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House of Commons

Wednesday 8 July 1992

The House met at half-past Two o'clock


[ Madam Speaker-- in the Chair ]

Oral Answers to Questions



1. Mr. Etherington : To ask the President of the Board of Trade what measures he proposes to boost British exports.

The Minister for Trade (Mr. Richard Needham) : The Government, through their overseas trade services organisation, provide a wide range of help, advice and financial support which is highly regarded by United Kingdom exporters. The plans announced by my right hon. Friend the Secretary of State last Friday for reshaping the Department of Trade and Industry will enable us to build even closer ties with exporters.

Mr. Etherington : As we have lost so much of our manufacturing base since 1979, is it not about time that the Department of Trade and Industry seriously considered the long-term outlook and sought to expand the export potential of manufacturers in Britain? When will the President of the Board of Trade use some of the imagination and verve that he is purported to have to take action on exports? Or shall we continue to see developments such as in Sunderland, North, where the possibility of expanding shipbuilding and marine services is sterilised by the building of yuppie housing and by other so-called prestigious projects, such as a business school which will not create one extra job but looks rather good?

Mr. Needham : The hon. Gentleman could assist in the promotion of jobs in exports in the north-east of England by welcoming and supporting companies that came to his area, such as Nissan, rather than, as a delegate of the National Union of Mineworkers, supporting the Trades Union Congress resolution that said that Japanese projects were alien organisations. Perhaps he should tell his constituents which are the alien organisations-- Japanese projects or trade unions such as that which he supports.

Mr. Madel : One way to boost exports would be for the Department of Trade and Industry to allow AWD (Bedford) Trucks to export civilian lorries to Libya. Given the unemployment difficulties in my constituency and the difficulty that that company is in, could my hon. Friend help me and the people of Dunstable and grant the company an export licence to export civilian lorries to Libya?

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Mr. Needham : I am grateful to my hon. Friend for raising the matter. As he knows, he is coming to see me tomorrow to discuss the issue. Obviously, I am as sympathetic as possible to any company that wishes to export. Nevertheless, Libya is a country to which United Nations sanctions apply and there are obvious complexities. I look forward, however, to discussing the matter tomorrow with my hon. Friend.

Ms. Quin : Does the Minister recall that the President of the Board of Trade pleaded with the Conservative party conference three years ago not to dismiss the trade deficit as unimportant and fully to recognise its seriousness? As we have had a trade deficit for five years, when does the Minister expect the trade balance to be in surplus?

Mr. Needham : The hon. Lady knows that we never give that forecast. When her party left office in 1979, the visible trade deficit was 4 per cent ; it is now 4.7 per cent. Her hon. Friends operated an industrial strategy, which cost the Government £6 billion a year, to pick and back losers. Compared with that figure, the deficit that we have now is insignificant.

North Sea Oil

2. Dr. Michael Clark : To ask the President of the Board of Trade if he will make a statement on his policy for encouraging the extraction of marginal oil from North sea fields.

The Minister for Energy (Mr. Tim Eggar) : The Government are committed to maximising economic recovery of North sea oil and gas. The fiscal regime is designed to achieve this.

Dr. Clark : Is my hon. Friend aware that many companies currently operating in the North sea find little incentive to extract the marginal oil from their fields? Will he therefore undertake to examine the obstacles in their way, including present and planned superfluous legislation, so that investment continues to flow to projects in the North sea rather than to the former Soviet Union, where investment may go if there are no profit and incentives in the North sea?

Mr. Eggar : I completely agree with my hon. Friend that we need a sympathetic legislative and fiscal framework for the North sea, and it is part of my job to ensure that. I am sure that he would agree that we must ensure that safety considerations are paramount, that the expenditure incurred in connection with the Cullen report is taken through and that the necessary measures are improved and implemented by the oil companies.

Mr. Malcolm Bruce : Does the Minister accept that the level of investment in the North sea is reaching a plateau, albeit at a high level of £5 billion, and that this is an appropriate time to consider the fiscal regime to ensure that there are adequate incentives for developing marginal fields, not merely to benefit the oil companies but to maximise the market for British-based service and supply companies?

