House of Commons Hansard Debates for 5 Dec 1990

Hansard

House of Commons

Wednesday 5 December 1990

The House met at half-past Two o'clock

PRAYERS

[Mr. Speaker-- in the Chair ]

PRIVATE BUSINESS

Fraserburgh Harbour Order Confirmation Bill

Mr. Secretary Lang presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Fraserburgh Harbour : And the same was read the First time, and ordered to be considered upon 11 December and to be printed. [Bill 18.]

Oral Answers to Questions

TRADE AND INDUSTRY

Vehicle Mileages

1. Mr. Illsley : To ask the Secretary of State for Trade and Industry whether he proposes to introduce measures to record vehicle mileages and prevent the sale of unroadworthy vehicles.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh) : My right hon. Friend the Secretary of State has asked me to apologise for his absence ; as the House will no doubt be aware, he is otherwise engaged in Brussels at the GATT negotiations.

In answer to the question, the Government intend to tighten up certain aspects of the law relating to the sale of unroadworthy vehicles and appropriate measures will be brought forward at the earliest opportunity. There are, however, no plans to introduce any statutory requirement to record vehicle mileages.

Mr. Illsley : I am grateful to the Minister for that reply. A 1987 survey conducted by trading standards officers showed that about 77 per cent. of older vehicles were unroadworthy and another survey showed that about 20 per cent. of hire vehicles were unroadworthy. That means that about 1 million of the vehicles traded annually are classed as unroadworthy because they have not qualified for an MOT certificate. Bearing in mind what the Minister has said and as trading standards officers now have powers to inspect vehicles under the trade descriptions provisions and in respect of credit arrangements, will the Minister be giving trading standards officers further powers to inspect vehicles for safety--[ Hon. Members :-- "Too long."] Will he also give further consideration to recording mileages at Swansea?

Mr. Leigh : Trading standards officers already have to administer no fewer than 30 Acts of Parliament and 900

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sets of regulations. Unlike Opposition Members, the Government are not convinced that tying up the measures with further red tape will do the industry any good at all. It is already an offence to sell unroadworthy vehicles.

Mr. Bellingham : Is the Minister aware that a large number of the second-hand vehicles that are sold have been clocked? Is he aware that a number of garages in the King's Lynn area have made representations to me about their grave concern about clocking of second-hand vehicles? Surely, one way forward would be to have cars manufactured with milometers that could not be put back or tampered with in any way.

Mr. Leigh : I certainly undertake to take my hon. Friend's proposal back to the Department and consider it carefully. My hon. Friend will be aware that there is already a large body of law that protects the consumer. It is already an offence under the Trade Descriptions Act 1968, the Road Traffic Acts and the Sale of Goods Act 1979 to clock vehicles.

Joint European Research

2. Mr. Martyn Jones : To ask the Secretary of State for Trade and Industry what discussions he has had on British companies' participation in joint European research projects.

Mr. Leigh : My noble Friend the Minister for Industry has responsibility for research and technology policy. He attended the recent Research Council of EC Ministers on 20 November and discussed EC research and development issues with his ministerial counterparts and the European Commission.

Mr. Jones : What action does the Minister for Industry propose to take to help ICL compete for European research money now that it has been taken over by Fujitsu?

Mr. Leigh : We raised the matter in writing with the responsible Vice-President of the European Commission. My noble Friend the Minister for Industry, who now represents the United Kingdom on research and technology issues, met the Vice-President to discuss the matter on 20 November. He was reassured that, for the purposes of collaborative research, the company would continue to be considered to be a British company.

Mr. Batiste : Will my hon. Friend confirm that British companies take about a fifth of the European Community research funds available for industrial development? Does not that show clearly that, when they are playing on a level playing field, British companies are well able to hold their own in the European Community?

Mr. Leigh : My hon. Friend is absolutely right and makes a very good point. We should always remember that the main spur to research is not what Government do but the profitability of industry. Industry's funding of research and development increased by nearly 50 per cent. between 1983 and 1988. My hon. Friend makes a fair point.

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Financial Services

3. Mr. Dunnachie : To ask the Secretary of State for Trade and Industry what steps he is taking to ensure that the United Kingdom financial services sector is able to compete fairly in the single European market.

The Minister for Corporate Affairs (Mr. John Redwood) : The financial services industry in the United Kingdom is a great success and I am sure that it will do extremely well from the wider European market that is now being constructed and in which we are participating fully with our partners. The Government are doing their bit by negotiating constructively on a number of measures to create the right framework for the wider industry. At the moment, we are negotiating on the financial services directive and the complementary capital adequacy directive. We are also working closely with the Commission to get passport directives on both life and non-life insurance.

