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Liaison Committee: Select Committee

The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the first Motion standing in my name on the Order Paper.

Moved, that a Select Committee be appointed to advise the House on the resources required for select committee work and to allocate resources between select committees; to review the select committee work of the House; to consider requests for ad hoc committees and report to the House with recommendations; to ensure effective co-ordination between the two Houses; and to consider the availability of Lords to serve on committees;

That, as proposed by the Committee of Selection, the following Lords be named of the Committee--

L. Belstead,

V. Cranborne (L. Privy Seal) (Chairman),

L. Dormand of Easington,

B. Hylton-Foster,

E. Jellicoe,

L. Jenkins of Hillhead,

L. Richard,

L. Weatherill.

That the Committee have leave to report from time to time;

That the Committee have power to appoint specialist advisers.--(The Chairman of Committees.)

On Question, Motion agreed to.

Privileges: Select Committee

The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, that a Committee for Privileges be appointed and that, as proposed by the Committee of Selection, the following Lords together with the Chairman of Committees and any four Lords of Appeal be named of the committee--

L. Allen of Abbeydale,

L. Campbell of Alloway,

L. Cledwyn of Penrhos,

V. Cranborne (L. Privy Seal),

E. Ferrers,

L. Glenamara,

L. Graham of Edmonton,

B. Hylton-Foster,

L. Jenkins of Hillhead,

L. Mowbray and Stourton,

L. Richard,

B. Stedman,

L. Strabolgi,

L. Strathclyde,

L. Wigoder.--(The Chairman of Committees.)

On Question, Motion agreed to.

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Address in Reply to Her Majesty's Most Gracious Speech

3.34 p.m.

Debate resumed on the Motion moved on Wednesday last by Lord Wade of Chorlton--namely, That a humble Address be presented to Her Majesty as follows:

"Most Gracious Sovereign--We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."

Earl Ferrers: My Lords, we come now to the last day of the debate on the Address in reply to the speech which Her Majesty was graciously pleased to deliver. One could not help but reflect, when witnessing that remarkable ceremony of the opening of Parliament, how much the Monarchy, Parliament and democracy are inextricably bound together in the United Kingdom.

We were made conscious again of the great debt of gratitude which we all owe Her Majesty for the way in which she carries out her responsibilities, and for the unique respect and affection in which she is held by both Houses of Parliament and throughout the country.

Noble Lords: Hear, hear!

Earl Ferrers: My Lords, today we turn our minds to industrial and economic affairs. Today's debate will be enlightened by two maiden speeches to which we all greatly look forward--one by my noble friend Lord Nickson, who is a distinguished industrialist, and the other by the noble Lord, Lord Gladwin of Clee, who is a distinguished trade unionist.

Earlier this year the Government published a competitiveness White Paper. That set out the policies which we propose to carry out in order to try to help British business to win at home and abroad. The White Paper is the first comprehensive attempt by any British government to try to set out what "competitiveness" is actually about.

Whether we can improve our ability to earn a living depends on our ability to better our industry; to better our trade; and to better our ability to sell both at home and abroad and to all manner of people. We can only improve our ability to earn a living if we can improve our competitiveness in an increasingly competitive world. Competitiveness in business is the only way to raise living standards and to improve the qualify of life of people.

It is the duty and the business of businesses to create wealth. Governments do not do that. They merely have to try to set the conditions in which businesses can succeed--and that is difficult enough, especially when the whole world goes into recession. But, fundamentally, it is to businesses and to their employees that we must look if, as a country, we want to improve our competitiveness.

Often the best way in which governments can help is to get out of the way; to give people their heads; and to allow their entrepreneurial spirit to flourish. If we look back a little--and there is no harm in doing that from

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time to time, provided that one does not do it for too long so that one gets a stiff neck--it was this Government who broke the ground on privatisation, a task which was unthinkable 15 years ago. Where we have led, many others have followed--France, Germany and the Eastern bloc. Even that bastion of communism, Russia is trying to follow suit.

