That Madam Speaker do issue her warrant for the Clerk of the Crown to make out a new writ for the electing of a Member to serve in this present Parliament for the borough constituency of Dudley, West in the room of John Graham Blackburn Esq., deceased.--[ Mr. MacKay. ]
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): The Post Office operateseveral businesses. We are actively engaged in widening the opportunities for Post Office Counters and we are helping to automate their services. We will announce any plans to change the present arrangements governing the remainder of Post Office activities as appropriate.
Mr. Dowd: Despite the Secretary of State's failure to convince all his own Back Benchers, let alone the British people, of the need to privatise Royal Mail, will he confirm that he will not allow his personal pique or vanity to sabotage a prosperous future for the Royal Mail within the public sector? If he cannot give such an assurance, will he make way for those who can?
Mr. Heseltine: I doubt very much whether the Post Office would want me to make way for the Labour party as it will remember that, faced with the dilemmas that I face, it was the Labour party's decision to cut the capital expenditure programmes of the Post Office by 30 per cent.
Mr. Heseltine: I believe that industrial action against back-door or front-door privatisation is extremely unwise. I understand that my right hon. Friend the Member for Conwy (Sir. W. Roberts) is concerned about the possible use of industrial action to frustrate the opportunities for the management of the Post Office to transfer individual
Column 580post offices from the public to the private sector. Where such post offices have been so transferred, that has been extremely successful.
Ms Hoey: Can the Secretary of State tell us very simply why he will not allow the Treasury rules to be changed--the changes could receive all- party agreement and be put through the House very quickly--to give the Post Office the commercial freedom that everyone knows it needs and deserves?
Mr. Heseltine: Because we are following the precedent of the Labour party in power which managed to cut the capital programmes of the Post Office by 30 per cent. If that was not enough, Labour cut the Electricity Generating Board capital programmes by 25 per cent. for exactly the same reason. In power--something Labour has now forgotten all about--Labour faced the same disciplines that we are facing.
Mr. Page: Now that the plans to privatise the Royal Mail have been dropped and, with them, the removal of commercial restrictions on the Post Office, does my right hon. Friend agree that instead of the taxpayer receiving the money and benefit from the sale of the Post Office and the Royal Mail and the annual income from corporation tax, the taxpayer may well have to find money to finance investment and pay to fight increasing commercial competition?
Mr. Heseltine: Those arguments are very powerful and they are the underlying arguments that have enabled the Government to privatise industry after industry, to turn state-run monopolies into world-class companies and to set a pace-setting programme across the entire world which Governments of all political persuasions are now copying.
Dr. John Cunningham: Why does the right hon. Gentleman walk up a blind alley on the future of the Post Office? Does he not recognise that the British National Oil Corporation--until it was dismantled by the right hon. Gentleman and his colleagues--operated successfully outside the public sector borrowing requirement and that, until recent weeks, British Nuclear Fuels also operated successfully outside the PSBR until he brought it back within the PSBR? Presumably, if the right hon. Gentleman believes that the Post Office cannot be successful in the public sector, he is condemning not only the Post Office but British Nuclear Fuels plc, too. Why does he not seek, with his hon. Friends and with the Opposition, an agreed way forward which will guarantee success for the Post Office and for Britain? That course is open to the right hon. Gentleman--why does he spurn it?
Mr. Heseltine: For precisely the reason that the Labour party could find no way of doing that when it was in office. If it is so simple, why did the Labour Government cut investment programmes by 30 per cent.?
Mr. Tredinnick: Will my right hon. Friend indicate what competition the Post Office faces, particularly from abroad, and will he say something about the fate of the letter post and whether it is declining?
Column 581Royal Mail. The fax machine and the bike boys are eating into its marketplace. A proliferation of private sector companies which are subject to the disciplines of their balance sheets are competing with the Post Office. As the whole House knows, it is extremely difficult to impose on a public sector organisation the disciplines necessary to ensure that taxpayers' money is not used unfairly to compete with the private sector. Plenty of Opposition Members who have British private companies in their constituencies would be the first to complain if they felt that those companies were being subjected to unfair competition.