Mr. Eggar : The hon. Gentleman is right. Investment is at a high level and the chances are that it will level off. That is the nature of investment in the North sea--as the hon. Gentleman realises, even if other hon. Members do not. On his specific point, different oil companies have different

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tax cases, depending on their problems and the nature of their fields. I have told a number of companies that we shall consider their cases if they put them to us.

Mr. Duncan : In recognising the tremendous success story that has followed investment in the North sea, does my hon. Friend agree that the industry must bear down on its production costs if it is to maintain its competitive advantage? Will my hon. Friend work with the industry to achieve that aim?

Mr. Eggar : I very much agree with my hon. Friend. If North sea production is to remain competitive, we must get control of capital costs, where the industry has been successful, and current operating costs, which need more attention, especially in view of the cost of operating in Aberdeen.

Mr. Dalyell : Is it not deeply unsatisfactory that, under the new set-up, this is the only reachable energy question on the Order Paper? Where precisely in the fiscal regime is there any item of legislation that encourages companies to get that last drop of marginal oil?

Mr. Eggar : I am happy to answer as many of the questions on the Order Paper as we reach, and I encourage the hon. Gentleman and others to ask their questions. On the hon. Gentleman's specific question about the fiscal regime, as he well knows, it is extremely complex. The way in which it operates depends on the fundamental tax regime of the oil company, the nature of the field, the length of time that the field has been operating and so on. The way forward is for each company to consider projects to establish whether they make sense in pre-tax terms, but not in post-tax terms. If that is the case, and if they have kept costs under control, they should make representations to us.

Mr. Colvin : Is my hon. Friend aware that the cost of abandoning the 155 structures in the North sea, in whole or in part, may well exceed the cost of building them ? What talks has he had with companies or oil organisations such as BRINDEX, which represents the British independent oil exploration companies, and the United Kingdom Offshore Operators Association about the fiscal regime, to encourage them to set aside the capital required to meet the cost of abandonment when that moment comes ?

Mr. Eggar : I recognise that that is a concern. For that reason, changes were introduced in the Finance Acts in the past two years. If there are specific additional worries, I should be willing to hear about them. Additional complications, which relate to prospective suggestions about how field structures should be abandoned and the environmental implications, also concern the industry and I am considering them.


3. Mr. Roy Hughes : To ask the President of the Board of Trade when he next expects to meet representatives of the Engineering Employers Federation to discuss the effects of the recession on the engineering industry.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine) : I met the Engineering Employers Federation last month. I have no plans for a further meeting.

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Mr. Hughes : Does the President appreciate that unemployment has increased for the 26th consecutive month--an increase of more than 1 million--and that a further 70,000 jobs, again in engineering, are expected to go soon? Overall, the prospects seem very grim, so why does the right hon. Gentleman not discuss with the engineering employers the Chancellor's so-called "green shoots", because many people believe that he has been using weedkiller instead of fertiliser?

Mr. Heseltine : The most effective support that we can give to the engineering and all other industries is to maintain our current counter- inflationary stance, keep interest rates coming down and maintain the thrust to provide increased international

competitiveness in this country. Nothing that we do will be influenced by the Opposition trying to get us to abandon the policies on which ultimate success depends.

Mr. Nicholas Winterton : Does my right hon. Friend accept that many members of the Engineering Employers Federation believe that he must work hard on the Treasury to make it understand the needs of engineering and manufacturing? Does he further accept that many members of the federation would be prepared to accept a modest increase in corporation tax if the Treasury would introduce 100 per cent. capital allowances?

Mr. Heseltine : My right hon. Friend the Chancellor of the Exchequer and I are at one on those matters and all others. On the basis of that happy partnership, we shall look forward to the recovery of the British economy.

Mr. Olner : When will the rhetoric finish and engineering employees get the same action from the Government as Germany and all other European countries get to assist their industries? The recession has gone on for far too long. It will never be over without investment in industry.

Mr. Heseltine : The hon. Gentleman takes a rather more pessimistic view of the Government's approach to the engineering industry than the employers themselves. I welcome the constructive response that they gave last Friday to the announcement that we would restore sectoral dialogue between the industry and my Department.

