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House of Commons

Thursday 22 February 2007

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Trade and Industry

The Secretary of State was asked—

Trade Links (India/China)

1. Andrew Selous (South-West Bedfordshire) (Con): What steps he is taking to promote trade with India and China. [122132]

The Secretary of State for Trade and Industry (Mr. Alistair Darling): The Government promote trade with both countries in a number of ways. I recently visited China and India to promote trade and I was accompanied by a business delegation on both occasions.

Andrew Selous: But does the Secretary of State agree that we are not doing well enough? The Minister for Trade told the House on 30 January that we sell more to Australia, which has a population of 20 million, than to either India, which has a population of 1.3 billion, or China, which has a population of 1.1 billion. Is it still the case that Belgium is managing to sell more to India than us? We should be doing better than we are. What will the Government do about that?

Mr. Darling: The answer is that we can always do better. It is worth bearing in mind that the UK is certainly the fourth largest investor in India, and may now be the biggest investor in India as a result of recent investments by Vodafone. The links between both India and China and the United Kingdom are good. We are building up trade in many areas, particularly in financial services and other service sectors. Both China and India are moving away from an interest in heavy manufacturing, in which countries such as Germany have traditionally done well in trade with them, into sectors such as services in which Britain has an outstanding reputation. Of course, in respect of both countries, we need to do better, which is why I visited them. There are good examples of additional investment. We want to encourage that two-way process.

Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): Unlike the hon. Member for South-West Bedfordshire (Andrew Selous), may I
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praise the Government for their tremendous efforts to build relations with India? In my lifetime, I have known no other Government make such an effort. But does the Secretary of State recall the joint declaration signed by our Prime Minister and Mr. Manmohan Singh, the Indian Prime Minister, on 20 September 2004? The declaration refers to plans to

Can I therefore ask what progress has been—

Mr. Speaker: Order. Secretary of State.

Hon. Members: Answer!

Mr. Darling: If I might deal with the first part of my hon. Friend’s question, praise for the Government is always welcomed and much appreciated. In relation to the second part, while people are sometimes understandably sceptical about the value of committees, especially those set up between Governments, the Indian one has actually been extremely productive. When I was in India in January, we made progress in four areas: Lloyd’s of London will now be able to write reinsurance business in India; the Indian Government are now prepared to consider legislation that would allow Britain’s big accountancy firms to set up and practise there; the Bar Association of India is now engaged in a way that will, I hope, lead to British law firms being able to practise in India; and Premier Oil has been given permission to begin production in the Ratna field. Such examples of engagement by the Government have made a difference.

In the medium and long term, the prospects for good trading relationships between India and Britain are exceptionally good, because both countries have the same outlook. The more that we foster that relationship and encourage investment into India, as well as Indian investment into this country, the better it will be for both our countries.

Mr. Ian Taylor (Esher and Walton) (Con): Given that the global business community is looking for investment wherever it is most effective, will the Secretary of State assure us that he is continuing talks with China and India about the science base and the growth of science and expertise in those two countries? If we cannot prevent companies from moving to those countries and investing in new research laboratories, we must collaborate with those countries in order to gain expertise back into this country.

Mr. Darling: The hon. Gentleman makes an exceptionally good point. A few moments ago, in reply to the hon. Member for South-West Bedfordshire (Andrew Selous), I said that I thought that both countries were reaching a stage at which they were taking a greater interest in services and in the non-traditional manufacturing industries such as pharmaceuticals, biosciences and so on. On my visit to India, I was particularly struck by the number of firms that want to work jointly with those in Britain. It is not a question of them coming here and taking over our companies; they value our science base and our ability to innovate, for which we have a worldwide reputation, and they want to ensure productive capacity in both the United Kingdom and India, to capitalise on the strength of both countries. We want to encourage that.

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China, too, recognises that we have something that it currently does not have, and as huge structural changes take place in economies across the world, we can capitalise on that. That is why we will continue to invest heavily in science: this year we spent about £3.4 billion, which is double the sum invested 10 years ago.

Mr. Lindsay Hoyle (Chorley) (Lab): Obviously, as a member of the Select Committee on Trade and Industry, I recognise the importance of the joint economic trade committee agreements with both India and China. Will the Secretary of State ensure that those JETCO agreements will lift the barriers that still exist to British exports to India? I am sure that he can do that. Will he also ensure that Typhoon will be part of the programme for India’s purchases in the future?

