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House of Commons

Wednesday 22 June 1994

The House met at half-past Two o'clock


[ Madam Speaker-- -- in the Chair ]


London Docklands Development Corporation Bill [

Lords ]. Order for consideration read.

To be considered tomorrow.

Oral Answers to Questions


Car Industry --

1. Mr. Peter Atkinson : To ask the President of the Board of Trade if he will make a statement on the prospects for the British car industry.

The Minister for Trade (Mr. Richard Needham) : It may be for the convenience of the House if I explain that the President of the Board of Trade is in the land of the midnight sun, and the Minister for Industry is attending the Industry Council in Luxembourg. I am sure that they would like me to pass on their apologies for not being here.

Prospects for the British car industry have never been better. The industry is in the healthiest state that it has been for a long time ; new car sales and new car production figures have both shown increases during the last year at a time when other markets, particularly in Europe, have been depressed.

Mr. Atkinson : I thank my right hon. Friend for his answer, and congratulate him on his appointment.

Will my right hon. Friend confirm that there has been a revolution in the fortunes of the British car industry in the past 15 years ? That is well exemplified by the experience of Nissan UK in the north-east of England : last year, it exported more British-built cars than any other car manufacturer in the country. I hope that my right hon. Friend agrees that that is a tribute to the company, the commitment of its workers and, in particular, the flexible industrial and labour-relations policies introduced by the present Government.

Mr. Needham : In 1979, the United Kingdom's car industry was on the way out ; now, it is on the way up. In 1979, when the Labour party was last in office, just over 1 million cars were produced ; now, production is up by some 30 per cent. Employment is now at 132,000, as against 290,000, so productivity has doubled. Investment in the car industry is now three times as great as it was in 1979. Furthermore, by the end of the decade, the British car industry will be back in surplus on the balance of trade.

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Other parts of British industry can learn a wonderful lesson from that ; another lesson to be learnt is what a Labour Government will do to people, and what a Conservative Government actually achieve.

Mr. Robert Ainsworth : As well as congratulating the British car industry as a whole on the success enjoyed by Nissan, will the Minister recognise the efforts made by Jaguar of late, and the fact that it is now re-employing staff whom it had laid off during the past few years ? Will he recognise that the biggest problem faced by such firms as Jaguar over the years has been the lack of a decent supply base in this country--along with gross fluctuations in the currency, largely as a result of the economic policies pursued by his Government ? When will he take measures to enhance the industrial base and to supply a stable economic policy leading to the long-term benefit of the car industry ?

Mr. Needham : The biggest barriers to the success of the British car industry over the years--until this Government came to power and changed the laws on industrial relations--were the antics of the trade union movement. I am delighted to say that the trade union movement has now accepted the need for the unions themselves to be able to show that they are responsible and respectable partners with industry. That is one thing that the Government have achieved. I commend "The Dawn of a New Era", introduced by the president of the Amalgamated Engineering Union. That fundamental change would never have taken place without the legislation passed by the Government. I do not believe for a moment that the position of Jaguar has anything to do with the factors mentioned by the hon. Member for Coventry, North-East (Mr. Ainsworth). Furthermore, our automated components suppliers are now some of the most efficient in Europe. They are starting to export all over Europe and the rest of the world, and they will play a vital part in increasing our manufacturing and engineering exports in the next few years.

Industrial Prospects --

2. Mr. Jacques Arnold : To ask the President of the Board of Trade when he next proposes to meet representatives from the Confederation of British Industry to discuss industrial prospects.

The Minister for Energy (Mr. Tim Eggar) : My right hon. Friend maintains close contact with the CBI on a wide range of issues, including the prospects of UK industry.

Mr. Arnold : Bearing in mind recent reports that British industry's confidence is now at a five-year high and that the British economy is growing faster than any other in the European Community, is not it tragic that, at this moment, our lines of distribution and supply should be disrupted by the selfish behaviour of the rail union ?

Mr. Eggar : I agree with my hon. Friend. The rail strike is bad for business, bad for employees, a number of whom are losing wages because they cannot get to work, and bad for Britain's image overseas. What contributes to all that is the obfuscation of the Opposition, who are not prepared to condemn irresponsible action by trade unions.