2. Mr. Salmond: To ask the President of the Board of Trade what measures he is taking to ensure that businesses are able to compete effectively within the single European market; and if he will make a statement.
The Parliamentary Under-Secretary of State for Trade and Technology (Mr. Ian Taylor): We have established a single market compliance unit which, alongside the trade barriers strategy, helps industry to tackle single market problems and conducts sectoral studies. We are assisting the Commission in its efforts to improve complaints procedures and are pushing successfully for closer co-operation between enforcement officials in the Community.
Mr. Salmond: Can the Minister identify the precise mechanism by which having a part-time chairman at £450,000 and a 75 per cent. salary increase for a chief executive will enable British Gas to compete more effectively in the single market? Is there not a contrast between the President of the Board of Trade's specific support for the company and the Prime Minister's general condemnation of excessive salary increases, or is the common connection that neither of them intends to do anything about it, presumably on the ground that the Tory party helps those who have already helped themselves?
Mr. Taylor: The hon. Gentleman's bile has obscured his judgment of the success of the policy and the way in which British Gas has helped its customers over the past few years. The salaries of chairmen of such companies on the stock exchange is a matter for the directors involved, as the chief executive himself has said. We are concerned to improve the quality of service to customers. In many privatised utilities, that is exactly what happens. In the sphere for which I am directly responsible, we must look at the tremendous success of British Telecom since privatisation and the at improvement in services to customers. Prices have fallen by 35 per cent. Why does the hon. Gentleman not talk about those successes rather than ranting and raving?
Mr. Quentin Davies: May I congratulate my hon. Friend and my right hon. Friend the President of the Board of Trade on their remarkable success in persuading our European partners finally to open the telecommunications market in the single market by 1998, which is a great success about which, needless to say, the media have said almost nothing? May I ask my right hon. and hon. Friends to build on that success by now pushing for a single market in energy and forcing the monopolistic
Column 582owners of pipelines and electricity grids elsewhere in the single market to open those networks to competition as soon as possible?
Mr. Taylor: My hon. Friend has noticed the Government's tremendous success in the Telecommunications Council on Thursday evening, when we persuaded recalcitrant Community colleagues to agree to liberalising infrastructure as well as services by 1 January 1998. I should point out to Opposition Members that the problem for several of those countries was that they were not sufficiently committed to liberalisation. A party that is not committed to liberalisation cannot envisage the true merits of the information superhighway. On my hon. Friend's second point, we are very much in favour of a single market in energy, and it is overdue. My hon. Friend the Under-Secretary of State for Industry and Energy is working hard to obtain agreement on this across the Community.
Mr. MacShane: Is the Minister aware that one of the greatest single hindrances for British companies seeking to operate in Europe is the high cost of electricity for large-scale industrial users in this country? Electricity prices for that group of users have risen by more than 50 per cent. in the past five years, while they have fallen in comparable European countries; in pence per kilowatt the cost is higher in the United Kingdom than in France, Italy, Belgium and the Netherlands. Will the Minister tell the chairmen of the privatised companies to stop lining their pockets and to produce electricity at prices which will allow British firms-- particularly those in the steel and chemical industries--to compete effectively in Europe?
The point is that larger users in particular are capable of negotiating contracts. British industry is competitive in the European Union, regardless of the price levels that the hon. Gentleman mentioned, specifically because we have the right competitive background for British industry to flourish. That is why it is doing well in the European single market, and why our partners in the European Union regularly view the Government's policies as those that they should follow.
The Minister for Export Trade (Mr. Richard Needham): With other DTI Ministers, I regularly meet the CBI to discuss a wide range of issues, including exports. Underlying export volumes have risen by 12 per cent. over the last year and now stand at record levels.
Mr. Batiste: Does my right hon. Friend agree that the unprecedented success of British companies in exports is due at least in some measure to the success of small British companies in re-exporting products to rather difficult markets--companies such as those in my Leeds constituency involved in re-exporting musical instruments? Will he consider ways in which his
Column 583Department could help such companies to expand their presence at international trade fairs through joint ventures?