Mr. Marlow : What rate of interest is appropriate at the current stage of the recessionary cycle? Does the Chancellor of the Exchequer agree with my right hon. Friend?

Mr. Heseltine : The rate of interest is that which the markets will accept, and the markets will accept the rate that reflects the level of inflation in this country, which is still more than the levels in many competing economies. Nothing would be more counter-productive to the recovery, which all hon. Members want, than indicating that the Government were to abandon their counter-inflationary strategy.

Mr. Gordon Brown : Given the President's stark admission on Monday that this is the most difficult recession since the war and given the figures that came out today showing a 92 per cent. increase in bankruptcies in engineering and elsewhere, foreshadowing a summer and autumn of further closures, redundancies and job losses, why is he failing to implement his well-publicised ideas for

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export, regional and industrial policy reform? Why, at the same time, is he presiding over cuts in support for industry and jobs in those very areas? Has he changed his mind or has the Cabinet changed it for him?

Mr. Heseltine : The real dilemma from which the hon. Gentleman suffers is that he is incapable of understanding what I have been saying all these years. In no conceivable way will I abandon my support for the recovery of the British economy based on a highly competitive improvement in performance, on which our competitiveness must depend.

Deregulation Unit

4. Mr. Quentin Davies : To ask the President of the Board of Trade what plans he has for the future of the deregulation unit in his Department.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : Deregulation is one of the Government's most important initiatives--at local, national and European level. We aim to abolish unnecessary regulations--

Mr. Skinner : Why does the Minister not light up his tie?

Mr. Hamilton : Why does the hon. Gentleman not switch off? We aim to abolish unnecessary regulations and licences, to make them as clear and effective as possible where they remain necessary, and to ensure proper compliance cost assessments in the case of new proposals.

The deregulation unit helps to co-ordinate the work of units in all Departments and we intend to continue with a vigorous programme of cutting red tape.

Mr. Davies : Does my hon. Friend agree that it is much more difficult to get rid of restrictions and regulations than to dream up new ones and that, therefore, a continuous effort is required by Government to redress the balance? In that context, will my hon. Friend give some thought to asking the deregulation unit to produce an annual report of its performance as a spur to and measurement of achievement?

Mr. Hamilton : I am grateful to my hon. Friend for his interest in the subject. We have an annual programme of reform in that sector. I report from time to time, usually by way of a parliamentary question, on the progress that has been made. I shall certainly give sympathetic consideration to my hon. Friend's request.

Mr. Hain : Is the Minister's definition of deregulation taking on a new meaning? I ask that question as his Department decided to strip the Royal Mail prefix from the Post Office's parcel force business. It seems as though that move may be an initiative to privatise that section of the Post Office.

Mr. Hamilton : I hope that you will agree, Madam Speaker, that that supplementary question was wholly irrelevant to the main question.

Madam Speaker : Order. As the Minister is responsible for the deregulation unit, the question was probably appropriate. [ Hon. Members -- : "Answer."] Order. If that is the Minister's answer, so be it. The hon. Member for Neath (Mr. Hain) will probably table a substantive question in future.

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Free Enterprise

5. Mr. Barry Field : To ask the President of the Board of Trade if he will set out the initiatives taken by his Department to encourage free enterprise in Poland, Romania and the former Soviet republics.

Mr. Needham : My Department can best encourage free enterprise by promoting trade with, and investment in those countries and ensuring that they have markets for their exports. My Department also provides advice and encouragement to potential British exporters and investors in many ways in those countries.

Mr. Field : My hon. Friend will be aware that an application for some of the funds made available by the Government to promote free enterprise in eastern Europe was refused on the ground that the installation and assets to be acquired were to be used for a military purpose. I believe that British taxpayers expect that swords will be turned into ploughshares. Will my hon. Friend ensure that, in future, the rules are more transparent so that business men do not waste time applying in such circumstances?

