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House of Commons

Wednesday 17 February 1993

The House met at half-past Two o'clock


[ Madam Speaker-- in the Chair ]

Oral Answers to Questions


Two-stroke Engines

1. Mr. Robert Ainsworth : To ask the President of the Board of Trade what action his Department is taking to ensure that the United Kingdom benefits from new two-stroke and orbital two-stroke engine technology.

The Minister for Industry (Mr. Tim Sainsbury) : The Government believe that two-stroke technology could deliver significant commercial and environmental benefits. It is one of a number of alternative vehicle technologies which are being studied by the Department of Transport.

Mr. Ainsworth : Does the Minister agree that the once-ailing French motor industry has dragged itself forward by taking a technological lead in diesel development and that it is important that we do not allow ourselves to fall behind again? The French industry advanced through the Government working actively with industry to ensure that development. Will the Department have the necessary input into this new and exciting sphere of technology to ensure that this time round British industry takes advantage of it when it comes on stream in a few years' time?

Mr. Sainsbury : I hope that the hon. Gentleman will recognise that the British vehicle industry is extremely competitive. Of course, like every other industry, it could improve, but it is definitely competitive with the French. I hope that he is also aware of the work done by the United Kingdom Engine Emissions Consortium, which has been substantially supported by my Department. Valuable work is also being done through a review by the Transport Research Laboratory, all of which will contribute to the industry. The vehicle industry spends substantial sums on research and development and it is the best judge of where R and D expenditure should be directed to the best commercial advantage.

Mr. Adley : Does my right hon. Friend agree that if we take advantage of the developments in orbital two-stroke engine technology we need to be able to do so within the stable framework of the European Community? I recognise that there may be short-term disadvantages for other countries with our social chapter opt-out, but does my right hon. Friend agree that, in the long term, our membership of the Community and our ratification of the

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Maastricht treaty is essential for that technology, its exploitation and all the other industrial and commercial aspects of British life?

Mr. Sainsbury : I very much agree with my hon. Friend and find that there is near-universal agreement among business leaders in all sectors of the industry and all sizes of business that our continued membership of, and role in, the Community is vital for our prosperity--certainly for our vehicle industry.

Mr. Beggs : Will the President of the Board of Trade undertake to ensure that his Department and British industry are fully aware of the outstanding achievements in two-stroke technology of Professor Gordon Blair and his team at Queen's university? Will the President of the Board of Trade seek to ensure that the benefits of that research and development create jobs in the United Kingdom and do not, as has happened in the past, export jobs elsewhere?

Mr. Sainsbury : I am happy to take this opportunity to pay tribute to the work of Professor Gordon Blair and Queen's university, Belfast, where there is well-recognised expertise in such technology. I think that I am correct in saying that my hon. Friend the Minister for Trade, in a previous role, was able to support the valuable work done by the team.

European Regional Development Fund

2. Mr. Knox : To ask the President of the Board of Trade what is the total value of grants allocated to England from the European regional development fund since its inception.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine) : The total value of ERDFgrants allocated to England since 1975 is approximately £3,900 million at 1993 prices.

Mr. Knox : Does my right hon. Friend agree that those grants make an important contribution to strengthening the British economy? Is he satisfied that the public are aware of the scale of those grants?

Mr. Heseltine : I agree with my hon. Friend that those grants provide important help to many parts of the country. I hope that the public are aware of them. The Government consistently represent Britain's case in achieving the maximum amount of grants to help the areas that need them.

Mr. Jim Cunningham : What proportion of those grants is used to assist British industry with the development of technology? Many of our competitors receive Government assistance and various forms of grant to help them to develop their technologies and industry. I am sure that the Secretary of State will also bear in mind the fact that, in manufacturing, development costs represent a high proportion of overall costs.

Mr. Heseltine : The hon. Gentleman will recognise that one has to be extremely careful about following the logic of that suggestion, because other countries may be using the grants to subsidise or support their companies. That would put our companies at a significant disadvantage.

Mr. Mans : What action has my right hon. Friend's Department taken in relation to the ERDF or any other

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funds that might be available from Europe or from the British Government to help the survival of Leyland DAF in Lancashire?