Mr. Darling: I cannot ensure that the Indian Government will do any of those things because, at the end of the day, it is up to the Indian Government. However, they recognise they are reaching a stage at which unless they break down barriers to trade, India will lose out. That is especially important as we approach the conclusion of the world trade talks, at which India’s position is pivotal. In the discussions that I have had with the Indian Trade Minister and those that my right hon. Friend the Chancellor has had with the Indian Prime Minister, we know that it is important to persuade all countries—India included—to do everything they can to break down trade barriers. They need British investment in financial services, the pharmaceutical industry and across the piece, including engineering. We want to encourage that and build on it.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Ten years ago, this country had a balance of trade surplus. Today, we are exporting 20 per cent. fewer goods to India than we were two years ago. Our balance of trade today stands at a whopping £56 billion deficit, the highest since 1697. Will the Minister tell us why that is?

Mr. Darling: If the hon. Gentleman wants to make comparisons with 10 years ago, he may recall that inflation then was in double figures, at 10 per cent. We have now had the longest period of low inflation since the 1960s. At one point, 3 million people were unemployed. Unemployment is now the lowest that it has been in the time that anyone can remember. National debt doubled under the Conservatives. Today, we have a very strong economic position.

In relation to trade, as I said, our position with India and China is strong and getting stronger. Most of that is built on the fact that we have an extremely strong British economy and, crucially, unlike the Conservatives, we are willing to put money into things like science and innovation, which is critical to our country’s future.

Keith Vaz (Leicester, East) (Lab): May I join my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) in congratulating the Secretary of State on his very successful visit to India? May I also say that my right hon. Friend looked stunning with the garland that was placed around him on his arrival?

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What practical steps will be developed as a result of the visit in terms of financial services, bearing in mind that both Mumbai and the City of London are key world financial centres?

Mr. Darling: I said that support for the Government is always welcome, and support for the Secretary of State is even more welcome, so I am grateful to my right hon. Friend for his compliments, if that is what they were. [Laughter.]

My right hon. Friend highlights an important area of future co-operation between Britain and India in relation to Mumbai. The Indian Government want to develop that city as a major financial services centre, not just for India, but for the region as a whole. We want to encourage that. The City of London is now able to open an office in Mumbai, and a lot of British companies are active there. We have been urging on the Indians a more liberal approach, allowing British firms to invest in Mumbai.

Some 23 Indian companies are listed on the London stock exchange and 13 are on the alternative investment market. That shows two things: first, the growing closeness and relationship between India and Britain, and, secondly, that the London stock exchange and the City of London are pre-eminent across the world and recognised as a very good place to do business. It is important that we keep it that way.

Energy White Paper

2. Mr. Mark Lancaster (North-East Milton Keynes) (Con): What discussions he has had with the Chancellor of the Exchequer on the energy White Paper. [122133]

5. Jo Swinson (East Dunbartonshire) (LD): What recent discussions he has had during the drafting process of his Department’s energy White Paper; and if he will make a statement. [122136]

7. Mr. David Evennett (Bexleyheath and Crayford) (Con): If he will make a statement on progress towards the publication of an energy White Paper. [122138]

The Secretary of State for Trade and Industry (Mr. Alistair Darling): Ministers have held numerous discussions with other parties and colleagues over the course of the energy review since it was launched in 2005. As I have set out in a written statement today, following last week’s court judgment it is now likely that the White Paper on energy and the new consultation on nuclear energy will be published in early May. If we can do it earlier than that, we will, but that time scale will enable the Government to make a decision on nuclear and on other issues arising from the White Paper in the autumn.

Mr. Lancaster: Does the Minister accept Ofgem’s criticism, and that of others, that the Government’s renewables obligations policy is unbalanced in how it treats potential sources of renewable energy? When will he deal with that criticism?

Mr. Darling: No, I am not convinced by Ofgem’s criticism. It has put forward an alternative means of encouraging renewable energy, but it seems to me to be
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broadly similar to the system that ran for many years until the late 1990s, which did not result in much in the way of renewable energy.

Two things must be said about the renewables obligation. First, and now for the first time, we are seventh in the world in terms of producing electricity from renewable sources. There are more and more applications to build wind farms as well as more investment in offshore energy generation, as well as wave and tidal power generation. Secondly, the industry needs some certainty. If we keep chopping and changing how we support renewable energies, we will run the risk that the whole thing will fall apart.

