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House of Commons
Wednesday 18 July 1990
The House met at half-past Two o'clock
PRAYERS
[Mr. Speaker-- in the Chair ]
Oral Answers to Questions
TRADE AND INDUSTRY
Short-termism
1. Mr. John Hughes : To ask the Secretary of State for Trade and Industry whether he intends to make any proposals to counter short-termism in British industry.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley) : Like my right hon. predecessor, to whom I pay tribute, I recognise the importance of this issue. Companies' ability to invest for the long term is a function of their profitability. The profitability of British industry has returned of late to the highest level for 20 years and business investment has consequently reached record levels.
Mr. Hughes : Can the Minister tell the House that on his appointment he was able to convey to the Prime Minister the magnitude of his task in repairing the damage that has been done to British industry because of short-termism? Does he recognise that it is also a malady which appertains to his own job? Can he again assure the House of his long-term commitment to industry?
Mr. Lilley : I have a long-term commitment to industry--have no fear --although I understand that the time customarily spent in this Department is shorter rather than longer. I shall certainly do all in my power to ensure that British industry continues to be profitable and therefore remains in a position to invest for the long term, as it has increasingly done under the Government.
Mr. Batiste : I congratulate my right hon. Friend on his appointment to this important job. Will he consider whether short-termism is largely due to the fact that because of our tax system too much of British savings is channeled to institutions whose fund managers are subject to short-term pressures? Is not the solution to encourage individuals to save more directly in United Kingdom industry?
Mr. Lilley : I am grateful to my hon. Friend. I am sure that he has hit upon an important point which lies behind some of the measures that we have taken in recent years to encourage direct individual saving in industry. Companies benefit from and welcome a large mass of individual direct shareholders and we are glad that there are now 11 million direct shareholders in British industry.
Mr. Gordon Brown : I welcome the Secretary of State to his new post. On countering short-termism, as the right
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hon. Gentleman has moved from the Treasury, does he agree with the Chancellor on economic and monetary union that"we are all committed to this goal",
or does he agree with his predecessor, who said in his resignation letter that
"economic and monetary union would be a disaster"?
Does he agree with the Chancellor-- [Interruption.] This is about the long-term future of British industry--
Mr. Speaker : Order. I am no great expert on economic matters, but surely the question relates to short-termism.
Mr. Brown : On the question of the long-term view for this country and for industry, does the Secretary of State agree with the Chancellor that the hard ecu is one possible route to a single currency, or does he hold to the view that a single currency without a single European Government is almost inconceivable-- [Interruption.]
Mr. Speaker : Order. That is a very long question.
Mr. Lilley : I am grateful to the hon. Gentleman for his kind remarks, and I am glad to find myself opposite him again. It should be no surprise to him that I entirely endorse the position of my right hon. Friend the Chancellor, and indeed the whole Government, on the issue of the hard ecu and EMU. That should be no surprise as, until a few hours ago, I had some responsibility under the Chancellor for that policy.
Airline Competition
2. Mr. Amos : To ask the Secretary of State for Trade and Industry what plans he has to ensure greater competition amongst British airlines to prevent the development of a monopoly by any one airline ; and if he will make a statement.
The Minister for Industry (Mr. Douglas Hogg) : My right hon. Friend will continue to exercise his powers, where appropriate, under the Fair Trading Act 1973 and other competition legislation. In particular, he will continue to refer to the Monopolies and Mergers Commission those mergers in the airline industry that appear to raise United Kingdom competition or other public interest issues. However, my right hon. Friend the Secretary of State for Transport has specific responsibility for airlines in the United Kingdom. His policy, which I support fully, is to encourage a sound and competitive industry with a variety of airlines while promoting healthy competition in all markets, in the interests of consumers.
Mr. Amos : I am grateful to my hon. and learned Friend for that answer. Given that competition invariably benefits the consumer through lower fares, more choice and a higher quality service, will he do his best to ensure that the smaller airlines are given every possible assistance and encouragement to resist the predatory and often unfair trading practices of British Airways? Despite British Airways' massive economies of scale, its prices are up to 40 per cent. higher than those of the smaller airlines. It also operates an unhealthy monopoly on the London to Newcastle route.