Mr. Needham : I understand my hon. Friend's concern. The four sectors for which the know-how fund is available are energy, financial services, food distribution and small business creation. As my hon. Friend says, defence conversion is not one of them, and that information has been published. I assure my hon. Friend that the Government will do all that they can to raise awareness of sectors covered by the know-how fund when that is possible.

Dr. Kim Howells : The Minister will know that, when it comes to creating a viable commercial market in eastern Europe, no commodity is in greater demand than a secure and safe supply of electricity. Many nuclear power stations in the Soviet Union play a vital role in producing electricity but are far from safe and far from reliable. Will the Minister therefore ensure that the huge accumulation of experience and expertise in this country is deployed in helping the operators of those nuclear power stations to make them safe so that we may avoid a catastrophic decline in electricity production and a disaster such as that which occurred at Chernobyl?

Mr. Needham : I certainly accept what the hon. Gentleman says about our expertise and the need for something to be done. I assure him that the Government will do what they can to that effect.

Mr. David Atkinson : Does my hon. Friend agree that those who run the former communist countries today are the same people who ran the state- controlled, centralised, bureaucratic communist economies that they once were? Does he agree that those people should be encouraged now to encourage those in exile in the west, who already understand the free enterprise system, to return home to their countries to apply the principles of which they have already had experience?

Mr. Needham : Yes, Madam Speaker.

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6. Mr. Kilfoyle : To ask the President of the Board of Trade what the trade balance for the engineering sector was in 1979 ; and what it is at the current time.

Mr. Needham : In 1979, there was an engineering trade surplus of £2 billion. In 1991, the last full year for which figures are available, there was a surplus of £500 million. However, in the first five months of this year there was a deficit of £1.6 billion.

Mr. Kilfoyle : The President of the Board of Trade is a former Minister with responsibility for Merseyside and will be well awsare of the collapse of all forms of engineering on Merseyside--indeed, in the north- west--since 1979. That has resulted in large numbers of job losses and plant closures by companies such as Plessey, Lucas, Marconi and Cammell Laird. Does the Minister agree that the declared intention of Ford to transfer research and development engineering functions from the United Kingdom to Germany presages another downward twist for British engineering, and its future?

Mr. Needham : Ford has plans to rationalise much of what it is doing in the United Kingdom. It increased its purchase of United Kingdom components to about £2.7 billion worth in the past year--that figure was £1.3 billion less five years earlier. A whole queue of companies is lining up to get involved in component production in the United Kingdom, with the arrival of the new Japanese inward investors and because of the improved quality and competitiveness of British component suppliers. I was near the hon. Gentleman's constituency on Monday opening a new Japanese factory which will produce a large number of automated components. What the hon. Gentleman says is just not true.

Mr. John Marshall : Does my hon. Friend agree that Honda, Nissan and Toyota, apart from providing direct employment in the United Kingdom, will become major exporters of British cars to the Community?

Mr. Needham : As my hon. Friend says, the effect will be that by the mid-1990s this country will be a net exporter of cars. That could hardly have happened under the previous regime and it would not have happened if the Opposition had had anything to do with it because, as they have said, they regard Japanese investors as alien organisations.

Mr. Dobson : Will the Minister tell us what the reaction of the Department of Trade and Industry is to the fact that the privatised electricity industry has virtually abandoned its formerly substantial research and development commitment? What impact does he think that will have on our engineering imports? [Interruption.] In case Conservative Members are not aware of this fact, if we do not manufacture things here and we want to build power stations here, we will have to import the plant and equipment to do so.

Mr. Needham : The hon. Gentleman may not have been fully awake when my right hon. Friend the Secretary of State was at the Dispatch Box. He may be aware, as the hon. Member for Dunfermline, East (Mr. Brown) is, that we are organising the Department in a sectoral fashion, so perhaps he should pose his question to the Minister responsible.

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Mr. Dunn : Is it not a fact that our engineering sector would do much better abroad if a number of Governments, such as that of the empire of Japan, took our goods on the same terms as we take theirs?

Mr. Needham : I quite agree with my hon. Friend that it is important to have the same credit guarantee arrangements across the world. Through the Organisation for Economic Co-operation and Development, the British Government are striving to achieve that objective. We hear Opposition Members knocking British engineering's achievements a great deal--although most of them have never run a business in their lives--whereas the record of the engineering industry in this country is second to none.

