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House of Commons

Wednesday 10 June 1992

The House met at half-past Two o'clock

PRAYERS

[Madam Speaker-- in the Chair ]

PRIVATE BUSINESS

Price's Patent Candle Company Limited Bill

[Lords]

Ulster Bank Bill

[Lords]

Orders for Second Reading read.

To be read a Second time tomorrow.

Oral Answers to Questions

TRADE AND INDUSTRY

Europe Open for Business

1. Mr. French : To ask the President of the Board of Trade how many businesses have responded to his Department's Europe Open for Business initiative.

The Minister for Trade (Mr. Richard Needham) : More than 400,000 requests for information have been received by the European Open for Business campaign since March 1988, including 266,000 calls to the hotline.

Mr. French : I congratulate my hon. Friend on the success of this initiative. What further measures does he propose to assist business after January, when the market starts? What representations has he received from business about the way in which it feels it can best be assisted to take the greatest advantage of single market opportunities?

Mr. Needham : I will pass my hon. Friend's congratulations to my right hon. Friend the Minister for Industry, who must take the credit as I was in other parts during the successful campaign. There is an immense amount to be done, not least in the enforcement and implementation of the single market. In the summer I shall certainly have discussions with industry about how we can develop the next part of our strategy for ensuring that British industry can take advantage of the single market and that the single market is working effectively.

Mr. Flynn : Does the Minister think it part of the success of the European Open for Business campaign that thousands of British jobs, including precious high-tech jobs from INMOS in my constituency, are being syphoned off to European countries? Why has his Department built a Chinese wall around itself, refusing to reply to messages from hon. Members and the managing director of INMOS who are begging the Department to set up practical partnership arrangements with INMOS to save high-tech


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jobs that have a great future? If France and Italy are prepared to invest in British industry and technology, why is the Department not prepared to?

Mr. Needham : As far as I am aware, the hon. Gentleman has not yet been on the telephone to me. The number is 215 4301, and there is no Chinese wall around my office. The single market presents enormous opportunities for our industry. Now that Britain has returned a Conservative Government who are setting the right atmosphere and the right mood of confidence for industry, thousands of jobs will be created.

Mr. Adley : As one who has been on the telephone to my hon. Friend at the weekend about a company in my constituency, may I thank him for his assiduous attention to duty? At an early date, will he give me a report by telephone or note about the progress that he is able to offer the company, Lovaux, on its current problems?

Mr. Needham : I shall phone my hon. Friend later this afternoon.

Recession

2. Mr. Gapes : To ask the President of the Board of Trade when he next plans to meet representatives of the south-east CBI to discuss the effects of the recession on industry.

The President of the Board of Trade and secretary of State for Trade and industry (Mr. Michael Heseltine) : I have no meetings planned with the CBI's south-east regional council in the immediate future, although I met the CBI's national manufacturing council on 29 April and I often meet individual CBI member companies.

Mr. Gapes : Why, given the jobs crisis in the south-east, has the Minister no such meetings planned? In view of the crisis in docklands and especially in Canary Wharf, the difficulties with the channel tunnel project and his so-called initiatives for east London corridors--we do not hear much about them at the moment--why is he doing nothing to deal with the serious jobs crisis in my constituency, where 4,600 people are out of work and the total is rising every month? One in nine people is out of work and we want jobs now.

Mr. Heseltine : I think that the hon. Gentleman misstates the contribution that the Government have made. We have brought down interest rates by 5 per cent. over the past 12 months and secured a level of inflation that is extremely attractive compared with that of our competitors. Above all else, to help the recovery of our economy we have kept the Labour party out of power.

Dr. Hampson : Does my right hon. Friend intend to explain to the CBI the significance of his adopting the title President of the Board of Trade? Does the board, which is potentially the most powerful of all Cabinet Committees, now meet?

Mr. Heseltine : The Board of Trade has not met for many decades, except in a celebratory mode to commemorate its 200 years of success. If it were to meet, it would be attended by the Archbishop of Canterbury, who would doubtless give inspiration to those Opposition Members who are looking for an industrial strategy.