Mr. Hogg : My hon. Friend identifies an important point. I agree that smaller airlines have an important part to play in maintaining a healthy, competitive airline
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industry. I am conscious of the importance of smaller airlines and small airports to the economic development of the regions which I visit in the course of my ministerial duties.Mr. Lambie : Is the Minister aware that when Mr. Michael Bishop and British Midland Airways applied for licences to fly between Glasgow and London, they stated that, if they were given those licences, they would compete fairly with British Airways in terms of price and service? Now that British Midland is no longer competing with British Airways in terms of price, it is complaining when British Airways gives a better service to passengers on flights between Glasgow and London. Will the hon. and learned Gentleman inform British Midland that, instead of trying to stop the service that British Airways provides for people travelling on that route, it should compete in terms of price? Will the Government break the pricing cartel of British Midland and British Airways?
Mr. Hogg : These are essentially matters for my right hon. Friend the Secretary of State for Transport, but I shall ensure that he is made aware of the hon. Gentleman's views.
Mr. Hill : Why is it almost impossible to have deregulation in the United Kingdom and Europe? America ably achieved deregulation almost overnight. Does not the international aviation industry compete with aviation industries in other countries? Rather than encouraging competition between United Kingdom airlines, we should open the markets to all, resulting in lower fares throughout Europe and the world generally.
Mr. Hogg : My hon. Friend makes an important point. I am in favour of considerable competition, but my hon. Friend will appreciate that we must carry many other countries with us on the subject of further deregulation.
Rover Group
3. Mr. Martyn Jones : To ask the Secretary of State for Trade and Industry when he expects to respond to the European Community's recent communication on the sale of the Rover Group.
Mr. Douglas Hogg : As yet we have not received the formal decision letter from the Commission. When we do, we will reply expeditiously. We have decided, subject to any representations by British Aerospace, to accept the Commission's decision on repayment.
Mr. Jones : I thank the Minister for that reply. Will he ask the new Secretary of State whether he will clear up the mess created by his two predecessors and tell the House, as he must tell the Commission in due course, the details of the secret tax incentives given to Rover and British Aerospace for the shabby Rover deal? Will the hon. and learned Gentleman ask the new Secretary of State to condemn his predecessors for their deception of the House and the Commission?
Mr. Hogg : The hon. Gentleman raised two points. I wish first to say something about my right hon. Friend the previous Secretary of State. In this respect, I speak on behalf of all Ministers and officials who had the privilege of serving under him. We very much regret what happened. My right hon. Friend was held in the highest affection and respect by those who knew him well, and I
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have a low opinion of those who now try to make personal political capital out of his misfortune. As to the-- [Interruption.]Mr. Speaker : Order. Let us hear the answer to the question.
Mr. Hogg : On the question of taxation, our position has always been that Rover Group and British Aerospace will be treated in precisely the same way as any other taxpayer. There is nothing in the Commission decision that casts doubt on that approach. The hon. Member for Dunfermline, East (Mr. Brown) owes the House an apology because he spoke of hidden tax concessions and, despite very careful scrutiny by the Commission, there is no evidence whatever of that.
Sir Hal Miller : I thank my hon. amd learned Friend the Minister for his generous tribute to the previous Secretary of State for Trade and Industry and I should like to be associated with that. Will he include in any response to the European Commission the fact that Rover had accumulated an overhang of £1.4 billion under the Varley-Marshall guarantee and had a further £1 billion investment programme? Had it remained in the public sector, there would thus have been potential for almost £2.5 billion in aid, which would have stuck a great deal more in the EEC craw than the minor sums that we are discussing.
Mr. Hogg : My hon. Friend is right. He might also like to address his mind to two other matters. First, what was done has safeguarded about 190,000 jobs. Secondly, when Rover Group was in public ownership it gobbled up £3.5 billion which could otherwise have been more profitably used.
