ; And the same was read the First time ; and ordered to be considered on Tuesday 3 December and to be printed. [Bill 12.]
Strathclyde Regional Council Order Confirmation Bill
Mr. Secretary Lang presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Strathclyde Regional Council ; And the same was read the First time ; and ordered to be considered on Tuesday 3 December and to be printed. [Bill 13.]
Oral Answers to Questions
TRADE AND INDUSTRY
Investment
1. Mr. Alan Williams : To ask the Secretary of State for Trade and Industry what plans he has to combat short-termism among investors in British industry.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley) : The most effective way of avoiding short- termism is to defeat inflation, a task which this Government are well on the way to achieving.
Mr. Williams : Does the Minister recall that, after collapsing by 30 per cent. at the start of the last decade, manufacturing investment took the rest of the decade to return to its starting point? Now it has collapsed by 20 per cent. again. Will he explain to industralists why they should risk their long-term capital on economic forecasts from Ministers who cannot get them right even three months ahead?
Mr. Lilley : The right hon. Gentleman forgets that manufacturing output fell under the last Labour Government and has risen under this Government. Figures in the CBI report show that manufacturing output in the past decade, at precisely the same point in the
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economic cycle, is up by a quarter, investment is up by a third, productivity is up by a half and manufactured exports are up by nearly three quarters.Mr. Norris : Does my right hon. Friend agree that the key to short- termism can often be found in the contracts which senior executives and directors write for themselves, concentrating on achieving short-term profit objectives to sustain a share price? Does he agree that there is an important role in publicly quoted company board rooms for non-executive directors to ensure that companies' long-term interests are reflected in management agreements with senior executives?
Mr. Lilley : My hon. Friend makes an important point. Shareholders should certainly take that factor into account when considering the performance of managers. In the long run, most shareholders, which are institutions investing on our behalf, must take a long-term view because they invest for our pensions and life assurance policies over the long term. Their interest, therefore, relies on long-term investments for long- term success, just as industry does.
Mr. Gordon Brown : Will the Minister confirm that in the Prime Minister's first year, far from escaping from short-termism, 45,000 businesses have gone under, 70,000 homes have been repossessed, 700, 000 more people have lost their jobs and manufacturing investment has fallen by £2 billion this year and, according to the CBI, will fall by another £400 million even in 1992? Is not the ultimate in short-termism the Government's failure to listen to the widespread demand from industry for a long-term industrial policy for Britain? As the Prime Minister has done nothing to change that policy in his first year, is not Majorism simply Thatcherism without the courage of her convictions?
Mr. Lilley : The hon. Gentleman illustrates perfectly the short- termism of the Labour Front Bench. His question was based on a 12-month view.
Mr. Charles Wardle : Why should businesses want the Government to dictate industrial policy? Why should short-termism be a feature of investment which the Government can influence? Surely it is up to boards of directors, executives and investment managers to decide whether they wish to invest in the short or long term. Is not the Government's only contribution to provide a stable economy with low inflation?
Mr. Lilley : My hon. Friend is absolutely right. It is the responsibility and duty of investors and businesses to take a long-term view and they increasingly do so. It is the Government's job to provide a stable framework and reduce inflation. The Labour party's policies would re -ignite inflation and exacerbate short-term pressures.
Mr. Salmond : Would the Secretary of State consider short-termism among investors as a suitable excuse for the rocky position of sterling on the foreign exchange markets? Does he accept that the position of sterling is a verdict on industrial performance and, if so, is the verdict guilty or not guilty?
Mr. Lilley : That is another example of someone criticising short- termism by taking the shortest possible
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short-term view. Does the hon. Gentleman believe that when he has created an independent Scottish state it will have a separate currency, or would he go for the ecu?Mr. Donald Thompson : Will my right hon. Friend take no lectures from the Labour party on short-termism, as its short-term policies will last only as long as the election and change for every by-election--
Mr. Speaker : Order. Is this about export credit guarantees?
Mr. Thompson : --especially in this field?
Mr. Lilley : My hon. Friend is absolutely right. One of the great problems that industry would face under a Labour Government would be knowing how long their policies would last before being reversed, not least on Europe. The Labour party seems to reverse its policies on that issue twice every decade.
Export Credit Guarantees
2. Mr. Andrew F. Bennett : To ask the Secretary of State for Trade and Industry if he will make a statement about export credit guarantees to eastern Europe and the USSR.