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Mr. Gordon Brown : I welcome the Minister to his new post. Will he confirm that, despite what he says, his Insolvency Service is predicting that insolvencies will rise to 35,000 this year? That will represent an appalling 60 per cent. increase in the number of business failures. Will the right hon. Gentleman confirm that the industrial policy that he once supported included investment in a research tax credit, a training levy, strengthened regional policy and reorganised export services, all measures that should be implemented immediately? Will he explain why action man is failing to act? Has the right hon. Gentleman exchanged his principles for his presidency?

Mr. Heseltine : I have merely exchanged the Department of the Environment for the Department of Trade and Industry. The hon. Gentleman is fully aware that his ideas were very much the discussion basis of the recent general election. Having failed to persuade the country, it is extremely unlikely that he can persuade the House.

Mr. John Marshall : I congratulate my right hon. Friend and his colleagues on the reductions in interest rates that have already taken place. May I humbly suggest to him that a further reduction may well be necessary?

Mr. Heseltine : I shall take the liberty of passing on my hon. Friend's views to my right hon. Friend the Chancellor of the Exchequer.

Regeneration

3. Mr. Mackinlay : To ask the President of the Board of Trade when he will next meet representatives of the TUC and of the south-east region of the CBI to discuss prospects for regeneration. Mr. Heseltine rose -- [Interruption.] The answer is worth waiting for. I have no such plans at present.

Mr. Mackinlay : If the President were to meet representatives of employers and workers in south-east England, what excuses would he advance for the record number of liquidations in the first quarter of the year and for the fact that 800 jobs are being lost in the region every day? What excuse would he offer to Essex man and Essex woman, who are enduring unemployment of 66,000 in their county this year?

Mr. Heseltine : I would offer no excuse. I would merely say that the country has to fight its way out of one of the worst recessions that we have seen since the war, and that it must do that against a background of all similar capitalist nations facing similar problems. The only way in which we shall succeed in fighting our way out is to excel in the increasingly competitive world that we face.

Mr. Rowe : Is my right hon. Friend aware that in the part of the south-east that I represent the Government are already showing clear signs that they recognise the certainty that Kent will lead the regeneration of the region? They are already spending millions of pounds on the necessary infrastructure. Will my right hon. Friend confirm that all the forecasts suggest that the volume of trade passing through and settling in Kent will be such that Kent will need to receive continued Government support?

Mr. Heseltine : My hon. Friend is right to ask that question. The level of Government support is substantial


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in terms of the infrastructure plans that are already under way and those that will unfold as the decade proceeds. It is a fact that the part of south-east England that my hon. Friend represents is bound to benefit enormously from the completion of the single European market. The scale of the benefit will depend very much on the entrepreneurial ability of British companies to react to it.

Electricity Generation

5. Mr. Hall : To ask the President of the Board of Trade what consulations he has had with the chairman of British Coal concerning future long-term contracts with the electricity generating companies.

The Minister for Energy (Mr. Tim Eggar) : I meet the chairman of British Coal on regular occasions and discuss a variety of issues.

Mr. Hall : That is a remarkable answer from a Department that now claims to be interventionist in industrial policy. Is the President of the Board of Trade aware that, before the privatisation of the electricity generating industry, it was announced that Fiddlers Ferry, a coal-fired power station in my constituency, was to use 2 million tonnes of imported low-sulphur coal a year? That would serve only to worsen our balance of trade deficit and to threaten jobs in the Lancashire coalfield, where Parkside is the only remaining pit, and it would leave us with sulphur dioxide emissions of 70,000 tonnes a year. Will the right hon. Gentleman now take urgent action to reduce coal imports, negotiate with British Coal to ensure that the power generating companies have a long-term coal plan, stop the dash for gas, invest in clean coal technology and rein back opencast mining?

Mr. Eggar : No. It is not an appropriate role for Government to stop coal imports, nor could we under our international obligations. However, I am confident of British Coal's ability at some collieries, particularly at the inland coal generating plants, to compete with coal imports. It must be the priority of all hon. Members to ensure that British Coal becomes world competitive. I am confident that it can.