Mr. Leighton : Although the Minister's Department is called the Department of Trade and Industry, does he agree that Britain is not allowed to have a trade policy because it is decided in Brussels? In view of what happened to Rover Group, it seems that we are not allowed to have an independent industrial policy either. Does the Minister agree that Sir Leon Brittan is now more powerful than he was when he was Secretary of State for Trade and Industry? Do not the Minister's civil servants tell him every day, "Minister, you cannot do this, that or the other because Brussels will not allow it", and is not that what irked the previous Secretary of State and made him rather vexed?
Mr. Hogg : First, it is a pity that the hon. Gentleman was not here on 28 June 1990 when he might have caught your eye, Mr. Speaker, during the statement made by my right hon. Friend the then Secretary of State for Trade and Industry. Secondly, I understood that Labour was pretending to be a European party, but Labour Back Benchers are showing that they have an extreme dislike of the European Community. It would be interesting to know which represents the proper view in the Labour party.
Mr. Roger King : Is my hon. and learned Friend aware that people in the west midlands are heartily sick and tired of all the accusations being levelled at Rover Group and British Aerospace? Car workers in the west midlands are anxious to get on with making the cars that are necessary for our economic improvement. In view of what the European Commission may say, will my hon. and learned Friend go ahead and tell it that negotiations between the
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companies and the Inland Revenue were entirely their own affair and that the benefits, if any, which might accrue from those negotiations can be set against the enormous amount of investment by British Aerospace and Rover Group in ever more credible products for the market?Mr. Hogg : My hon. Friend is entirely right. I suspect that his constituents were also interested in the express finding by the Commission that a sale price of £150 million was correct and reasonable. The hon. Member for Dunfermline, East has alleged from time to time that that was an undervaluation.
Mr. Gordon Brown indicated dissent.
Mr. Hogg : The hon. Gentleman need not shake his head because I have his quotes. It is time that he apologised for being so misleading.
Mr. Henderson : Before the Minister gets too carried away, will he confirm that he expects to have to give a full, written report to the Commission about the tax concessions?
Mr. Hogg : The Commission has made it plain that Rover Group and British Aerospace should be treated like any other taxpayer. That is what we have always proposed to do.
Buy British Campaign
4. Mr. Amess : To ask the Secretary of State for Trade and Industry what recent representations he has received in favour of a "buy British" campaign.
The Parliamentary Under-Secretary for Industry and Consumer Affairs (Mr. Eric Forth) : My Department has received a number of such representations. We recognise the advantages of purchasing British products when they are competitive in design, quality and price.
Mr. Amess : Is my hon. Friend aware that our hon. Friend the Parliamentary Under-Secretary of State for Corporate Affairs will be visiting my constituency of Basildon next Wednesday to launch the "buy British goods from Basildon" campaign? Will he join me in congratulating local businesses on their initiative? Does he agree that the success that I am sure the campaign will enjoy will make a valuable contribution to Britain's balance of payments?
Mr. Forth : I am sure that the sense of delight and honour is shared equally between Basildon and my hon. Friend the
Under-Secretary of State. I am sure that everyone is looking forward to the visit. My hon. Friend the Member for Basildon (Mr. Amess) has made the important point that it is right that individual areas such as his constituency should take the initiative in ensuring that local companies buy from each other wherever that is possible and justifiable. That will stimulate the local economy and the use of British goods by the British industrial sector. All of that will assist the recovery of Britain's claim in that sector, which we all want.
Mr. James Lamond : Has the Minister recently taken the opportunity to shop in C and A, British Home Stores or Littlewoods, and has he tried to find anything British among their stocks of shirts, underwear and suits? Is he aware that it is difficult to buy British, even if one wants to
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do so? With the possible exception of Marks and Spencer, almost every multiple store makes it easy for our competitors to bring foreign textiles into Britain.Mr. Forth : The hon. Gentleman makes an interesting point. I can speak only for myself, and I stand before the House in my British-made suit --
Mr. Speaker : Order. I am glad to hear that good news.
Mr. Forth : It is for each individual to exercise consumer choice and decide whether to buy British goods. If more of us did that, all retail outlets would have to reconsider their sales policies to meet our requirements, but it must be driven by the consumer.
