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2. Mr. James Gray (North Wiltshire): What recent representations he has received on the impact of his policies on manufacturing industry; and if he will make a statement. [60337]

The Chief Secretary to the Treasury (Mr. Paul Boateng): The Chancellor receives regular representations on a variety of topics, including manufacturing. The Government have embarked on an ambitious programme of economic reform, which, having served as a solid and stable foundation for the economy, now provides the best basis for manufacturing output to recover, through 2002 and into 2003, from the sharp slowdown that has affected the world economy in the past year.

Mr. Gray: The Minister may not yet have had a chance to read the excellent report that arrived on my desk this morning, but perhaps he will find an early opportunity to do so. The report, produced by Great Western Enterprise and entitled "Economic Prospects for Chippenham", says that manufacturing industries in the area are declining, in both relative and absolute terms. It states:

It goes on to talk about the levels of taxation and bureaucracy that have caused that large-scale decline. Does the Minister accept any personal responsibility for the fact that manufacturing is, and has been for 12 months, in recession?

Mr. Boateng: We have cut the burden of regulation. [Laughter.] Oh yes we have. We make no apology whatsoever for what we have done on the minimum wage. We make no apology for what we have done to promote fairness at work. As for the regulation that has been imposed on industry and business over the year, this Government have done more than any other to put in place the means by which it can be checked, so we rebut that allegation.

I very much look forward to learning more from that report about what is happening in Chippenham. However, I hope that the hon. Gentleman, in the spirit of generosity for which he is well known, will at least acknowledge what has been done by this Government, including the action by my right hon. Friend the Secretary of State for Trade and Industry to support regional development agencies. In addition, in the past week, the south-west manufacturing advisory service has opened in the hon. Gentleman's constituency. It will fund a team of five experts, who are already in place, to provide practical advice to manufacturers in the region. That addresses the real issues that face manufacturing and builds on the stability that my right hon. Friend the Chancellor has given the economy. This is something that the hon. Gentleman should welcome, instead of criticising as he has done.

Mr. Peter Pike (Burnley): I congratulate my right hon. Friend on his promotion. Does he recognise that in

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constituencies such as mine manufacturing is extremely important to the local economy and for maintaining employment? Will he confirm that he recognises that the aerospace industry in particular has had difficulties since 11 September, that it remains the Government's policy to ensure that industry can overcome those problems, and that the Government continue to be ready to discuss the problems faced by industry in both the short term and the long term?

Mr. Boateng: I am grateful to my hon. Friend for the generosity of his remarks. I know that he takes a particular interest in manufacturing and in the aircraft industry, and we share that interest. In the aftermath of 11 September, we have given the industry specific help on insurance. He will know that it is also benefiting from the tax credits that we have provided for research and development to promote the industry's productivity and build on its high skills. That is the best way to give manufacturing a long-term competitive advantage against our rivals.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): With Welsh manufacturing industry in sharp decline, thousands of jobs have been lost over the past five years. Does the right hon. Gentleman agree that objective 1 funding will help provide infrastructure to boost the Welsh gross domestic product? Will he or his right hon. Friend the Chancellor please confirm, therefore, that Wales will receive full public expenditure cover of £170 million from Europe, plus £100 million match-funding from central Government, which we were not given last year because we were sold short? Will the right hon. Gentleman redouble his efforts to ensure that that does not happen this year?

Mr. Boateng: I must resist the temptation, however beguiling, to make public spending announcements at this stage. The hon. Gentleman well knows that we are working closely with my right hon. Friend the Secretary of State for Wales and with the Welsh Executive to do all that we can to support manufacturing in Wales. I hope that the hon. Gentleman will accept that additional jobs have come on stream since the Government came to power in 1997, and recognise the real gains that have been made as a result of the steps that we have taken in terms of macro-economic reform, and the excellent work that is being done in Wales between the Executive and the Government to promote the Welsh economy.