Mr. Heseltine : My hon. Friend will realise that these grants apply to specific regions. We make representations to ensure that Britain maximises its entitlement. The case of Leyland DAF is still under close attention by my Department. We are watching and

assisting--wherever appropriate--the actions of the receiver.

Intervention Fund for Shipbuilding

3. Mr. Byers : To ask the President of the Board of Trade what further discussions he plans to hold within the EC on the intervention fund for shipbuilding ; and if he will make a statement.

Mr. Heseltine : None at present, but I am keeping the situation under review.

Mr. Byers : Will the President of the Board of Trade explain how the United Kingdom Government can agree to a 36 per cent. subsidy from the intervention fund for shipyards in Germany and yet deny access to the intervention fund for shipyards in this country? Does he agree that warship builders should have access to the intervention fund to help them to diversify into the merchant sector? Is not it about time that the Government put the British shipbuilding industry first and took positive action so that we can win new orders and keep jobs in our communities?

Mr. Heseltine : The hon. Gentleman will be aware that those arrangements were entered into as part of a reduction in capacity and it was decided in 1985 that the grants would not apply to warship manufacturers on privatisation. Their cost structures, with very high overheads because of the highly sophisticated products that they make, would not make them easily capable of competing in the merchant ship sector. In any case, there is already significant overcapacity in that form of construction.

Mrs. Browning : In putting the interests of British shipbuilding first, will my right hon. Friend not make the mistake that the Labour Government made--of subsidising shipbuilding to the extent that ships were sold off cheap to Poland, thus flooding the marketplace? We were then unable to be competitive.

Mr. Heseltine : My hon. Friend makes a most important point. I am also aware that once the Labour party had nationalised the warship builders, we secured no further export orders.

Mr. Cousins : Is the President of the Board of Trade telling us that in no circumstances would he contemplate stepping forward to protect the interests of the 50,000 workers in naval shipbuilding at Lowestoft, Southampton, Belfast, on the Clyde and the Tyne, and at Barrow, or to obtain access to intervention or any other sort of funding permitted by the European Community?

Mr. Heseltine : The hon. Gentleman obviously did not hear my reply-- that I am keeping the matter under review. I do not believe, however, that access to the intervention fund would solve the acute problems of low demand that these companies face.

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Standing Charges (Pensioners)

4. Mr. Chisholm : To ask the President of the Board of Trade what proposals he has in relation to the paying of gas, electricity and telephone standing charges by pensioners.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : Government legislation has provided the regulators with full powers to regulate utility prices for supply to household customers and a duty to protect the interests of consumers. Utilities may decide on the form and scale of their charges, including standing charges, but must satisfy their regulator.

Mr. Chisholm : Is the Minister aware that a large number of pensioners have difficulty with their electricity, gas and telephone bills, and that standing charges often represent 50 per cent. or more of those bills? Does he realise that the profits of the privatised utilities have exceeded £35 billion during this unending recession? Will the Government therefore follow the example of the Irish and other European Governments by ensuring that a small part of those fat profits is used to abolish pensioners' standing charges?

Mr. Hamilton : Of course, under nationalisation we were used to industries making not profits but losses, which were paid for by the community generally. If the hon. Gentleman wants to protect the interests of those on lower incomes, he has got the wrong end of the stick. Of those in the bottom one fifth of the income scale, only about 30 per cent. are pensioners. If, having phased out standing charges, we were to recoup that revenue by increasing prices, the poorest in society would be the losers.

Mr. Bill Walker : Does my hon. Friend agree that nothing is for free and that standing charges are part of the charge made for having and using any service that is available? If there were no standing charges, other charges would have to be adjusted accordingly. The question is, on whom would those adjusted charges fall and who would be most greatly disadvantaged?

Mr. Hamilton : I agree entirely with my hon. Friend. Some standing charges have diminished over the years. Since privatisation, British Gas standing charges have reduced by 32 per cent., which reflects that company's success in paying its way by being efficient. That is a great British company, as many companies that were previously nationalised have become--earning income abroad which contributes substantially to their increased profits, from which tax revenue is paid rather than consumed.

