House of Commons Hansard Debates for 1 Nov 1995

Mrs. Roche: When the Minister next meets representatives of small businesses, will he explain to them in detail why the consultancy brokerage service has had to be axed before it was even launched, at a cost to the public purse of almost £3 million? Is not such incompetence yet another example of how, under the Conservative Government's management, Britain has slumped to 18th in the world prosperity league?

Mr. Taylor: The slumping going on in the House is in the originality of the questions being asked by Members on the Labour Front Bench. The business links system,

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which is now countrywide and which combines training and enterprise councils, enterprise agencies, universities and business interests, is the best business support system of any country. In those circumstances, I hope that the hon. Lady, who has just made her debut in the Labour Front-Bench team, will enjoy seeing what a Conservative Government are delivering in the field.

Mr. Gallie: Is my hon. Friend aware of the start-up of flights between Prestwick and Stansted airports? Does he believe that it breaks the mould of expensive flying within the United Kingdom? Does he further believe that it gives a great opportunity to small businesses in my constituency to extend their areas of operation and that it will greatly encourage those who wish to start up new businesses?

Mr. Taylor: My hon. Friend is an indefatigable fighter for the interests of businesses in his constituency. I am sure that the new airport arrangements will assist, and I wish the new venture the very best of luck. I am sure that Ministers at the Scottish Office and the Department of Trade and Industry will take a close interest in the progress being made.

Electricity Industry

9. Ms Coffey: To ask the President of the Board of Trade when he last met the electricity regulator to discuss regulation policy. [38657]

Mr. Eggar: I hold discussions with the Director-General of Electricity Supply on a regular basis.

Ms Coffey: Does the Minister agree that the proposed acquisition of Norweb by North West Water raises certain issues about the current regulatory system? Clearly, neither the water regulator nor the electricity regulator has in the past been able to anticipate the massive profits generated by those industries. The benefits have not been passed on to customers--shareholders have been the major beneficiaries. Does the Minister agree that it is now time to look again at the regulatory framework, to ensure that, in any future mergers, customers and employees as well as shareholders get a much better deal?

Mr. Eggar: As the hon. Lady knows, that matter is shortly to be considered by my right hon. Friend the Secretary of State, so it would be wrong for me to comment on it at this stage.

Mr. Riddick: Will my right hon. Friend confirm that, since privatisation, the price of electricity in Yorkshire has fallen by 16 per cent? Will he further confirm that my constituents will enjoy the benefits of a £50 rebate next year as a result of the demerger of the National Grid, and that the regulator has stipulated that the distribution prices charged by Yorkshire Electricity should be reduced by 3 per cent. per year for the next four years? Does the Minister agree that that is excellent news for consumers of electricity--our constituents--and that the Labour party is desperately trying to divert attention from it?

Mr. Eggar: Privatisation has brought enormous benefits to electricity consumers. Prices have fallen by 9 per cent. in real terms over the past two years, and next year prices for the average electricity consumer will be £90 lower than they were last year. My hon. Friend is right to say that further reductions beyond next year are in the pipeline.

Mr. McWilliam: If electricity companies are so successful, why do I have to pay so much for my

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electricity from Northern Electric while it keeps being the subject of predatory takeover bids from friends and bankers of the Conservative party or from American multinationals? Why can I not get my electricity at a fair price?

Mr. Eggar: Assuming that the hon. Gentleman has lived in the Northern area of electricity provision for many years, I might point out that for the first time he will already have had, and will have in future, a real reduction in the price of his electricity--a feat never achieved before, and certainly not under nationalisation.

Mr. Allason: Will my right hon. Friend confirm that the electricity regulator has a role to play not just in protecting the interests of the consumer but in protecting those of the shareholders? Is he aware that during the recent merger involving South Western Electricity, some shareholders were denied the right to retain their shares in the company? Would it not be right for the regulator to take up that matter?

Mr. Eggar: My hon. Friend is right to say that the electricity regulator must, under statute, take account of the interests both of consumers and of the financial situation of the companies that he regulates. It is a matter of company law, not peculiar to the electricity industry, that, once 90 per cent. acceptances have been received, there is effectively a compulsory right for the acquiring company to purchase the additional shares. That does not apply only to the utility companies; it is a general rule which has been on the statute book for a number of years.

10. Mr. Ashton: To ask the President of the Board of Trade what steps he has taken to increase competition in the electricity industry. [38658]

Mr. Jonathan Evans: Privatisation has opened the electricity industry to the disciplines of the market, and it has provided for increasing competition where previously there was none.

