House of Commons Hansard Debates for 8 Feb 1995

Mr. McWilliam: What steps does the Minister propose to take specifically to protect the manufacturing of ammunition in the north-east of England given the talks that are taking place between British Aerospace and GIAT of France, a wholly owned French Government company? That poses a threat to the royal ordnance factory at Birtley and to the jobs and the excellent work that the men do.

Mr. Taylor: I appreciate that the hon. Gentleman is greatly concerned for his constituency and his constituents who work at British Aerospace. It would be inappropriate for me, as a Minister, to intervene in discussions with a private sector company, but I hope that all companies, including British Aerospace, understand the importance of maintaining a presence in a vibrant north-east region. I visit the north-east regularly as sponsor Minister and have excellent meetings with Gateshead metropolitan borough council. There is an influx of inward investment and there is no sign that companies around the world have anything

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other than the highest regard for the north- east. That may have a determining influence on the discussions to which the hon. Gentleman referred.

Mr. Knapman: Would I be right in thinking that if a British-owned firm, such as an engineering firm in Gloucester, wished to expand its production or perhaps even export its production to Japan, no such subsidies would be available to it, but if a Japanese-owned firm wanted to set up in the north-east, several thousand pounds per job would be available for it? Is that wholly satisfactory?

Mr. Taylor: It is wholly satisfactory for those people employed by the Japanese company in the north-east. There is a constant flow of companies wishing to invest in the north-east--the most obvious recent example was the Korean company, Samsung, which is itself creating 3, 000 jobs and to which another 3,000 jobs will be connected through local suppliers. That is extremely good news for the north-east of England and for Government assistance to inward investment. The north-east has benefited particularly from that, which is why the region's vibrancy is now the most striking feature I see when I visit it. I hope that when other north-east Members come to the House, they will talk up and praise what is happening in the north-east so that more and more people in the House appreciate the region.

Electricity (Standing Charges)

17. Mr. McAvoy: To ask the President of the Board of Trade if he will discuss with the Electricity Consumers Committee the benefits of abolishing standing charges to customers on low incomes.

Mr. Ian Taylor: That is a matter for the Director General of Electricity Supply and for the regional electricity companies, which must decide how best to structure their charges.

Mr. McAvoy: As electricity companies can afford share options worth £23 million to the executives and directors of National Power and PowerGen, does the Minister agree that those companies should use their profits to abolish standing charges, which would go a long way towards offsetting the extra cost of VAT on fuel imposed by the Government?

Mr. Taylor: For a start, the hon. Gentleman should know that electricity prices have been falling, which has been more than offsetting the cost of value added tax to the consumer. Secondly, it is within the remit of the regional electricity companies to abolish standing charges if they so wish--the Merseyside and North-Western electricity board has done so. Thirdly, in nearly all cases, standing charges have been frozen for the past two years, and where that has not happened, they have been reduced. I hope that the example set by Eastern Electricity only yesterday will be copied in other parts of the country.

Mr. David Shaw: Will my hon. Friend confirm that many executives who are leading the nation's privatised electricity companies are performing extremely well? Electricity prices have fallen in real terms and they are likely to continue to fall. Will he confirm that the executives at the head of our privatised utilities earn a

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lot less than many of those who contributed to the Leader of the Opposition's fighting fund in his bid to lead his party?

Mr. Taylor: The job of senior management in any company, including electricity companies, is to run that company and ensure that it makes a profit which ultimately can be reinvested to improve services. As the electricity companies have clearly improved services since privatisation, senior management can be congratulated on those grounds. How they are remunerated is a matter for them and their shareholders.

Mr. Stevenson: The Minister said that standing charges have been frozen and have not increased, but does he realise that, in the five years following privatisation, standing charges in the Midlands electricity board area increased by no less than 33 per cent? Does he also realise that standing charges have not been frozen but have increased through the application of value added tax? Standing charges have nothing to do with the use of electricity and they hit those people on low incomes the hardest. When will the Government stand up for those on low incomes and intervene to remove standing charges?

Mr. Taylor: The hon. Gentleman should remember that the overall decline in electricity prices included standing charges. In the past two years, prices--even in the Midlands area--have been effectively frozen.

The hon. Gentleman should bear in mind the help that is targeted on those who are most in need and he should also realise that, if standing charges were abolished, the cost would have to be recovered by changes in consumer pricing based on consumption. Many people have high levels of electricity consumption because of the way in which their houses are heated, and they would be penalised. The argument is not quite as simple as the hon. Gentleman makes out.

Coal Privatisation

18. Mr. Skinner: To ask the President of the Board of Trade what assessment he has made of the reduced R. J. Budge bid prior to the privatisation contract from English pits; and if he will make a statement.

Mr. Charles Wardle: Adjustments to RJB Mining's bid reflect developments since tenders were submitted in September 1994, or otherwise information which was not available to bidders at the time. The price paid by RJB Mining is still substantially higher than other tenders.