Mr. O'Neill : Does the Minister agree that the most effective way of alleviating fuel poverty is to increase the housing stock's energy efficiency and to assist the funding of such work? Is he prepared to instruct the electricity regulator to introduce an E factor similar to that employed by British Gas, whereby it is prepared to fund environmental improvements and conservation? [Interruption.] If the Minister has finished consulting his colleagues, perhaps he will give the House an answer.

Mr. Hamilton : I prefer to ask those who know about the subject-- unlike the hon. Gentleman, who prefers to rely on his colleagues' ignorance --and my hon. Friend the

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Minister for Energy is the Minister principally responsible for such matters. I can tell the hon. Gentleman that we have no power to instruct the regulator in such terms. The regulator's powers are set out in Acts of Parliament. He is obliged to consider a variety of factors, which are all defined in legislation.

Trade Missions

5. Mr. Tredinnick : To ask the President of the Board of Trade how many trade missions abroad will be supported by Ministers in his Department in the foreseeable future ; which countries they will visit ; and if he will make a statement.

The Minister for Trade (Mr. Richard Needham) : Ministerial participation is provisionally planned for at least 14 missions to 17 countries in the next year. It is likely that others will be arranged through the year.

Mr. Tredinnick : Given the spectacular success of the visit by my right hon. Friend the Prime Minister to Saudi and Oman, when he secured 20,000 jobs--many in Labour-held constituencies--does my hon. Friend agree that the highest priority should be given to Minister-backed trade missions? Will he confirm that his highest priority is to get out and back British business abroad as well as at home?

Mr. Needham : Of course, it is the highest priority of Ministers in the Department of Trade and Industry to get out and sell. It is also vital that those who go out and sell know how to do so and the markets to which they go. I would not advise Opposition Members to go on Cook's tours because when they have set out their stall, 18 million potential customers have invariably said no.

Mr. Bennett : Does the Minister agree that manufacturers of mining equipment, such as Oldham Batteries in my constituency, have regularly co- operated in trade missions, but that they want help from the Government to ensure that when they win orders they have the credits to fulfil them? They also need a home-based mining industry to support their export drives.

Mr. Needham : That is why, in the autumn statement, we increased Export Credits Guarantee Department cover by £700 million and, during last year, reduced the premium rate. That is also why we are continuing to review the cover available to support our capital goods industries, to achieve our objective of doubling sales over the next five years.

Mr. Thomason : Will my hon. Friend arrange an early visit to Japan, so that he can emphasise the importance of inward investment from that country to Britain, we can remain the principal recipient of Japanese inward investment among all the European countries and we can continue to talk up the enormous advantages of British industry--contrary to Labour, which always seeks to destroy its character?

Mr. Needham : My hon. Friend will be pleased to learn that my right hon. Friend the Member for Guildford (Mr. Howell) and I are going to Japan next month--along with two hon. Ladies from the Opposition--to achieve precisely the objective that he wants.

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Mr. Robin Cook : Did the Minister note that the business men who accompanied the Prime Minister on his trade mission to India complained that the premiums charged by the British Government for export credits are still double those charged by the Governments of our competitor countries? Why does the Department's budget for next year show that it is to stop subsidising export credits and start making a profit from them? How does the Minister expect British exporters to win in the world market if they are saddled with the only Government in the world who are using export credits as a source of profit?

Mr. Needham : The hon. Gentleman knows that that is nonsense. He knows that the ECGD has paid out in almost every year of its existence to top up the interest rate to which he referred. It so happens that, because interest rates in this country have fallen below the OECD average, it is possible--indeed, probable--that the ECGD will start to recoup some of the money that it has paid out. The hon. Gentleman is talking through his hat-- or would be, if he were wearing one.

As for the premium rates in India, given the losses suffered by the ECGD, we must accept the need to make a reasonable effort not to waste the taxpayer's money. If one compares British premium rates with those in Germany, one sees that one reason why we did so well in Hong Kong, in the face of German competition, was that our premium rates were lower.

South-east Kent

6. Mr. David Shaw : To ask the President of the Board of Trade when he next expects to visit Dover, Deal and south-east Kent to discuss opportunities for trade and industry.

