House of Commons Hansard Debates for 9 Mar 1994

Mr. Bell : We welcome the exchange that the Minister has had with the TUC. Does he accept that Her Majesty's Opposition have always given their full support to our export drive, and continue to give it full support today--and will continue to do so in the future ? Anyone who seeks to maintain the contrary is guilty of base calumny.

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As for the Government's current difficulties with Malaysia, it is our earnest wish to give the Government every support in achieving a successful outcome to the talks. It is desirable that the talks with Malaysia reach a fruitful conclusion before the signing of the general agreement on tariffs and trade on 15 April in Marrakesh. Although Malaysia may not be a signatory to that accord, it would be in its interests to reach an harmonious conclusion.

Mr. Needham : I welcome the hon. Gentleman's confirmation that the Opposition will do all that they can to help British exporters. I am not sure that that was always the case in the past.

As for the hon. Gentleman's comments on GATT, Sir Leon Brittan and the Commission will take a close interest in that matter. As the hon. Gentleman says, we must get this row out of the way as quickly as possible, and we are unlikely to do so if it is constantly exacerbated by the ludicrous comments of the editor of The Sunday Times .

Mrs. Gillan : I recognise that a beneficial change for exporters was the improvement in the Export Credits Guarantee Department regime announced in the Budget. Will my hon. Friend undertake to look at the bonding support to small and medium-sized businesses ? As those businesses increasingly win overseas orders, they come up against their bonding limits and, in some cases, they are prevented from even tendering for overseas contracts because of the bonding support position.

Mr. Needham : I am perfectly happy to look at that matter on behalf of my hon. Friend. I should point out that, during the past two years, the premium rates have reduced by some 27 per cent. and the amount of cover made available to British industry has increased by some £2 billion. Today, I see that the ECGD has announced that it is supporting a major new order with GEC Alsthom in inner Mongolia.

Gas Appliance Installers --

12. Mr. Loyden : To ask the President of the Board of Trade what further estimate he has made of the number of gas appliance installers who are failing to register with the Council for Registered Gas Installers.

Mr. Eggar : I have made no such estimate.

Mr. Loyden : What action does the Minister intend to take to reduce the number deaths--one a week--caused by carbon monoxide poisoning ? Is it a part of the Government's deregulation policy that they allow thousands of cowboy outfits to install gas appliances ?

Mr. Eggar : All businesses must register and, of course, we have no intention of imperilling safety.

Industrial Growth --

13. Mr. Fishburn : To ask the President of the Board of Trade what forecasts have been made for industrial growth for 1994 in the United Kingdom and in Germany.

Mr. Heseltine : Industrial production rose by nearly 3 per cent. in the UK last year, but fell by 7 per cent. in

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Germany. Both the Organisation for Economic Co-operation and Development and the European Commission are forecasting that the UK will be the fastest growing major EC economy in 1994 and 1995.

Mr. Fishburn : Would my right hon. Friend like to spell out some of the reasons behind the remarkable change in the industrial prospects of the two countries ? Will he hazard a guess as to whether that change will be permanent ?

Mr. Heseltine : The reasons are to be found in the fact that our exchange rate is competitive, our interest rates are low, our industrial relations are the best in 100 years, our inflation is low and our productivity has been rising significantly. That gives us a remarkable opportunity if we can contain the inflationary pressures, which the Government are determined to do.

Mr. Redmond : The President of the Board of Trade must be aware of the tremendous input of the people of South Yorkshire in those figures. Will he, therefore, ensure that the Rechar money to create that manufacturing base is made available to improve on those figures ?

Mr. Heseltine : We shall do whatever we properly can to ensure that the Rechar money is distributed where it can do the most good. The hon. Gentleman is absolutely right to draw the attention of the House to the fact that none of the excellent indicators to which I have referred could have been achieved without the dedication of the British work force. The fact that we now have the trade unions off the backs of working people means that we have achieved quite remarkable productivity gains.

Mr. Butcher : Does my right hon. Friend agree that one of the things that worry German industrialists is the way in which social and welfare costs in Germany are loaded on to employers' costs and the costs of employment ? In this country, the same social and welfare programmes are funded by the taxpayer. Does that not represent the best possible deal for British wealth creators and the British social programme ? Will my right hon. Friend use his role as the defender of the interests of the wealth- creating sector and of other Whitehall Departments to ensure that that deal is not broken, no matter what emanates from Brussels in the future ?

