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House of Commons

Thursday 12 July 2001

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

World Trade Organisation

2. David Taylor (North-West Leicestershire): If she will make a statement on the future work of the World Trade Organisation. [2032]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The next ministerial conference of the WTO will take place in Doha from 9 to 16 November. The United Kingdom Government seek a broad-based new round. We believe that that is the best way forward for a world trading system that will benefit all countries, including developing countries.

David Taylor: Unprecedented public hostility and civil disorder have been provoked by the WTO plans for further liberalisation of trade, because they fail the basic tests concerning environmental sustainability, cultural diversity, the eradication of poverty and respect for human rights. This autumn in Doha, will our Government stand shoulder to shoulder with the poor and dispossessed peoples of this planet against the mega-rich corporate lobbyists, so that smoke from the streets of Seattle does not drift into the conference chambers of Qatar?

Ms Hewitt: I understand the concerns that many people have about the exploitation of workers and the environment in developing countries by some multinational companies. The answer, as I know my hon. Friend agrees, is not violent protests such as we saw on the streets of Seattle; nor is it to cut developing countries out of world trade. The answer is to develop a rules-based system for world trade that will help developing countries—and that is what the Secretary of State for International Development and I shall work to achieve in partnership not only with our colleagues in the European Union, but with our colleagues in developing countries. I am sure that my hon. Friend will want to support us in those endeavours.

Miss Anne McIntosh (Vale of York): What reassurance can the Secretary of State give the House today that the conference planned for the autumn will be conducted safe from the rioting that we have seen on other

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such occasions? Mindful of the incidents during recent football matches in Copenhagen, can she reassure the House that the Government will convince their partners that the conference will be held in absolute safety and that conclusions will be reached?

Ms Hewitt: I know that the Qatari Government are doing everything possible to ensure that the conference is indeed held in conditions of safety and security. Naturally, they are backed in those endeavours by the United Kingdom Government and our partners in the EU.

Andrew Mackinlay (Thurrock): Does my right hon. Friend understand that for many of us the other side of the coin to the WTO is the International Labour Organisation? What efforts will she make to ensure that discussions at the WTO take account of the many unfulfilled obligations of this and other Governments attending the conference to commitments that we have signed up to as members of the ILO? There is a feeling in this House that under both the Conservative Government and this Labour Government insufficient attention is being given to our obligations to the workers whose interests are represented by the ILO.

Ms Hewitt: My hon. Friend raises an extremely important point. Indeed, I have raised that very issue of the discussions that need to happen within the ILO with Mike Moore, the general secretary of the WTO, when I spoke to him recently. Of course we have to ensure that there are fair rules on labour standards and environmental issues as part of a framework for fair trade in the global economy. We must also ensure—this is of considerable concern to India and other developing countries—that the need for fair labour standards and environmental protection is not used as an excuse for protectionism by developed countries against the poorest countries.

Mr. John Horam (Orpington): The Secretary of State said that she would co-ordinate her approach with the Secretary of State for International Development. Will she assure me that she will also co-ordinate it with the Secretary of State for Environment, Food and Rural Affairs?

Ms Hewitt: Of course.

Manufacturing Business

3. Mr. David Borrow (South Ribble): What steps are being taken by her Department to support exporting by small manufacturing businesses. [2033]

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): Among the steps we are taking are £17.5 million of support to more than 9,000 UK businesses attending overseas trade fairs and meetings in 56 countries, £2.2 million on overseas trade missions, and a new £1.9 million pilot programme to support new exporters in each region of the UK. That is part of the Government's £66 million annual trade development and promotion programme.

Mr. Borrow: I thank my hon. Friend for his reply. When I visit small manufacturing companies in my constituency, once we have got past the lengthy discussion about the

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weakness of the euro we get down to practical talks about what the Government can do to help small manufacturing companies to export. A common theme in most of those discussions is the need for more support for attending trade fairs. In particular, some existing rules restrict the number of times that a company can be supported in attending trade fairs. That should be re-examined. At a time when exporting manufacturing industries are finding things especially difficult, perhaps my hon. Friend's Department could look again at the existing rules to see whether further resources and assistance can be made available.

Nigel Griffiths: I know that my hon. Friend is a doughty champion of manufacturers in his constituency and region. The existing support available is £2,300 for each trip to exhibit abroad. Exporters are entitled to up to three such grants over a set period. Indeed, the result of that spending is trade for UK firms estimated at £500 million. That represents a return of well over 25 to 1, and is money well spent. However, I shall certainly take on board the thoughtful points made by my hon. Friend.

Mr. David Heathcoat-Amory (Wells): Will the Minister confirm that Britain is now running the biggest deficit in traded goods since 1697, when records began? Small businesses feel completely frustrated by the extra red tape and regulation pumped out by the Government, all of which damage their competitiveness in international markets, thereby adding to that trade deficit. Is the Minister aware that the DTI's own regulation taskforce, headed by the Labour peer Lord Haskins, has now called the system unworkable and has criticised the Department's efforts—or claims—to be simplifying things as ineffective, and in some cases non-existent? What is the Minister going to do about that criticism? Will his Department simply carry on ignoring the criticism from his own side or will it finally do something about it?

