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Trawlermen (Compensation)

6. Shona McIsaac (Cleethorpes): If she will make a statement on the compensation scheme for former Icelandic water trawlermen. [83607]

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): Following the 1997 election, the Government made a commitment to compensate former trawlermen who lost their livelihoods as a result of the settlement of the cod war with Iceland in 1976. Thousands of former trawlermen have received compensation totalling tens of millions of pounds.

Shona McIsaac : While I fully accept that the compensation scheme put right a serious injustice, will my hon. Friend put his hand on his heart and tell me whether he believes that further injustices may be being perpetuated because the standards of proof of eligibility are being set so high that many men are being denied the compensation owed to them? Does he feel that a balance-of-probability standard of proof would be better in these cases?

Nigel Griffiths: No, I do not. The independent adjudicator, who arbitrates on appeals, has so far been unable to provide a way of identifying vessels eligible for the scheme, and of preventing unsubstantiated or bogus claims from those who did not trawl in Icelandic waters. Any move away from the evidence that we have accepted to date would be unfair on more than 4,600 former trawlermen who have received legitimate payments.

EU State Aid

7. Mr. Clive Betts (Sheffield, Attercliffe): What proposals she has put forward to reform EU state aid policy. [83608]

The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson): We continue to press the European Commission to reform its state aid

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rules, to introduce more economic analysis to its consideration of cases, and to streamline its procedures. The Commission is receptive to our objectives and ideas.

Mr. Betts : I thank my hon. Friend for that answer. She will doubtless recognise the problems caused to many regeneration schemes by the Commission's outlawing of state aid given through the previous partnership investment programme. While welcoming the interim arrangements made with the Commission, does she accept that there is now a need for long-term, permanent agreements that allow state aid to be given in a way that recognises the importance of public-private partnerships in delivering regeneration in many of our towns and cities?

Miss Johnson: I do indeed. We are pursuing a twin-track strategy on regeneration: we are encouraging the Commission to introduce a new regeneration framework, and in parallel we are supporting effective regeneration schemes under the existing rules. Given my hon. Friend's Select Committee work, he is well aware of that strategy, which includes six regeneration schemes for which approval has already been granted.

Mr. Mark Field (Cities of London and Westminster): As the Minister knows, one of the ideas inherent in EU state aid policy is ensuring as far as is possible a level playing field throughout Europe in economic affairs. With that in mind, has she any comments to make on the agency workers directive, which her Government signed on our behalf only last week?

Miss Johnson: This is unfinished business, as the hon. Gentleman ought to appreciate. He will also know that, in general, we are at the low end of state aid, and that the Commission regards us as a very good performer in terms of the overall league tables.

Mr. David Chaytor (Bury, North): In the context of the loan to British Energy and the necessary approval from the Competition Commissioner, if the Government were to reverse their previous policy of requiring nuclear generators to internalise the costs of radioactive waste management and decommissioning, would that be acceptable under current EU state aid criteria?

Miss Johnson: As my right hon. Friend made clear in her statement to the House on 28 November, the restructuring is based on a proposal for solvent restructuring. That was preceded on 27 November by the European Commission approving the rescue aid that the Government are giving to British Energy. That approval also covers the proposal to fund the company until 9 March next year.

Mr. Tim Yeo (South Suffolk): Will the Minister confirm that the £450 million of aid for rural post offices—finally announced to Parliament on Monday after being trailed by Government spin doctors in the middle of October—is not state aid but simply involves the spending of surpluses generated by the Post Office in its profitable years? Does not the need for that aid arise from the Government's mistaken decision to stop

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paying cash benefits to pensioners and other claimants at post offices, which will cut sub-postmasters' incomes by 40 per cent?

Miss Johnson: That decision has been cleared by the Commission. I am sure that the hon. Gentleman knows that his question is inaccurate, as pensioners who do not want to use the new arrangements will be able to turn to the universal bank, which will cover future payments through post offices. The House will appreciate that 3,500 rural post offices closed in the time of the previous Conservative Government.

Manufacturing Sector

8. Mr. Ben Chapman (Wirral, South): What support she is providing to the manufacturing sector. [83609]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The Government's manufacturing strategy that was published in May identified seven key areas of activity for Government and industry that are crucial for manufacturing success. We are taking action in all of those areas to help British manufacturers cope with very difficult global conditions.

Mr. Chapman : My right hon. Friend may be aware that Candy Domestic Appliances, a company that has manufactured refrigerators in my constituency for decades, recently announced its closure. Despite exemplary efforts by the unions and the work force, the company simply found that the pound-euro exchange rate was an uncompetitive barrier that it could not surmount. In the light of that, and of the global restructuring that is in train, will my right hon. Friend say what plans she has to help firms such as Candy, and to sustain a UK manufacturing base?