Mr. Heseltine : My hon. Friend draws attention to an important aspect of our competitiveness. Underlying the Government's strength is the opt-out provision, negotiated by my right hon. Friend the Prime Minister, which gives us a real opportunity to pioneer in Europe and to change attitudes towards the costs which increasingly mirror the anxieties of the Europeans.

Mr. Hardy : Does the right hon. Gentleman consider that we can maintain adequate industrial growth without a successful engineering steel industry ? How can he justify the grossly inadequate response of Her Majesty's Government to the unfair practices in the EC steel-producing areas ?

Mr. Heseltine : The hon. Gentleman will know that my right hon. Friend the Minister for Industry secured clear assurances from the European Commission in December that there would be no revenue subsidies, that there would be close monitoring of any aid given to the industry and

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that there would be a reduction in capacity. He will also welcome the fact that the privatised British Steel is now one of the most effective steel producers in the world.

Mr. Wells : How much does my right hon. Friend estimate that industrial production will be reduced by the damaging speeches of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), the leader of the Liberal Democrats, and of the right hon. and learned Member for Monklands, East (Mr. Smith) on the Pergau dam ?

Mr. Heseltine : I have no doubt that the speeches of the leader of the Liberal Democrats and of the leader of the Labour party would be capable of reducing jobs in Britain, provided that one condition was fulfilled, and it is extremely unlikely that that would ever happen--that anyone took a blind bit of notice of either of them.

Steel --

14. Mr. Win Griffiths : To ask the President of the Board of Trade what percentage of steel production covered by the treaty of Paris is manufactured in the United Kingdom.

The Minister for Industry (Mr. Tim Sainsbury) : In 1993, 12.9 per cent. of crude steel production covered by the treaty of Paris was manufactured in the United Kingdom.

Mr. Griffiths : Does the Minister realise that, notwithstanding the statement made about the courageous performance that he put up in Brussels in December, the other steel industries in Europe are far more subsidised than the industry in Britain and there remains a serious danger to British steel industry jobs ? What can he say to steelworkers in my constituency working next door in Port Talbot about the safety of their jobs in those circumstances ?

Mr. Sainsbury : I recognise that there is continuing concern about illegal subsidies paid to other European producers. I assure the House that we want the Commission to act as vigorously against those subsidies as it has against the alleged cartel.

Mr. John Marshall : Does my right hon. Friend welcome the transformation in the British steel industry, which was losing £1 million a day in 1979 and is now the most efficient steel industry in western Europe ?

Mr. Sainsbury : I am happy to join my hon. Friend in congratulating all at British Steel--management and work force--on what they have achieved in productivity gains. We now want them to be able to take advantage of their productivity improvements and their

competitiveness against other European steel producers.

Mr. Fatchett : In December last year, the Minister promised before his negotiations in Brussels that he would save British Steel capacity and jobs from unfair subsidised competition. Why has he failed to deliver that promise ? Why have all his negotiations proved to be such an abject failure ? Will he give a guarantee that there will be no further cuts in capacity in British Steel and no further job losses ? Or are all his words to come to nothing ?

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Mr. Sainsbury : British Steel does not appear to agree with the hon. Gentleman's assessment. It is reported to have said : "Mr. Sainsbury has done well pushing our line over the last few months but it appears he has not found support around the table." My natural modesty would normally not allow me to mention that, but perhaps, in the circumstances, I shall be forgiven.

Mr. Mans : Does my right hon. Friend agree that now that the steel industry has been made efficient in Britain as a result of privatisation, the best way in which the continental industries can reach the same level of efficiency is to be privatised and not subsidised ?

Mr. Sainsbury : My hon. Friend puts the point extremely effectively. Privatisation would lead to a much more efficient European steel industry.

Japanese Investment --

15. Mr. Corbett : To ask the President of the Board of Trade when he next plans to visit Japan to discuss investment in the United Kingdom.

Mr. Heseltine : I have no plans to visit Japan in the near future, although I had a most useful visit in January, during which I had the opportunity to discuss inward investment with several key Japanese industrialists.

Mr. Corbett : As the Secretary of State and his Government have given up encouraging British investment in British industry and rely increasingly on the Japanese, on his next visit would he like to discuss with Japanese industrialists who are thinking about investing here the shabby way in which British Aerospace treated its partner Honda when it sold Rover behind Honda's back ? What does he think that that will do to encourage the confidence of Japanese investors ?

