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Mr. MacShane indicated assent.

Mr. Bell: My hon. Friend nods his head, for which I am grateful. Usually when I quote Karl Marx, Mao Tse Tung or, in this case, Browning, he corrects me, so on this occasion I must be right.

Signing up to a new comprehensive round of multilateral negotiations with so much unfinished business in the world of trade and commerce is more likely to ensure that the unfinished business stays as it is--unfinished.

The Government always like to look for clear blue water between us, but on the single currency they are very worried that, having agreed to a referendum, there is no clear blue water. Conservative Back Benchers are desperately trying to persuade the Government that a decision should be taken to rule out a single currency in the lifetime of a new Parliament under a possible but fictitious Conservative Government. But there is clear blue water between us on social rights and a proper social clause in the international community in the WTO. The President said, when asked by my hon. Friend the Member for Rotherham, that the WTO was a trading organisation, not a social body. But that is not the view taken by the United States Government, the French Government, or many of our members.

The President said today, as did the Minister for Trade the other day, that there was some harmony and unity in the European Union on this issue. That is not the case as I see it. Perhaps the President will correct me. I understand that there will be a Council of Ministers meeting in Singapore to discuss these issues, and the position will then be taken on 10 December at a special meeting of the Council of Ministers, which will consider the European Union's negotiating position.

It is our view--we state it very clearly here--that world trade cannot be built on the back of human rights. It cannot be built on the back of forced labour. It cannot be built on the back of exploitative child labour. There has to be a right to organise in countries that wish to trade and export, and a right to bargain collectively. We believe that those elementary human rights and trade liberalisation are not--to use a lawyer's phrase--mutually exclusive.

I repeat that the majority of our European partners agree that the Singapore ministerial conference should examine how the WTO may be used to promote core labour standards. On this issue in Europe, as on other issues, we are becoming increasingly isolated within the Union by opposing any attempt to link trade policy with labour standards and by resisting any meaningful discussion of this issue in Singapore. Therefore we urge, even at this stage, the Government to accept the principle of a working party within the WTO to examine these issues.

I end as I began, with a reference to the chaos theory of politics and how it runs up and down the Conservative Benches like mice scampering up and down the Benches

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opposite. The same mice must awaken Ministers of the Crown in the night. It will be a relief, no doubt, for the President of the Board of Trade to fly off to Singapore for the beginning of the WTO conference.

Mr. MacShane: He can have lunch with journalists first.

Mr. Bell: My hon. Friend, from a sedentary position, talks about a lunch with journalists. The essence of parliamentary democracy is to stay thin, stay on a diet and stay away from lunches with journalists.

No doubt the President will enjoy his flight. I wish him well on behalf of our country as he goes to negotiate the first ministerial conference of the WTO, which will be an historic event. He will represent our interests as best he can in the twilight zone that exists between the Government in situ and the Government in waiting.

11.6 am

Mr. John Butterfill (Bournemouth, West): I shall have to rather disappoint the hon. Member for Middlesbrough (Mr. Bell). Although I am aware that nothing emanates from the Opposition without being approved by the hon. Member for Hartlepool (Mr. Mandelson) and the Labour spin doctors, I shall not quote from a central office brief today. In fact, I have not even read that brief. My speech relates entirely to my own research and statistics provided to me by the House of Commons Library.

It is right that we should dwell on inward investment, not because it is the only worthwhile form of investment, but because the extent to which foreign investors are prepared to invest in our economy is very much a reflection of their confidence in the way in which it is being run. It is very telling to remember what the position was when we took over government in 1979. At that time, inward investment was a mere £2.9 billion a year. Under the Conservative Government, it peaked in 1989-90 at £17 billion, although, of course, it fell off during the world recession. Despite that recession it continued at around £10 billion a year throughout 1991-94. Last year, it had grown back to £14 billion a year. That is an amazing reflection of the confidence that overseas investors have in the economy as run by my right hon. Friend and his colleagues.

I pay tribute to the invest in Britain initiative, but in particular to the ways in which that initiative has been developed under the Government and the much closer links that now exist between our initiatives and the activities of not just the DTI but the Foreign and Commonwealth office. They are essential if we are to maintain our export progress and our success in encouraging inward investment.

Inward investment has been helped by regional assistance. The fact that grants are available for those who want to invest in this country undoubtedly plays a part. It is interesting to note that the level of regional assistance that we are able to give under EC rules is much lower than many other EC countries are able to give. Despite that, we continue to attract a disproportionate amount of overseas investment.