The Minister for Trade (Mr. Tim Sainsbury) : Export Credits Guarantee Department short-term export credit cover is available, subject to certain conditions, for the USSR and all the countries in eastern Europe. The availability of medium-term cover varies from country to country.
Mr. Bennett : The Minister will be aware of Oldham Batteries in my constituency, which has an excellent reputation for making mining batteries. He will also be aware that the British market for such products is steadily declining and there is considerable scope for the company to sell batteries to eastern Europe and the Soviet Union. Is he aware that that firm and many other people feel that the Governments of other countries in Europe give more assistance to manufacturers to sell to eastern Europe and the Soviet Union than do the British Government? Will the Minister give an assurance that the jobs of my constituents will be helped by the Government's provision of credit?
Mr. Sainsbury : The Export Credits Guarantee Department has assisted an enormous volume of exports and will continue to do so. I am sure that the factory in the hon. Gentleman's constituency would like to be paid for its exports. Perhaps the hon. Gentleman is aware that the economy of the Soviet Union is in a confused state and that some of the other countries have heavy debt burdens. Those matters will have to be taken into account when we consider whether to allow credit for exports to those countries.
Mr. Knapman : After the long bout of socialism there is bound to be economic instability in Russia and perhaps the way forward would be for those who do not trust the rouble to use barter deals. Will my hon. Friend pay particular attention to the application of a company in my constituency which requires a small amount of insurance cover that could lead to tens of millions of pounds' worth of business?
Mr. Sainsbury : My hon. Friend takes a close interest in the prosperity of companies in his constituency and has
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written to me about that case. I am happy to say that my officials will be meeting representatives from the company tomorrow to see what ECGD can do to help in the present confused economic position in the Soviet Union.Ms. Quin : Will the Minister confirm that we have stopped medium- term cover for the Soviet Union longer than any other OECD country? Does the Department of Trade and Industry accept that, while there may be no short-term commercial interest in giving export credit cover, there is a case for doing so in the national and long-term commercial interest? Such a case should be made out. What is the Treasury's attitude to providing cover? Is it simply intent on killing off ECGD altogether?
Mr. Sainsbury : All the major export credit agencies are reviewing cover for the Soviet Union.
Exports
3. Mr. Ian Taylor : To ask the Secretary of State for Trade and Industry if he will make a statement on the level of the United Kingdom's exports in 1990-91 to (a) the United States of America and (b) Japan.
Mr. Sainsbury : In the year to September 1991, the value of United Kingdom visible exports to the United States of America was almost double the level of a decade earlier, while exports to Japan had nearly quadrupled.
Mr. Taylor : My hon. Friend gives impressive figures which underline the importance of a successful outcome to the GATT talks. Will he give the House more information on the Priority Japan campaign which is being run with British industry? I understand that it has already achieved positive results and it shows just what British industry can do.
Mr. Sainsbury : I agree entirely with my hon. Friend about the importance of a successful outcome to the Uruguay round of GATT. As a result of the Priority Japan campaign, which my Department launched with British industry, British exports to Japan have risen by no less than 80 per cent. since 1988.
Mr. Beggs : Does the Minister agree that we shouldall congratulate those British companies that have contributed to the success in export achievements? Does he further agree that the levels achieved have been assisted by investment in the United Kingdom, including Northern Ireland, by American and Japanese companies? Will he continue to encourage further investment, which will lead automatically to further increases in exports?
Mr. Sainsbury : The hon. Gentleman is right to recognise the importance of inward investment in contributing to export success. For example, our exports of television sets substantially exceed imports. Investment in Northern Ireland, as in other parts of the United Kingdom, is important. That is why I am so concerned about the hostile attitude to inward investment taken by the Trades Union Congress and the failure of the Opposition to repudiate the TUC view.
Mr. Anthony Coombs : Will my hon. Friend confirm that exports have increased by 70 per cent. over the past 10 years and that this country now exports more per head
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than even the Japanese? Over the past three months Bristol Babcock in my constituency has received export orders of £10 million.Mr. Sainsbury : My hon. Friend is right. The success of our manufactured exports gives the lie to the Opposition's portrayal of manufacturing. British exporters have been extremely successful and that is because the Government have provided them with the right framework for success.
Airlines (Purchasing Decisions)
4. Mr. Flannery : To ask the Secretary of State for Trade and Industry if he will meet representatives of British airlines to discuss the consequences for the British aircraft engineering industry of their recent decisions on purchasing aircraft and engines.