Britain led the world in privatisation: the world watched Britain; the world admired Britain; and the world followed Britain. It has been the greatest success story of the last half century, pioneered by my noble friend Lady Thatcher when she was Prime Minister.

It was this British Government which showed that privatisation increases efficiency: it cuts costs; it improves management; and it enables businesses to react to what the public and the customer wants. It ensures that investment decisions result from the needs of customers, not from the whims of bureaucrats. It does so by increasing efficiency. If that happens, it leads to lower prices. That is good for the customer and for business, because it enables businesses to compete effectively against their competitors.

Since 1979, 47 major businesses have been transferred to the private sector. If anyone doubts the benefit of that, let me remind your Lordships of one simple fact. In 1979 those now privatised industries cost the taxpayer £35 million a week. Those same industries are now returning to the Exchequer £50 million a week in taxes on profits. That is some considerable turnaround.

We intend to continue in that vein, both to privatise part of the United Kingdom Atomic Energy Authority and to deregulate the domestic market for gas. Privatisation will enable AEA Technology to realise the full potential of its commercial activities. It will be able to sell its services in the way in which it--and not the Government--sees fit. That will benefit both its customers and our competitiveness. The Gas Competition Bill will bring genuine competition to the whole of the gas market. In all the brouhaha about whether people should get a discount for paying by direct debit, and all the rest, we tend to forget that since privatisation the domestic gas consumer has already benefited from a fall, in real terms, in gas prices before VAT of over 20 per cent. Now they will be able to benefit further.

The independent suppliers are confident that they can offer price reductions of around 10 per cent. By having more than one supplier, it will enable the industry, as a whole, better to provide what the customer wants. It was only at the end of the previous Session that we saw the passing into law of the deregulation Bill. Everyone hates regulation, until, of course, things go wrong, and then they say, "People should not be allowed to do such things". But, in our increasingly sophisticated society we have to have regulation whether for food, for safety or for the way in which we conduct our business. But these things, like tadpoles, have a nasty habit of multiplying themselves. But, unlike tadpoles, the old ones do not die off; they tend to hang around to the inconvenience of everyone.

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Bad regulation has a heavy impact, particularly on small businesses. Yet small businesses are the engine room of the future. Deregulation will help these small businesses to concentrate their efforts on what they do best--that is, creating wealth and jobs. There are some 3,500 regulations which, as the current jargon says, "impact" on businesses. We have already earmarked nearly 900 of those for repeal or for reform. Some 55 measures, which will save businesses millions of pounds, have already been notified to Parliament under the new procedures. But this is only scratching at the surface. We want to cut out those regulations which raise prices, which destroy jobs, and which stifle innovation and choice. We have extended this work to cover charities and the voluntary sector, and we intend to keep up the pressure, both at home and in Europe.

If the Government are to enhance rather than to harm competitiveness, we need to understand how businesses operate and to understand the opportunities and the threats which businesses face. Businesses also need to see, and to know, how others operate. We have therefore sponsored different parts of industry to do different things to help them to become more competitive. We have, for instance, taken car component manufacturers to Japan to learn some of their methods. We are working with business, with trade associations and with people who have been seconded from the private sector to apply the search for improvement right across the board.

I said that small businesses are the engine room of the future, so they are. It is worth reminding ourselves that no fewer than 1.2 million businesses were created during the 1980s. There were approximately 3 million businesses in the United Kingdom in 1992, and 96 per cent. of those employed fewer than 20 people. Between 1989 and 1991--only two years --these small firms created an additional 350,000 jobs. We should never underestimate the powerful influence which small businesses have on the economy of the country.

