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Mr. Page: While being grateful for and impressed by the huge amount of inward investment and the hundreds of thousands, if not millions, of jobs that have been created, will my right hon. Friend speculate about whether he believes that that inward investment flow will be enhanced or diminished by the Labour MEPs' enthusiasm for clause IV?

Mr. Heseltine: My hon. Friend raises the point to which I referred a moment ago. The Leader of the Opposition is flogging around Brussels at the moment because he is absolutely terrified of the damage that his own supporters are doing to his prospects of ever leading this country. I must say that my sympathies are all on the side of the Labour MEPs who are obviously determined--

Mr. Foulkes: On a point of order, Madam Speaker.

Madam Speaker: Order. Points of order come after Question Time, but I will anticipate what the hon. Gentleman wishes to say: at Question Time we deal with Government policy, not Opposition policy. I call Dr. Cunningham.

Dr. John Cunningham: Thank you, Madam Speaker. Good inward investment in the British economy is welcome. However, is the right hon. Gentleman satisfied that inward investment from Hong Kong Land and the Swiss Bank Corporation is being conducted properly in the hostile takeover bid for Northern Electric? Is there not a case for an inquiry into the Northern Electric share dealings, for example? Is not there a question of insider dealing and the exploitation of legal loopholes by the Swiss Bank Corporation?

Is it acceptable that those practices should go on in a hostile takeover bid for a regional electricity company? Will those matters not set the trend for the future ownership of regional electricity companies? Does not the right hon. Gentleman think that there are so many questionable aspects to the bid that he should ask the Monopolies and Mergers Commission to investigate all parts of it?

Mr. Heseltine: The right hon. Gentleman raises some very important issues. He will understand that inquiries are being conducted in the proper manner and it would be quite inappropriate for me to add in any way to a general acknowledgement of those inquiries.

Mr. Sykes: Talking about inward investment and its importance in creating jobs, is my right hon. Friend aware that a large international company in my constituency, when faced recently with a decision about whether to build a new factory in France, decided not to do so because of the cost of the social chapter? It decided instead to double the size of the production line in Scarborough--much to the benefit of my constituents.

Mr. Heseltine: My hon. Friend gives the House more good news. Inward investment at present accounts for


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17 per cent. of employment in this country, 23 per cent. of net output, and 33 per cent. of gross value added in manufacturing.

Carpet Manufacturers (Subsidies)

11. Mr. Illsley: To ask the President of the Board of Trade what representations he has made to the European Commission regarding illegal subsidies to European carpet manufacturers.

Mr. Eggar: The UK Government maintain regular contact with the Commission to monitor its progress in pursuing cases of illegal aid in this sector and will continue to do so to ensure that the Commission does not let the matter go by default.

Mr. Illsley: I am grateful for that response. Will the Minister press the EC particularly with regard to Belgium and the illegal subsidies that the Belgian Government have given to carpet manufacturers operating in this country--notably the Beaulieu and Fabelta companies? The Belgian Government were found guilty of supplying illegal subsides to those companies, thus allowing them to operate in this country to the detriment of British carpet manufacturers. I have a constituency interest in the matter. Shaw Carpets Ltd. in my constituency announced the redundancies of 50 per cent. of its work force over Christmas, and its difficulties arise, in part, from those illegal subsidies.

Mr. Eggar: I am well aware of the concern of the hon. Gentleman and other hon. Members on both sides of the House about the Belgian case in particular. As the House probably knows, Belgian aid to the Beaulieu carpet company, to which the hon. Gentleman referred, has been ruled illegal. The Belgian Government and the Belgian courts are currently involved in action to recover from the company aid that was given illegally and that is proceeding. The United Kingdom Government are keeping in close touch with the Commission to make sure that pressure is maintained to ensure repayment. I am sure that the hon. Gentleman will welcome the United Kingdom's success in making sure that the Maastricht treaty provides for fines on member states that do not comply with judgments.