Mr. Grylls : Does my hon. Friend agree that although "buy British" is a well-intentioned campaign, it might be better to advocate "sell British" because the quality is best and the price most competitive? People should not be forced to buy something that is not the best. No doubt my hon. Friend made his judgment on his smart suit because it was the best and had the most competitive price.
Mr. Forth : It is worth recording that more than 90 per cent. of the goods and services bought by the Government are from United Kingdom sources. That shows that it is possible, both at the public level and in private purchasing, to strike a balance between value and cost and patriotism. Those ideals are quite consistent and not in contradiction.
Mr. Nigel Griffiths : Does the Minister acknowledge that the policies that the Government have pursued have brought about the worst manufacturing trade deficit in history? Will he assure the House that the change of Secretary of State will result in new policies at the Department of Trade and Industry which will set us back on the road to success?
Mr. Forth : There is no reason why that should be so. I have every confidence that the new Secretary of State will wish to pursue the excellent policies of his predecessors, and so he should. It is well known to all hon. Members--except, perhaps, the hon. Gentleman--that the Department of Trade and Industry, under successive Secretaries of State, has created an economic and industrial climate in which British industry can fight back against an increasingly competitive world trading position and, indeed, improve Britain's trading position. It is only against the background of our taxation policies, our industrial relations policies and our concentration on improvement of management that we can do that. I am confident that the future will lead us further in that direction.
European Single Market
5. Mr. David Evans : To ask the Secretary of State for Trade and Industry how many of the measures so far agreed for the creation of the single European market have yet to be implemented by the United Kingdom, and what is the comparable figure for other member states.
Mr. Lilley : The United Kingdom, with Denmark, has the best record of implementing single market measures. Of the 95 measures that should by now be in force, only 13 remain to be implemented in the United Kingdom. That figure is twice as good as the average for other member
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states. The country with the next best record to that of the United Kingdom is the Federal Republic of Germany. I am arranging for a full list to be printed in the Official Report.Mr. Evans : I congratulate my right hon. Friend on his promotion, and I wish him well. I thank him for those figures. Do not they show that we are true and honest leaders in the creation of a single European market? Does he agree that Labour would sell its soul and that of the nation over Europe--this time for a few deutschmarks, but usually for a lot less?
Mr. Lilley : My hon. Friend is absolutely right, and I thank him for his remarks. The United Kingdom was very much the first and strongest supporter of the single European market, has been consistent in implementing its measures, and is the most effective in enforcing them. We continue to take a lead in ensuring that the single European market is carried through to a successful completion. We know that the Opposition's hearts are not in it because they do not support the underlying philosophy of the single market.
Mr. Beith : I welcome the right hon. Gentleman to his new post. Does he believe that the European Commission should be extremely active in promoting adherence to the single European market in all member countries and in bringing to book any country that fails fully to co-operate, or if the Commission does so, will the Secretary of State accuse it of bullying and interference in the affairs of sovereign states?
Mr. Lilley : I believe that member countries should implement measures to which they have agreed. However, I am in favour of the minimum of government at all levels.
Mr. Wells : I join others in congratulating my right hon. Friend on his new appointment. Does he agree that implementation in Europe ought to be followed by enforcement, and that that can be effective only if all the people of a country in which directives are implemented have been consulted as part of the approval process of their national Government and of the Council of Ministers? Does not that provide a clue to the way in which we can help other European countries more quickly to incorporate the directives into their own legislation and to implement them?
Mr. Lilley : My hon. Friend makes an important and valuable point. It has always been a tradition in this country that laws are passed after consultation and discussion--[ Hon. Members :-- "Oh?"]--and we want to see the maximum consultation and discussion about European as well as domestic measures as they pass through the House.
Mr. Caborn : Does the Secretary of State agree or disagree with the view of his predecessor that economic and monetary union will be a disaster --yes or no?