Mr. Sainsbury : My right hon. Friend the President of the Board of Trade and I both visited east Kent last year. We both look forward to further opportunities to do so.

Mr. Shaw : I thank my right hon. Friends for the tremendous interest that they have shown in Dover and Deal and in the problems faced by the area. I am also grateful for the support given by the Department and the European Commission in allocating moneys to help customs clearance agents and freight forwarders.

May I remind my right hon. Friend of our application for assisted area status? It is especially important, because the decision by all political parties in the House to proceed with the channel tunnel project will lead to tremendous change in my constituency. Some short-term help, along the lines of assisted area status, will be necessary if Dover and Deal are to succeed during that process of change.

Mr. Sainsbury : I assure my hon. Friend that we shall take careful account of the points that he has made, including the one about the short- term implications of the channel tunnel. I hope that he agrees, however, that the tunnel will also bring great opportunities to the area. I am happy to confirm that my Department is currently talking to the British International Freight Association and the east Kent initiative, with the aim of co-ordinating a United Kingdom bid for funds from the customs agent regulations that the European Commission has made available.

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Mr. Nicholas Brown : Having arrived in Dover, will the Minister board a ship and travel up to Tyneside? Will he tell the people there what his Department is doing to ensure the survival--

Madam Speaker : Order. Most ingenious ; I rather expected that one. Let us move on to question 7.

Assisted Area Status

7. Mr. Sumberg : To ask the President of the Board of Trade what representations he has received in connection with the Bolton/Bury assisted area status ; and if he will make a statement.

Mr. Sainsbury : My Department received a joint written submission from the metropolitan borough councils of Bolton and Bury and one from Inward, the North West Regional Development Organisation. Several letters of support were also received from local businesses. My noble Friend Baroness Denton met a deputation of council representatives, business leaders and local Members of Parliament on 27 October 1992.

Mr. Sumberg : I appreciate that many new friends are knocking on my right hon. Friend's door--from Deal and Dover, from the mining communities and from London. Will he bear it in mind, however, that withdrawing assisted area status from Bury and Bolton would send entirely the wrong signal to the business community in my constituency?

Mr. Sainsbury : As my hon. Friend knows, I cannot anticipate the outcome of the review, but I assure him that I have taken careful account of what he said.

Mr. Lewis : I welcome the conversion of the hon. Member for Bury, South (Mr. Sumberg) to the idea of intervention.

While the Minister is considering his hon. Friend's remarks, may I point out that, over the past nine years, 72,000 manufacturing jobs have been lost in the Bolton and Bury travel-to-work area and four manufacturing closures have been announced over the past seven days? Assisted area status is needed and I add my support for it.

Mr. Sainsbury : I cannot add to what I said earlier to my hon. Friend the Member for Bury, South (Mr. Sumberg). I know from our many conversations that he could not be more energetic in pursuing his constituents' interests.

Magnox Nuclear Power Stations

8. Mr. Whittingdale : To ask the President of the Board of Trade whether he will make a statement on the future of the Magnox nuclear power stations.

The Minister for Energy (Mr. Tim Eggar) : My hon. Friend will be aware that my Department's coal review is nearing completion. The review is considering, among other issues, the impact of nuclear generation on the electricity market, including the position of the Magnox power stations.

Mr. Whittingdale : As the Magnox nuclear power stations have the lowest avoidable costs of any form of electricity generation, does my hon. Friend agree that it makes sense, economically and environmentally, to keep them in operation for as long as it is safe to do so and that

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this applies in particular to Bradwell power station in my constituency, which has just passed its long-term safety review with flying colours?

Mr. Eggar : I agree that nuclear stations, including the Magnox stations, offer considerable environmental benefits and, as the recent Ernst and Young study showed, have the lowest avoidable costs. Bradwell has performed particularly well and since the completion of its inspection has been available for 97 per cent. of the time--a high record of availability indeed.

Mr. Cunliffe : As the hon. Gentleman has probably now been convinced by his political colleagues that intervention is necessary to assist the 31 pits that are in jeopardy, does he believe that a genuine transfer of about half the nuclear levy for Magnox stations would help most of the collieries to survive? In the long term, if all the £1,270 million nuclear levy were transferred, it would assist all the 31 collieries to maintain production until supplies were exhausted.