The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh) : No, Sir
Mr. Flannery : Has not the Minister discussed with the chairman of British Airways the very large order for American planes with American engines? Does not he understand the impact that that will have on British Aerospace and Rolls-Royce? It would have been possible for British Aerospace to manufacture the wings and for Rolls-Royce to manufacture the engines. British manufacturing is taking a blow and all that the Minister can do is to give a monosyllabic, negative answer without any explanation.
Mr. Leigh : Naturally, I understand Rolls-Royce's disappointment, but we must put the matter in perspective. Rolls-Royce's order book stands at a record £7 billion. Some two thirds of the turnover of the British aerospace industry is exported. It would be against our interests to adopt a more protectionist and interventionist policy in aerospace, because it could lead to other countries adopting the same approach. That would be against the interests of our industry.
Mr. Hayward : Does my hon. Friend recognise that there is disappointment on both sides of the Chamber at the recent decision by British Airways? Although we recognise that it was a business decision, there are substantial implications, particularly for Rolls-Royce. I reiterate what the Minister said : the aerospace industry in general is exporting more than ever before in the face of substantial competition from abroad.
Mr. Leigh : My hon. Friend is right. Rolls-Royce is having success with its excellent new Trent engines and has succeeded in getting an order for the Airbus A330. We wish the company every success for the future. My hon. Friend is right to pinpoint the fact that it would be against the interests of British Airways and Rolls-Royce for politicians to second- guess the commercial decision making of private companies.
Mr. Hoyle : Does not the Minister realise that nobody is asking the Government to second-guess? He is merely being asked why he did not discuss the matter with Lord King. Further, does he realise that Rolls-Royce now has very little chance of being specified as the lead engine on the 777? The fact that the alternative was a stretch version of the A330 would have meant, as my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) said,
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that both the wings and the aero engines would have been manufactured in Britain. That would have been good for Britain, for employment, for British Airways, for British Aerospace and for Rolls-Royce.Mr. Leigh : There was a time when Ministers in the Department of Trade and Industry not only discussed these matters with the industries but directed them. I remind the Opposition that in those days, when British Airways was still in state ownership, it made a loss of £140 million before tax. By contrast, in 1990 the airline posted a profit of £130 million. The question is really an attack on the privatisation of British Airways, which is a successful company operating in a highly competitive marketplace. Nothing would be more disastrous for the future of British Airways than for it to be summoned to my right hon. Friend's office and told how to run its affairs. We used to do things that way and British Airways made a thumping loss as a result.
Inflation
5. Mr. Burns : To ask the Secretary of State for Trade and Industry what representations he has received from business men about the importance of controlling inflation.
The Minister for Corporate Affairs (Mr. John Redwood) : Many business men have stressed the importance of controlling inflation. I am sure that the House will welcome the fact that it is down to 3.7 per cent. and below the EC average, as that provides the sort of background against which businesses can expand and export abroad.
Mr. Burns : Does my hon. Friend agree that, at 3.7 per cent., the rate of inflation is half the lowest level that it was under the last Labour Government? Does he accept that small business organisations are extraordinarily worried by the interview given by the Leader of the Opposition to the Evening Standard ? When tackled on how the Labour party would deal with inflation, the right hon. Gentleman said, "To cut a story short, we do not know."
Mr. Redwood : That was a rare moment of honesty and brevity from the Leader of the Opposition. We all welcome his precision in noting the fact that the Opposition do not have a proper policy. How right my hon. Friend is to point out that our rate of inflation is less than half the best rate ever achieved by the 1974-79 Labour and Labour-Liberal Administration. We do not intend to repeat their experience and we have the policies to make sure that we do not.
Mr. Alton : Notwithstanding the importance of trying to reduce inflation, does the Minister agree that increasing unemployment--8,000 more jobless people in the city of Liverpool alone since January this year--and the effect on the telecommunications industry of the recent GEC announcements mean that he should look especially at ECGD funding? I commend to him early-day motion 209, tabled by the hon. Member for Cambridgeshire, South-West (Sir A. Grant), which calls on the Government to take a more realistic view of the help that they can give to telecommunications if those important jobs are to be safeguarded.
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Mr. Redwood : That information is vital to the creation of new jobs. A former Labour Prime Minister got that far in his thinking in the 1970s when he pointed out that one could not have high inflation and lots of employment and that high inflation would reduce rather than increase the number of jobs.The best way to create jobs in the telecommunications industry is through liberalisation, our duopoly review, opening up the market, allowing the new products to come through and allowing customers to make their decisions in the marketplace. I promise the hon. Gentleman that jobs will follow from those decisions.