Mr. Hardy : In the discussions, did the Minister deal with the problem of industries, such as the engineering and

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steel industry, which face grossly unfair competition from our European partners ? If so, will he tell the House what he told them ? What urgent action is being taken to remedy that unsatisfactory position ?

Mr. Eggar : I am sure that my right hon. Friend has discussed that issue with leaders of industry and my right hon. Friend the Minister for Industry is now discussing it in the European Union.

Mr. Sykes : Does my hon. Friend agree that British prospects are immeasurably enhanced by the competitiveness of British industry today ? Will he remark on the prospects for competitiveness in the rail industry as a result of today's strike ? While he is about it, will he try to find out what the hon. Member for Livingston (Mr. Cook) thinks about today's rail strike ?

Mr. Eggar : The hon. Member for Livingston (Mr. Cook) is a belated moderniser within the Labour party. He seems to mix up obfuscation with modernisation.

Mr. Cousins : Let me take that question off on a different track. Now that the aims of clause 4 have been achieved and every British company has majority shareholdings which are common owners, does the Minister agree with the Financial Secretary to the Treasury that the relationship between those common owners and the people responsible for running industry is not the right one on which to secure a long-term basis for investment and finance ?

Mr. Eggar : That question may make sense within the arcane intricacies of the Labour party's leadership contest and the various complications with regard to whether the modernising arm or acting leader of the Labour party wishes to do away with clause 4, but it makes no sense to the rest of the House or to the country.

Mr. Butcher : I welcome Britain's almost unique position in Europe and its industrial prospects. Does my hon. Friend agree that one reason why world stock markets have been falling is the growing realisation that there is a worldwide shortage of capital because Governments are syphoning off too much money to fund their deficits ? Given the excellent work that his Department has done on competitiveness, would we not have a conspicuous competitive edge if we were to provide the most attractive taxation regime for capital taxation in the western hemisphere ? Will he champion that cause ?

Mr. Eggar : I agree that Government deficits are bound to influence worldwide interest rates. I have taken careful note of my hon. Friend's preference on capital taxation and shall ensure that my right hon. and learned Friend the Chancellor is aware of what he said.

Nuclear Review --

3. Mr. Simon Hughes : To ask the President of the Board of Trade what information he can now give about the timetable for the nuclear review.

Mr. Eggar : The industry's commercial case for new stations has now been published. The Government have invited submissions from all interested parties, including comments on that case, by 30 September. We will consider carefully all representations received.

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Mr. Hughes : Is not the Government's timetable the latest in the rather inglorious series of privatisations of energy industries ? First we have indecision, then we have delay and then we have botch up. Will the Minister come clean on the following questions ? Why is the Green Paper being written by the nuclear industry, not the Government ? Why are the Government being inconsistent by not saying that they will make anyone who buys the nuclear industry take responsibility for all the liabilities-- past, present and to come ?

Mr. Eggar : The hon. Gentleman should do two things. First, he should do the House the courtesy of studying exactly what the Government have said. There is no question of the Government publishing a Green Paper in the first place and there is no question whatsoever of the nuclear industry writing that Green Paper. Secondly, I suggest that he sticks to windmills.

Mr. Whittingdale : Will my hon. Friend take the opportunity to congratulate Nuclear Electric plc on the remarkable turnaround which that company has achieved, which has put it on course to achieve an operating profit by next year, before the nuclear levy ? Will he seriously consider the submissions to the nuclear review from Nuclear Electric, which make it clear that the best thing that could happen to that company is for it to be freed from state ownership and allowed to compete freely in the private sector ?

Mr. Eggar : We shall obviously want to consider carefully the representations that have been made, at some considerable length, by Nuclear Electric and the other elements in the nuclear industry. The banter that issues from the Opposition whenever reference is made to improvements in the record of the nuclear industry is not only a disgrace but unfair to the many thousands of people who work in that industry, a number of whom belong to trade unions that support the Labour party.

Mr. O'Neill : Whose review--that of the Department of Trade and Industry, that of the Department of the Environment or that of the Scottish Office--will be responsible for consideration of on-site dry storage ? It seems that that aspect of nuclear waste management is being lost. There have been lengthy public inquiries into it, and there have been reports, but it has not been included in the current review. Therefore, it should be dealt with separately since it has gone through the judicial process. Should not there be a clear line on that, and does not it have to be resolved quickly, because it enters into all the commercial judgments that will have to be made ?