In 1995-96--which is the last year for which figures are available--regional assistance was only £159 million, but that attracted projects worth £2.69 billion. The reward

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that we receive for the limited amount of assistance that we can give is out of all proportion to the performance of our European competitor countries.

Last year, our share of total world inward investment was 9.5 per cent. Between 1984 and 1993, the United Kingdom gained 43 per cent. of all world direct investment in the European Union. By contrast, Germany received 3 per cent., France received 15 per cent., the Netherlands 9 per cent. and Spain 9 per cent. Our share of inward investment into the European Union is so much greater than that of other countries that it gives us enormous hope for the future of our economy, provided that we maintain the policies that have managed to attract that level of investment.

This country is attractive for various reasons. It is attractive for people to live in, and the English language is an important factor. Financial assistance and the financial expertise that is available in the City of London are important factors. Our labour skills are particularly important: we are developing a better trained and better educated work force than hitherto. A third of our young people now go on to higher education compared with one in eight when the Labour party was last in office. The single market is an important factor. Our unit labour costs give us a great advantage. That does not mean low wages. It means that we do not impose on employers the burdens that exist elsewhere, as a result of which--according to the Library--our unit labour costs are less than half those in Germany, and less than two thirds those in Japan.

Our net earnings from inward investment--not the capital--have risen under the Government from £3.99 billion a year in 1979 to nearly £12 billion in 1995. The United Kingdom economy has benefited enormously. A great deal of that would be thrown away if the Labour party's policies were adopted. If we took up the social chapter--as Labour would like to do--we would have the same constraints as they have in other European Union countries. Instead of 43 per cent. of inward investment, we could go down to Germany's figure of 3 per cent. That is why it is essential to maintain our policy of remaining outside the social chapter, and that a Conservative Government are re-elected at the next general election.

11.13 am

Mr. Archy Kirkwood (Roxburgh and Berwickshire): I welcome the debate on this extremely important subject. It is an important time to be looking at the problems facing all western economies because of increasing globalisation. I welcome the fact that the President of the Board of Trade and the Government have seen fit to introduce the debate, especially as he is going to Singapore. The Singapore meeting is extremely important, and much valuable work will be done there. The hon. Members for Rotherham (Mr. MacShane) and for Middlesbrough (Mr. Bell) were obviously angling for postcards from the Secretary of State while he is there. I would settle for a statement in the House after he comes back telling us what progress has been made.

The hon. Member for Bournemouth, West (Mr. Butterfill) made a statistically based speech. I cannot find fault with the statistics that he used. I, too, have taken advantage of the work that has been undertaken by the Library. I think that some of his conclusions are a bit iffy, but the statistics that he used are beyond reproach.

As the hon. Gentleman said, inward investment in the past 10 years peaked in 1989-90, and it has fluctuated since. It must be recognised that it has increased recently.

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We will receive more accurate figures for 1995 on 17 December, but the provisional figures make it clear to my satisfaction that direct inward investment will increase to about £14 billion, and outward investment is also likely to increase sharply in 1995 to £27 billion. I welcome that. It is partially the result of work done by the Department of Trade and Industry, Locate in Scotland and the Invest in Britain Bureau. I have no hesitation or compunction in recognising that openly--long may it continue.

I want to ask about the circumstances that we may face in the future, and to be reassured that the DTI, working with Locate in Scotland and the Invest in Britain Bureau, is carefully monitoring the effect of inward and outward flows of investment on our manufacturing base. I have anecdotal evidence that much of this incoming investment is going in directions that do not assist manufacturing industry.

There were previously some concerns that companies were merely building assembly units in this country. An article in The Economist said that there was now evidence that research and development was beginning to flow more systematically than in the past, so some of the fears may be out of date. I would be reassured if the Department were carefully monitoring the effect of the investment. It is not only the value of the money coming in that is important, but the productive use to which it is put. I am concerned that we should develop our manufacturing base to make good some of the shortfalls that, I would argue, we have had in our manufacturing sector in the recent past.

I hope that the Minister will tell us--if not now, perhaps in correspondence later--what work, if any, is being done to assess the impact of inward and outward flows of investment on the important manufacturing sector. I refer to outward flows and the manufacturing sector, because I have evidence from world-class companies, such as the knitwear manufacturers Pringle of Scotland in my constituency, which are at the highest end of the market. There is an enormous temptation for companies such as Dawson International, Pringle of Scotland, Ballantyne and other well-known international names in knitwear to outsource their manufacturing. I hope that the DTI will not be complacent, will watch what is happening and will do everything in its power to keep the manufacturing base, as much as is possible, within the shores of the United Kingdom.