At the moment, we are discussing nuclear power generation and there are people who argue that renewables can fill the gap that may be left by a lower number of nuclear power stations. We need more renewable energy, not less, so I am yet to be persuaded by Ofgem’s submission. Of course I will listen to what it has to say, but it is important that we continue to provide some stability to energy policy.

Jo Swinson: Following last week's High Court ruling that the energy review consultation was “seriously flawed”, the Prime Minister said

Today, the Secretary of State has announced a new consultation, but in light of the Prime Minister's pre-emptive comments, surely that consultation is set to be as seriously flawed as the previous one.

Mr. Darling: Well, the hon. Lady might do worse than to read the judgment. It is perfectly possible—indeed it is highly desirable—that Government take a lead in promoting policy. The Government have to have a view on nuclear. I appreciate that, being a Liberal Democrat, the hon. Lady has never had that problem, because the Lib Dems do not have to have a view on anything. I see that her hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) is not here, but, as she knows, his view is different from hers.

In relation to nuclear, the Government's position is that, especially at a time when the amount of electricity generated by nuclear will fall from about 20 per cent. to about 7 per cent. of the total market over the next 15 to 20 years, there is a case for replacing that amount of energy generation with new nuclear generation. What the judge found was that the process of consultation was flawed, and I fully accept that. I therefore intend that we will carry out a full and proper consultation, so that people can have their say. One thing is clear: the issue will not go away. We need to have greener sources of electricity generation and to ensure security of supply. That is something that the Liberal Democrats are constitutionally incapable of doing.

Mr. Evennett: I note the Secretary of State's comments and welcome the fact that the White Paper will be published in May, if not before. Conservative Members are obviously disappointed that it has taken so long. Is the Minister aware of my constituents’ concerns about the Government's apparent lack of a coherent and credible energy policy, and their scepticism about the consultation in the light of the
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decision to approve the waste incinerator in Belvedere, where the consultation with local people and experts was not taken into account? Will this be a real consultation or just another sham?

Mr. Darling: It is important that there is a full and proper consultation. I used to be deeply sceptical about nuclear power. I changed my mind because the facts changed in two respects. First, the science on climate change is now very clear. Unless we get ourselves into a position where we can produce more electricity from low-carbon sources, we will continue to pump carbon into the atmosphere, and that cannot be justified. Secondly, the amount of oil and gas in the North sea is slowly but surely declining. That means that, if we do not do anything about it, we will import more oil and gas from other parts of the world. That is an especially serious prospect when we consider that that oil and gas will, in many cases, be coming from areas that have huge political problems. I therefore think that nuclear needs to be part of the mix.

That is my view and it is the Government's view, but I have given an undertaking that we will consult on that because people need to engage with the argument. As I said earlier, that argument will not go away and it is essential that we engage with it. If people have better solutions, let us hear them, but for goodness’ sake do not think that, by putting off the decision, we will not be faced with the difficult choices that any Government worth their name have to make.

Mr. Denis MacShane (Rotherham) (Lab): In the Secretary of State’s discussions with the Chancellor of the Exchequer on the energy White Paper, will he pay specific attention to the needs of industry? There is a fashionable London view that only services count and that every product with metal or steel in it can be imported into this country, and that that is the future. I am not sure that that is the case, and our steel, glass and other industries need a coherent energy-pricing policy, which they have not had in recent years. I know that the Secretary of States has made good efforts in that respect, but please will he, with the Chancellor, focus hard on sending out the right signals for our industry electricity users?

Mr. Darling: My right hon. Friend is right. Last winter, there was a shock to the system in that we did not get the expected gas supplies. The result was that wholesale prices went up and the prices being paid by steelmakers and other heavy industrial users were far higher than they should have been. This year, because we now have additional gas coming from Norway, the Netherlands and Belgium, and because we now have greater capability in terms of bringing in liquefied natural gas, and have taken other new measures too, wholesales prices have come down by about 60 per cent. and, thankfully, those prices are about to be passed on to domestic consumers as well as industrial consumers. However, my right hon. Friend is right: if we do nothing—if we ignore the problems that we can see arising in the next 10 to 15 years—we will have very severe energy problems. I am prepared to put up with a six or seven-week delay because, frankly, it is better to get right how we deal with the big problems over the next 20 to 30 years.

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