Mr. Lilley : As I told the hon. Member for Dunfermline, East (Mr. Brown), I entirely support the Government's policy on that issue and had a hand in formulating it. One Friday morning a little while ago, I made a speech elaborating my views in an interesting debate initiated by a Labour Member who does not share the views of the Opposition Front Bench and in which we watched the divisions in the Labour party open very wide.
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Following is the information
Comparable figures for other member
states are
|Number
------------------------------------------
Denmark |13
Federal Republic of Germany |15
France |21
Ireland |23
Spain |26
Netherlands |27
Luxembourg |30
Belgium |32
Greece |35
Portugal |44
Italy |55
East-West Trade
6. Mr. Wareing : To ask the Secretary of State for Trade and Industry what meetings he has had with his counterparts in the countries of eastern Europe in the past six months to discuss east-west trade.
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood) : During the past six months, Department of Tradeand Industry Ministers have met their trade or industry counterparts from the Soviet Union, Czechoslovakia, the German Democratic Republic, Hungary and Poland, as well as other Ministers from Bulgaria and Romania. I myself have held meetings in London with Ministers from Czechoslovakia, the USSR and Hungary, and have visited East Germany, Romania and Czechoslovakia.
Mr. Wareing : Does the Minister agree that the fact that the previous Secretary of State was caught in a time warp and expressed extreme chauvinist views did nothing to enable him to encourage trade with eastern Europe, particularly with the German Democratic Republic? Does the hon. Gentleman further agree that the recent increase in premiums by the ECGD has not helped? Will he reconsider those premium levels, particularly as they affect trade with the Soviet Union?
Mr. Redwood : My right hon. Friend the former Secretary of State for Trade and Industry made several successful visits to countries in eastern and central Europe, accompanied by business men who were very grateful for the help that he gave in presenting their case in those countries as a source of potential business. The evidence abounds. Joint ventures are increasing, and there is a growth in trade with countries in eastern and central Europe. The time warp is with the Opposition. They are the ones who want policies that failed in east and central Europe. They want to foist back on the British people interventionism, expensive subsidies and sweeteners, at the taxpayers' expense, which would not be successful. [Interruption.] Yes, I use the word "sweeteners". That is exactly what the Labour party wants, at the expense of the British taxpayer, and it would do great damage.
The Export Credits Guarantee Department makes short-term credits available, on various terms, to all the eastern and central European markets. The implementation of the EMS will be reviewed by my right hon. Friend the Secretary of State for Trade and Industry.
Mr. Forman : I welcome the efforts that have been made by successive Department of Trade and Industry Ministers
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to promote east-west trade. Can my hon. Friend give some examples of joint ventures that, so far, have been successful? That is one way, together with equity participation, in which this country could benefit more from trade with eastern and central European countries.Mr. Redwood : Joint ventures span several industries and activities. There are 60 in Poland and 48 in Hungary, by United Kingdom companies that are known to the Department. There may be others. For example, there is a well-known joint venture in railway equipment in Hungary, which is very successful. A British pub is being established in Hungary. A range of consumer and engineering industries will, I am sure, make a great contribution to United Kingdom economic activity in those countries.
EC Industry Ministers
7. Mr. Steinberg : To ask the Secretary of State for Trade and Industry which meetings of the European Community's Industry Ministers he has not attended in the past year.
Mr. Douglas Hogg : I have attended each of the Industry Council meetings during the past year, with the exception of the 28 May 1990 meeting, which was attended by Sir David Hannay, the United Kingdom permanent representative to the European Communities.
Mr. Steinberg : This question was directed at the previous Secretary of State for Trade and Industry. However, I venture to ask whether the new Secretary of State will give an undertaking not to treat those vital meetings in Europe with the contempt shown by his predecessor. Does the Minister share the views of his predecessor on Europe--that Germany is trying to take over the whole of Europe?
Mr. Hogg : I can suppose only that the hon. Gentleman was not listening. I made the point that I attended all the Industry Council meetings, bar one, during the past year. For completeness of information, may I observe that I attended all five of the Research Council meetings, for which I am also responsible?