Trading Standards Officers

7. Mr. Callaghan : To ask the President of the Board of Trade what estimate he has made of the shortfall in the number of trading standards officers.

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh) : There is a shortfall of about 300, 14 per cent. of the total.

Mr. Callaghan : I hear what the Minister says. Does he agree that there is an inadequate number of inspectors? Is he aware that car-clocking fraud is costing the general public £200 million a year? Why does not he implement the recommendations of the Automobile Association and the Royal Automobile Club and introduce a national car mileage registration scheme to stop fraud?

Mr. Leigh : Trading standards officers already have adequate powers to deal with these matters. The hon. Gentleman should remember the old adage about glass houses. His borough of Rochdale has fewer trading standards officers than the complement allows for : it has nine but should have 13--despite the fact that we have given Rochdale a massive increase in its block grant, from £19 million to £28 million, to cover trading standards officers. I suggest that the hon. Gentleman addresses his remarks to his borough council.

Mrs. Peacock : My hon. Friend will be aware of the importance of trading standards officers in many different consumer sectors. Has he had any representations from them about the misleading advertising of Global Marketing Europe (UK) plc, a timeshare company?

Mr. Leigh : My hon. Friend will know that we are concerned about timeshare practices. We approached the Commission before the last election. As a result, it is drawing up a directive now. We also fully supported the Timeshare Act 1992 introduced by my hon. Friend the Member for Basingstoke (Mr. Hunter), which instituted a cooling-off period for timeshare purchases. We are making progress, but we recognise that trading standards officers will have an important role to play.

Mr. Nigel Griffiths : Is the Minister aware that his failure to implement the Borrie report has cost car buyers more than £1,000 million in fraud and that his inaction has led to a car clocking epidemic, with one in five second-hand cars being clocked and 400,000 people being swindled this year?

Mr. Leigh : The hon. Gentleman spent the 17 months before the general election grossly overstating his case, and

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he is plainly continuing in the same vein. He knows perfectly well that we shall address these matters in a general review of consumer affairs in the new informed markets Bill. The directive on unfair terms in consumer contracts was agreed only last week. Despite the fact that my noble Friend the Under-Secretary of State for Consumer Affairs and Small Firms is a former racing driver, she cannot move that quickly and introduce legislation within a week.

Mr. Sproat : Does my hon. Friend have any plans to strengthen the powers of trading standards officers so as to prevent companies from setting up businesses, starting to trade, running up debts, not paying those debts, declaring themselves insolvent and then starting up again in the same businesses with almost the same names?

Mr. Leigh : That is a matter for my hon. Friend the Under-Secretary of State for Corporate Affairs, who no doubt has heard what my hon. Friend has said.

Trade Descriptions Acts

8. Mr. Hutton : To ask the President of the Board of Trade what recent discussions he has had with the Institute of Trading Standards Administration about updating the Trade Descriptions Acts.

Mr. Leigh : There have been no recent discussions, but the institute was fully involved in the 1990 review of the Act.

Mr. Hutton : Is the Minister satisfied with the present range and scope of the Trade Descriptions Act 1968 or does he agree with me and with the trading standards officers that it needs to be extended to include false statements on services, particularly mis-descriptions, and bogus claims about professional qualifications?

Mr. Leigh : I agree that the Act is old and needs updating. We want to make sure that it covers services as well as goods. There are a number of concerns about green claims, for example, so the hon. Gentleman is right. In our review of the Act, on which we have already consulted, we shall address those points. I hope that we shall be introducing the informed markets Bill fairly soon. That will deal with all these points and update the Trade Descriptions Act. The hon. Gentleman has made a fair point.

Mr. Rupert Allason : While I welcome the action that the Government have taken on timeshare, there is still concern about the related practice of pyramid selling. Has my hon. Friend had any representations from trading standards officers or from members of the public who have entered into what amount to almost legalised pyramid selling organisations? Mr. Leigh : We have had representations on terms of selling and we keep these matters under review, but at present we have no plans to change the legislation on this.