As my hon. Friend knows, this is the only recovery since the war--and I mean the Boer war--in which the trade deficit has actually declined. British exports are now at the level that they reached in the mid-1980s, and the decline of the British percentage share worldwide has ceased. That is because of the tremendous success of the Government's policy, and the dynamism of the British manufacturing base.
Mr. Austin Mitchell: Do not the improvement in British exports since devaluation and the even greater improvements in exports outside Europe, where the devaluation has been greater, indicate the need for a competitive exchange rate to boost exports? Would not the best way of providing encouragement be to offer Eddie George on a free transfer to the Bundesbank instead of allowing him to yammer on about putting up interest rates--and therefore the pound--every time recovery stirs?
Mr. Needham: The hon. Gentleman asks enough questions over a month to know the answer to that himself. The fact is that Britain's share of world trade in manufacturing stopped declining in the mid-1980s, having--as the hon. Gentleman knows--declined consistently for most of the century. That cannot be purely to do with our leaving the exchange rate mechanism. The real factor is that Britain's exports are now more competitive and our productivity is increasing, as is our quality, mainly because the Government have managed to attract vast amounts of foreign investment into this country and to improve the competitiveness of British industry.
Mr. Garnier: My right hon. Friend mentioned the Boer war. Will he encourage the CBI and its members to export vigorously to the Republic of South Africa--a country that needs all the trade that it can get, but trade that will benefit British industry as well?
Mr. Needham: My right hon. Friends the Prime Minister and the President of the Board of Trade have already taken large missions to South Africa and I intend to add to those twice next year. I think that British business understands the importance of South Africa and the opportunities there, and that we shall take every opportunity to exploit those opportunities.
Column 584improvements in productivity and quality. Those changes have also fed down the supply chain to component suppliers.
Mr. Burden: Surely the Minister accepts that the hallmark of the really successful motor manufacturers recently, such as Rover in my constituency, has been the fact that they work closely with the trade unions representing the work force, that they value collective agreements and realise their validity, and that they have conditions of service well above the social chapter minima and low-pay thresholds. Does that not show just how bogus is the Government's approach of advocating low wages and union bashing?
Mr. Eggar: I confirm that the number of working days lost through industrial action has decreased dramatically since 1979--from 29.5 million days then to 649,000 days last year. That is a credit to the industrial relations changes brought about by the Government which the Labour party consistently opposed.
Mr. Anthony Coombs: As the motor industry makes such a major contribution to manufacturing industry in the west midlands, which itself accounts for more than a third of exports from Britain, is it not encouraging that a recent CBI survey of the west midlands shows that no fewer than 80 per cent. of companies expected an increase in sales in the next three years and 60 per cent. expected an increase in exports? Would that not be jeopardised by the huge rise in business taxation which the Opposition expect will increase by no less than 50 per cent. at a stroke?
Mr. Eggar: My hon. Friend is absolutely right. The worst thing that we could do in terms of inevitably reversing the present trend towards increased competitiveness by British industry would be to take on board the burdens of minimum wages and joining the social chapter, which is exactly what the Opposition advocate.
Mr. Ian Taylor: The figures for VAT registration and deregistration in 1993 are not yet available, and they would be the best guide. Commercial sources show a decrease in company failures in the south-west during the first nine months of 1994 compared with the same period in 1993.
Mr. Jamieson: Is the hon. Gentleman aware that in Devon and Cornwall since the mid-1980s 21,000 people have lost their jobs in defence-related industries, many of them small businesses, with a total loss of £500 million to the local economy? When will the hon. Gentleman announce new measures to assist small businesses in Devon and Cornwall, and when will he take the interests of the south-west seriously?
Mr. Taylor: The hon. Gentleman should know that we do take the interests of the south-west seriously, as any visit to the Government office in the south-west will show. In addition, the help that we are giving through Business Links particularly helps smaller companies in periods of adjustment or expansion. We are working with
Column 585the defence industries and through the European Union's Konver programme. However, the hon. Gentleman might think closely about the Labour party's policy towards defence as that would be the biggest job destruction programme going.