Mr. Anthony Coombs: While I welcome the new marketing efforts of the carpet industry, does my right hon. Friend agree that it is of concern that 52 per cent. of the British market in carpets is foreign supplied, and it has taken no fewer than seven years for the Belgian Government still not to pay back the £5 million subsidy they gave Beaulieu? In that regard, will my right hon. Friend engage with the European Commission to examine the possible subsidies on the cost of polypropylene to Belgian carpet companies to the competitive disadvantage of British carpet companies, which have seen polypropylene prices rise by 20 per cent. in the past year when there does not seem to have been an equal effect on Belgian carpet manufacturers?

Mr. Eggar: I assure my hon. Friend that we share his concern on that particular aid case and we are monitoring carefully the position in Belgium. We are keen to work closely with the British carpet industry to make sure that competition is absolutely fair and that the general state aid rules are applied evenly across the European Union.


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Aerospace Industry

12. Mr. Barry Jones: To ask the President of the Board of Trade what was the amount of cash earned in Britain by the aerospace industry in 1993; and if he will make a statement.

Mr. Eggar: Figures are not yet available for 1993. In 1992 the aerospace industry's contribution to GDP was £4.3 billion.

Mr. Jones: The figures are magnificent. They prove that British Aerospace plc is making a great contribution to British manufacturing and exports. With that in mind, does the Minister agree that it would be appropriate for the Government to give British Aerospace a vote of confidence by stating that the British Government will purchase the future large aircraft? Does he know that my constituents are experts in wing technology and already make the wing of the Airbus? They would be extremely keen to see the Government place that order. Additionally, perhaps British Aerospace could produce the successor to the aging Nimrod.

Mr. Eggar: I am aware of the important role that aerospace plays in the hon. Gentleman's constituency and the particular interest that he personally has displayed on behalf of his constituents and in support of British Aerospace. On 16 December my right hon. and learned Friend the Secretary of State for Defence made an important announcement with regard to the FLA. He stated clearly that we will rejoin the FLA programme when it is managed commercially by the Airbus consortium. He also stated that we expect to have a requirement of between 40 and 50 FLA. His announcement was warmly welcomed by the aerospace industry and by British Aerospace in particular, as it included the announcement of an order for 25 C130J aircraft--that benefits some 36 United Kingdom companies involved in the production of those aircraft.

With regard to the hon. Gentleman's last point about the maritime aircraft replacement, I can assure him that the DTI will continue to work closely with the Ministry of Defence to make absolutely certain that the commercial and industrial interests are not overlooked in any decision that may be made.

Sir John Cope: My right hon. Friend will be aware that I also welcome the FLA announcement that was made before Christmas. Will he lose no opportunity to emphasise, both within Government and wider, that the tremendous success of Airbus last year in outselling Boeing both reinforces the case that it can deliver on the future large aircraft and emphasises the great importance to the United Kingdom aerospace industry of participation in the project and hence in the future success of Airbus?

Mr. Eggar: It was an extremely important decision for the British and European aerospace industries. Airbus had a very good year last year: for the first time it outsold Boeing, selling 125 aircraft to Boeing's 120. I hope that that considerable achievement will continue into 1995.


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Beer Orders

14. Mr. Wareing: To ask the President of the Board of Trade what plans he has to make changes to the beer orders following the planned changes in the management of the Grand Metropolitan estate.

Mr. Jonathan Evans: I assume that the hon. Gentleman has in mind the recent decision announced by Grand Metropolitan to withdraw from the direct management of Inntrepreneur Estates Ltd. These changes have no effect or bearing on the beer orders. I therefore have no plans to make any changes to those orders.

Mr. Wareing: Is it not time that the DTI carried out a thorough inquiry into the pub activities of Grand Metropolitan through Inntrepreneur Estates, in which Grand Metropolitan still owns a share? Is the Minister aware that last year 10 per cent. of Inntrepreneur tenants were driven out of business because of the chronic over-renting of premises and other aggressive policies pursued by Lord Shepherd and Grand Metropolitan? Is he aware that most Inntrepreneur tenants now regard Lord Shepherd and Grand Metropolitan as the Rachman of today's pub trade? It is alleged that there have been 14 suicides among tenants of the organisation.