Mr. Heseltine : The hon. Gentleman knows full well that discussions took place with Honda about these matters as they were taking place with BMW. The fact is that the board of British Aerospace decided that the best interests of British Aerospace and the company that it looked after were served by a deal with BMW. It would do the hon. Gentleman a great deal more good if he would now concentrate on building on the success of the deal that is available rather than on the problems of one that is not.

Mr. Oppenheim : Is there not some irony in this new-found love of Japanese investment among Opposition Members ? Did they not complain bitterly when Honda first became involved in Rover ? Is not the lesson of the days when Red Robbo and his mates were cranking out Allegros and Marinas--that is, when they were not asleep or on strike--that the less say that politicians, particularly Labour politicians, have in who runs the car industry, the better ?

Mr. Heseltine : My hon. Friend is absolutely right to draw attention to the disastrous investments that the Labour party made in the British motor industry, which were partly responsible for its collapse and, therefore, the fact that so much of it is now foreign owned. The United Kingdom has more than 41 per cent. of total Japanese investment in the European Community, and it must be in

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the interests even of Opposition Members to understand that we should admire that, praise it and seek to build on it.

Mr. Robert Ainsworth : Does the President of the Board of Trade realise the amount of damage that will be done not only to our prospects for future investment from Japan but directly to Rover if there is a complete breach between Honda and Rover ? Is he prepared to play an active part in ensuring that such a breach does not happen ?

Mr. Heseltine : I have no grounds for believing that either side is approaching the difficult negotiations that it has to undertake with anything other than a realisation that they must be successfully concluded. The hon. Gentleman must understand that, the moment I appeared, the consequence would be simple--both sides would ask me for taxpayers' money to support their own ambitions.

Mr. Lidington : Does my right hon. Friend agree that a major reason why this country receives the lion's share of Japanese investment in Europe is that non-wage labour costs are much lower in the United Kingdom than on the continent ? Will he do all in his power to ensure that the differential is maintained ?

Mr. Heseltine : My hon. Friend is right. That is why the opt-out clause that my right hon. Friend the Prime Minister negotiated is so important. Japanese investors in this country know full well that they have a Government who are sympathetic to their interests and who will fight their corner as British companies when they invest here, so they have continued to come. The surest way of choking off Japanese investment would be to have a Labour Government, with their determination to impose on Japanese potential investors costs that they would not wish to pay.

Mr. Robin Cook : Does the Minister recall hearing the Minister for Industry assuring the House in the statement on Rover in January that his Department would do all it could to help the relationship between Honda and Rover to continue ? In view of his reply to my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) that, the moment he appears, taxpayers' money will be required, will he explain what his colleague meant when he said that the Department would do all it could and tell us whether he and his Ministers are doing anything at all to keep the relationship open ?

Mr. Heseltine : The hon. Gentleman will be fully aware that we have had conversations with both parties on a continuing basis, but there is absolutely no guarantee that my Department's offering in some way to facilitate the dialogue would be in the best interests of either of the parties negotiating.

Industrial Growth --

16. Mr. Streeter : To ask the President of the Board of Trade what forecasts have been made for industrial growth for 1994 in the United Kingdom and in other EC countries.

Mr. Heseltine : The United Kingdom and Ireland are estimated to be the only EC economies where industrial production rose last year. Both the Organisaton for Economic Co-operation and Development and the

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European Commission are forecasting that the United Kingdom will be the fastest growing major EC economy in 1994 and 1995.

Mr. Streeter : Does my right hon. Friend agree that these excellent forecasts demonstrate that many British companies are thriving in the economic framework that the Government have put in place, particularly low interest rates, low inflation, low corporation tax and the important supply side performance of the past 15 years ? Is not this the best way to promote industrial growth--for the Government to put in place the right framework and let industry get on with it ?

Mr. Heseltine : My hon. Friend makes an important point. We believe that the present framework is one of the most exciting to have been available to British industry in recent decades. We give a wide range of additional support to our companies in many different sectors and will continue to ensure to the best of our ability that the services that we provide are of the highest standard.

Mr. Barry Jones : Does the right hon. Gentleman expect more sales of the airbus to the United States ? When will the general agreement on tariffs and trade on outstanding aerospace matters begin ? Will he pledge that the Government will fight the corner for that great industry ?