Mr. Andrew Mitchell : Is my hon. Friend aware that it is the size of the contracts to be concluded between the coal industry and the generators, not the shape of the privatisation, that will determine the size of the coal industry in the future? Can he tell the House when he expects those contracts to be concluded?

Mr. Eggar : I am aware, as I am sure the House is, of the importance of those commercial contracts to the future structure and size of the British coal industry. I understand that negotiations are taking place between the generating companies and British Coal and the regional electricity companies and the generating companies. They are commercial negotiations, but I am taking a close interest in them.

Mr. Redmond : What discussions has the Minister had with the chairman of British Coal on importing dirty fuel?

Mr. Eggar : As I have already said, I have had a number of discussions with the chairman of British Coal on a variety of matters. As the hon. Gentleman will be aware,


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British Coal has alleged that coal has been dumped by certain countries, and those allegations are with the European Commission.

Dr. Michael Clark : Does my hon. Friend agree that one way to ensure that long-term contracts for British coal continue is to ensure that research and development into efficient and clean coal-burn technology continues? Does my hon. Friend have plans to ensure that our lead in that area is maintained, even after privatisation, by ensuring that the Coal Research Establishment at Stoke Orchard survives?

Mr. Eggar : I am well aware of the importance that my hon. Friend and others attach to clean coal and new coal-burning technologies and we shall take that into account as we go through the consultation process on the road to privatisation.

Mr. Dobson : Does the Minister recall that the Government's merchant bank advisers, Rothschild, advised the Secretary of State to intervene directly in the negotiations between the generators and British Coal to ensure that British Coal obtained high-take, long-term contracts? Will the hon. Gentleman take that advice and intervene ; or is this yet another example of his having no such plans at the moment?

Mr. Eggar : I do not think that the hon. Gentleman has been listening. I made it clear that I understood that commercial discussions and negotiations were going on. I also made it clear that I am keeping a close watch on them.

Mr. Oppenheim : Would not limits on coal imports effectively be placing the interests of the coal industry above those of its customers, which include many energy-intensive industries employing millions of people in jobs which may well be lost if those industries are forced to rely on high-price domestic coal? Are not such trade barriers ultimately self- defeating--first for the protected industry which simply becomes cosseted and inefficient, secondly for its customers, who have to buy high-priced goods, and thirdly for the economy as a whole?

Mr. Eggar : As usual, my hon. Friend has put his point effectively and well. We are doing no one any favours by artificially raising energy prices both for the domestic consumer and for the major energy users. I remind my hon. Friend that, since 1979, the Government have made about £17 billion available to British Coal ; that works out at a third of a million pounds for every one of the 50,000 people now employed in collieries, and it shows the extent of the subsidies and other assistance given to British Coal by this Government.

Monopolies and Mergers

6. Mr. Watson : To ask the President of the Board of Trade what recent representations he has received on policy for monopolies and mergers within the banking and financial sector.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : I have received a number of representations onthe bid for the Midland bank by the Hong Kong and Shanghai banking corporation, and on the possible offer made by Lloyds bank, which has now been withdrawn.


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Mr. Watson : The threat of a Lloyds takeover of the Midland bank has now been withdrawn, but had the takeover gone ahead it would have posed a threat to thousands of jobs and, possibly, hundreds of bank branches. Will the President of the Board of Trade take account of his own advice now that he is Secretary of State? According to that advice, in the event of a takeover bid involving a company with more than 500 employees, that company should involve its employees in consultation plans with a view to implementation of the takeover, and the bidder should be required to show that any benefit resulting from the takeover would be in the wider national interest.

Why did the President of the Board of Trade show such interest in takeovers before he returned to government, and why, now that he is back in government, has no Government action been taken on this important matter?

Mr. Hamilton : The Government take the national interest into account in all mergers and takeovers. If the Lloyds bid had gone ahead, it would have been examined by the Monopolies and Mergers Commission, which would have considered both its benefits and its disadvantages. The Government's policy is perfectly clear ; it is as it always has been. We look to competition, but not exclusively to competition : the national interest may well be wider.