Mr. Evans: I am aware that my predecessor met the hon. Gentleman last year, together with representatives of the tenants. I am also aware that a delegation led, I believe, by my hon. Friend the Member for Southampton, Test (Mr. Hill), had a meeting with my predecessor. It was made clear at that time that the Department is perfectly happy to investigate--and will arrange for the Director General of Fair Trading to investigate--any allegation of a breach of the beer orders, or any breach of undertakings given by IEL at the time of the takeover.

Such matters as have come to the Department's attention since then have been investigated. I am bound to say, however, that given the strength of the remarks made by the hon. Member for Liverpool, West Derby (Mr. Wareing), I rather hoped that he would be more forthcoming. The Department could not be asked to do more than make that offer to the hon. Gentleman, if there are specific allegations of breaches of the beer orders or of undertakings made by IEL.

Mr. Couchman: The House will know that until recently I ran a family company operating public houses in London. I wish to dissociate myself from the remarks of the hon. Member for Liverpool, West Derby (Mr. Wareing). I have now disposed of my interest in that company, apart from remaining a non-executive director for a brief period.

It is now five years since the flawed report by the Monopolies and Mergers Commission, "The Supply of Beer", was published and the beer orders were passed by the House. May I urge my hon. Friend to get his Department to review the operation of those orders? The British pub remains in severe jeopardy as a result of many factors, not simply the orders themselves.

Mr. Evans: As I told the hon. Member for West Derby, my Department is certainly prepared to investigate any specific allegations that are made. If my hon. Friend has any such allegations to put before the Department, they will be examined.


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Exports

15. Sir Michael Neubert: To ask the President of the Board of Trade what is the level of exports by price and volume for the last 12 months; and what were the figures for the previous 12 months.

Mr. Needham: In the third quarter of 1994, underlying exports rose by 14 per cent. in volume and by 15 per cent. in value.

Sir Michael Neubert: Is not the present buoyancy of our overseas trade as good a piece of news as we have had for many a year, and is not the export-led recovery that we are now experiencing the best possible augury for sustained prosperity for this country for years ahead?

Mr. Needham: My hon. Friend is right. At a time when Opposition Members and many in the press were forecasting an increase in our deficit, that deficit is declining. Let me tell the hon. Member for Wentworth (Mr. Hardy), who asked a question earlier, that since 1981 the volume of United Kingdom-manufactured exports has grown faster than that of the exports of France, Germany or Japan; our world trade in manufactures has stabilised; last year we increased our share of the export markets, and we are likely to continue to do so this year. The deficit in manufactures is declining, and there could not possibly be better news for the country.

Mr. O'Hara: It is indeed many a year since we heard such good news. I notice that the Minister took 1981, not 1979, as his base date. Does he recognise, however, that an important reason for our improved export performance--particularly to our major markets in Europe--is the swifter recovery in consumer spending in Europe? What measures can he announce today to ensure that, when consumer spending eventually recovers in this country, domestic manufacturing capacity will be expanded to meet the ensuing demand for consumer goods?

Mr. Needham: The best way to expand domestic demand is on the back of an export-led boom. The hon. Gentleman always claims that I start from 1981, not 1979, so just to please him I shall start from 1979. Between 1977 and 1979, when the hon. Gentleman's party was in power, the surplus on manufacturing declined by 3 percentage points of GDP. Had the Opposition continued in power with that sort of record, we would now have a minus figure of 16 per cent.--and getting worse--instead of a figure of minus one, and getting better.

Inward Investment

16. Dr. Spink: To ask the President of the Board of Trade what is his latest estimate of the proportion of total European inward investment which is captured by the United Kingdom.

Mr. Heseltine: In 1993 the UK had 41 per cent. by value of the stock of Japanese investment in the EC and 43 per cent. by value of the stock of United States investment in the EC. Comparable stock figures are not readily available from other countries outside the EC.