Mr. Heseltine : The hon. Gentleman will understand that we will do all that we can properly do to support that industry. The negotiations that were left outstanding at the initial conclusion of the GATT round are scheduled to be completed as early as practicable. We shall continue to watch carefully to see what happens. I do not wish to make a forecast about the precise sales, which must be a matter for the companies involved.

Regional Offices --

17. Mr. Rathbone : To ask the President of the Board of Trade how many regional offices have been established, and where ; and what further locations are planned.

Mr. Sainsbury : There will be 10 integrated regional offices and a number of sub-offices. I shall arrange for the locations to be published in the Official Report .

Mr. Rathbone : The House will welcome my right hon. Friend's announcement. Can he also reassure the House on the methods of co- ordination and co-operation to be established between the offices, local training and enterprise councils, local chambers of commerce and industry and local authorities--all of which will be particularly important in the development plans of the Sussex prime port of Newhaven ?

Mr. Sainsbury : I know the importance that my hon. Friend attaches to the port of Newhaven. The creation of the integrated regional offices will facilitate the sort of co-operation between Departments, training and enterprise councils, chambers of commerce and industry and local authorities to which he refers.

Following is the information :

There will be new integrated regional offices in 10 regions : London ; South East, based in London and other locations in the region ; South West, based in Bristol ; Eastern, based in Cambridge and Bedford ; East Midlands, based in Nottingham ; West Midlands, based in Birmingham ; Yorkshire and

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Humberside, based in Leeds ; North East, based in Newcastle ; North West, based in Manchester ; and Merseyside, based in Liverpool.

Japanese Investment --

18. Mr. Gunnell : To ask the President of the Board of Trade how many Japanese companies opened their first European manufacturing plant in the United Kingdom in each of the calendar years from 1987 to 1993.

Mr. Heseltine : From information available to my Department it is not possible to determine whether any particular investment during the period in question is the first by a Japanese company in Europe. However, the number of Japanese manufacturers making their first investments in the United Kingdom in each of the years from 1987 to 1993 is as follows : 1987, 23 ; 1988, 15 ; 1989, 29 ; 1990, 34 ; 1991, 23 ; 1992, 17 ; and 1993, nine.

Mr. Gunnell : I am sure that the Secretary of State will wish to congratulate Yorkshire and Humberside development association on the successful conference on Anglo-Japanese partnership last week. Will he acknowledge that many of the investments that the Japanese brought to this country required the co-operation at local level of Labour-controlled local authorities ? Does he agree that Labour-controlled authorities have an excellent record in co-operating with development organisations to produce those settlements ? Does he also agree that the shortfall in numbers shown by the two figures of 17 and nine that he gave for the past two years is the result of a complex number of factors ? It certainly provides no evidence that the rejection of the social chapter by the Conservative party helped to secure Japanese inward investment.

Mr. Heseltine : The hon. Gentleman will know that the figures show beyond any doubt what we all know--that the Japanese industrial economy has been going through one of the most difficult periods since the war. I would be the first to recognise that local authorities, whether Labour or Conservative, largely behave in a responsible way in trying to help the Government and all those involved in inward investment to secure satisfactory arrangements. I wish that the Labour party in the House of Commons would act with the responsibility of local authorities.

Mr. Duncan Smith : Does my right hon. Friend agree that one reason why Japanese companies have invested in this country is our system of low regulation levels compared with those of many of our counterparts in the EC ? Will he join me in congratulating my right hon. Friend the Foreign Secretary on his stalwart action in stopping any changes to the blocking minority in the Council of Ministers ?

Mr. Heseltine : I will certainly convey to my right hon. Friend the Foreign Secretary the support of my hon. Friend, as well as others of my hon. Friends, for the negotiations that he is conducting.

Mr. Burden : Does the President accept that the answer that he gave to my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) will be greeted with astonishment and disgust by my constituents in Longbridge ? Does he not recognise that unless the rift between Rover and Honda is repaired, the casualties will be many jobs in my constituency and elsewhere ? Will he

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accept his responsibility to intervene and ensure that the rift is repaired and that the new partnership can be as successful as the old one ?