Sir Peter Emery: Does my hon. Friend agree that unemployment in east Devon, as in most of Devon, is among the lowest in the United Kingdom and that the investment of overseas companies in Devon and Cornwall is high and based on small industries which have grown in order to attract such investment? Will my hon. Friend do everything possible to continue the support that we have had from the Department of Trade and Industry to ensure that such investment continues?
Mr. Taylor: I am grateful to my right hon. Friend for being positive, which is in the interests of the region. The Government are giving considerable help in the form of DTI assisted area status, particularly for Plymouth where the inward investment office will be. As I have said, there is the status 2 objective for the European Union, particularly for the urban areas, the Konver 1 and 2 programmes and Business Links seeking to ensure that small companies, to which my right hon. Friend referred, receive the best possible advice. That is a story of considerable assistance; if Opposition Members did more to highlight it, they might provide companies with more incentives to move into the area.
Mr. Bell: That is a story of complacency rather than assistance. When the hon. Gentleman talks about the south-west and the small business man, will he refer to the famous memorandum of the famous John Maples, which states clearly that privatisation has not been popular and that the small business man in particular feels let down? That view was immediately echoed by the hon. Members for Upminster (Sir N. Bonsor), for Bridlington (Mr. Townend), for Bexleyheath (Mr. Townsend), for Aldridge-Brownhills (Mr. Shepherd) and for Dover (Mr. Shaw). None of those Back-Bench Members supports the Minister, and Mr. Maples does not support the Minister, so who does?
Mr. Taylor: The Minister is not looking for support for something that he is confident that he is doing right. That will be self-evident, and support will flow from the success of the economy, including that of the south-west. There is no question but that the south-west is benefiting from the Government's policies across the board, which have stimulated growth among smaller companies. All the figures now emerging from the banks show a rising number of business start-ups and an increase in the total stock of businesses in each of the first three quarters of this year. Those are the statistics. What I said earlier shows that we are also providing a framework for further support to allow those companies to grow from small into medium-sized businesses. That is actually rather good progress.
Mr. Streeter: Has my hon. Friend been able to assess the adverse impact on all small Devon and Cornwall businesses supplying goods and services to the dockyards if a future Labour Government were to comply with the policy of the Labour party conference and scrap Trident, thus destroying the dockyards?
Column 586loud in the interests of his constituents, and I know that they are now paying close attention to the support that the Government have given him. There is no doubt that Labour policy on defence, especially on Trident, would be devastating for people in and around the dockyards. Those problems would continue and get worse if ever a Labour Government came to power--which is one reason why people in the south-west would be well advised to read the Labour party's defence document, especially on Trident.
Mr. Illsley: The Minister may be aware that there is increasing speculation among mineworkers employed in the coal industry that their contracts of employment will be terminated when they are required to apply for jobs in the private sector. Can he tell us whether that will happen, and whether any payment will be made to mineworkers invited to transfer to the new privatised coal industry? Will there be redundancies, with fewer men employed in the industry in future?
Mr. Wardle: Miners transferring to the private sector will not be redundant and they will transfer under the well established Transfer of Undertakings (Protection of Employment) Regulations, which will cover their contractual rights, including those relating to redundancy levels. The hon. Gentleman has always been perfectly open about his past employment with the National Union of Mineworkers, but it is a bit rich for him to suggest that an industry which has received nearly £20 billion from the taxpayer since 1979 should ask the taxpayer to dip further into his pocket and give miners a parting gift when they sensibly join the private sector.
Mr. Wardle: My hon. Friend is right; that is the cover provided by the TUPE regulations. When the Minister of State made his announcement last month about the preferred bidders he made it clear that those companies were well funded and able to meet their liabilities. Thanks to the TUPE regulations, they will do precisely that--when necessary.
7. Mr. Martyn Jones: To ask the President of the Board of Trade what further discussions he has had with the National Consumer Council about the level of service provided by telecommunications companies.