Mr. Eggar : That relates to a decision that has to be taken by my right hon. Friend the Secretary of State for Scotland. My understanding is that he has decided to await the radioactive waste management study that is being carried out by the Department of the Environment, but obviously waste management and storage must be considered carefully in the context of the nuclear review.

Food Producers --

5. Mr. Tyler : To ask the President of the Board of Trade what steps he is taking to reduce the competitive disadvantages facing United Kingdom food producers within the EU single market.

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Mr. Needham : British food producers are competitive. They are winning business in the single market. The UK's exports of foodstuffs to the European Union increased from more than £2.7 billion in 1990 to £3.8 billion in 1993. That is an increase of 40 per cent. The Government are backing that excellent performance with support for marketing and exports.

Mr. Tyler : Is the Minister satisfied that the GATT regime and the EU single market mechanisms are sufficient to deal with the problem of subsidised dumping of agricultural and horticultural produce, and especially the salad produce that is coming to this country at prices below production cost ? Has he seen the evidence about that issue that the National Farmers Union has put before hon. Members ?

Mr. Needham : The hon. Gentleman is the Liberal Democrat spokesman on agriculture. I cannot understand why he is asking me what is obviously an agricultural question. The Ministry of Agriculture, Fisheries and Food has considered the question that he has posed and has not found any evidence to the effect that he has suggested. If the hon. Gentleman has that evidence, I suggest that he does two things--first, write to the Minister direct and, secondly, ask the Minister about it on Thursday.

Mr. Nicholls : Is not the biggest disadvantage to food producers in the EC the possibility of over-regulation by Brussels ? Is not it a profound piece of cheek for a representative of the Liberal Democrat party to come along to the House, representing a party which would give away our veto in Europe and lie down to anything that is imposed on it by Brussels, and then shed crocodile tears all over the green leather about regulation from Europe ?

Mr. Needham : My hon. Friend, representing as he does a seat in the west country, knows as well as I do that what the Liberal party says in the constituencies, in the House of Commons and in Brussels is mutually contradictory. We should not be surprised about that ; we should just make sure that our constituents know it.

Advanced Technology Programmes --

7. Mrs. Anne Campbell : To ask the President of the Board of Trade what estimate he has made of the effects of the cuts in the advanced technology programmes.

The Parliamentary Under-Secretary of State for Technology (Mr. Patrick McLoughlin) : The advanced technology programmes had been running for six years. We will be spending the money that was previously devoted to them on new activities. These were set out in the competitiveness White Paper and will help the majority of firms to get better access to, and advice on, technology.

Mrs. Campbell : Is not the Minister aware that cutting the advanced technology programmes has led to 25 scientists and engineers being made redundant at the Welding institute in Abington, near Cambridge ? Does not he realise that bewildered industrialists cannot understand why the Government are inflicting such home-grown damage on a firm that is the major promoter of technology transfer in the United Kingdom ?

Mr. McLoughlin : As I said, the programmes had been running for six years. We have to examine the best way of

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using the resources that we have at the Department of Trade and Industry. Is the hon. Lady calling for more spending, for higher taxes or for cutting borrowing ?

Mrs. Gillan : The advanced technology programmes have been a success. Has my hon. Friend had a chance to look at AEA Technology, which has performed impressive diversification into neural networks and environmental science ? Is he aware that the firm is operating under some uncertainty, waiting for a statement about its privatisation ? Is he in a position to tell me when such a statement will be forthcoming ?

Mr. McLoughlin : My hon. Friend's point is well taken. We are considering the matter, and we hope to be able to make an announcement of the sort that she requires shortly. That is a matter for my hon. Friend the Minister for Energy, who has taken note of what she says.

Mr. Nigel Griffiths : Will the Minister confirm that the Government have cut tens of millions of pounds from industrial collaborative research funding for textiles, printing, paper and other manufactured products ? Why are they the only Government in Europe cutting funding for collaborative research in those industries ?

