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18 Nov 2002 : Column 469—continued

9.45 pm

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): This has been a lively, instructive and often thoroughly enjoyable and entertaining debate, especially for those of us on the Labour Benches watching the debate on the Conservative Benches—in particular the exchanges between Mr. Nice on the Conservative Back Bench and Mr. Nasty on the Conservative Front Bench.

Several hon. Members referred to the position of manufacturing. My hon. Friends the Members for Ochil (Mr. O'Neill), for Leicester, East (Keith Vaz), for Birmingham, Northfield (Richard Burden), for Coventry, South (Mr. Cunningham) and for Bexleyheath and Crayford (Mr. Beard) all referred, rightly, to the importance of our manufacturing sector to the future of our economy. We all know—several hon. Members have referred to it—how tough it is for manufacturing firms and manufacturing workers when the markets in the rest of the European Union, in the United States and in south Asia have all been so hard hit.

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As my right hon. Friend the Chancellor said today and on many other occasions, despite the decisions that we made five years ago and the enormous strength and stability that those decisions have brought to the British economy, it is impossible to insulate every one of our manufacturing firms and exporters from the difficulties and downturn in the rest of the world economy. However, as we know, not only from every manufacturer that we talk to but from just about every business leader, what they welcome and need most of all is precisely that climate of economic stability, the lowest interest rates, the lowest inflation, the lowest unemployment and therefore the lowest bills for unemployment for more than 30 years.

Mr. Ian Davidson (Glasgow, Pollok): Does the Secretary of State recognise that French unemployment has risen every month for the past 17 months and does she accept that that is a clear indication that the euro is not working?

Ms Hewitt: My hon. Friend makes an important point about the level of unemployment in France. In many other continental countries, unemployment is far higher than our own. I would not myself attribute that to the effect of the single currency, which has enormous benefits in terms of transparency and the reduction in exchange rate and transaction costs that its gives, particularly to manufacturers. However, those problems of high and stubborn unemployment within the eurozone are one of the reasons why this Government have been the leading proponent of economic reform in the European Union and we will continue to be so.

Alistair Burt: No Conservative Member denied the problems and issues affecting manufacturing industry in relation to the global climate, but our point was that manufacturing had raised several specific issues that had caused it problems and had been laid at the Government's door, from national insurance to the climate change levy. The Government cannot blame world economic conditions for that. Why do not the Government take notice of what manufacturing is saying and change some of the things that manufacturing wants them to change?

Ms Hewitt: I do not know whether that was a bid to be the Mr. Very Nice of the Conservative party, but let me stress that under the climate change levy, which is precisely designed to increase renewable energy, any manufacturer who enters into an agreement for pollution reductions gets an 80 per cent. discount. For any manufacturer or other company that is contracting to buy clean electricity there is no impact from the climate change levy.

Of course, as I have said, what manufacturers need is the climate of economic stability that we have created. However, on top of that, and in response to requests from manufacturers, we have put in place the first Government manufacturing strategy that the United Kingdom has had for 30 years. In pursuit of that, we are opening in every region centres for manufacturing excellence that are directly helping manufacturers to be more competitive in these very difficult world conditions.

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My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) referred specifically to the importance of science and innovation. It is indeed the investment in our world-class science base, and the commercialisation arising from it, that will form the foundation for prosperity in the future. I particularly welcome, as I know she does, the very successful efforts—led by the North West Development Agency—of the north-west science partnership.

My hon. Friend the Member for Ochil, the hon. Member for Gordon (Malcolm Bruce) and others have referred to the extremely important issues that we face on the energy question. I readily confirm that, with your permission, Mr. Speaker, I will make a statement to the House of Commons before the loan facility that we put in place for British Energy expires at the end of next week. As hon. Members know—I have said this on many previous occasions—the only reason why we extended that financial assistance to British Energy was the overriding priority, and our responsibility in government, of ensuring security of supply and the safety of nuclear generating plants. I shall have more to say on that subject in the statement, just as I will have far more to say—especially in the energy White Paper, which we will publish in the new year—on the important issues raised concerning the operation of the energy market.

The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) and the hon. Members for Tiverton and Honiton (Mrs. Browning), for Huntingdon (Mr. Djanogly), for North-East Bedfordshire (Alistair Burt), and for South Suffolk (Mr. Yeo) raised the question of regulation. The shadow Chancellor was challenged to name three regulations—just three out of the thousands that he is supposedly complaining about—that he would scrap. He had some difficulty, but he finally came up with just one candidate for repeal out of all the thousands that led them to make accusations against us: statutory instrument No. 440. Well, he clearly has not read it. I have had the opportunity to do so, and I shall give him a copy. What he failed to realise is that it is a deregulatory measure. In schedule 2(a), at the heart of this statutory instrument, are the exemptions from requirement to give building notice or to deposit full plans. It is a deregulatory measure—one of several that we have brought forward in government.

It is worth reflecting on this Government's record on regulation. In 1996—

Mrs. Browning: A document published in February, entitled XRealising Europe's Potential: Economic Reform in Europe", lists the next steps for such reform, the second of which is

Can the Secretary of State give us some examples of such regulation?

Ms Hewitt: I have just mentioned the excellent and now very well known statutory instrument No. 440, but I could also mention my right hon. Friend the Chancellor's excellent initiatives on VAT. A radically simplified VAT scheme has cut red tape for 500,000 small businesses, and saved a typical small business up

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to #1,000 a year. I could also mention that, in 1996, under the Government of which the right hon. and learned Member for Folkestone and Hythe was a member, 230 statutory instruments imposed a cost on business. That has steadily fallen: in 2001, 93 statutory instruments imposed a cost on business.

If the shadow Chancellor would bother to look at all the statutory instruments to which he is so fond of referring, he would realise that a large proportion of them derive directly from the foot and mouth crisis, and only 93 last year imposed costs on business. We have halved the proportion of regulation that imposes any costs on business.

Chris Grayling: As the Secretary of State claims to be in deregulatory mode, will she give a clear undertaking that the agency workers directive will not become law in this country?

Ms Hewitt: We led the way in persuading European Union colleagues to sign up to the better regulation action plan. We are busy negotiating with our EU partners to ensure that they understand the completely different context for agency temporary workers in the United Kingdom, where they are extensively used, to the great benefit of both the workers and the businesses that use them.

Mr. Howard: Will the Secretary of State confirm that if the Government had not signed up to the social chapter, they could have blocked the agency workers directive, whereas now the matter will be decided by majority voting so they cannot block it even if they want to?

Ms Hewitt: The shadow Chancellor did not believe in the minimum wage when we introduced it and refused to say today whether he would be in favour of regular updating. Let me be clear: we are in favour of the social chapter. If he and his party want to continue to be against it, they can make that argument with the British people—but I do not think that the hon. Member for Buckingham (Mr. Bercow) will support him in that.

One of my predecessors in this job, a distinguished former Conservative Front Bencher, Lord Heseltine, recently said that one of the reasons why the United Kingdom is one of the best places in the world to do business is the lack of a regulatory climate here. Of course, that judgment is supported by the OECD, The Economist intelligence unit and all the benchmarking studies.

Both the shadow Chancellor and the right hon. and learned Member for Rushcliffe (Mr. Clarke) made great play of taxation, so I want to take this opportunity to put on the table a few facts on the subject. The OECD shows that the United Kingdom remains a relatively lightly taxed economy, with one of the lowest total tax burdens in the European Union, well below the EU average. Conservative Members are very fond of citing the tax burden on business, but the OECD shows that in 2000 it was just over 7 per cent. in Britain, lower than in France, Italy or Germany—lower, indeed, than in 12 European Union countries.

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