Trade and Tariff Barriers
6. Mrs. Gorman : To ask the Secretary of State for Trade and Industry if he will make a statement on progress in lowering trade and tariff barriers ; and what progress is being made in the GATT negotiations.
Mr. Lilley : We believe that a successful conclusion of the GATT Uruguay round before the end of the year is vital for Britain, essential for the world economy and still within our grasp.
Mrs. Gorman : I thank my right hon. Friend for his interesting reply. Could not the European Community learn something from north America, where a tariff-free trade area, consisting of Canada and the United States and soon to be joined by Mexico, has been created? That has been achieved without the need for massive bureaucracy or supranational government or any loss of sovereignty. Does my right hon. Friend agree that free markets need only a system of laws and not all that bureaucracy?
Mr. Lilley : My hon. Friend makes a telling case. It is indeed a fact that the greatest prize in Europe is the completion of the single market. The Government are single-minded about the single market. It is a British idea, introduced by a British Commissioner and it will be brought to a conclusion under a British presidency. We believe that that is of supreme importance to Europe and we want to extend the benefits wider through agreements with the European Free Trade Association.
Mr. James Lamond : Although both the successful conclusion of the GATT negotiations and the temporary extension of the multi-fibre arrangement are welcome, can the Secretary of State assure us that there will be some mechanism to control the expansion of imports of textiles and footwear into this country after the MFA finishes? Will he bear in mind the fact that many eastern European countries are looking to this country as a possible dumping ground and they produce their goods with wages of about 20p an hour?
Mr. Lilley : The hon. Gentleman, who follows these matters closely, will know that an outline agreement affecting textiles is on the table which, I hope, given the completion of the whole GATT round, will come into force. That will mean that the gradual integration of textiles into the usual GATT arrangements over 10 years will be accompanied and, in most cases, preceded by a strengthening of the rules and discipline of GATT which, among other things, apply to surges of imports, dumping and so on. I hope that that is a reassurance. It has been taken as a reassurance by the British textile industry.
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Mr. Grylls : Will my right hon. Friend use his considerable influence to ensure that the problems outstanding on the GATT negotiations are discussed at the Maastricht summit? Many people rightly think that they are far more important than many of the items currently on the agenda which are causing problems. Let us get down to tackling practical matters such as getting those trade negotiations tied up. I hope that my right hon. Friend uses his influence.
Mr. Lilley : My hon. Friend is right to emphasise the great importance that we attach to a successful GATT round. There is nothing more important for the world economy. At the G7 Heads of Government meeting, my right hon. Friend the Prime Minister obtained the personal commitment of the round before the end of the year and it was partly as a result of that that the valuable meeting took place between President Bush and Mr. Lubbers, on behalf of the Community, which I hope has moved matters towards a conclusion. Whether there will be enough time at the Maastricht summit to discuss those matters as well remains to be seen.
Mr. Ron Brown : If the Secretary of State believes that he can get rid of tariffs, why does he support the Common Market, now known as the European Community--that big business club which is essentially a conspiracy against the working class and is certainly not wholeheartedly supported on this side of the House? Will he explain his philosophy? If he really accepts that, somehow or other, the Common Market is a panacea and if the British people have no say about whether we should continue our membership of that club, which does not have the interests of the common people at heart, how can it be justified?
Mr. Lilley : The hon. Gentleman goes on about conspiracies against the working class, but I gather that in his constituency the working class conspired against him.
We have abolished tariffs within the single market and the level of tariffs outside the Community is on average, 4 or 5 per cent.--much lower than it used to be. We are determined to resist calls for a fortress Europe, which would be damaging to world trade. One reason why we are determined not to have a Labour Government is that they might tip the balance in the Community towards a fortress Europe and against the forces of free trade which we have successfully orchestrated so far.
Industry (Support)
7. Mr. Andrew MacKay : To ask the Secretary of State for Trade and Industry what discussions he has had with the Confederation of British Industry to discuss Government support for industry.
Mr. Lilley : I regularly meet representatives of the CBI to discuss all matters affecting industry. This month I was the first Secretary of State for Trade and Industry to be invited to address its conference since it began 15 years ago.
Mr. MacKay : When my right hon. Friend last met the CBI, did he have an opportunity to discuss its recent report on manufacturing industry in which it said that the Government should have no role in backing winners, which is precisely the Opposition's policy?