Nigel Griffiths: We certainly intend to take Lord Haskins' suggestions seriously. I note that Francis Maude, when he was a Minister—[Hon. Members: "Oh!"] Is he still in the House? [Interruption.] The right hon. Gentleman is still with us—I apologise to him. He will be able to refresh our memory about the fact that in 1995 he used almost the same words as the right hon. Member for Wells (Mr. Heathcoat–Amory). I am sorry that the right hon. Member for Wells does not pay tribute to the 170,000 new businesses of the past four years. I am also sorry that instead of going back two or three centuries, he does not go back to 1989. At present, the deficit is under 2.25 per cent. as a proportion of gross domestic product, which is much lower than the 1989 figure of 4 per cent. How does the right hon. Gentleman explain that?

Mr. Harry Barnes (North-East Derbyshire): Under 1973 fair trading legislation, if a multinational company makes a bid for a UK manufacturing firm, it can be referred to the Competition Commission on the grounds of loss of exports. Will the Government retain that condition? If so, will they make use of it on occasion?

Nigel Griffiths: We will shortly be consulting on reform of the competition regime. I shall ensure that my hon. Friend's points are noted and considered.

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Climate Change Levy

4. Mr. David Amess (Southend, West): What representations she has received from business about the impact of the climate change levy on UK competitiveness. [2034]

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): The Department has received a number of representations from business about the climate change levy, including its impact on UK competitiveness. The levy has been introduced to help the UK deliver its commitments to reduce emissions of greenhouse gases, while safeguarding UK business competitiveness.

Mr. Amess: I welcome the Minister to the Dispatch Box—and I now realise how old I must be getting—but can he justify placing that extra tax on manufacturing companies throughout the UK, especially when small businesses involved in manufacturing have been brought to their knees as a result of the policies of this rotten Government? Finally, will the Minister justify how those poor hard-working companies will be able to pay the extra £30 million in VAT on top of their existing liabilities?

Mr. Alexander: I thank the hon. Gentleman for the characteristic grace and generosity of his introductory remarks.

The competitiveness of UK business extends beyond the climate change levy. We have established a platform of stability in this country, with low inflation and interest rates, and we have offered incentives to the manufacturing community. On the specific issue of the climate change levy, I merely make the following points: all the revenues are recycled via reduced national insurance contributions and energy support for business; there is an 80 per cent. discount for energy-intensive sectors that deliver energy savings in negotiated agreements with the Government; and modern manufacturing competitiveness requires not only labour productivity, but resource productivity.

Mrs. Jackie Lawrence (Preseli Pembrokeshire): The Minister will be aware that the report of the United Nations Intergovernmental Panel on Climate Change, which has been published today, shows that global warming is increasing at double the rate that the panel predicted five years ago, with the result of failing crops throughout the world and possibly a loss of a quarter of food supplies in the poorest countries. Does he agree that the issue is not the climate change levy and its impact, but the impact of inaction on humanity in the future?

Mr. Alexander: I thank my hon. Friend for that very timely question. The latest work of the Intergovernmental Panel on Climate Change confirms the very worrying trend, and the consequences for the world if we do not tackle the problem of climate change. That reinforces the Government's determination to take action on climate change. It is noteworthy that although the Conservative party was willing to countenance international agreements when it was in government, it seems to have lost that resolve in opposition.

Mr. Michael Jack (Fylde): Is the Minister aware of the impact of the climate change levy on investment in

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fuel-efficient combined heat and power systems? This week I received a representation from British Sugar, advising me that its investment in combined heat and power was under threat not just from the application of the levy, but from the operation of the new electricity trading arrangements—as the Minister will learn if he can find the appropriate spot in his briefing notes. Will he give me an undertaking for British Sugar that he will carefully consider that matter and review whether, if he wants energy efficiency, turning off investment in combined heat and power is the best way to achieve it?

Mr. Alexander: The position of individual businesses, including the one that the right hon. Gentleman mentions, will depend on the extent to which they take advantage of the various levy exemptions, the new capital allowances for energy efficiency investments, the energy support and the advice on the new carbon tax. If he wishes to write directly to me about the company that he mentioned, I shall, of course, ensure that the matter is dealt with.

Paddy Tipping (Sherwood): Will the Minister consider British Sugar's representations? He will know that bringing new environmentally friendly combined heat and power systems on stream is a Government policy objective, and the present arrangements for the climate change levy on energy exports to the local network are causing very real problems.

Mr. Alexander: I am happy to give my hon. Friend that assurance.

Mr. Alan Duncan (Rutland and Melton): I, too, welcome the hon. Gentleman to his position as Minister. It gives me especial pleasure, as I think that I top him by about a quarter of an inch—[Laughter]—at most.

The climate change levy was introduced in April. As the Minister well knows, manufacturing costs rose sharply in May and output fell more sharply than at any time for a decade. Does he accept that, as a matter principle, a tax should not be levied just when the sector that it hits hardest is having the hardest time? What possible justification can he give for adding to the hardship of manufacturers? How can he say today that the tax will improve the sector's competitiveness?

Mr. Alexander: I thank the hon. Gentleman for his characteristic generosity concerning my arrival at the Dispatch Box—matched only by his initial comments on my appointment to the Department of Trade and Industry.

On the hon. Gentleman's substantive point, the Government have indeed worked in partnership with business to consider a range of measures, and significant changes have been made to the climate change levy since it was first introduced. That reflects the DTI's sponsorship work. We need to ensure that British businesses get ahead of the curve by improving the productivity not only of the labour in those companies, but of the resources that they use. Countries and companies throughout the Organisation for Economic Co-operation and Development are introducing similar measures and our challenge is to ensure that we lead on an agenda of manufacturing productivity. The climate change levy makes an important contribution to that as well as to our environmental objectives.

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