Ms Hewitt: I was extremely sorry to hear about Candy's decision to transfer production from my hon. Friend's constituency out of the UK. As he is aware, officials from my Department were in close touch with the company and the unions throughout the discussions. We went through the various investment options to see whether the plant could be kept open. I am sorry that that did not prove fruitful.

The Government have set out, in their manufacturing strategy and in the one published by the regional development agency, exactly what we will do to ensure that more of our manufacturers remain competitive. They can do that by improving skills, for example, and in particular by strengthening the links between smaller manufacturers and our outstanding science base. It is from that science base that the new products and processes that are the key to manufacturing success will emerge.

Mr. Richard Page (South-West Hertfordshire): The right hon. Lady will be aware that, under this Labour Government, hundreds of thousands of manufacturing jobs have been lost in this country over the past few years. What representations has she made to the Chancellor of the Exchequer, and what calculations has

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her Department made, regarding the effects on employment in the manufacturing sector of the national insurance changes that will come in from April?

Ms Hewitt: Every business leader to whom I have spoken since the announcement by my right hon. Friend the Chancellor agrees that it is essential that we put more money as a country into the national health service. The question therefore is not whether we are going to make more money available, but where it will come from. There is general support throughout the country for my right hon. Friend's decision that the costs of that investment in the NHS should be borne fairly, through a 1 per cent. addition to the national insurance contribution from employers, employees and the self-employed.

I note that the Opposition want to go back on that increase in NHS investment. I do not think that that will commend itself to the public any more than most Conservative policies.

Mr. Martin O'Neill (Ochil): Business across the country has welcomed the manufacturing strategy. Among manufacturers, there is qualified optimism about what could happen in uncertain times, but also still a nagging concern about the impact of the climate change levy on industries that are both capital intensive and labour intensive. Will she undertake an industry-by-industry survey of the impact of the climate change levy after 18 months? Will she try and give us an assessment of how the concept of fiscal neutrality is applied in this context? It seems to escape the understanding of many people, who are paying a lot of money and not getting much in return.

Ms Hewitt: On fiscal neutrality, my right hon. Friend the Chancellor made it very clear that there is no net gain at all to the Exchequer from the climate change levy, because what is paid by business has been recycled in lower national insurance contributions. It is also worth stressing that any business customer that secures its electricity from renewable sources does so without any payment of the climate change levy and any industrial company that has signed up to one of the energy efficiency agreements gets an 80 per cent. discount on their climate change levy. We are of course working with industry to keep the operation of the levy under review and in particular to see whether the eligibility for those 80 per cent. discount agreements can be widened in ways that would be beneficial to our industry.

Mr. Tim Yeo (South Suffolk): Is not the best help that the Government could give the manufacturing sector a cut in the £47 billion of extra taxes that Labour has imposed on business, a cut in the burden of red tape and regulation, a decent transport system, a supply of school and college leavers whose qualifications and skills meet the needs of employers and a Secretary of State who fights the corner of manufacturers instead of criticising management?

Ms Hewitt: The hon. Gentleman is talking nonsense, as he well knows. He has not bothered to refer to the cuts in corporation tax introduced by my right hon. Friend the Chancellor, the research and development tax credit—initially for smaller firms, now for larger firms,

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welcomed universally by manufacturers and worth nearly £500 million—and the substantial investment that we are making after years of neglect in developing skilled scientists, engineers and technicians—one of the most pressing problems for manufacturers. The hon. Gentleman fails to tell the House that we have lower levels of business taxation than Germany, France and Italy—lower, indeed, than 12 countries of the European Union. On all the recent international benchmarking surveys, we have a better regulatory environment than almost any other major industrialised country.

Mr. Andy Reed (Loughborough): I am sure that my right hon. Friend, as a fellow Leicestershire Member of Parliament, is aware that Brush Electrical Machines has had to reduce its working week to four days in recent times. However, there is good news for the company, if only we can get the assistance of the DTI, the East Midlands development agency and Leicestershire agencies to ensure that there is a shift in production to some new exciting products. Will my right hon. Friend give me an assurance that she will use her good offices, as a fellow Leicestershire MP and as Secretary of State, to ensure that the company gets every assistance to move this exciting project forward, even if that means some cash help as well?

Ms Hewitt: My hon. Friend will understand that the Chancellor does not allow me to bring a cheque book to Trade and Industry questions. However, I readily undertake to ensure that my officials will work with him and with the company to see whether any help can be given, possibly through the regional development agency, to ensure that the exciting opportunities that are opening up to the company are seized and lead to success and further job creation.

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