Mr. Chris Mole (Ipswich): Does my right hon. Friend agree that one of the planks of the Government's support for manufacturing industry has been the provision of resources to regional development agencies in order to establish centres for manufacturing excellence? Does he also agree that the Conservatives' proposals to abolish RDAs would undermine the ability of our regions to support their manufacturing sectors?

Mr. Boateng: That is undoubtedly the case. Nothing undermined manufacturing more than the boom and bust that characterised the previous, Conservative Administration. We have sought, particularly in respect of small and medium-sized enterprises, to build on the platform of stability that has characterised the first five years of this Administration, and to take SMEs forward

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by means of the RDAs, the research and development tax credit, and the mechanisms that we are introducing to reduce the tax burden on business. All that is good news for manufacturing and has contributed to the record number of jobs that are now enjoyed by our constituents throughout the country.

Mr. John Bercow (Buckingham): I congratulate the Chief Secretary warmly on his appointment. I relish jousting with him, but I gently remind him that last year there were an extra 4,642 regulations impacting on business.

Given that that was the recent verdict in the Financial Times of the general secretary of the Amalgamated Engineering and Electrical Union, the Chancellor's friend, Sir Ken Jackson, what need does the Chancellor have of any enemies?

Mr. Boateng: I only wish that the generosity of the hon. Gentleman's opening remarks had been reflected in the rest of his comments. What he clearly overlooks is the fact that it is this Government who have created a record number of jobs—more than a million new jobs created since 1997. It is this Government who have created, for the first time, the basis of stability that enables us now to tackle the deficit in productivity that existed over so many years when the Opposition had the administration of the economy. As a result, the most recent survey on the subject by Lloyds TSB can say that growth in productivity has accelerated to its fastest pace in more than two and a half years. That is progress. The Opposition would take us back to the past, and that would be a disaster.

World Poverty

3. Judy Mallaber (Amber Valley): If he will make a statement on his recent action to encourage international trade with a view to reducing poverty in the world's poorest countries. [60338]

5. Mr. Andrew Love (Edmonton): If he will make a statement on his recent action to encourage international trade with a view to reduction of poverty in the poorest countries. [60340]

The Chancellor of the Exchequer (Mr. Gordon Brown): Our policy for a successful resolution of the World Trade Organisation development trade round includes negotiated reductions in agricultural export subsidies, with a view to phasing them out, and the granting of duty-free and quota-free access to the least developed countries for all exports except arms, and it will require finance to build the capacity of developing countries so that they can participate fully and effectively in the forthcoming negotiations. In order to discuss those issues after yesterday's justice for trade lobby at Westminster, the Secretaries of State for International Development and for Trade and Industry and I will meet representatives from Churches and NGOs on 25 July.

Judy Mallaber: I thank my right hon. Friend for that answer. In particular, I welcome the proposals to help

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those countries to increase their capacity and to engage in the multilateral talks. What is his estimate of the progress that has been made in convincing the international community of the need to make the international trading rules fairer to poorer countries, in the light of the comments made by yesterday's magnificent lobby?

On a different but connected note, will my right hon. Friend also discuss with his colleagues in the Department of Trade and Industry what further help is needed by our textiles and clothing industry, which has suffered massive job losses in the past 20 years as a result of changes in international trading patterns, so that it can reposition itself in the market by developing new high value-added products and areas of work?

Mr. Brown: My hon. Friend will know of the textile and clothing industry forum—a partnership that is considering supply chain relationships in the industry to improve its efficiency and competitiveness. The project is worth £3.8 million and is led by the British Clothing Industry Association. On the problems faced in relation to textiles as a result of the openness of international markets, we as a Government will do what we can to work with British textile producers to see what can be done. She is absolutely right that we also need evidence that there will be progress in meeting the ambitious aims set down at Doha. Thirty years ago, the 49 poorest countries in the world had 3 per cent. of world trade. They now have 0.5 per cent., so there is an enormous challenge to be met. One of the things that we will do is help financially developing countries to play their full part by having the capacity effectively to negotiate in the trade round.