Mr. Ian Taylor: Although my officials met the National Consumer Council following its September 1993 report, "Paying the Price", which covered the work of all the utility regulators, the level of services provided by
Column 587telecommunications companies is primarily monitored by Oftel. Oftel deals directly with representations from consumers.
Mr. Jones: I am glad that the Minister has mentioned the NCC report, "Paying the Price", as it says that since privatisation the cost of connecting a telephone has increased by 20 per cent. How does he justify that?
Mr. Taylor: Matters of interconnection are now being assessed by Oftel, which has said that a report will be published early next month. Oftel has kept continuously under review the question of whether the consumer is best protected and the necessity, in a highly complicated sector, of providing a proper balance between access to BT and enabling it to perform properly as a company.
The key point to bear in mind, however, is that since the liberalisation of BT call costs have been reduced by 35 per cent. in real terms. Cheap communications are important not only to customers but because they will enable the information super-highway to grow.
Mr. John Marshall: Does my hon. Friend agree that many pay phones did not work when BT was in the public sector, whereas many more do so today? Does not that show that competition and privatisation give a better service to the consumer?
Mr. Taylor: My hon. Friend is quite right: shareholders are not known to vandalise telephone boxes. Since competition began, universal service provision--a matter of considerable debate 10 years ago during the phase of liberalisation, which was not supported by the Labour party--has increased. There are now more telephone boxes--most of which now work--and more people have a telephone. That is a tremendous success for a policy, which the Labour party could well reconsider--with guilt for not supporting it.
Mr. Nigel Griffiths: How can the Minister be satisfied with Oftel's record when fewer of our citizens have phones in their homes than those of France and Germany? Why do British customers pay higher connection charges than most of our competitor countries, and should not the regulator be given powers to reduce connection charges to the French and German levels of under £30?
Mr. Taylor: The hon. Gentleman makes unreasonable comparisons with other countries' telephone systems. [Interruption.] Opposition Members should listen to what I have to say. I attended a European Telecommunications Council meeting last Thursday, at which Minister after Minister complimented us on the way in which liberalisation had given the British public an excellent telephone network based on competition.
Each of the cases that Oftel is investigating contains detailed proposals backed by reports, and another report in December will propose protection for the consumer. As a result of liberalisation, the British public has received a better quality of telephones and lower prices. Where there are problems, BT and the other new companies have offered special bargains such as the low-pay tariff. Those are excellent moves by a competitive market that is responding to customer demand.
Mr. Fabricant: Is my hon. Friend aware that this country now has more digital links than France or Germany, that long distance and international phone calls are cheaper here than in France or Germany and that--to
Column 588be precise--less than 30 per cent. of call boxes worked before privatisation, whereas now more than 95 per cent. work?
Mr. Taylor: Britain is the best place in the European Union for international businesses to conduct their business. It is interesting that, from Paris, it is cheaper to phone somewhere else in France via New York than it is to use France Telecom. That is a remarkable fact, and it would not occur in this country. We have just found a United States equivalent for telephone purposes, and there is now the possibility of extremely cheap lines across the Atlantic. That again will assist British business.
Mr. Hughes Does the Minister recognise that the problems of state subsidies and unfair practices have temporarily abated because of the upturn in demand for steel? Nevertheless, when the downturn comes we shall be back to square one. Is not there some justification for the widespread feeling among steel workers that the Government have put up only a sham fight on their behalf?
Mr. Eggar: I simply do not accept that. I pay tribute to the management and work force of British Steel and of the other steel companies for the dramatic change that has been achieved since privatisation. I know that the hon. Gentleman's constituency has been through a period of change. He now has a world-class plant in his constituency that is producing a record amount of extremely high quality steel.
It is well known that the Government strongly opposed a number of European Union proposals. Last December, however, we accepted, a package of six article 95 cases. We are discussing a particular article 95 case, the EcoStahl case, with the Commission and the German and French Governments, and at the same time we are keeping British Steel and the British Independent Steel Producers Association--BISPA--closely informed of progress. It is a difficult issue. We are aiming to achieve equivalence between the present article 95 proposals and the December 1993 proposals.