Mr. Eggar : Those issues are among a number that are being considered by the review. The hon. Gentleman's proposition makes sense only if one assumes that the liabilities that rest on Nuclear Electric are not genuine liabilities, which has not yet been established.

Mr. Page : In supporting my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale), may I ask whether my hon. Friend is aware that the avoidable costs of the Magnox stations are the lowest in the nuclear industry and that comparisons with other forms of energy production show that they are considerably cheaper, at 1.2p per unit? Has a calculation been made of the costs of production of CO by other sources of electricity and the effect on our environment?

Mr. Eggar : My hon. Friend is right about the avoidable costs of Magnox stations, which are low. Their environmental impact is one of the factors that will be considered in the review.

Dr. Kim Howells : Does the Minister recognise that many of the Magnox stations are situated in some of the most remote areas of the country and are centres of high-paid employment in those areas? If he is going to announce the closure of Magnox reactors, will he ensure that he does not do so with the same ineptitude and thoughtlessness as he announced the pit closures?

Mr. Eggar : I am not sure whether the hon. Gentleman is in favour of or against closing Magnox reactors, but he makes a valid point : employment is associated with nuclear stations in much the same way as it is with mining.

Inward Investment

9. Mr. Riddick : To ask the President of the Board of Trade what steps his Department is taking to encourage inward investment.

Mr. Heseltine : My Department's Invest in Britain Bureau runs a comprehensive programme for promoting the United Kingdom overseas. Lord Walker, who advises me on inward investment, is helping me to consider how we can step up our efforts to make them as effective as possible.

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Mr. Riddick : Is my right hon. Friend aware that the OECD has forecast that Britain is likely to increase its share of world trade this year? Is not one reason for that, as Jacques Delors said, that Britain has become a paradise for overseas investment and is not that because the Government have tackled the excessive power of the trade unions and refused to sign the job-destroying social chapter? Is not that in stark contrast with the union-dominated Labour party, which seems to believe that only the state can generate economic growth--a view which not even the Russians believe nowadays?

Mr. Heseltine : My hon. Friend is right on that specific point, but, of course, there are many other reasons why this is now the most attractive part of the single market in which to invest. It is because of the Government's policies that 36.1 per cent. of American and 40.9 per cent. of Japanese direct investment in the European Economic Community comes to the United Kingdom.

Mr. Eastham : Although it is essential to encourage investment from abroad, may I impress on the Secretary of State a recent document produced by the Engineering Employers Federation? It is a most scathing report about the lack of support from the Government. Is it not about time that we also encouraged our industries so that they can participate and benefit, thereby increasing manufacturing in Britain?

Mr. Heseltine : That is a travesty of the views of the EEF with which I had a lengthy discussion last night. If the hon. Gentleman genuinely wants to encourage inward investment into this country he should persuade his party not to put the costs of the social chapter on British industry.

Mr. Streeter : Is my right hon. Friend aware that inward investment in the far south-west is largely dependent on the critical Plymouth- Heathrow airlink? Is he further aware that the airlink is increasingly under threat because of the increasing squeeze on regional services at Heathrow? Will he confirm that his Department will take whatever action is necessary to protect the Heathrow slot?

Mr. Heseltine : I know how important that issue is to my hon. Friend. I have no doubt that on my visit to the south-west later this week I shall hear more about it. We are in touch with the Department of Transport, but, as my hon. Friend will be aware, in the end much of the decision making lies with the private sector.

Mr. Gunnell : Does the Secretary of State agree that Japanese companies that come to this country in general bring with them very good working practices, usually including a negotiated agreement with a trade union and agreed conditions of work which far exceed those laid down in the social chapter? In those circumstances, will the Secretary of State explain how the social chapter can possibly be a deterrent to companies that, at home, implement working conditions of a higher standard?

Mr. Heseltine : It is not the working conditions but the working costs imposed by the social chapter which will be the deterrent.