Mr. Skinner: How on earth can the Government justify the fact that a bidder for the English coal industry put in a bid of approximately £900 million, which was accepted as the highest bid, but the Department of Trade and Industry then reduced the bid to around £800 million? In other words, the Government have ripped off the taxpayer by £100 million.

If that practice occurred in local government, the councillors who accepted a bid and then reduced it by that kind of percentage would be surcharged and kicked out of office. The bid should be investigated and, what is

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more, there should be an investigation of the Department of Trade and Industry which has allowed this sordid episode to occur.

Mr. Wardle: If the taxpayer has been ripped off anywhere, I suspect it is in the form of the £20,000 million in taxpayers' money that has subsidised the industry since 1979.

The hon. Gentleman must know that it was always intended to adjust tender prices to reflect developments that took place after the tenders were submitted. It is not a static situation and there was a reduction in all the successful bids. In any case, the price paid for the English bids was considerably higher than the other tenders. The hon. Gentleman should remember that 28 deep mines which were owned previously by British Coal are now owned in the private sector. The hon. Gentleman has contributed to that process by shouting for more subsidies, resisting change and resisting the realities of the competitive world in which we live.

Mr. David Evans: Does my hon. Friend agree that since we privatised the coal industry we have created jobs in that industry day in, day out? Does he further agree that when that lot opposite were in government during the 1960s and 1970s, they closed 325 pits at the cost of 250,000 miners' jobs? That is what that caring, sharing Labour party did.

Mr. Wardle: How could I possibly match my hon. Friend's eloquence and persuasive force? He is absolutely right. Those 28 deep mines are now in the private sector and they have the best chance they have had for years to prove how competitive they can be.

Mr. Clapham: Is the Minister aware that, out of the blue, the supervisory unions in the mining industry have been told that the industrial death and retirement scheme will be wound up? It is a scheme to which they have contributed and which has £2 million in funds. Can the Minister tell us why the scheme was not carried over under the Transfer of Undertakings (Protection of Employment) Regulations 1981? What will happen to the £2 million in funds?

Mr. Wardle: Employment contracts for those whose jobs were transferred to the new enterprise are protected by TUPE, as the hon. Gentleman appreciates. The new industry-wide pension schemes are required to provide benefits no less advantageous than those provided by the mineworkers' scheme and by the staff superannuation scheme.

Trade Associations

19. Mr. Page: To ask the President of the Board of Trade what steps his Department is taking to ensure that only a single trade association liaises with each industrial sector.

Mr. Heseltine: As I made clear in a speech at the CBI last week and on other occasions, I want to see powerful, well-resourced and effective trade associations which represent the interests of all within their sector. To encourage that process, I have said that officials should refer to me only proposals or representations from a lead association in a sector.

Mr. Page: I thank my right hon. Friend for that positive response. Does he agree that, without one umbrella lead

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trade association in a sector, the Government would receive only a host of confused and muddled messages? That would waste the time of officials and Ministers getting those diverse messages and, worst of all, those trade associations would be doing a disservice to their members by not putting their views coherently to the Government.

Mr. Heseltine: My hon. Friend has taken great interest in this important subject and I agree with him. There are too many trade associations. Many are too small and under-resourced. If they are to represent their members effectively to the Government and the European Commission with a wider audience, there is room for rationalisation and we in the Department of Trade and Industry are doing what we can to encourage that.

Inward Investment

20. Mr. Congdon: To ask the President of the Board of Trade what estimate he has made of jobs created or safeguarded by inward investment projects during 1994.

Mr. Heseltine: According to figures notified to my Department's Invest in Britain Bureau for the financial year 1993-94, almost 30, 000 new jobs have been created and some 69,000 jobs safeguarded as a result of inward investment. Figures for the financial year 1994-95 will be available in June.

Mr. Congdon: I welcome those figures. Does my right hon. Friend agree that companies choose to invest here because of the favourable economic climate that has been created for business with flexible labour markets and a positive approach to deregulation? Would not all that be put fundamentally at risk if we imposed the unnecessary burdens of the social contract on businesses in Britain?

Mr. Heseltine: My hon. Friend is absolutely right. There is a surge of inward investment into Britain because it is perceived that it is the best place within the European Union in which to locate both service and manufacturing activities and, I am delighted to say, an increasing number of company headquarters and research and development facilities. With the Government's policy of maintaining the maximum competitiveness within the British economy and the European Union, we can build markedly on that success.

Mr. MacShane: The President of the Board of Trade is following the Prime Minister yesterday and in Question Time on Thursday in saying that the lack of a social chapter here has some impact on inward investment. The Prime Minister and the Secretary of State for Employment quoted Daimler- Benz extensively, saying that the chairman of Daimler-Benz decided to come to the United Kingdom because there was no social chapter. [Interruption.] I have his statement in German. He does not mention the social chapter, he does not mention Europe and he does not mention England. Will the President of the Board of Trade ask the Prime Minister and the Secretary of State for Employment when citing European business men at least to be accurate and not dishonest?