Mr. Heseltine : The hon. Gentleman assumes that there is a role for the Government in what are essentially commercial arrangements. There is not a shred of evidence to show that either party wants the Government to intervene in this circumstance. If I thought that there was a danger of breakdown, that might change the circumstance, but there is no evidence of such a danger. Over the past three days, I have had personal dialogue with one of the principal players. Those people would have made very clear their views if it were necessary for me to take any positive steps at this stage. No purpose whatsoever is served when the hon. Gentleman or any of his hon. Friends raises scares of this sort, which are not reflected in the dialogue going on at boardroom level.

Mr. Fabricant : Is my right hon. Friend aware that south Wales has become the silicon valley of Europe, producing Japanese colour television sets and computers, and that the Staffordshire-Derbyshire corridor has become the Detroit of Europe, with its Toyota plant ? Does he agree that if it were up to the Labour party's

interventionist policies and support for the social chapter, there would be no Japanese investment in Britain at all ?

Mr. Heseltine : I cannot but admire the neo-imperialism of my hon. Friend. We have achieved a triumph of inward investment in all parts of the country. The essence of the case is to keep Britain competitive so that the investment continues to come.

Companies (Political Donations) --

19. Mr. Enright : To ask the President of the Board of Trade what further assessment he has made of the operation of the Companies Act 1985 in relation to the use of associated companies to make political donations.

Mr. Neil Hamilton : The responsibility for reporting political donations rests with the companies making them. Under section 234 and schedule 7 to the Companies Act 1985, parent companies are obliged to disclose in the directors' report political donations exceeding £200 in aggregate made by it and all its subsidiaries, including foreign ones. I have no plans for any further review.

Mr. Enright : Does that not show staggering complacency ? Is the Minister aware that, arising from the contracts for the Pergau dam, which were let to firms contributing to Tory party funds, there is considerable suspicion here that the bribery was not in Malaysia but on the part of the United Kingdom Government ?

Mr. Hamilton : Only those who are easily staggered will be staggered by my response, but we are not surprised at the hon. Gentleman's.

Mr. Hendry : I congratulate my hon. Friend on the staggering wisdom of his last reply. Will he confirm that during the 1980s British industry, under Conservative policies, grew faster than industry in any other country ? Under Conservative policies, British industry is now coming out of recession faster than industry in any other country. Does that not show that investment in the Conservative party is a sound commercial decision and the

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best investment that companies can ever make and that investment in any other party is the shortest route to bankruptcy yet devised by man ?

Mr. Hamilton : I agree with my hon. Friend. It is staggering that the Labour party has still not learnt the lesson that improved competitiveness is the way to increase employment. As Labour Members are incapable of learning that lesson, they will never be in a position to form the Government of this country.

Mr. George Howarth : Is the Minister aware that, in response to parliamentary questions about 41 quangos that I tabled last year, we were told that 127 members of those bodies were connected with companies that donate to the Tory party ? Is it not clear that what is going on is an auction for places on quangos-- appointments in return for donations to the Conservative party ?

Mr. Hamilton : That matter was comprehensively debated in the House recently, and the Labour party was comprehensively trounced.

Rover --

20. Mr. David Evans : To ask the President of the Board of Trade what was the average profit or loss per vehicle when the Rover car company was a nationalised industry.

Mr. Sainsbury : The British Leyland group did not produce figures for profitability per vehicle for its constituent businesses. From 1975 until privatisation, the

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taxpayer invested about £3.5 billion in British Leyland. At the end of that period, Rover had trading tax losses of £1.6 billion.

Mr. Evans : I thank my right hon. Friend for his reply. Does he agree that the British car industry was bankrupt under the weight of unions, nationalisation and socialism ? Does he also agree with me that during the past 15 years of Conservative Government this country has never had it so good ? [Interruption.] Even the lot opposite have given up Lambeth and cloth caps for Chelsea and baseball caps.

Mr. Sainsbury : If we had not reversed the policies of the Labour party, instead of British car production being at the best level since 1972, it might have disappeared altogether.

Mr. Campbell-Savours : On Rover, has the Minister seen the television programmes in which executives of Honda were interviewed, and said repeatedly that they were treated shabbily, and in one case treated dishonourably, by the British ? Do Ministers have a view on that ? Will they stand up and say what they believe has happened in that specific case ?

Mr. Sainsbury : I fear that I may have rather less time to watch television than the hon. Gentleman and I did not see the television programme to which he referred. As my right hon. Friend the President of the Board of Trade confirmed this afternoon, the Government welcome inward investment from Japan and, indeed, from all other countries.

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