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Assisted Area Status

10. Mr. Ian Bruce : To ask the President of the Board of Trade if he will give a report on the progress of the application for Weymouth and Dorchester travel-to-work area to have assisted area status.

Mr. Sainsbury : The application for assisted area status for the Dorchester and Weymouth travel-to-work area is, together with all such other applications received by my Department, still under consideration.

Mr. Bruce : Surely my right hon. Friend and I have a community interest in ensuring that the minimum number of places need assisted area status. Could not action by the Department of Trade and Industry, in talking to the Ministry of Defence about moving thousands of jobs from an area of high unemployment to those of lower unemployment, ensure that we do not need to have assisted area status in Weymouth but can preserve the jobs and economy of that area?

Mr. Sainsbury : My hon. Friend does, of course, know that these are essentially matters for my right hon. and learned Friend the Secretary of State for Defence who, I know, will take my hon. Friend's views carefully into account. We shall also take carefully into account any implications for employment opportunity in the Weymouth and Dorchester travel-to-work area of any proposed moves by the Ministry of Defence.

Industrial Strategy

11. Ms. Coffey : To ask the President of the Board of Trade what plans he has to meet the Association of British Chambers of Commerce to outline his industrial strategy.

Mr. Heseltine : I and my officials regularly meet the Association of British Chambers of Commerce. We share the same interests in providing quality service to business. The association has involved my Department closely in the progress of its five-year development plan, and we are also working together on my one-stop shops initiative.

Ms. Coffey : I wonder whether the President of the Board of Trade is aware of increasing concern about the disadvantages faced by British businesses--small, medium and large--in competing against industries from other countries for export contracts, because of higher levels of support given by their Governments? That support is shown in a variety of ways. What proposals does the right hon. Gentleman have to rectify the situation for the benefit of British business?

Mr. Heseltine : It is extraordinary that, at every Question Time, Opposition Members seek to misrepresent the achievements of British industry in the export market. The hon. Lady' s question is simply not compatible with the fact that exports of manufactured goods, excluding erratics, are now at a record level--5 per cent. higher than in the last quarter, and 6.5 per cent. higher than a year ago. Why cannot the Labour party say how well Britain is doing, rather than run it down?

Mr. Nicholas Winterton : Does my right hon. Friend accept that I have considerable sympathy with the views that have just been expressed by the hon. Member for Stockport (Ms. Coffey), who, with me, is a panel member of the new manufacturing and construction industries

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alliance, which is to be launched in just under a fortnight's time on 2 March? Does not my right hon. Friend accept that the national chambers of commerce believe that the country needs a new strategy to regenerate our manufacturing base? Will he therefore continue to advance the interests of this sector, which generates the only non- inflationary growth--the type of growth that this country needs?

Mr. Heseltine : I have come increasingly to recognise that my hon. Friend often finds himself in agreement with the views expressed by Opposition Members. I notice that, in his support for our manufacturing base, he seems to be prepared to vote more often against than with the Government whom he was elected to support.

Mr. Robin Cook : Why does not the President of the Board of Trade admit that his response to the collapse of DAF has shown up his lack of industrial strategy and the contrast with the industrial strategies of the countries of Europe? Is he aware that the Dutch and Belgian Governments are actively intervening to save jobs in their countries by agreeing to invest in the factories there? Can he explain why, when I met the Dutch Minister for Finance as recently as last week, there had been no ministerial contact from Britain in the nine weeks during which the Dutch had been working on a rescue package? Does not he understand that if Leyland DAF goes down, it will take with it scores of suppliers and thousands of skilled jobs? Cannot he see that if he does not even talk to the Dutch Government he will make it more likely that the axe will fall on British jobs?

Mr. Heseltine : Last week the hon. Gentleman was trying to undermine the British banks ; now he is undermining the credibility of what the British Government are doing in these circumstances. He must know full well that my right hon. Friend the Minister for Industry has been in touch with his opposite number in the Dutch Government. He must know that we are in constant touch with the receiver and that we have kept in touch with the banks involved. If he searches his conscience he will find that he is aware that the best way to save parts of Leyland DAF is to give all possible support to the receiver, who is trying to do exactly that.

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