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Electricity and Water Companies
17. Mr. Chisholm: To ask the President of the Board of Trade what recent representations he has received regarding the ownership of the electricity and water companies. [32126]
Mr. Eggar: I refer the hon. Member to the answer I gave earlier to the hon. Member for Pendle (Mr. Prentice).
Mr. Chisholm: The Minister made no attempt to answer earlier questions on the subject--perhaps because of his disagreements with the President of the Board of Trade. Will the hon. Gentleman lay down even one principle in place of the confusion and chaos that currently typify Government policy? Will he acknowledge that consumer interests should take precedence over takeover and dividend mania? Will he be more ready in future to refer bids to the Monopolies and Mergers Commission?
Mr. Eggar: I agree with the hon. Member for East Kilbride (Mr. Ingram), who is all in favour of competition. I detect from the questions of the hon. Members for Edinburgh, Leith (Mr. Chisholm) and for Pendle that they do not entirely agree with the hon. Member for East Kilbride.
Research and Development
18. Dr. Lynne Jones: To ask the President of the Board of Trade what assessment he has made of the effectiveness of the Government's policies in encouraging British businesses to increase their investment in research and development. [32127]
Mr. Ian Taylor: Evaluations of past research and development support show that it enhanced the amount and scope of the R and D undertaken and enabled firms to complete projects earlier. Support for collaborative R and D has improved interaction between industry and the science base. The recent "forward look" publication shows business expenditure on research and development is increasing in real terms.
Dr. Jones: If Britain is to become the enterprise centre of Europe, does the Minister agree that it must improve its performance in research and development--which, with the honourable exceptions mentioned earlier, lags way behind that of more successful economies? Last week's White Paper showed that, while dividend pay-outs have inexorably risen, investment in R and D is not even back to the pre-recession level. Will the Government stop dismissing the importance of fiscal incentives to encourage profit retention for investment over dividend pay-outs?
Mr. Taylor: The trouble with the Labour party is that it is increasingly giving the impression that it opposes dividends, which shows a fundamental lack of
understanding of how financial systems work in this country. Dividends are a vital part of growth in the value of pensions. However, I accept--as I have done earlier today--that British companies should pay more attention to the percentage of their sales spent on research and development. That is a matter of considerable importance, and I shall say more about it when the latest research and development scoreboard from the DTI is published next week.
Mr. Nicholas Winterton: I am grateful to my hon. Friend for that response, in which he implied that we are not investing enough in research and development--as we are not investing enough in industry generally. Will my hon. Friend make further proposals to the Chancellor of the Exchequer and to the Treasury to enhance investment, not least in research and development, using fiscal measures that encourage success?
Mr. Taylor: My hon. Friend, who is a great champion of manufacturing industry, knows that investment plans in industry are best prepared against a background of low inflation, low interest rates and stable economic management. We are delivering those things, which is why we are increasingly receiving the enthusiastic support of inward investors and of UK industry. However, I am always on the lookout for measures that might stimulate research and development.
I repeat that there is absolutely no way in which British companies will be able to compete into the next millennium if a much greater effort is not made in research and development by British companies in relation to the best companies worldwide. More chief executives should pay attention to the rate of change of innovation and the rate of change in how products are introduced to the market.
Takeover Provisions
19. Dr. Wright: To ask the President of the Board of Trade what plans he has to alter the takeover provisions affecting UK companies. [32129]
Mr. John M. Taylor: We have no plans to alter the current takeover provisions.
Dr. Wright: Does the Minister accept that firms that live in permanent fear of takeover are unlikely to put long-term investment before short-term returns? Does he accept that British firms are peculiarly vulnerable to takeover, especially to foreign takeover, because of the laxity of our takeover rules? Is it not time to revisit the rules by which British firms must live and--too often--die?
Mr. Taylor: On the first point, takeovers play an important part in ensuring that companies are run efficiently, which is in the interests of shareholders and consumers alike. If managers want to retain control of their firms, they must run them as efficiently as possible. As for foreign shareholdings, few countries enjoy more overseas corporate control than the United Kingdom. Inward investment is a two-way street, and it is very welcome.
Mr. Salmond: The Minister seems to be telling us that successful companies do not get taken over. Given the profitability, success and strategic importance of the Royal Bank of Scotland to the Scottish economy, does the Minister welcome the fact that the takeover threat to the bank appears to have receded in the past two weeks?
Mr. Taylor: The existing merger control provisions in this country are satisfactory at the statutory level and at the non-statutory level. Each case is examined on its merits. As for a merger of a particular bank in Scotland, that is a commercial decision for the parties. The necessary statutory and non-statutory issues would be brought into being only if competition issues arise subsequently.
University Research Equipment
20. Mr. Chidgey: To ask the President of the Board of Trade what assessment his Department has made of the effect of reductions to the education budget on the funding of equipment for research in universities. [32130]
Mr. Ian Taylor: I refer the hon. Gentleman to the answer I gave to the hon. Member for Aberdeen, North (Mr. Hughes) a few moments ago.
Mr. Chidgey: Is the Minister aware that, as a direct consequence of the lack of funding for equipment, universities are now unable to undertake critical experiments, and that multinational firms are consequently switching their research programmes from British universities to universities overseas? Does he accept that there is an urgent need for the Government to support universities' budgets, particularly the current £474 million shortfall for priority equipment alone--which is five times the amount that they have had available to spend in previous years? Does he accept that the Government must take some action to help on this issue?
Mr. Taylor: I do not accept that our best research universities are in the state that the hon. Gentleman describes. Nothing I see as I go around all those universities suggests anything other than the excellence of the research that is being carried out. We must be careful about spreading stories about the top universities in this country having such difficulties.
I do not deny that the forefront of research requires the forefront of equipment, which presents particular problems as the pace of change impacts on our research base. However, it is for the vice-chancellors to manage their affairs properly. It is evident that in not all cases have universities properly allocated money for research equipment in accordance with the ambitions that they publicly discuss.
I need much more information from the vice-chancellors to enable me to see what is going on. I underline the fact that, judging by the citations and the articles now being published, British universities are producing excellence, and inward investors welcome the accessibility and excellence of that research base.
21. Mr. Winnick:
To ask the President of the Board of Trade if he will enter into discussions with the Confederation of British Industry over donations to political parties. [32131]
Mr. Lang:
I see no reason to do so.
Mr. Winnick:
There is every reason to do so. Does the Secretary of State not realise how scandalous is the fact that those in industry who donate to the Conservative party are, in the main, the same people who receive the peerages and the knighthoods? Since November 1990, when the Prime Minister arrived at No. 10, of the five
Mr. Lang:
If anything is scandalous, it is the Opposition's sour and mean approach to such matters. The fact is that directors have a legal duty to act in the interests of their companies, and all companies must disclose in their company accounts contributions for political purposes of more than £200. The beneficiaries must also be disclosed. That is a fair and sensible way forward.
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