Mr. McLoughlin : As I have said, we always have to look at the best way of using our resources. We are helping a number of companies by means of the Business Links offices that we are setting up throughout the country. The EC research and development budget will grow by 5 per cent. per annum until 1999, and the Government contribute to that budget. The recently published R and D scoreboard shows a welcome 9 per cent. increase in R and D investment in United Kingdom companies.

Mr. Ian Taylor : Will my hon. Friend note that the competitiveness White Paper enhances the work done in the science White Paper ? The Government really are trying to achieve better collaboration between industry and the academic community in their various programmes. I welcome the advances being made in the technology foresight programme, for instance.

Mr. McLoughlin : I am grateful to my hon. Friend for mentioning a number of areas of collaboration, and the money that we are spending through the links programme, the small firms merit award for research and technology programme and various other programmes by which we are helping industry. My hon. Friend was right to draw attention to the foresight programme, which is an important one.

Post Office --

8. Mr. Barnes : To ask the President of the Board of Trade what representations he has received concerning the future of the Post Office since 19 May.

Mr. McLoughlin : My Department has received approximately 830 representations since 19 May expressing a range of views on the future of the Post Office. These matters will be addressed in the Green Paper, which will be published shortly.

Mr. Barnes : Will the Minister give me a categorical assurance that there will be no VAT on parcels, no further closures of rural post offices and no worsening of this great public service ? Why does not he follow the views of the

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Union of Communication Workers, which seeks commercial freedom for the Post Office, not its destruction by elements of privatisation ?

Mr. McLoughlin : If the Union of Communication Workers adopts the same stance as that taken by the Rail, Maritime and Transport union, it is most unlikely that I will agree with anything that it says. We have looked hard at the issue of VAT on stamps ; we have consulted the European Commission ; we are satisfied that privatisation will not mean the imposition of VAT. As for rural post offices, the hon. Gentleman should be thinking about how to give them more work so as to ensure that people want to take them on. Of the 20,000 post offices, 19,000 are in the private sector. I want them to succeed and to get the increased business that they require so as to ensure that people want to take them on as viable businesses.

Mr. Peter Ainsworth : Does my hon. Friend agree that the Post Office is one of the world's finest distribution companies but that if it is to prosper it must be allowed greater access to capital markets for investment and expansion ? Does not he think that the best way to ensure the future of rural post offices is to unshackle the Post Office from state ownership ?

Mr. McLoughlin : As I have said, we shall shortly publish a Green Paper outlining a number of options for consideration. We shall say in that Green Paper which is our favoured option. If rural post offices are to survive, we need to find a way to ensure that people are prepared to take them on as businesses. Some 19,000 post offices are in the private sector. Usually, rural post offices close because nobody wishes to take on those ventures.

Mr. Roy Hughes : Does the Minister recognise that the President of the Board of Trade has stirred up a hornets' nest on this issue and that people are genuinely angered ? Why do not the Government concentrate on building a successful public enterprise with the requisite commercial freedom ?

Mr. McLoughlin : The only people stirring up a hornets' nest on this are those in the Labour party who consistently say that somehow rural post offices are under threat. They speak as if the status quo is an option and say that the universal service and the universal tariff are under threat. There is no threat to either.

Mr. John Marshall : Does my hon. Friend agree that the fears expressed about the Post Office are precisely the same as those that were expressed by the same people when British Telecom was privatised ? Does he also agree that wherever privatisation has taken place there has been increased investment, improved productivity and a much better service for the customer ?

Mr. McLoughlin : My hon. Friend rightly points to what has happened with British Telecom. My hon. Friends will remember that when we were privatising British Telecom we were consistently told by the Opposition that it would mean an end of all rural phone boxes because they would not be maintained. There are now more rural phone boxes and, even more remarkable, they actually work.

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Mr. Robin Cook : If consultation on the forthcoming Green Paper confirms that the great majority of the Post Office's customers do not want it to be privatised, will the Government accept their verdict ? Is the answer yes or no ?

Mr. McLoughlin : The hon. Gentleman wants a yes or no answer. When does he intend to give us a yes or no as to whether he supports the rail strike ? Indeed, when will any member of the shadow Cabinet give us a yes or no answer

Madam Speaker : Order. The hon. Gentleman has been asked a question. He is a member of the Executive and he has a duty to answer it.