Mr. Quentin Davies : I welcome the likelihood that, for the foreseeable future, there will be four rather than three clearing banks in England and Wales. But are my hon. Friend and my right hon. Friend the President of the Board of Trade happy that those four banks should have 90 per cent. of the corporate lending market? Has not that effective oligopoly enabled the banks to achieve a remarkable success in driving through an increase in their margins and charges at a time of falling loan demand, in a recession? Will my hon. Friend ask the Office of Fair Trading to take a thorough look at the whole position?

Mr. Hamilton : My right hon. Friend the President of the Board of Trade has asked the Director General of Fair Trading to keep that question under review. My hon. Friend will be aware that, last year, the director general considered whether there was any evidence of collusion, anti- competitive practice or exploitative behaviour by the banks in their relations with small businesses. He concluded at that time that there were no grounds for action under competition legislation, but it is open to him to institute an investigation at any time if he thinks fit.

Petroleum Engineering Department

7. Mrs. Fyfe : To ask the President of the Board of Trade what plans he has to relocate the petroleum engineering department from London to Aberdeen.

Mr. Eggar : The arguments for and against relocating the Department's petroleum specialists to Aberdeen are being considered in depth by independent consultants. I await their report and conclusions.

Mrs. Fyfe : Has not the consultation being going on for a considerable time? If it is not obvious that the PED should be relocated in Aberdeen, will the Minister tell us what factors are persuading him that that may not be a good idea?


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Mr. Eggar : The independent consultants' study has begun, and I hope to receive the results in August. We are committed to publishing it, and I shall of course take account of its findings in reaching a final decision.

Mr. Raymond S. Robertson : Will my hon. Friend refer the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) to the Scottish Conservative manifesto? It stated unequivocally that, should the independent inquiry say yes to relocation, the Government were committed to relocating the PED, and that in the meantime it would be entirely wrong to pre-empt the inquiry.

Mr. Eggar : I agree, and I pay tribute to the energy with which my hon. Friend has made me aware of his concerns--and those of his constituents--about the relocation of the PED.

Mr. Malcolm Bruce : Will the Minister assure the House that the comments that he made on Monday about the high cost of operating in Aberdeen were not an attempt to soften us up for the decision not to relocate to Aberdeen? Does he accept that the industry would like the jobs to be located in Aberdeen, as that would increase efficiency? The comparison with America, therefore, is hardly relevant. Will he put pressure on the Scottish Office to make the necessary infrastructure investment in north-east Scotland, which would help to reduce operating costs?

Mr. Eggar : I assure the hon. Gentleman that the comments that I made in Aberdeen about the potential long-term problem of moving to Aberdeen's higher-cost base do not show that I have formed any view about the PED. I am deliberately keeping an open mind until I receive the consultants' report.

Mr. Robert Hughes : On a point of order, Madam Speaker--

Madam Speaker : Order. I shall take points of order later.

Ealing Enterprise

8. Mr. Harry Greenway : To ask the President of the Board of Trade what funding his Department has provided to Ealing Enterprise ; and what estimate he has made of the number of jobs created.

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh) : Ealing Enterprise received pump priming in its start-up phase and is now supported by the West London training and enterprise council.

Mr. Greenway : Is my hon. Friend aware that Ealing Enterprise was founded by me and that it has been a source of many jobs for my constituents and others? Will he put more money into it and commend its excellent example to other parts of the country?

Mr. Leigh : Most Members are just Members, but my hon. Friend is Mr. Ealing. The whole House will recognise that he is one of the most dedicated and conscientious constituency Members. The enterprise agency that he founded has been successful. It has been helped by us in the past and it has created more than 1,200 jobs. Enterprise agencies are central to our strategy of creating


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the enterprise culture which so transformed the economy in the 1980s and resulted in there now being more than3 million businesses in this country.