Dr. Spink: Can my right hon. Friend confirm that this superb inward investment performance greatly contributes to our economic success at the moment? Can he confirm


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that inward investment would be threatened if we followed the policies espoused by the Opposition parties--policies such as a minimum wage and the adoption of the social chapter? Would they not destroy inward investment, and with it our economic success and millions of jobs in this country?

Mr. Heseltine: My hon. Friend is right. That is why we are determined to fight for the British interest: to ensure that the excesses of the social chapter are never applied here.

Mr. Clelland: Does the Secretary of State recall, during the debates on privatisation, that Opposition Members were repeatedly told that inward investment opportunities from Europe and elsewhere would be enhanced by the regionally based nature of the privatised electricity companies? Indeed, the White Paper went to some lengths to spell out the advantages of such companies. Notwithstanding what the right hon. Gentleman has said today about the complications of the takeover bid for Northern Electric by Trafalgar, do the Government still believe in the principle of regionally based electricity companies--yes or no?

Mr. Heseltine: Yes.

Mr. Colvin: Does my right hon. Friend agree that during today's exchanges we have heard many reasons for the improved inward investment to the United Kingdom as a share of the total in Europe; but should we not add to those the fact that we have a stable Government with a fundamental belief in free enterprise, a highly skilled work force which is far more mobile than it used to be because of our housing reforms, the best industrial relations record in Europe, and we are members of the European Union without the social chapter? Does he agree that all those advantages could be put at risk if the alternative Government sitting opposite us were elected?

Mr. Heseltine: I quarrel only with my hon. Friend's use of one word. There is no credible alternative Government on the Opposition Benches.

Post Office

17. Mr. Barnes: To ask the President of the Board of Trade what is his Department's policy on allowing commercial freedoms to the Post Office; and if he will make a statement.

Mr. Heseltine: The Post Office operates several businesses. We are actively engaged in widening the opportunities for Post Office Counters and are helping to automate its services.


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We will announce any plans to change the present arrangements governing the remainder of Post Office activities in due course.

Mr. Barnes: The Government are still in favour of Post Office privatisation even though they have been forced by some of their Back Benchers and by the Opposition to drop it. Will they now consider the position of the Union of Communication Workers, which is against privatisation but for commercial freedom operating fully within the public sector? Will the Government bear that in mind as an alternative to any proposals that they may want to introduce at a later stage?

Mr. Heseltine: The hon. Gentleman obviously does not even realise that 19,000 of the 20,000 post offices are already privately owned.

Mr. Dykes: May I thank my right hon. Friend for kindly responding to the suggestions that my colleagues and I put to him at a meeting before Christmas about the future of the Post Office? Will he confirm that decisions should be made sooner rather than later to remove uncertainties, which do not help the management or the work force? Importantly, as option 1 was specifically mentioned as one of the possibilities or probable policies in the Green Paper, we should proceed with the component of full commercial freedom for a very successful corporation.

Mr. Heseltine: My hon. Friend will understand the inherent difficulties in equating full commercial freedom with public ownership.

Mr. Wilson: As that answer suggests, is the Secretary of State still sulking in his tent and refusing to accept the defeat which was inflicted upon him not only by hon. Members on both sides of the House but, above all, by the British public? Instead of a grudging response, will he agree, before he gives evidence to the Select Committee on Trade and Industry at the end of the month, to come forward with some positive and creative proposals that will find support throughout the House and the country for giving the Post Office greater commercial freedom within the public sector, which it wants and deserves?

Mr. Heseltine: It is very easy for the hon. Gentleman to make wild suggestions. When the Labour party was in power, it never occurred to it to do any such things. In fact, the Labour Government did exactly the opposite and held back Royal Mail and Post Office investment, as they did in the rest of the public sector. It is nothing but the most trivial political hypocrisy for the Labour party, which slaughtered the capital investment programmes of the nationalised industries using the excuse of proper management of the national economy, to suggest that when it is in Opposition it is possible to change the disciplines that we are discussing.


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