Mr. McLoughlin : We shall, of course, take note of what is said in the light of the publication of the Green Paper, but we will also want to make sure that our proposals will ensure a good future for the Post Office. There are some serious questions to be asked about that. Even the Select Committee on Trade and Industry, an all-party committee, said that the status quo was not an option.

Lady Olga Maitland : Has my hon. Friend seen the comment by the chairman of the Post Office that the only way to a really secure future for the Post Office is for it to offer a wider range of services ? Is not the campaign by the Labour party to scaremonger people into believing that rural post offices will be closed absolutely disgraceful ?

Mr. McLoughlin : I have gone a long way to try to assure my hon. Friends and the House about my commitment and that of the Government on the question of a nationwide network of post offices. Unlike both the Opposition parties, ours was the only party to spell out in our manifesto the importance that we attach to a nationwide network of post offices. This week, the chairman of the Post Office rightly told us about some of the problems faced by the Post Office because of current restraints.

Lloyd's --

9. Mr. Mike O'Brien : To ask the President of the Board of Trade when next he proposes to visit Lloyd's to discuss future Government policy in relation to the insurance industry.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : I maintain regular contact with Lloyd's to discuss matters of mutual interest and concern.

Mr. O'Brien : In the light of the enormous losses sustained by names at Lloyd's and the importance of the insurance underwriting business in Britain, is it not about time that the Government undertook an urgent review of the works of the Lloyd's Act 1982 and the Financial Services Act 1986 with a view to moving away from self-regulation, which has patently failed, and towards a system of proper effective statutory regulation ?

Mr. Hamilton : I shall give the hon. Gentleman the benefit of the doubt and ascribe his supplementary question to ignorance rather than malice. I hope that he is not wholly unaware of all the changes that have taken place in the governance of Lloyd's in recent years, and the substantial progress which has been made in returning the insurance

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business generally to profitability. I wish that Opposition Members would concentrate more on supporting British industry rather than knocking it and running it down.

Mr. Hawkins : Does my hon. Friend agree that the United Kingdom's insurance industry is one of the jewels in the crown of UK plc, and that it is vital for the Government to continue to support the United Kingdom insurance industry and ensure that Lloyd's returns to success and profitability ? Is it not indicative of the attitude of the Opposition that they are entirely motivated by ignorance and prejudice and a desire to run Britain down ?

Mr. Hamilton : I entirely agree with my hon. Friend. I shall shortly be taking a delegation from the British insurance industry to Japan to try to break into the Japanese market, which in the past has been highly protected and controlled, because our industry is among the best and most innovative in the world and there are many opportunities for us to develop the insurance business and improve our overseas earnings.

Mr. Bell : Ignorance or malice is hardly a proper response from a Minister of the Crown who is normally courteous. If he would be kind enough to look again at the Lloyd's Act 1982, he will see that it provided for a financial institution to be above the law. That is why there has been exploitation. Are not those sufficient grounds for the Lloyd's Act 1982 and the Financial Services Act 1986 to be reviewed so that we can have full statutory regulation of Lloyd's that is both transparent and accountable to the House ?

Mr. Hamilton : I certainly would not accuse the hon. Gentleman of being ignorant in this respect as he was a member of Lloyd's, but got out at the right time. However, he is misleading himself if he thinks that a system of statutory regulation might have provided a different result from that which was a consequence of the Lloyd's Act 1982. As the hon. Gentleman knows, the Committee that considered the Lloyd's Act 1982 included two Opposition Members, including the current Front-Bench spokesman, the hon. Member for Oldham, West (Mr. Meacher). It was therefore a decision of the entire House to put in place the regulatory system contained in the Lloyd's Act 1982. I believe that the changes that have been made within the framework of the Lloyd's Act 1982 will protect Lloyd's in future from many of the mistakes that occurred in the past and we look forward to the future with confidence.

Competitiveness --

10. Mr. Richards : To ask the President of the Board of Trade when he next proposes to meet representatives from the Confederation of British Industry to discuss the White Paper on competitiveness.