Mr. Ashton: Is the Minister aware that that increasing competition has meant that the East Midlands electricity board closed 60 shops last year, putting hundreds out of work and providing a far worse service for pensioners and others who want to pay their bills? The money from that has gone to increase earnings per share from 12p to 78p and the chief executive has paid himself a bonus of £120,000. Is the Minister further aware that, when the National Grid is sold off, households will receive £50 each, while shareholders will be given £2 billion and the chief executive who handles this legalised theft will receive a bonus of £200,000? Is that competition?

Mr. Evans: It is curious that Labour Members all spend their time deriding the regional electricity companies but then write to me saying that every proposed merger application should be referred to the Monopolies and Mergers Commission and that the companies should remain in the hands of those now in charge of them.

Mr. Stephen: Does my hon. Friend agree that the electricity industry exists to provide electricity for consumers, not jobs for employees? Does he think that the electricity consumer would like to return to the old days of nationalisation, when a chief executive was paid rather less and electricity cost much more?

Mr. Evans: As my hon. Friend has made clear, privatisation has ensured that the consumer's interest has

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been to the fore. That is illustrated by the powers exercised by the Director General of Electricity Supply. I endorse my hon. Friend's remarks. Consumers would not have obtained the present deal under the old 100 per cent. state monopoly which Labour Members fought in the trenches to retain.

Ms Eagle: Does the Minister not appreciate the anxiety in the north- west with the takeover of MANWEB by Scottish Power and the proposed merger between North West Water and NORWEB, with the possible loss of thousands of jobs, fat cat salaries for those who run the industries and poorer services for customers? There is no good deal, merely a privatised monopoly.

Mr. Evans: With regard to the Scottish Power-MANWEB deal, the hon. Lady should know that the Director General of Fair Trading advised my right hon. Friend the President of the Board of Trade that there were neither competition nor public interest grounds to warrant a reference to the Monopolies and Mergers Commission.

The hon. Lady referred to the proposed merger between North-West Water and NORWEB. Had she been listening earlier, she would have heard my right hon. Friend the Minister of State say that the matter is on my right hon. Friend the Secretary of State's desk. It is therefore inappropriate for Ministers to comment.

Military Equipment Exports

11. Mr. Bayley: To ask the President of the Board of Trade what proportion of export credit guarantees last year were used to support the export of military equipment. [38659]

Mr. Oppenheim: Eighteen per cent. of the value of guarantees issued by the Export Credits Guarantee Department in 1994-95 were for contracts for the export of military equipment.

Mr. Bayley: Does the Minister realise that less than 2 per cent. of our total exports are of military equipment but that they receive more than 30 per cent. of all export credit guarantees? How does he justify that? Does he realise that, if United Kingdom manufacturers of civilian equipment received the same Government support as arms manufacturers, we would not have slumped from 13th to 18th position in the world prosperity league, and the York carriage works in my constituency would not have lost vital far east export orders to competitors in Germany and France, and would not, therefore, be closing, with the loss of all 750 jobs?

Mr. Oppenheim: Let me put the hon. Gentleman's mind at rest on one matter. The Labour advertisement which appeared in this morning's press stated that France had overtaken us in the past 15 years. That is wrong. France overtook us when the Labour Government were in office. To fiddle the figures in its advertisement, Labour included Hong Kong and Singapore, which were excluded in the 1960s and 1970s. According to the World Bank, in terms of gross domestic product per head, Hong Kong and Singapore are also ahead of Japan and Germany, so we are in fairly good company.

The hon. Gentleman talked about the Export Credits Guarantee Department. He should be focusing on the percentage of export credits relating to the export of

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capital goods to non-OECD countries. Given the total figures, ECGD cover is the right proportion when compared with the overall proportion of exports. If the hon. Gentleman is saying that we should reduce ECGD cover for defence exports, he should make that absolutely clear, as such a reduction would have severe job implications for many people represented by Labour Members.

Mr. Nigel Evans: Is my hon. Friend aware that, in my constituency, thousands of people are employed by British Aerospace in the military defence industry? Many small to medium-sized businesses are supplying British Aerospace. It is important that those businesses receive Government support through export credit guarantees, and that the Government support projects--as we have done--such as the Eurofighter 2000, which means that we are able to secure many thousands of jobs and manufacturing skills in the north-west, especially in the smaller industries to which I have referred.