Mr. Kirkhope : In his busy schedule, will my hon. and learned Friend have time to consider one of the latest of the Labour party's policy documents, "Looking to the Future", which I understand is in its first edition? It calls for high spending and interventionist policies. Does my hon. and learned Friend agree that those are the very policies that would pull our industry down and leave us looking completely naked whenever we met European Industry Ministers?
Mr. Hogg : Anybody who has subjected the Labour party's policies to analysis knows that they would result in very much higher taxation, greatly increased public expenditure and a great escalation in the rate of inflation.
Several Hon. Members rose--
Mr. Speaker : Order. It might be helpful to the whole House if hon. Members asked questions of the Secretary of State and his Ministers instead of asking them to agree with their views.
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Electronic Equipment
8. Mr. McWilliam : To ask the Secretary of State for Trade and Industry what proportion of electronic equipment sold in the United Kingdom comes from overseas.
Mr. Forth : The latest available figures show that 71 per cent. of electronic and information technology equipment sold in the United Kingdom is imported. This figure includes all such equipment, including components. No information is available on finished electronic equipment alone.
Mr. McWilliam : I am grateful to the Minister for his answer. However, what steps is he taking, together with his EEC counterparts, to encourage and develop the component manufacturing industries in Britain and the rest of the EEC, given the large proportion of components of finished electronic equipment that originate from outside Britain and the EEC?
Mr. Forth : The hon. Gentleman is correct in his analysis that that is a problem we all share. When I say "we" I mean all OECD countries because, with the exception of Japan, we all have a trade deficit in information technology. I am sure that the hon. Gentleman understands that the good news is that the United Kingdom has a large trade surplus with the rest of the Community countries--£900 million last year--in this category of equipment. Therefore, we are positive and optimistic, as we are entitled to be. If the hon. Gentleman and his hon. Friends persist, as they seem to, in looking on the gloomy and pessimistic side, downgrading the performance of British industry, they must answer for that. We like to recognise success when it occurs.
Mr. Churchill : Will my hon. Friend tell the House on what grounds GEC and Siemens have recently been released from many of the undertakings that they gave less than a year ago in the context of their takeover of Plessey?
Mr. Forth : Regrettably, I cannot answer my hon. Friend's question because it is not part of my responsibility. I can assure him that we shall look carefully at his point and I shall ask my colleagues to give him an answer as quickly as possible.
Rover Group
9. Mr. Nellist : To ask the Secretary of State for Trade and Industry what is the net benefit to the taxpayer of the sale of Rover to British Aerospace ; and if he will make a statement.
Mr. Douglas Hogg : The sale of Rover Group for the best available price brought considerable benefits for taxpayers. It relieved them of responsibility for a company which had swallowed up £3.5 billion in the past and which carried the contingent liability of the Varley-Marshall- Joseph assurances. That stood at £1.6 billion in March 1988 and was set to rise significantly over the corporate plan period. The deal also safeguarded over 190,000 jobs, mainly in the west midlands.
Mr. Nellist : What is the chance of the new Secretary of State taking a leaf out of Hercules' book and cleaning out this particular Augean stable, the smell of which has ripened substantially in the past week with the revelation
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that eight secret meetings took place between his Department, British Aerospace and the Inland Revenue between March and July 1988 and that £411 million in secret tax concessions was offered as a further sweetener to British Aerospace? What hold does British Aerospace have over his Department, or does the Minister intend to deny that those discussions took place?Mr. Hogg : This is a continuing effort on behalf of the Labour party to impose on British Aerospace substantially increased burdens. The Commission has reviewed all those matters and reached a considered view. One of the findings was that £150 million was a fair and reasonable price. It also reviewed the tax questions. The time has come for the Labour party to tell the House whether it accepts the Commission's findings. If it does, it must eat an awful lot of humble pie.
Mr. Oppenheim : If there was a hidden subsidy, surely one might expect the Opposition to approve of it, bearing in mind the fact that they are in favour of industrial subsidies and that they gave the British car industry billions of pounds. Is their sudden distaste for subsidies a genuine change of heart, showing that they have embraced the free market, or is it the usual mixture of hypocrisy and opportunism?
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