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Dairy Industry

10. Mr. Owen Paterson (North Shropshire): If he will make a statement on monopolies in the dairy industry. [100534]

The Secretary of State for Trade and Industry (Mr. Stephen Byers): The recent Monopolies and Mergers Commission report found that Milk Marque was using uncompetitive practices to exploit its monopoly position. I am pleased that the members of Milk Marque have agreed to establish three successor bodies.

Mr. Paterson: Processing milk on the continent is twice as efficient as in this country because companies such as MD Foods in Denmark, Parmalat and Danone are based on large farmer co-operatives with a substantial hold of their national milk market. The Government are determined to smash up Milk Marque--although it falls under the European definition of a monopoly--at vast legal expense. How will successor companies ever get up to European standards of efficiency when they will be so much smaller?

Mr. Byers: I know that the hon. Gentleman does not like facts that get in the way of his prejudice, but may I inform him that the Monopolies and Mergers Commission report said that there should be a compulsory break-up of Milk Marque? I did not agree with that. I said that the auction practices should be changed. It is the members of Milk Marque who have voluntarily agreed to break it up into three successor bodies. I have said clearly that, provided that they act in a competitive way--I have asked the Director General of Fair Trading to look at the matter during the next few months--from April, I am prepared to agree that they can get into processing.

That is my commitment; that is my decision. It reflects the fact that it was the Conservatives who, when they moved away from the Milk Marketing Board, required that Dairy Crest, the processing arm, be separated from Milk Marque. That was the Conservative Government's decision. The present Government have acted in the interests of the dairy industry.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich): The Secretary of State's position will be welcomed by both customers and farmers, but the Milk Marketing Board was set up precisely because, during the 1920s, the whole industry was devastated by industrial practices that wiped out any protection for producers or customers. I hope that he will at least keep a sharp eye on developments in the successor companies to ensure that we do not damage the dairy industry even further.

Mr. Byers: My hon. Friend makes an important point. A balance can be struck between protecting the industry, allowing it to become more competitive by letting it get into processing--I welcome the opportunity of giving it that agreement--and reflecting the needs of the consumer. I happen to think that a competitive dairy industry will be able to provide consumers with a quality product at a good

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and affordable price. Those are my objectives. The procedures that have been agreed voluntarily by the farmers themselves will be the best way forward.

Mrs. Angela Browning (Tiverton and Honiton): The Secretary of State will know that there is some concern among dairy farmers that the break-up of Milk Marque into three parts rather than two may make them unviable or make one particular area less viable. Will he assure the House that he will monitor, or ask the Office of Fair Trading to monitor, the position carefully? If it looks as though the decision to split into three, rather than two, will jeopardise certain regions, will he be flexible enough to allow some form of amalgamation to take place before more dairy farmers have to sell up and get out of farming?

Mr. Byers: We need to be absolutely clear. The decision to break Milk Marque up into three successor bodies was taken by the members of Milk Marque themselves, not by the Government. The Government looked at the MMC recommendation, which was for a compulsorily break-up, and said no. That was my decision, but the members of Milk Marque have now made that decision. It is arrogant in the extreme for Conservative Members to try to overrule the decisions of members of Milk Marque. It is their decision and I welcome the fact they have now agreed to go into three successor bodies.

Manufacturing Sector

11. Mr. Andrew Reed (Loughborough): What research he has undertaken into the prospects for a successful manufacturing sector in the knowledge-driven economy. [100535]

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): Last month, my right hon. Friend the Secretary of State for Trade and Industry published "Manufacturing in the Knowledge Driven Economy", which celebrates the success of some of our leading manufacturing companies and sets out our strategy for further increasing the competitiveness and productivity of our manufacturing industry.

Mr. Reed: I thank the Minister for that reply and for the Government's commitment to manufacturing industry, perhaps particularly to the textile sector. Does she acknowledge that a knowledge-based economy and manufacturing are not opposites, but that development of such an economy is the only way in which British manufacturing will be able to survive?

Does the Minister also recognise the severe problems facing the textile sector? When the report is produced next week, will she consider ways of ensuring that--particularly in Leicestershire, where the textile sector is suffering because of the changes that Marks and Spencer is making in its sourcing policies--those textile jobs are protected for the future? Does she also acknowledge that successful companies such as Datalink--which will open tomorrow in my constituency--are examples of manufacturing companies that invest in the knowledge- based economy?

Ms Hewitt: My hon. Friend is absolutely right, and I look forward to visiting his constituency tomorrow and

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opening Datalink Electronics. However, as an east midlands Member of Parliament, I also share his concern about conditions in the textile industry. Recently, I visited Richard Roberts, whose headquarters is in my constituency and who is directly affected by the decision at Marks and Spencer.

As my hon. Friend said, next week we shall receive the draft report of the textiles industry strategy group. I look forward to discussing with employers and unions how we can further support the textile industry in making the necessary investments to ensure that it remains competitive in an increasingly competitive market.

Mr. John Bercow (Buckingham): Further to the truly risible response earlier to my hon. Friends the Members for Sevenoaks (Mr. Fallon) and for Tiverton and Honiton (Mrs. Browning), does the Minister agree that crucial to the future success of the manufacturing sector in a knowledge-driven economy is a light-touch regulatory environment? To that end, will the hon. Lady tell us what assessment she has made of the American model, in the form of the Regulatory Flexibility Act 1980 and of the Small Business Regulatory Enforcement Fairness Act 1996, and will she immediately announce the conclusions of her assessment--or is she just another part-time Minister?

Ms Hewitt: I understand that the hon. Gentleman's favourite word, at least for this week, is "risible", and I have no doubt that he will be able to explain why. I also know that he is a great fan of sunset clauses, and therefore hope that he will welcome the fact that I have included a sunset clause in the Electronic Communications Bill, which recently received its Second Reading. The new small business service which I am in the process of establishing will have a particular responsibility for helping to streamline United Kingdom regulations and for ensuring that burdens on small businesses are kept to the necessary minimum.

South Africa (Trade)

12. Mr. Ian Davidson (Glasgow, Pollok): If he will make a statement on the implications for the UK of the EU agreement on trade with South Africa. [100536]

The Minister for Trade (Mr. Richard Caborn): The European Union is South Africa's major trading partner, and the agreement will strengthen that relationship and create new opportunities for United Kingdom and South African companies to do business with each other. For those reasons, the Government strongly support the conclusion of the agreement.

Mr. Davidson: Does the Minister accept that the United Kingdom has a particular responsibility to try to create a prosperous post-apartheid South Africa because of the previous Conservative Government's long-term support for the apartheid state? What specifically are the United Kingdom Government doing to go that extra mile, to ensure that we play our part in trying to create more jobs, employment and prosperity in South Africa?

Mr. Caborn: Our Prime Minister went that extra mile at Berlin, where, because of his initiative, the agreement was made. Although we should have liked the agricultural

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sector to go a little further than it did, the lead given by our Prime Minister in Berlin is clearly paying dividends in our now very strong relationship with South Africa. That lead was evident also at Seattle and in the Commonwealth, and I am sure that it will pay dividends in the future.

Mr. James Gray (North Wiltshire): Despite the Minister's risible claims about the Government's close relations with our European brothers and sisters on the continent, will he confirm whether British beef may be exported to South Africa under the agreement?

Mr. Caborn: The answer is no at the moment. A scientific team from South Africa was in this country a few weeks ago and it is now reporting to the South African Cabinet. I hope that we shall get an agreement to export beef to South Africa, which was the largest market outside the European Union. We are pursuing the issue vigorously.

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