Mr. Heseltine: My right hon. Friend the Prime Minister is accurate in pointing out that European companies are flowing into every part of this country under our inward investment programme, because they

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know it is the best place to be. If we want to bring that to an end, all we have to do is replace this Government with the Labour party.

Mr. Quentin Davies: Can my right hon. Friend think of anything more likely to discourage foreign investment in this country, other than a Labour victory at the next general election, than sending a signal to the world that we are decoupling from future developments in the European Union?

Mr. Heseltine: My hon. Friend is perfectly correct to make the vital point that the inward investment we are attracting from outside the European Union and the rationalisation of investment within the EU are based on the United Kingdom's competitiveness within the European Union.

Dr. John Cunningham: As to inward investment, ABB invested £70 million in new technology at the carriage works at York--making it one of the most advanced factories of its kind in Europe. What does the President have to say to the workers and management of that plant, when it is threatened with closure because of the complete shambles caused by rail privatisation and the ending of British Rail orders from that works for new coaches? What signal does that shambles send to other companies about inward investment in the British economy?

Mr. Heseltine: I tell those people straight that, if they think that if Labour came to power it would bring to factories jobs for which there is no demand, they are even sillier to listen to the Labour party than I thought.

Mr. Jenkin: Should not my right hon. Friend be at pains to stress that if Britain opts out of the single currency, we will still be part of the single market? Would it not be better to spend £75 million on the Invest in Britain Bureau than to waste it on a speculative venture and the European Monetary Institute?

Mr. Heseltine: We are not faced with that decision. I am sure that my hon. Friend, with the wisdom that he brings to this as to all other matters, would want to be in possession of all the facts in all the circumstances before taking a decision.

British Telecom Connection Charges

22. Mr. Gerrard: To ask the President of the Board of Trade what representations he has made to British Telecom on the level of its connection charges to residential customers.

Mr. Ian Taylor: None. Regulation of BT charges is a matter for the Office of Telecommunications. Connection charges have fallen by 17 per cent. in real terms since 1984.

Mr. Gerrard: Does the Minister not accept that the cost of installing a telephone in the UK is significantly higher than in most industrialised countries? It is four times higher than in Germany, three times higher than in France and double the cost in the United States. Is that not a real deterrent, particularly for people on low incomes and pensioners, who are among those who could

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benefit most from having a telephone? Is it good enough for the Minister to say that he does not care and that it is not a matter for him?

Mr. Taylor: Far from not caring, I care deeply that the UK telecommunications industry reaches every part of the country and people who were not previously able to afford a telephone. The hon. Gentleman should not assume that this country's industry comprises only BT. It is interesting that cable companies offering telephone services are attracting subscribers who could not previously afford a telephone, because cable company entry terms are more attractive. That is the effect of market competition. Incidentally, by definition, such new subscribers live in urban areas, because that is where most cable companies operate at present. This country has a good overall record of universal telephone coverage. That will continue with new technology, such as use of the radio spectrum, particularly in outlying areas.

Mr. Sumberg: If we had listened to Labour, telecommunications would still be a nationalised state monopoly and imposing high charges. Instead, there is competition and the public benefit. UK telecommunications lead the world.

Mr. Taylor: My hon. Friend is absolutely right. Certain countries represented on the European Union Telecoms Council still do not understand that the consumer can only benefit from liberalisation of services, and that only in that way will consumer costs decline. That is why it is a triumph for this country to have persuaded the rest of the EU to liberalise all services by 1 January 1998, to the great benefit of telephone companies of all sorts in this country, which will be able to offer their services and supplies throughout the European Union.

Gas Standing Charges

23. Mr. Olner: To ask the President of the Board of Trade if he will discuss the impact of standing charges on low-income customers when he next meets the Gas Consumers Council.

Mr. Ian Taylor: I refer the hon. Member to the answer I gave earlier to the hon. Member for Clwyd, South-West (Mr. Jones).

Mr. Olner: The Minister's previous answer was not satisfactory. Does he agree that the 75 per cent. increase in pay awarded to British Gas's chief executive, coupled with a 13 per cent. reduction in showroom staff, is a crime? Does he not think that some of the company's £1.6 billion profit should be used to reduce standing charges for people on extremely low incomes who are suffering from the value added tax increase imposed by the Government?

Mr. Taylor: What appears to be a crime is the Opposition's wilful misunderstanding of the benefits to the consumer. The consumer has benefited from a fall in prices since privatisation. That is what hon. Members who are concerned for their constituents should be talking about. There has been a 15 per cent. fall in prices, even allowing for 8 per cent. VAT. That shows that we have an extremely efficient industry. Simply to go on about management salaries is to distort the truth. It also reveals the hon. Gentleman's complete lack of understanding of what is in his constituents' interests.

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