Mr. Campbell-Savours : Does the Coopers and Lybrand Deloitte report on inward investment relate to London, and in particular to Ealing, in the same way as it relates to the northern region, in so far as it makes recommendations about assisted area status? What is the report's status? Is it a consultative document? Will it be debated by the House before Ministers make recommendations? Will we have the opportunity to question Ministers on the contents of the report, which has major implications for my constituents?

Mr. Leigh : One thing is absolutely certain : the report has nothing to do with Ealing Enterprise.

GATT

9. Mr. Ian Taylor : To ask the President of the Board of Trade what progress has been made in the general agreement on tariffs and trade negotiations.

Mr. Needham : Talks are continuing between the United States and the European Community to try to resolve their remaining differences, principally over agriculture. That is essential to open the way to wider agreement in the round.

Mr. Taylor : Has my hon. Friend noted the forecast that a successful conclusion of the GATT talks could lead to an increase in world trade in goods and services of £110 billion a year? With the safeguards for countries in the developing world, might not the benefits of such a successful conclusion be far more in the long-term interest of those countries than the discussions in Rio, with all the media attention focused on them? May we have more media attention focused on the GATT round?

Mr. Needham : I entirely agree that a successful outcome to the GATT round would lead to an increase in trade, as suggested by the Organisation for Economic Co-operation and Development, of £110 billion. That wealth creation can produce the tax stream that can do so much to improve the lot of the third world and, above all, its terrible environmental problems.

Mr. Madden : To ensure confidence in the British textile and clothing industry, will the Minister say when the Government will announce a further extension to the multi-fibre arrangement?

Mr. Needham : As the hon. Gentleman knows, the multi-fibre arrangement will finish at the end of this year, and the method of replacing it is tied up with the GATT negotiations. I still believe that it is probable rather than possible that we shall be able to reach some agreement on GATT, but, failing that, I assure him that the Government will ensure that arrangements are put in place to cover the future of the MFA.

Monopolies and Mergers Commission

10. Mr. Barry Field : To ask the President of the Board of Trade what plans he has to review the legislation preventing a Monopolies and Mergers Commission inquiry reconvening to review the effect of its recommendations.


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Mr. Neil Hamilton : Where appropriate, the Director General of Fair Trading may be asked to review the effectiveness of measures taken following a report by the Monopolies and Mergers Commission. He also has a general duty to keep markets under review. Where he has concerns about the competitive situation, he may ask the MMC to look again at markets that have been the subject of previous investigation by the commission.

Mr. Field : May I be the first Conservative Member to congratulate my hon. Friend on his appointment? As he saved the nation from the roof tax in a memorable speech, I hope that I can invite him to save the nation from a number of perverse decisions by the Monopolies and Mergers Commission-- such as the decision on the brewers, which has thoroughly upset all the landlords and beer drinkers of the nation, the decision on gas prices which has put the horticulturalists in a parlous state, and the report on Isle of Wight ferries which said that we had the most expensive ferries in the world but drew no conclusions. Will my hon. Friend either amend the legislation so that in future the Monopolies and Mergers Commission must reconvene within nine months to reconsider the results of its actions, or abolish that last reservoir of state-subsidised socialism for ever?

Mr. Hamilton : I cannot satisfy my hon. Friend on his last point, but he may be aware that the chairmanship of the commission becomes vacant later in the year. If he would like to apply for the job, he might be able to sort it out himself.

Recession

11. Mr. Kilfoyle : To ask the President of the Board of Trade what representations he has received from businesses in the north-west concerning the effects of the recession on industry.

Mr. Heseltine : Ministers and officials of my Department receive considerable correspondence about the state of business in the north-west.

Mr. Kilfoyle : Given that two Tory recessions have cost a third of a million manufacturing jobs in the north-west and that last year 4, 130 businesses in the north-west went bust--a 54 per cent. increase on the previous year--would not Ministers be better served by changing their approach and policies rather than the title of their Department?

Mr. Heseltine : It is curious that the hon. Gentleman should ask me that question when, if his party had been elected to government, it would by now have refused to order the fourth Trident submarine and be threatening the nuclear industry in the north-west and slaughtering the defence budget on which so many companies there depend.

