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Regional Policy
4. Dr. Moonie: To ask the President of the Board of Trade if he will make a statement on the significance of the European Commission's first cohesion report for the regional policy of the United Kingdom. [10590]
9. Ms Quin:
To ask the President of the Board of Trade if he will make a statement on the impact of the European Commission's first cohesion report on regional policy in the United Kingdom. [10597]
Mr. Greg Knight:
As I informed the hon. Member for Wolverhampton, South-East (Mr. Turner) on 4 December, Official Report, column 696, the European Commission's cohesion report shows that the UK is one of the few EU countries where regional unemployment differences have decreased. It also shows that, since 1989, there has been a narrowing of relative gross domestic product per capita between UK regions.
Dr. Moonie:
How does the Minister explain the fact that, according to the report, the gap between the richest and poorest regions in the UK has widened over the past 10 years? Does that not betray the abject failure of his regional policy?
Mr. Knight:
I suggest that the hon. Gentleman rereads the report because it deals not with wealth and poverty but with differences in wealth. [Hon. Members: "Oh!"] There is a difference, which I shall explain. If the UK experienced growth in every region but some regions grew slightly faster than others, it would be a matter for comment in the report. That has happened in many UK regions. The report is an interesting discussion document, but it ends in 1993 and does not take account of the recovery since then.
Ms Quin:
Contrary to what the Minister says, the report also shows that the gap between rich and poor has widened and that the number of people living below the poverty line has increased. Given that the report fits in well with reports from the Institute for Fiscal Studies, the Joseph Rowntree Foundation and others, will the Minister not dismiss the report but admit that there is an urgent problem that must be tackled?
Mr. Knight:
I am not dismissing the report, which is a useful discussion document. I simply do not draw the same conclusions as do some Opposition Members. The report also shows that, in 1983, eight UK regions were among the 25 EU regions with the highest unemployment levels. By 1993, there was none, such has been our success in creating employment. The report also reveals that the long-term unemployed have shared in the UK recovery: the number is down by 500,000 since its peak in 1986.
Sir Michael Neubert:
What effect would it have on regions in England, especially northern England,
Mr. Knight:
My hon. Friend makes a good point. The tartan tax would have an effect similar to that of a minimum wage. It would mean that the most vulnerable people in work would be sacked.
Mr. Wilkinson:
When considering the long-term implications of the report, will my hon. Friend bear in mind that the United Kingdom has, in comparison with many continental countries, done exceedingly well? If the momentum to greater prosperity in Britain is to be maintained, there is no point in the UK continuing to provide more and more taxpayers' money for a fund that, if successful, will lead to jobs being transferred from Britain to other parts of the Union.
Mr. Knight:
I hear what my hon. Friend says. It is important that, across Europe, the British idea of reducing state aid is applied. That policy must continue. Once temporary problems have been sorted out, it is our policy to ensure that state aid in EU member states is reduced, and eventually eliminated. That is the way to secure long-term jobs that are based on the productivity, success and competitiveness of private companies.
Mr. Wigley:
Is the Minister aware that the gross domestic product per head in Wales has dropped from 92 per cent. of the European Union average 15 years ago to only 83 per cent. now? We were overtaken last year by the Irish Republic, which in the past 12 months has accelerated ahead to the extent that it now has a GDP per head 9.3 per cent. greater than Wales yet the Irish Republic is receiving all the benefits of the cohesion funds. Can the Minister ensure that the benefits from the European Union come to areas such as Wales which have a need in terms of GDP per head when the fund is renegotiated in 1999?
Mr. Knight:
Wales has done well in the recent past, but one of the problems that the cohesion report identifies is what happens to aid to EU member states when circumstances change. The report mentions Ireland as an example of where perhaps in the present circumstances a country should not receive the aid that it has received in the past. That is something that we shall want to see clearly dealt with in future discussions.
Mr. Batiste:
Can my right hon. Friend confirm that youth unemployment in Britain is about two thirds of the European average? Is that not the most powerful reason for rejecting the job-killing social chapter so beloved of the Labour party? With its inflexibilities, the social chapter does so much to damage the prospects of the least well-off and most vulnerable in society.
Mr. Knight:
My hon. Friend is right. Youth unemployment in the United Kingdom is only two thirds of the EU average. We need to do more, but the figures show that the number of 16 to 18-year-olds in education and training in the United Kingdom continues to rise. That is good news.
Mr. Harvey:
What steps do the Government take to monitor where regional selective assistance and other
Mr. Knight:
The hon. Gentleman makes a fair point. We have a network of monitoring committees which assess the value of schemes which can apply for structural funds. From time to time, the Department asks for reports back on how the schemes have been implemented. That dialogue must continue so that we can ensure that we are getting value for money, and that structural funds go to the areas of greatest need.
Mr. John Marshall:
Does the report make the point that, while in the 1970s unemployment in Scotland was much higher than in other parts of the United Kingdom, that is no longer the case? Is that not the most effective form of regional policy, which the hon. Member for Kirkcaldy (Dr. Moonie) should have had the grace to welcome?
Mr. Knight:
That is indeed the case. The report reveals that the United Kingdom has more of its working-age population in work than any other large EU country. In the United Kingdom, the proportion is more than 68 per cent. In France, it is only 60 per cent. and in Germany, it is only 65 per cent.
Mr. Hoon:
The EU Commission's cohesion report highlights Britain's relatively poor national and regional economic performance over the longer term in comparison with other EU member states. Does the Minister agree with the report of the Commission on Public Policy and British Business that that is the result of
"a disproportionately high number of underperforming British companies--underinvestment--insufficient high quality training and education--unsteady government policy"?