Mr. Love: International trade is growing and I believe that the European Union has a role to play in ensuring that the poorest countries benefit from that. International trade should be happening for poor countries and not to them. In that regard, what action is my right hon. Friend taking to speed up the removal of all the tariff barriers that impede the trade of poor countries?

Mr. Brown: My hon. Friend is absolutely right. That issue confronts an existing policy of the European Union—the common agricultural policy. As was said earlier, the talks held this weekend in Seville will be followed by publication by the European Union of a paper on the common agricultural policy. I believe that we can make progress on cereals, direct payments and the modulation changes that have been recommended before. It is very important that we recognise that an agricultural budget that takes up 50 per cent. of European Union resources, keeps prices artificially high in our countries, and makes it difficult for the poorest countries to enter the markets is unfair to everybody and must be reformed. These proposals—and in their more radical form—will be supported by this country in the negotiations.

Mr. George Osborne (Tatton): Further to that answer, can the Chancellor offer us a personal prediction of when the trade barriers imposed by the EU will finally disappear? As he said in giving his figures on world trade,

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they have held the developing world in poverty for many years. Does he have any idea when those barriers will disappear?

Mr. Brown: We have many targets, but for me to set a target for what 15 member states of the European Union can agree in a very short time is very difficult indeed. The hon. Gentleman must reflect on the fact that, in 18 years of Conservative government, the amount spent on agricultural subsidies increased dramatically, rather than being reduced. It is in all our interests that we push the matter forward. There must be progress before enlargement and because the Doha talks resume next March. He should be encouraged by the fact that not only the Canadians, who were chairing the G7 meeting, but the French and others who were present, signed up again to the liberalisation of these markets. That is very important indeed.

Dr. Jenny Tonge (Richmond Park): Is the Chancellor confident that he can convince his fellow Ministers at the forthcoming G8 meeting that the World Trade Organisation should sign up to the international development targets that are already agreed to by the United Nations and other multilateral agencies?

Mr. Brown: Every international organisation of substance—the IMF, the OECD, the UN and the World Bank—have already signed up to the development goals. That is implicit in the work that is being done to prepare for the next stage of the world trade round.

I think that the hon. Lady knows that unlike many other international organisations, the WTO is in a sense a one member, one vote organisation. The role of developing countries in setting the terms of negotiation and the final outcome can be extremely important. I do not think, therefore, that it will be difficult to persuade members of the WTO that the world development goals are important and should be signed up to. I think that the hon. Lady knows also of the challenges to persuade these countries to take the action that is necessary and—I put this to all right hon. and hon. Members—and to provide the necessary resources.

Mr. John McFall (Dumbarton): My right hon. Friend may be aware that Horst Kohler, the managing director of the IMF, has kindly agreed to appear before the Treasury Committee in the next two weeks. In advance of that appearance, will my right hon. Friend support the proposals of Mr. Kohler's deputy, Ann Kruger, for a bankruptcy court for defaulting countries, so that they do not slide further into poverty and ruin their international trade? Is that not the proper approach for crisis prevention rather than merely crisis resolution?

Mr. Brown: I hope that Mr. Kohler will enjoy his appearances before the Treasury Committee as much as I do. I look forward to hearing what he has to say. It may interest the House to know that there was agreement at the G7 meeting in Halifax, Canada last weekend—for the first time in all the meetings I have attended—on the measures that must be taken for crisis prevention and crisis resolution. That will include international bankruptcy proceedings.

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These things are far more relevant to emerging market economies than they are to developing countries. However, a far greater role is included for surveillance, so that we are aware of what the problems are in individual countries before crises hit us. There is a far greater role for publicising what is really happening so that we do not get Argentina-type crises hitting us without prior warning, and for prior work to avoid them. There will be a far better resolution of crises once this happens. By improving crises prevention mechanisms, we will help not only emerging market countries such as Argentina, but the poorest countries in Africa.

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