The relationship between small businesses and the banks has received a good deal of attention in recent years, and the Government have made it clear that we expect the banks to show understanding and sensitivity in their dealings with small firms. Despite this, many small businesses continue to feel disenchanted with their banks, and I hope that this is a matter which can be addressed. Late payment of debts is a matter of particular concern for small businesses. Cash flow is, of course, vital to their survival and to their growth and no one should underestimate the damage which can be done to cash flow--and indeed even to the viability of the business as a whole--by the late payment of debt. We do not believe that a statutory right to interest is the right answer, but we have said that we will review the case for legislation if there has been no significant improvement within two years.

Small businesses often need help and advice. They ask anything from, how do I start a new business?, how do I raise money?, what accounts do I have to keep?, what are the statutory requirements for my business?, to how can I export? There is much advice and knowledge on offer but from such a huge variety of outlets that the poor unfortunate businessman seeking help frequently does not know which way to turn. So the Government

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decided that there should be one place, in each locality, essentially run by private enterprise, to which the aspiring businessman can turn for help. These are what have been called Business Links. The Business Links will bring together all the local business support agencies including the training and enterprise councils, the chambers of commerce, the enterprise agencies, and national and local government. Business Links will reach out to companies which want to grow by providing them with support and advice which are specifically geared to their own particular needs.

From April 1996 all the services of the Department of Trade and Industry will normally be provided through Business Links, including support for exports, for innovation and technology, for design, and for the new diagnostic and consultancy services. Business Links will be able to help companies to export, to improve design, to improve the quality of their business planning, to encourage innovation and the spread of good practice, to improve their financial skills, and to improve the professionalism of their marketing activities. There are already 52 Business Links open. Our aim is to have at least 200 Business Links established in England by the end of next year.

Britain is first and foremost a trading nation. We are so good at denigrating ourselves and our achievements that one sometimes forgets what we have achieved. Few people realise that the United Kingdom exports more per head than does either Japan or the United States; that after decades of decline our share of world trade in goods stabilised in the 1980s; and that our exports are now at a record high. They grew by 12 per cent. in volume in the last year alone. Last year we exported more televisions and microchips than did either France or Germany, and over twice as many as did Italy. We exported twice as many computers as did either France or Italy, and more than Germany. We want to build on these achievements. And, what is more, we cannot afford to relax our efforts, because our competitors will not be relaxing theirs.

Although our exports are doing well, as a country we could do better, particularly in breaking into new markets. Last year Germany exported five times as much as we did to China and Italy exported more than twice as much. Although our exports to China grew by an impressive 47 per cent. between 1992 and 1993, German and Italian exports grew by 50 per cent.--and that was from a higher base. So, in order to help to encourage our exports, we in the Department of Trade and Industry have recruited over 100 private sector people, who have been seconded from the private sector, to work as export promoters. They are people who know about business, who know about running companies and who know about exporting--the opportunities and the pitfalls. And they will be able to help and to advise others who want to export.

In all of these ways the Government are helping industry to improve its competitiveness. But the most important thing which a government can do is to provide the conditions in which businesses can invest in the future with confidence. Low inflation and low interest rates are vital if we are to remain competitive.

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Fortunately, as a result of the policies which we have adopted, inflation is running at its lowest level for over a quarter of a century. It has been below 3 per cent. for 13 consecutive months--the longest consistent period since 1964. Interest rates have been brought down to their lowest levels for 17 years. The outlook for the British economy is the best it has been for many years. In the past year alone output has risen by over 4 per cent. This is the strongest growth we have seen since the end of 1988, and it has far outstripped even the best projections. And we are still expected to be the fastest growing major European Union economy this year. In the last year alone, manufacturing output has risen by 5 per cent.; investment in plant and machinery is up by over 5 per cent.; unemployment has fallen by over 300,000; manufacturing productivity has risen by 6 per cent., far outstripping the growth in earnings; and unit wage costs have actually fallen by nearly 1½ per cent.--the biggest drop since records began in 1970. These figures are, I believe, all enormously encouraging, but we cannot ease up. In this life you are on an escalator. You either go up or down. If you stand still, you soon land down at the bottom. We want other countries, too, to invest in the United Kingdom because this creates jobs; it creates work for other companies which provide the components; and it is good for Britain.