Mr. Evans: I thank my hon. Friend for that reply. Will he confirm that since privatisation gas prices have fallen by 23 per cent.? I know that my hon. Friend likes to have instant control of himself, but does he agree that Bambi has already lost control of the lot opposite? Does he also
Column 589agree that-- [Hon. Members:-- "Reading".]--we have not heard much about the 50 per cent. pay rise that Bambi got when he became leader of that lot on the Labour Benches?
Mr. Harvey: When the Government introduce a competitive market into the gas supply industry, what protection do they intend to offer small- volume consumers in areas remote from the sources of supply against the higher economic costs of supplying gas to them? Upon whom will the cost of restructuring the industry fall?
Mr. Eggar: As the hon. Gentleman knows, a number of issues lie behind that question. In the coming months, a regional differential in prices will be introduced that will differentiate region by region as opposed to urban area as against rural area. We therefore do not expect transportation charges to differ to the extent implied by the hon. Gentleman. We will publish full details in the proposed Bill and in the accompanying licence of the various obligations that will be placed on the competitor companies to British Gas. I am sure that the hon. Gentleman will be reassured by that information. I know that his party is in favour of gas competition and I look forward to working with him.
Mr. Wilson: The country is now well aware that the chief executives of British Gas have awarded themselves grotesque pay rises. The chief executive has been awarded an increase of £205,000 a year. Will the Minister confirm that, by remarkable symmetry, in the current year his Department has cut the grant to the Gas Consumers Council by £209,000? Will he further confirm that there could be no more eloquent commentary on the concern felt by his Department and the Government for the consumer as opposed to their worship of private greed?
Mr. Eggar: Why does not the hon. Gentleman pay credit to British Gas for a reduction of 23 per cent. in real gas prices? Why does he not follow the line taken by the shadow energy Minister, who has welcomed the Government's announcement about ending British Gas's monopoly, which will therefore increase the benefits of competition that will be enjoyed by consumers?
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Jonathan Evans): It is for the Director General of Fair Tradinto consider this proposed merger and to advise my right hon. Friend the President of the Board of Trade under the Fair Trading Act 1973 whether the merger should be referred to the Monopolies and Mergers Commission. All representations received by the Department of Trade and Industry are being forwarded to the Office of Fair Trading.
Column 590ahead, will my hon. Friend give serious consideration to submitting it to the MMC, should the Office of Fair Trading consider that that is the right way to proceed?
Mr. Evans: I am grateful to my hon. Friend for the warmth of his welcome. At this stage, it is the job of the Director General of Fair Trading to investigate those cases, but he is willing to receive views from all interested parties and I am sure that my hon. Friend will pass his observations to him.
Mr. Davidson: Does the Minister accept that people are anxious about the possible takeover of VSEL not only by GEC but by British Aerospace, particularly about the impact that it might have on Yarrow's on Clydeside? Would not it be far better for the Government to make it clear now that they will refer neither bid or both bids, but will not discriminate in favour of one bid as opposed to another?
Mr. Evans: As I have already said, at this stage it is a matter for the Director General of Fair Trading, but I am sure that the competition authorities will pay close attention to all the views expressed. I have no doubt that the hon. Gentleman will join my hon. Friend the Member for Wyre (Mr. Mans) in making representations to that quarter.
Mr. Nicholas Winterton: I wish to advise the House that Avro International, the regional jet division of British Aerospace, is located on the periphery of my constituency and is therefore a vital employer in the Macclesfield borough. If GEC succeeds in taking over VSEL, it will create a virtual monopoly in shipbuilding, which cannot be good for the defence pound and its purchasing capacity. Will my hon. Friend take on board the fact that many Conservative Members are strongly opposed to GEC's bid and will do everything possible, in representations to the Government and the Office of Fair Trading, to point out the problems that would result if GEC were successful?
Mr. Evans: My hon. Friend is an experienced Member of the House and will therefore appreciate that, at this stage, I cannot discuss specific issues raised by the merger. He will have heard the observations that I made to other hon. Members and I am sure that the strength of opinion that he has expressed will be made clear to the Director General.