If the Minister, like the Deputy Prime Minister, cannot bring himself to agree with the conclusions of that independent report produced by some of Britain's most distinguished business leaders, does he agree with his Government's third competitiveness White Paper, which concludes that
"The same factors mean that Britain has a much larger proportion of poor company performance than France, Germany or Italy"?
Mr. Knight:
I certainly do not agree with the conclusions of the socialist think tank report. Employment is the key issue which runs through every page of the cohesion report. What is clear from the report is that here in the United Kingdom we are winning on the employment front. We are winning on youth employment, employment for women and getting the long-term unemployed back to work. That is what matters.
Inward Investment
5. Mr. Hawkins: To ask the President of the Board of Trade how many jobs have been created and safeguarded as a result of inward investment since (a) 1979 and (b) 1992. [10592]
Mr. Lang: Since 1979, the Invest in Britain Bureau has recorded more than 853,000 jobs associated with inward
investment decisions, of which over 352,000 relate to the period since 1992. The United Kingdom is still the number one location in the European Union for investment from Japan, the United States and Korea. That is an enviable record, which the Government are determined to maintain in the face of increased competition from our European partners.
Mr. Hawkins: I thank my right hon. Friend for that answer. Does he agree that, in the years leading up to 1979 under the last Labour Government, the received wisdom of every international commentator was that Britain was the sick man of Europe, and we were down at the bottom of the league tables with Turkey? Is it not the case that the Government's policies have transformed the position and attracted vastly more inward investment and that, in particular, manufacturing industry and the motor trade throughout the country, including Vauxhall in the north-west, have done tremendously well? Will my right hon. Friend confirm that he will continue to pursue those policies?
Mr. Lang: My hon. Friend is right. Because we have helped the United Kingdom's economy to become more competitive and rejected the social chapter and the other burdens that the Labour party and the European Union would impose on us, we have, in the words of Mr. Jacques Delors, turned the United Kingdom into a "paradise for inward investment". My hon. Friend mentioned the motor industry and I am sure that he welcomes yesterday's announcement by Nissan, which will create some 3,500 jobs, and the recent announcements by Ford-Jaguar, Vauxhall, Rover-BMW and Toyota. Like so many other manufacturing industries in this country, the motor industry is now buoyant and successful because of the Government's policies.
Mr. Sheerman: The Secretary of State surely knows that we are all in favour of inward investment, but the Government use it as a fig leaf to cover the nakedness of their policy on indigenous investment. The Government's investment record is rotten and rates poorly against those of all our major competitors. The Government use inward investment as a cheap shot--almost as cheap as the antics of the Deputy Prime Minister yesterday.
Mr. Lang: The hon. Gentleman is talking nonsense. He should reflect on the fact that, while unemployment has been rising throughout the European Union for the past few years, it has been falling in the United Kingdom, and that the UK is attracting more than 30 per cent. of all the inward investment into the European Union and more than 40 per cent. of all the American and Japanese investment into the EU. That is a judgment from the world on the competitiveness, efficiency and success of the British economy as a good place to manufacture and invest.
Mr. Dunn: Does the Minister agree that we will use every opportunity to attract inward investment, including the refusal to introduce a windfall tax? Will he take the opportunity to condemn the insider dealings of Robert Ayling, who appears to have struck a deal with the Labour party to his own benefit, at the same time earning himself £750,000 a year for bowing and scraping to the Leader of the Opposition?
Mr. Lang: I agree with my hon. Friend that the windfall tax would penalise consumers of essential
utilities, would be arbitrary in its impact and would be unfair on investors and consumers of essential utilities in this country. It is a policy to which the Labour party is committed as part of its high-spend, high-tax approach to the running of this country.
Mr. John D. Taylor: The Government's record in attracting inward investment to the United Kingdom has been remarkably successful in recent years and most people recognise that, but will the Secretary of State bear in mind that one negative factor could damage us in the years ahead--the imbalance between corporation tax levels in the United Kingdom and those of some of our competitor nations?
Mr. Lang: I am surprised to hear the right hon. Gentleman say that, because our corporate taxes are among the lowest in Europe. When we came into office, the corporation tax rate was 52p in the pound, and 42p in the pound for small businesses. Those rates have been dramatically reduced. The corporate tax rate for small businesses is now 23p in the pound and that is one of the reasons why so many businesses have taken root--there are now over 1 million more than there were, including those in Northern Ireland.
Sir David Madel: Does my right hon. Friend agree that more jobs will be created and safeguarded as long as we keep interest rates low and stop the pound becoming overvalued? Will he ask the Governor of the Bank of England to pay exceptional attention to the views of industry on what our interest rates should be?
Mr. Lang: I am sure that my right hon. and learned Friend the Chancellor will take note of my hon. Friend's point. However, I am sure that my hon. Friend will also reflect on the fact that the capacity of Governments to influence exchange rates is extremely limited. The present exchange rate is a reflection of the strength and growth of the British economy and it helps us to fight inflation. The improved productivity and competitiveness of our economy enables us to continue to manufacture and export at present levels.
Dr. Howells: Do the figures on inward investment include the purchase of privatised utilities by American and French companies? Do those purchases actually create jobs, given the massive hurdles that those British firms are forced to climb over before being allowed a share of the American and French utility markets? Why have the Government displayed such indolence and half-heartedness in fighting to win for British business fairness in competition and equality of access to the hugely protected markets of France and Germany?
Mr. Lang: The hon. Gentleman seems to be completely unaware of the dramatic successes that privatised industries are having in worldwide markets. When I was in India the week before last, representatives of British Telecom were with me and they secured a £60 million deal. The same is true in other industries: for example, the water industry has people on overseas missions all over the world, winning business for this country.
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