Mr. McLoughlin : My right hon. Friend the President of the Board of Trade and other DTI Ministers maintain close contact with the CBI on a wide range of issues.

Mr. Richards : Will my hon. Friend confirm that improving the competitiveness of the Post Office is a major objective of Government policy ? Was he aware that last Monday I opened a new post office at Colwyn Heights in my constituency ? Does not this enterprise by my constituents, Mr. and Mrs. Jones, signify a new future for the Post Office ?

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Mr. McLoughlin : I am grateful to my hon. Friend. I wish Mr. and Mrs. Jones well in their venture of opening a post office. I hope to be able to provide them with new services which will produce more profitability for their business venture.

Mr. Barry Jones : Why do the Government not adopt a strategy for British manufacturing ? Is not the reason for the total lack of convincing measures in the recent White Paper the fact that the Prime Minister will not let the President of the Board of Trade have a strategy for British manufacturing industry ?

Mr. McLoughlin : That is rather at odds with the usual approach of the party that normally sings the TUC's song. So far, John Monks of the TUC has said :

"This White Paper is a welcome shift in the Government's approach to competitiveness".

The latest training and enterprise councils newsletter also stated :

"The Government's White Paper on Competitiveness has received a broad welcome by the TEC leaders".

I therefore reject what the hon. Gentleman has said.

Mr. Ward : Will my hon. Friend join me in approving the emphasis on small firms in the White Paper ? Will he listen to their concern about the difficulty in collecting debts from some of their bigger brethren ?

Mr. McLoughlin : I am grateful for what my hon. Friend has said on that point which, as he knows, was dealt with in the White Paper. We intend to introduce several measures to tackle late payment of debt. There have already been some welcome improvements in this country compared with other countries, but we will deal with the issue again if sufficient progress is not made.

Mr. Fatchett : Is it not a simple fact that the glossy, expensive, £600 per page White Paper contains no new ideas on investment, research and development on training, and no strategy to restore the strength of Britain's manufacturing industry ? Does the Minister agree that the sheer bankruptcy of ideas in the White Paper is the reason why so many people feel that the President of the Board of Trade would make such a good chairman of the Conservative party ?

Mr. McLoughlin : The White Paper deals with some of the issues of concern to Britain. There is no doubt that the policies advocated by the Opposition, such as the imposition of the social chapter on British industry, would do nothing to improve competitiveness.

Mr. Quentin Davies : Has not Britain's improvement in competitiveness been well shown this afternoon, for example in earlier answers about the automotive industry and industrial prospects ? The very last thing that we need is the restoration of the destructive trade union practices of the past--including secondary picketing, which the Labour party is pledged to restore.

Mr. McLoughlin : I can assure my hon. Friend that there is no way in which the Government will backtrack on any of the trade union legislation that we have introduced, but the same cannot be said for the Opposition. More than 40 per cent. of the value of Japanese investment stock has come to the United Kingdom in inward investment and, in 1992, some 39 per cent. of the value of United States investment stock in the European Community came to

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Britain. Other countries look to the United Kingdom as a place to invest because we have created the right climate for investment.

Life Assurance --

11. Mr. Denham : To ask the President of the Board of Trade in what circumstances a life assurance company is required to submit quarterly reports to his Department.

Mr. Neil Hamilton : The power to require insurance companies to furnish information, including the submission of quarterly returns, may be exercised on any of the grounds set out in the Insurance Companies Act 1982. This power is most frequently used following authorisation or change of control.

Mr. Denham : Will the Minister confirm that Guardian--formerly Guardian Royal Exchange--is under constant review by his Department ? Is he aware that some endowment policies sold by that company see £7 of growth in the life fund bringing only 70p of benefit to investors ? Is it not one of the worst performing companies in the country and does not its appalling record of bad management and bad investment highlight another failure in the regulatory system for personal financial services ? The Minister's Department monitors solvency and the regulatory organisations monitor marketing--why does no one ensure that the public get a fair deal ?

Mr. Hamilton : As the hon. Gentleman knows, it has been a long- standing practice of the Department of Trade and

Industry--including the period when we had a Labour Government, if the hon. Gentleman's memory goes back that far--not to reveal the nature of its regulatory contact with individual companies.

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