Mrs. Peacock : My right hon. Friend will be aware of the importance of the GATT negotiations not only to the textile industry in the north- west, but to Yorkshire. Can he assure the House that the Government will retain their robust position on the GATT round in the hope of a successful outcome for textiles as well as agriculture?

Mr. Heseltine : My hon. Friend raises perhaps the most important opportunity facing our companies. We are committed to doing everything in our power to press our


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colleagues to reach an early conclusion to the GATT round, and I assure my hon. Friend that we shall continue to do so.

Mr. Hoyle : As the President of the Board of Trade has taken that rather pompous title, does it mean that he is no longer bothered about industry and energy, or can he tell the people of the north-west what he intends to do about all the industry that has been destroyed by the Government and about the last remaining pit which is hanging on by a thread?

Mr. Heseltine : The fact that the hon. Gentleman somehow thinks that trade has nothing to do with industry or the price of energy is a devastating revelation of the ignorance of the attitudes of the Labour party.

Mr. Sumberg : Does my right hon. Friend recall that before the election the hon. Member for Liverpool, Walton (Mr. Kilfoyle) came to the House to forecast doom and gloom for the north-west, saying that there would not be one Conservative seat left and that we should be completely decimated in that area? Should we not therefore take his forecasts with a large pinch of salt?

Mr. Heseltine : I have not kept such a beady eye on the hon. Gentleman as my hon. Friend has. Perhaps I shall do so in the future, although on mature reflection I very much doubt whether I shall.

Regional Policy

12. Mr. Hutton : To ask the President of the Board of Trade if he will make a statement on the Government's regional policy.

The Minister for Industry (Mr. Tim Sainsbury) : The Government remain committed to an effective, well-focused regional policy.

Mr. Hutton : Does the Minister agree that an important element of an effective regional policy for Britain in the 1990s, unlike the statement that he has just made, would include specific and targeted measures to help constituencies such as mine which are dependent on defence-related spending? Is he aware that tens of thousands of jobs in the defence industry have been lost since 1990? When will he present to the House a range of specific policies which will offer a reasonable prospect of secure employment to people in my constituency?

Mr. Sainsbury : I assure the hon. Gentleman that employment opportunities will be the major factor that we shall take into account in our review of the assisted areas map. The implications for employment opportunities of cutbacks in defence spending will be fully taken into account, along with all other relevant factors.

Mr. Knapman : Will my right hon. Friend confirm that business and commerce should always be based where they are most efficient, and that we therefore have no national cohesion policy?

Mr. Sainsbury : I assure my hon. Friend that the Government do not intend to try to dictate to industry or commerce where they should go. I recall industrial development certificates and, even more horrific, office development permits. I dare say that if the Labour party had its way we might return to those bad days.


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Mr. John D. Taylor : As employment in the regions could be improved at a stroke by reducing interest rates, why does the Minister continue to support the exchange rate mechanism, which freezes those opportunities?

Mr. Sainsbury : Interest rates have some influence on industry's decisions on investment and expansion, but currency stability also has a great influence, as do many other factors. The right hon. Gentleman would do well to take that into account.

Mr. Bill Walker : When my right hon. Friend is examining the policies, will he look carefully at travel-to-work areas? In particular, will he note that in my constituency a travel-to-work area was created some years ago embracing Blairgowrie, Pitlochry and Aberfeldy? Anyone who knows the highland parts of Perthshire knows that it is nonsensical to describe that as a travel-to-work area.

Mr. Sainsbury : My hon. Friend must be the most knowledgeable person about those areas, and I admit that I should like to know them better than I do. However, travel-to-work areas will be the basic building block of the review of the assisted areas map and there will be no fresh census data on which to reassess those areas until 1994. That would leave the review too late.

Ms. Quin : In his book, "Where There's a Will", the President of the Board of Trade called for an active regional and industrial policy, but other DTI Ministers in the past have supported the anti-regional policies of the No Turning Back group. Will the Minister give a clear statement today that the DTI is turning its back on the No Turning Back group for good?


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