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Mr. Lilley : I discussed it with the CBI and congratulated the CBI on it. It was an excellent report. It endorsed British industry's achievements under the policies that we have been pursuing for the past 12 years, urged us to continue and build upon them in future and condemned utterly the sort of policies still advocated by the Labour party, which is stuck in a mind-set of the 1960s and 1970s.Mr. Alex Carlile : The CBI, in its cogently argued annual report, argues for a more involved, better-funded Department of Trade and Industry doing more to help British industry. The Secretary of State, with the Chancellor, argues for a less well-funded, less involved Department of Trade and Industry. Will the right hon. Gentleman explain why the CBI is wrong and he is right?
Mr. Lilley : I can tell the House why the hon. and learned Gentleman is wrong. First, it was not an annual report but a one-off ; secondly, it did not call for more funding--
Mr. Lilley : It did not. Thirdly, it specifically ruled out more funding and subsidies and a return to the policies pursued by the last Labour Government, with the support of the Liberal party. The CBI rejected all that. It said that it did not want the Government to channel funds in the direction of strategically selected industries.
Mr. Nicholls : Does my right hon. Friend recall the CBI's estimate that a 1 per cent. rise in inflation costs industry some £5 billion? Does not that show that the Government could best serve the CBI by running the economy in such a way that inflation is kept down and does not reach the levels that it reached under the last Labour Government?
Mr. Lilley : That is absolutely right. That is why the CBI has warned against policies--advocated by Labour--that would re-ignite inflation. Premature cuts in interest rates, £35 billion of extra public spending, and increased public borrowing and taxation would all set fire to inflation. To put Labour in charge would be like trying to douse a fire with kerosene.
Mr. Nigel Griffiths : If the Government's record is so good, why has the CBI just reported that investment in manufacturing has fallen by 18.8 per cent. in the past year, and that it will fall by 4.4 per cent. next year? Is not the estimate of a fall of 22.2 per cent. in two years a damning verdict on the Government?
Mr. Lilley : On the contrary, the CBI takes a long-term view--unlike Opposition Members, who rarely take a view longer than 12 months--and it commends the fact that manufacturing investment is now a third up on the level of 10 years ago. It says that recent years have seen a transformation in Britain's manufacturing base, and it condemns those who do not recognise it and continue to run down the achievements of British industry. That, I think, is a pretty clear coded reference to Opposition Members.
Mr. Nicholas Winterton : Does my right hon. Friend accept that the Department of Trade and Industry has an important role to play in creating the right climate for manufacturing industry? I know that a question has already been asked about export credit guarantees, but
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does not my right hon. Friend feel that the Government could be more pragmatic, constructive and helpful in assisting manufacturing industry to gain the many orders for capital equipment in the Soviet Union and eastern European countries that cannot proceed because of the Department's failure to grant export credit cover?Mr. Lilley : My hon. Friend is absolutely right to refer to the Government's role in setting the right climate and environment and providing the right services for industry.
My hon. Friend asked about the Export Credits Guarantee Department. We have paid out eight times as much in funds to industry as we have taken in premiums since 1984. Over that period there has been only a 10 per cent. increase in the average premium--some premiums have risen while others have fallen. Naturally, companies trading in the more risky markets, for which premiums have been increased somewhat to reflect the risks, are less than enthusiastic. Overall, however, I think that the comparatively small increase in premiums demonstrates a pragmatic response, given the huge losses incurred over past years.
Motor Industry
8. Mr. Martyn Jones : To ask the Secretary of State for Trade and Industry when he next expects to meet representatives of the Society of Motor Manufacturers and Traders to discuss the effects of the recession on the motor industry.
Mr. Leigh : My right hon. Friend met representatives of the Society of Motor Manufacturers and Traders on 11 November to discuss various motor industry issues. While no further meeting is planned for the immediate future, the Department maintains regular contact with the SMMT at all levels.
Mr. Jones : Is the Minister aware that car sales have fallen every month for the past two years and that, as a consequence, domestic production fell by 27 per cent. last month alone? Will he offer any hope for the future of the industry and its employees when he next meets the SMMT?
Mr. Leigh : What the hon. Gentleman fails to mention is that the industry has shown enormous flexibility in increasing exports by a massive 78 per cent. in the first nine months of this year. Contrary to what he said, that has enabled the industry to maintain production at much the same levels as those of 1990.
Mr. Roger King : My hon. Friend has just referred to the car industry's exports during the past few years, and especially this year, which reflect the quality of the product and the improvements in manufacturing technology. Does he agree that to stimulate demand within the United Kingdom home market, where problems exist on the retail side, the industry is entitled to expect some special attention from the Chancellor of the Exchequer at the next Budget, which could include a reduction in or the total elimination of the appalling 10 per cent. special car tax?