9. Sir Michael Neubert : To ask the President of the Board of Trade what plans he has to improve the attraction of London as an international centre for trade.

Mr. Neil Hamilton : London is already the location of many international businesses and remains one of the

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world's leading financial centres. Our policies, including the recent establishment of a ministerial committee for London, will help to ensure that London maintains its position.

Sir Michael Neubert : Is it not ironic that that segment of our capital city and principal trading centre which is closest to our new home market of continental Europe is the least developed? What contribution is my hon. Friend making towards ensuring the success of London docklands and the survival of that strategically vital project, the extension of the Jubilee line?

Mr. Hamilton : As my hon. Friend will know, my right hon. Friend the President of the Board of Trade played an important part in getting the docklands project going-- [Interruption.] It is a highly imaginative project, which in due course will lead to the regeneration of the whole of that east London corridor. Some 50,000 jobs have already been created in docklands this year, compared with a much smaller number 10 years ago. Although the recession has resulted in difficulties for docklands, the project will not collapse. In due course, other companies will come in to complete this huge project, which will be the best news for east London that it is possible to hear.

Mr. Salmond : Will the Minister clarify the Government's attitude to London's bid for the Eurobank? Is he aware that press reports from the Lisbon summit suggested that the Prime Minister was engaged in a futile rearguard attempt to protect London's claim, while the Secretary of State for Scotland, on a boat in the River Forth, was simultaneously hinting that the Government were reasonably sympathetic to Edinburgh's claim? Are the Government backing London, Edinburgh or nowhere for the site of the Eurobank?

Mr. Hamilton : I can assure the hon. Gentleman of one thing : if Scotland were independent, nothing would go to Edinburgh.

Mr. John Greenway : Does my hon. Friend agree that London is one of the pre-eminent financial services industry centres in the world? Is he aware that the Lloyd's insurance market contributed £8.5 billion to invisible exports in the past five years and supports some 80,000 jobs? Does she agree that the Walker and Morse reports published last week will lead to a strengthening of London's position as a major insurance centre?

Mr. Hamilton : I entirely agree with my hon. Friend that Lloyd's is an important flagship for the insurance sector of London as a great financial centre. It does not help when Members such as the hon. Member for Neath (Mr. Hain) make irresponsible and unwarranted claims on the basis of half-truths. Last week the hon. Gentleman denounced the Walker report as whitewash before it was even published ; he then had to retract after he had read it. It would be better for us all if Labour Members would make supportive noises about an industry which employs large numbers of people and is a major earner of foreign exchange for this country.


10. Ms. Eagle : To ask the President of the Board of Trade what measures he proposes to assist British exporters.

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11. Mr. Heppell : To ask the President of the Board of Trade if he will make a statement on the steps he is taking to back British exporters.

Mr. Heseltine : The Government, through their overseas trade services organisation, provide a wide range of help, advice and financial support which is highly regarded by United Kingdom exporters. I announced last Friday my plans for reshaping the DTI, which will further enhance our understanding of exporters' needs and our ability to communicate with them.

Ms. Eagle : I am grateful for that response. Is the right hon. Gentleman aware that the existence in Britain of Stone Manganese Marine-- the last remaining maker of propellers with its own foundry--is being threatened by unfair foreign competition from Poland and Korea? Is he further aware that that company is the holder of three Queen's awards to industry and that 80 per cent. of its turnover is exported, which helps our export effort? What steps will he take to ensure that such high-quality, strategically important companies are not killed off by unfair foreign competition and Government negligence?

Mr. Heseltine : I share the hon. Lady's concern that no British company should be threatened by unfair foreign competition. If she or the company concerned will let me have the details, she may be assured that they will be carefully examined.

Mr. Heppell : Is the right hon. Gentleman aware of the table in the publication "European Economy" showing that the United Kingdom has the lowest average annual export growth between 1979 and 1990 of any country in the European Community? Does he believe, as I do, that part of the reason for that abysmal record under successive Conservative Governments is the cuts that they have made in export support services?

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