But if we want other countries to invest in the United Kingdom they will want to be satisfied that we will be a better country in which to invest than are others. To a large extent we are succeeding. Britain is now the most attractive place to invest in Europe. We have, for example, the lowest main rate of corporation tax in the European Union. Forty per cent. of Japanese inward investment to Europe has come to the United Kingdom; 43 per cent. of American inward investment to Europe has come to the United Kingdom; we remain the number one location for United States and Japanese investment.

Those who want to invest in Europe have chosen the United Kingdom rather than France, Germany, Italy or Spain because they see that the United Kingdom is the best country in which to invest; that it is a country which encourages investors, and that it is a country which treats investors fairly. Inward investment since 1979 has created or safeguarded at least 600,000 jobs.

A great deal of investment by other countries into the United Kingdom has taken place over the last decade. In 1989 Toyota invested £700 million in their car plant at Burnaston. That created 3,000 jobs. Fujitsu invested £400 million in a semi-conductor factory in County Durham, creating over 800 jobs. That is likely to increase to 1,600. Robert Bosch of Germany has invested £100 million in a factory near Cardiff to produce car alternators. That has created 800 jobs. Last month Samsung of Korea announced a decision to invest £450 million to set up manufacturing facilities in the North East of England. The company is also transferring its European headquarters to London. Together these will employ around 3,000 people. Earlier this month Sony announced its new European computer games centre in Merseyside. That will create 260 jobs.

The advances being made and about to be made in communications, computers and technology are likely to have an impact on our lives and our way of life not

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dissimilar to that which the steam engine had on our forebears. Whereas a few years ago car doors were being formed by panel-beaters, now they are being designed by computers in three-dimensional graphics. Whereas a few years ago we thought it a wonder to have direct access by telephone to someone in another country, now the fax is being supplemented by video conferencing and by interactive television.

That is a development with quite extraordinary possibilities, one of the least of which--although it may be one of the easier ones to understand--is that if your Lordships wished to watch a cricket match on TV--something which I fancy some noble Lords sometimes do--your Lordships would be able to determine whether to watch the match from the position of mid-off, the wicketkeeper or even silly point. That is an important point. That is the way in which television and television technology will develop. If it can do that in connection with what one might call pastimes, think what it can do for industry.

Telecommunications, and all that that covers, will play a fundamental part in innovation and efficiency, not only in research and development but in all the phases of production and marketing. It offers enormous opportunities for the expansion of businesses and for employment, particularly for small and medium-sized firms. Those who do not take advantage of it will miss out.

Information superhighways will be a major catalyst in enhancing the competitiveness of the United Kingdom as we move into the 21st century. The Government have set out their vision for building the United Kingdom's information superhighways in a command paper which we published on Tuesday.

We led the world in liberalising our telecommunications sector way back in 1984. We are now well placed to be a leader in the new era of what is known as "broadband communications". It is thanks to privatisation and deregulation that the United Kingdom is already a world leader in these new information techniques, and this gives us an excellent platform on which to build.

We will have to match the emerging "broadband technologies" with what is being done for the superhighways. This is complicated stuff, and deeply technical, but there is a growing convergence between telecommunications, information technology and broadcasting and the Government will do all that they can to encourage and to foster this. Networks for schools and hospitals are already well under way.

My Lords, I believe that the future is hugely exciting. It holds out possibilities for us which were previously unthought of and, if they were thought of were discarded, probably as fantasy. The world has shrunk. Technology has vaporised barriers. We are in a world market; it is simply not an option to be an island on our own. We want to be there "mixing it" in the markets of the world with the best of them: there is a better opportunity tomorrow. Our job is to find it, to seek it out, and then to exploit it. I have no doubt that the entrepreneurialism of British business, which has

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characterised the nature of British business over the centuries, will achieve that--provided that we set the right conditions. That we are determined to do.

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