Mr. Oppenheim: My hon. Friend is right. The House should be aware that 400,000 jobs are dependent on the defence industry. Those jobs are concentrated in various constituencies, including those of the hon. Member for Dunfermline, East (Mr. Brown) and the right hon. Member for Derby, South (Mrs. Beckett). If it is now Labour policy to cut back export credit support for defence sales, perhaps the Opposition will let us know. We can then assess the effect on their constituents' jobs.

Manufacturing Output

12. Dr. Lynne Jones: To ask the President of the Board of Trade what estimate he has made of the likely date by which manufacturing output will be at least 3 per cent. higher than in 1990. [38660]

Mr. Oppenheim: My right hon. and learned Friend the Chancellor of the Exchequer will be publishing a new forecast for manufacturing output later this month.

Dr. Jones: I was-- [Interruption.] I was taken aback by the fact that the Minister was not prepared to give any kind of estimate. Is not our manufacturing production only just about where it was before the recession began? It is no wonder, then, now that the competitive advantage of the devalued pound has faded away-- [Hon. Members:-- "Question."] --that we are back in the red with our balance of payments in manufacturing, which never occurred before the Conservative Government came to power. [Interruption.] What mark out of 10-- [Interruption.]

Madam Speaker: Order. The more the House calls the hon. Lady to put a question, the longer it will take her. Will the hon. Lady come to her question now?

Dr. Jones: Yes, Madam Speaker. What mark out of 10 would the Minister give the Government for that performance?

Mr. Oppenheim: If I could give them 11 out of 10, I would. Manufacturing output grew by 4 per cent. last year and it is forecast by the Confederation of British Industry to grow by 4 per cent. this year. It is at record levels. When the Labour party was in charge of the commanding heights of British industry, British Steel was the world's largest loss maker and British Leyland made cars that

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were the butt of music hall jokes. Manufacturing output fell under the last Labour Government and growth in manufacturing productivity was bottom of all the main industrial countries.

Since 1979, not only have we got record manufacturing output, but the growth in our manufacturing productivity and in our manufacturing exports has been 80 per cent. Manufacturing has done very well under the Conservative Government.

Mr. Dover: Does my hon. Friend agree that it will reach the 3 per cent. extra above the boom times provided that the country is sensible enough to re-elect a Conservative Government? We are the only party that understands the needs of manufacturing industry.

Mr. Oppenheim: The proof of the pudding is very much in the performance. In the 1960s and 1970s, Britain was bottom of the Group of Seven league of major industrial countries in terms of manufacturing output growth and growth in productivity. In the 1980s and 1990s, we were top in the growth of manufacturing productivity and ahead of Japan and equal to the average of the G7 countries in growth of manufacturing output. As I have said, manufacturing has done very well indeed under the Conservative Government, in stark contrast with the disastrous state in which the last Labour Government left it.

Mr. Purchase: Did we not lose 350,000 jobs in manufacturing during the reign of the Conservatives in the 1980s? Did not imports of manufactured goods exceed exports in 1984 for the first time in Britain's industrial history? Is not manufacturing investment now lower than it was five years ago under the present Government? What has the Minister to say to that?

Mr. Oppenheim: There is one very big difference between our trading performance and that of the last Labour Government. Under the Labour Government, there was a period of surplus, but it was declining very rapidly. Under the Conservative Government, the performance has improved and, for the first time in many decades, we have maintained our share of world exports in manufactures. I also remind the hon. Gentleman that under the Labour Government jobs in manufacturing fell at the rate of 700,000 a year, output fell and productivity was stagnant. Under the Conservative Government, output has risen and productivity is at record levels.

Mr. Day: Is my hon. Friend aware that part of the improvement in manufacturing output in this country has been due to companies such as Avro International, which is based at Woodford in my constituency of Cheadle and has just recently made a marvellous export sale to Australia? Will my hon. Friend take the opportunity to congratulate the management and work force of Avro International on that breakthrough in the Australian market?

Mr. Oppenheim: I will indeed take that opportunity. The performance of British Aerospace is indicative of the improved performance of British manufacturing since 1979. Looking back to the 1970s, companies such as BAe, British Steel, British Leyland--all the nationalised, monopoly industries-- were almost dead on their feet; they were industrial basket cases, whereas now they are highly successful, exporting all over the world. Rolls-Royce has trebled its share of the civil aero engine

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market, BAe is profitable again, and British Steel, which was the world's largest loss maker, is now one of the most profitable steel companies in the world--it exports 40 per cent. of its output, accounts for 80 per cent. of the domestic market and is once more a highly efficient industry. That is the story of what has happened to British manufacturing in the past 15 years.