Mr. Leigh : I am sure that my right hon. Friend the Chancellor of the Exchequer will note with great interest my hon. Friend's comments. If he does not do so, I shall draw them to his attention.
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Mr. Geoffrey Robinson : Is the Minister aware of the very serious position that faces the Jaguar car company in my constituency? Is he aware that the effect of the special car tax and of the vicious recession in the United Kingdom and the USA has led to the sacking of more than one third of Jaguar car workers this year? Does he realise that we need to deal urgently with the special car tax and to review the punitive arrangements affecting company cars that have so badly hit the Jaguar car company in my constituency?Mr. Leigh: The luxury car companies are restructuring, especially Rolls-Royce and Jaguar. We wish them success in the future. The hon. Gentleman will know that I cannot comment on what he said about taxation. I shall ensure, however, that my right hon. Friend the Chancellor of the Exchequer is made aware of his comments.
Mr. Butcher : May I press my hon. Friend a little further on the question of the special car tax, given the Government's excellent record in getting rid of idiosyncratic taxes, of which this is one? Will my hon. Friend confirm that were he to make representations to the Chancellor of the Exchequer, there is no constitutional impediment to the Chancellor abolishing taxes before Budget day?
Mr. Leigh : I shall draw those remarks to the attention of my right hon. Friend the Chancellor.
Mr. Henderson : On a recent visit to Preston, the managing director of Leyland DAF told me that sales of trucks and buses--which I am sure the Minister agrees form an important part of the industry--in 1991 are at their lowest level since the 1930s. Does the hon. Gentleman have the grace to accept that that is clear evidence of the damage that has been done to our economy by a Government who have no industrial policy? Can he declare that the Government intend to produce an industrial policy? Furthermore, what support can he give to the motor industry?
Mr. Leigh : I am sure that the House would be interested to know what the Labour party's industrial policy is for the motor industry. British Leyland absorbed a massive £2.9 billion in state subsidies while it was nationalised. What is the Labour party's policy? All we have, in the Opposition's current phrase of the month, is a kneejerk reaction. They have no policy for the future of the motor industry. We have created a flexible motor industry that increased its exports by 78 per cent. in the first nine months of this year. We have every reason to suppose that as soon as there is a reverse in the current downturn in demand, we shall be able to move to even greater success in the home market.
Inward Investment
9. Mr. Squire : To ask the Secretary of State for Trade and Industry what recent representations he has received from business men about the need for the United Kingdom to remain a receptive and attractive base for inward investment.
Mr. Redwood : The CBI has recently pointed out how important inward investment is to this country, and pointed to the success of this Government in attracting it--a success not assisted by some in the Labour movement,
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who call it "alien". I hope that Opposition Members will dissociate themselves from that comment, because Japanese and American investment is more than welcome here.Mr. Squire : Does my hon. Friend agree that a co-ordinated tax policy across the Community--now advocated by the Opposition--would severely damage inward investment, much of which is attracted here by our lower corporation tax and income tax rates? The Labour party advocates that in addition to its well-known policies of intervention, control and regulation.
Mr. Redwood : I agree with my hon. Friend. The tax on businesses is much lighter here than in France, and it is also lower than in Germany. That is a powerful argument for companies that are thinking of locating within the Community to come to Britain. Were we ever to have the misfortune of a Labour Government, which is unlikely in the immediate future, the British public might welcome common taxation systems. Average taxation rates would then be lower than Labour rates, but higher than Conservative rates. We intend to keep a Conservative Government for that and other reasons.
Mr. Ted Garrett : The Minister made great play of being single- minded. Does he accept that that single-minded attitude about which he is boasting is the curse of British manufacturing industry? How can one expect inward investment when no assistance is given to our existing industries? I am referring to the machine tool industry, which is a key industry now suffering and struggling to keep seventh place in the world. There were further redundancies last week. I warn Ministers that if the machine tool industry goes under, it will act as a deterrent to inward investment because it will show that the Government are not committed to the principle of assistance.
Mr. Redwood : The Government have a clear industrial policy which has been set out by my right hon. Friend the Secretary of State. Low taxation is vital to that policy, as is the assistance given in some assisted areas by my hon. Friend the Minister responsible for regional selective assistance. Also vital is the support that we give to exports and trade abroad when British companies are involved. The hon. Gentleman should do his homework on those points. We have a single-minded policy for British industrial success, but the Opposition have a feeble-minded policy which would achieve nothing for British industry.
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