Inevitably, commercial and competitive pressures may require some companies to look to low-cost countries to outsource manufacturing. That has a debilitating effect and in the long run, between now and 2020, it could be worrying. The least that the DTI could do is to monitor that, look at what can be done and offer assistance within the competitive rules of the European Union.

The Library briefing mentions a useful 1991 survey by the Invest in Britain Bureau. It surveyed 200 manufacturing and research and development companies that had invested in the United Kingdom and asked them to state their main reasons for doing that. The situation may have changed since 1991 because, like everything else in this modern world, the processes of trade and industry change exponentially. The pace of change is frightening.

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I should like to have the answers obtained in the 1991 survey refreshed. At that time, 45 per cent., nearly half the companies surveyed, mentioned the need for a UK presence. Some 29 per cent. mentioned the need for a European base; and 25 per cent. maintained that their market in the UK warranted local manufacture. It is important to me to know whether that 25 per cent. in particular has been sustained or whether it is dropping. Other reasons quoted in the survey included the English language, which was mentioned by 16 per cent. of the companies. The hon. Member for Bournemouth, West (Mr. Butterfill) mentioned that. Some 14 per cent. mentioned financial assistance; labour skills were quoted by 10 per cent. and 10 per cent. mentioned the European single market. Finally and perhaps significantly, 6 per cent. mentioned labour costs.

The thesis by the President of the Board of Trade, supported by the hon. Member for Bournemouth, West, is that labour costs and whether we are in or out of the social chapter are crucial to inward investment. But that is not supported by the 1991 survey. It will be useful to the House in terms of studying the global market and its development and inward investment and how it is affecting manufacturing, to have such a survey regularly. It would be sensible to consider revisiting these questions once every five or six years. I do not know whether it is in the Minister's powers to direct that.

I have some thoughts for the President of the Board of Trade and his entourage as they wing eastward on Singapore Airlines, or on whatever airline they are using this afternoon. The Uruguay round was difficult. It took an inordinate time to put together an agreement, but we must not forget that there is still some unfinished business in the agreements that were struck there. Perhaps the Minister will address one or two--just one or two--of the agreements and commitments.

First, does the evidence show that there have been further significant tariff reductions since the Uruguay round? We are about halfway through the round and it would be useful to see the evidence of success in achieving tariff reductions because that is important to our exporters. Secondly, has there been significant progress on getting dispute settlement mechanisms properly organised? Have they protected our domestic industry from dumping, anti-competitive practices and the other actions that occurred all too often before the agreement? Thirdly, has there been a further tightening of disciplines on unilateral protection? That is important, as is the commitment to set up a wide-ranging framework for reviewing the agreements and further negotiations in the Uruguay round.

It is necessary to know the Government's view. I know that they have to negotiate through the EU in the ministerial meeting, but what information or evidence will the UK delegation at Singapore present in these important areas? That is crucial to the knitwear industry which struggled to achieve the multi-fibre arrangement. My constituents are interested in that because China is the monopoly supplier of cashmere yarn--the essential raw material from which the knitwear industry in my constituency makes high value-added exports for world markets.

Former state trading nations such as China give all sorts of support, hidden and explicit, to the producers of cashmere and to their manufacturing industries, and in that context it is essential that the multi-fibre arrangement

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is adhered to, monitored and reinforced. At the time of the negotiations the knitwear industry asked for review periods to be built into the Uruguay round as it progressed to make sure that monitoring was being successfully undertaken so that dumping and other such anti-competitive practices could be stamped out.

The Singapore meeting is important in terms of issues other than merely checking how far the Uruguay round commitments have progressed. I was slightly concerned by the emphasis in the White Paper, which was reinforced by the President of the Board of Trade, on the Government's rather unfettered free market, laissez faire approach. That approach is no secret: it is one of the Government's unique selling points. However, I take a slightly different view.

I am concerned that in the globalisation of the world economy--it is a horrible term but I cannot think of a better one--there are few checks and balances and no proper regulation. I do not mean regulation that imposes burdens because I am in favour of competitiveness and free trade, but some matters have to be carefully watched.

The President of the Board of Trade mentioned environmental factors. Global economic sustainable development is essential and I hope that the considerations in Singapore will include that and will try to make sure that the increase in competition and trade will not be at the expense of the environment. Sustainability should be built into the plans that are formulated in Singapore. I am worried that the third world will be frozen out of a fair share of what trade is going. There is evidence that some African economies have been badly served in the past few years. I hope that Ministers in Singapore will examine that.

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