Scientific Invention

13. Mr. Flynn: To ask the President of the Board of Trade what new proposals he has to improve the application of scientific invention to industry. [38661]

Mr. Ian Taylor: The Government are committed to innovation and wealth creation through science and technology. The £40 million foresight challenge, the Office of Science and Technology and DTI competitions in industry/academic collaboration and technology transfer and the improved Smart, Spur and Link schemes are recent initiatives.

Mr. Flynn: What sort of example is the Conservative party setting in regard to the application of scientific inventions on the Internet? The web sites of the Labour and Liberal parties are fully interactive, but the only way to interact with the Conservative site is by means of a game which features the Prime Minister playing cricket and invites the public to "spot the ball". Is not one of the reasons why this country has slipped from 13th to 18th in the prosperity league the fact that all that the Conservatives can offer it on high technology is balls?

Mr. Taylor: I was in charitable mood and intended to congratulate the hon. Gentleman on putting a science question on the Order Paper following the transfer of responsibility for science to the Department of Trade and Industry, but he has mentioned a competition that Labour would constantly fail, because it can never spot the ball.

We have done an enormous amount to advance all the technologies in this country and their application on the Internet and the super-highways. We have made possible new processes which help education, hospitals and schools. The Conservative party's Internet site is independently regarded as the most exciting of the political parties' sites, as indeed it must be, as I launched it at the Conservative party conference.

Mrs. Lait: I thank my hon. Friend for coming to Hastings last week and visiting Instrument Technology Ltd.--a company which is applying industrial techniques to the sciences of vacuum generation and semi- conductors. Does he agree that there are administrative blockages in some of the international scientific programmes such as CERN? What action is he taking to try to help British companies win contracts?

Mr. Taylor: I valued my visit to Hastings last Friday, and I was impressed by the company that my hon. Friend took me to see. There is no doubt that it is one of the leading companies in the vacuum generation part of the industry, supplying research to establishments such as CERN. Unfortunately, many of the procurement techniques adopted by CERN make it difficult for companies to tender properly. Having led a trade delegation to CERN about a year ago, I am engaged in continuing discussions with it.

Mr. Ingram: Is the Minister prepared to accept that what is happening in the international prosperity league

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table is mirrored in the league table showing percentage of gross domestic product spent on research and development? The United States spends 2.72 per cent. of its GDP on research and development and Japan spends 2.93 per cent. while Britain is much further down the league, spending only 2.19 per cent. Given those figures and the link between research and development expenditure and industrial performance, is it any wonder that Britain has slumped to 18th place in the world prosperity league table?

Mr. Taylor: I am beginning to think that the record has stuck. Throughout Question Time the Opposition Front Bench has been given evidence of which it was not previously aware, but it has not yet adjusted its own records. Our science base is widely regarded as excellent. The research in our universities and the work done by the research councils is remarkable and our science and engineering base has grown by 10 per cent. in the past 10 years, so we need not suffer by comparison with other countries. Indeed, in many of our best industries--the pharmaceutical industry, for example-- we are world leaders.

I welcome the hon. Gentleman to his position shadowing me on science. When he has considered some of the establishments in this country, he will realise what the centres of excellence are. Nevertheless, I concede that we must do better: there is no question but that there are too many holes in our good performance and too many sectors where there is not enough read- out from the excellent science base into industry and where British industry is not examining the longer-term requirements of encouraging science, both applied and basic, for the benefit of competitive performance. The purpose of the DTI and the Office of Science and Technology is to try to remedy that, both by encouraging the science base and by increasing technology transfer and innovation.

Trade with North America

14. Mr. Fabricant: To ask the President of the Board of Trade when he next plans to visit his counterparts in North America to discuss bilateral trade with the United States and Great Britain's relationship with North American Free Trade Agreement countries; and if he will make a statement. [38662]

Mr. Lang: I shall be visiting the United States of America and Canada next week to discuss the United Kingdom's successful trade and investment relationship with my counterparts in the American and Canadian Governments and with others in both countries.

Mr. Fabricant: I am delighted that my right hon. Friend will be visiting the United States of America and a united Canada. Is he aware that British companies are the biggest investors--they invest more than companies in any other countries--in the United States, and vice versa? Is he also aware that the United States is our second largest trading partner? Does he not think that that is partly due not only to our historical connections, but to a common language, a common culture and a common legal system? Does he agree that talk from the Labour party that we should concentrate only-- [Hon. Members: -- "Get on with it.]

Madam Speaker: We could have an Adjournment debate on that interesting topic. Perhaps the hon.

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Gentleman would apply for one, but as this is Question Time, would he now put a direct question and resume his seat?

Mr. Fabricant: I stand chastised, Madam Speaker. Does my right hon. Friend agree that there is no mutual exclusivity and that we can trade well, not only with Europe, but with the United States of America and the NAFTA countries, too.

Mr. Lang: My hon. Friend is right in all his points. I appreciate his difficulties as there is so much good news to impart to the House and such a great need for education among those on the Opposition Benches. He is right that the United States of America is the United Kingdom's second largest market. Our exports this year are running at some 8 per cent. higher than last year so far and, at £16.8 billion, our exports last year were a record.

Mr. Eastham: If it is so glorious to have our investments pumped into America, would it not be wise if some of that investment were pumped into Britain? Instead of the Tory Government swanking about the Japanese investing in Britain, why are we not investing in Britain ourselves?

Mr. Lang: The hon. Gentleman might like to know that investment in plant and machinery in the UK has risen by 50 per cent. since 1979, and that since 1981 investment has risen faster than throughout Europe.

Isle of Wight Ferry Services

15. Mr. Barry Field: To ask the President of the Board of Trade when he expects to publish the further report on ferry services and fares to the Isle of Wight. [38664]

Mr. Jonathan Evans: I understand that the Director General of Fair Trading expects to announce the outcome of his review of the market for the supply of cross-Solent ferry services in December 1995.

Mr. Field: I thank my hon. Friend for that answer. There is no denying that there has been massive investment in all ferry routes to and from the Isle of Wight--in new vessels, better terminal facilities and improved timetabling--but the House will recognise that the Isle of Wight sees itself as a captive market whenever it wants to visit England. I hope that my hon. Friend will bear that in mind when he receives the report.

Mr. Evans: My hon. Friend has always kept the position under close review on behalf of his constituents. He will know that the Monopolies and Mergers Commission concluded that, although there was a monopoly position, it could not be said to operate against the public interest. Nevertheless, it was decided that there would be a review after three years to ensure that the public interest was in no way damaged. That review has been undertaken, and I assure my hon. Friend that I will closely consider its contents when they are received.

Nuclear Safety

16. Mr. Foulkes: To ask the President of the Board of Trade what steps he is taking to ensure that safety standards are being maintained in the nuclear industry. [38665]

Mr. Eggar: The independent Health and Safety Executive's nuclear installations inspectorate continues to

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monitor closely the safe operation of all UK nuclear installations. The Government will not permit any weakening of the existing regulatory regime, nor of the safety standards currently in force.

Mr. Foulkes: Why was the Minister so dismissive earlier of the remarks by Captain Richard Killick, who has spent a lifetime in the industry? Should he not pay serious concern to the fact that Mr. Killick is worried about nuclear safety if the Government go ahead with privatisation? If the Government nevertheless press ahead with this crazy privatisation, will it not be further evidence of their frenetic lurch to the right?

Mr. Eggar: I am delighted that the hon. Gentleman has at least tried to produce a new soundbite. That is a relief to us. He should have a word with his hon. Friend the Member for Hartlepool (Mr. Mandelson) and must try to ring the changes rather more often.

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On the substance of the question, I would take Mr. Killick's comments rather more seriously if he had raised them with Scottish Nuclear and if he had taken them up with the nuclear installations inspectorate rather than going first to the hon. Member for Cunninghame, North (Mr. Wilson) and the press. In my judgment, scaremongering about nuclear safety is highly irresponsible and hon. Members should have no part in it.

Mr. Whittingdale: Did not the worst nuclear accident that the world has ever seen occur in a state-owned nuclear power station? Does my hon. Friend agree that we already have one of the toughest safety regimes in the world governing nuclear generation and that, if anything, that regime will be made still tougher once the industry is transferred into the private sector?

Mr. Eggar: I entirely agree with my hon. Friend. This Government will do nothing to imperil nuclear safety. The NII is the independent arbiter of the continuance of the extremely high safety standards which have been such a feature of the British nuclear industry.

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