Mr. Dunnachie : We welcome the single European market, but we and others in the insurance industry worry about the unfair competition facing our companies from the German, Italian and French conglomerates. What is the Minister doing to ensure a level playing field for our British companies?

Mr. Redwood : Of course we want a level playing field for all companies in the European Community. That is the purpose of negotiating fair rules of conduct, such as those in the directives that the Commission is now proposing. The hon. Gentleman can rest assured that the Government will battle hard to get a fair deal for our companies and for customers throughout the Community. If only Opposition Members had equal dedication to the purpose of creating an open and liberal market in Europe, that would make it even easier for us.

Sir Robert McCrindle : Could my hon. Friend give us a little more information about the progress that is being made with the capital adequacy directive? Are we any closer to achieving the position in which small to medium-sized financial intermediaries in this country will be allowed to continue to provide the service that they provide at the moment, bearing in mind the fact that the position in other European Community countries is very different from that which has always prevailed in the United Kingdom?

Mr. Redwood : My hon. Friend is quite right. It is important for this country and for the European market as a whole that there should be a fair regime allowing independent financial advisers to carry out their important work. The United Kingdom Government have worked closely with the Commission to identify different categories of adviser for capital adequacy purposes, but we believe that their capital requirements should be related to the risks that they are running.

Under the current draft, investment advisers will not be required to provide any capital for that purpose, but will still gain access to the passport. We are now working on the question of how much capital those advisers should have who also handle client money and arrange deals for clients. That is still an issue of contention in Community negotiations. My hon. Friend can rest assured that we wish

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to see a flourishing independent financial advisory sector in this country and that we do not wish the directives to damage it.

Ms. Mowlam : The Minister just said that he is keen that British competitiveness should be enhanced in the single market, so I am sure that he agrees that it will be enhanced if his Department acts swiftly and efficiently when dealing with fraud when it is based in the City. In that context, what has the Minister done about the problems and financial difficulties at Hamilton House, which have now been with us for over three years? More specifically, when did his Department last receive communications from the regulators on this issue and what did the Department do?

Mr. Redwood : I do not intend to go into the details of individual cases across the Floor of the House in such sensitive issues. The hon. Lady knows that we are keen to pursue fraud and malpractice wherever it may be. It was this Government who introduced powerful new laws and regulations to do so and we have brought a number of cases to court for that purpose. We are seeing again today that Opposition Members are interested only in fraud and malpractice. That is not the way to represent the United Kingdom's financial services industry to the wider Europe.

Mr. Dunn : Will my hon. Friend confirm that some European Community member states impose controls and restrictions on cross-border insurance services which are not necessarily in the interests of the policy holders and which, in the end, only reduce competition and increase prices?

Mr. Redwood : As my hon. Friend says, there are a number of barriers in the insurance market. One of the points we are trying to get across in the early discussions on the possible directives is that there is no need to regulate product specification.

The important thing is to regulate the solvency of companies and the fit and proper nature of those running them in carrying out the business. I hope that we have success in persuading our colleagues in Europe, because it is in the interests of all forward-thinking companies and customers in the wider Europe that maximum choice and competition is offered.

Manufacturing Output

4. Mr. Battle : To ask the Secretary of State for Trade and Industry what plans he has to boost manufacturing output.

Mr. Leigh : The Government promote continued growth of manufacturing industry with policies such as reducing rates of tax on profits, privatisation, deregulation, elimination of restrictive practices, trades union reform and negotiations to reduce trade barriers through the general agreement on tariffs and trade and in the European Community. In addition, my Department continues to operate a range of schemes to improve business performance under the enterprise initiative.

Mr. Battle : When the regional Confederation of British Industry and the Leeds chamber of commerce predict a bleak mid-winter for manufacturing as a direct result of the Government's policies, does not that suggest that those policies are not working? What practical action will the Government take to arrest the manufacturing decline in

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Leeds? Will the welcome, positive developments in the finance, service and business sectors be at the expense of engineering, printing and textiles, and costed in rising unemployment in my constituency?

Mr. Leigh : What a pity it is that Opposition Members always want to talk down British industry. They fail to say that, in the past decade, output in manufacturing has increased by a quarter, compared to what happened under a Labour Government, when it fell. This Government recognise that manufacturing output depends critically on profitability and competitiveness which, under the Government, are at record levels.

Dr. Blackburn : Will my hon. Friend take the opportunity to pay a warm and generous tribute to manufacturing industry in the west midlands, which is still buoyant, particularly the hand-cut crystal glass industry, which is worthy of commendation?

Mr. Leigh : I am grateful to my hon. Friend. He is a fine champion of British industry, particularly industry in the west midlands.

Mr. Hoyle : If the Minister would reflect for a moment on his foolish remark that the Opposition are not concerned about manufacturing industry, he might realise that in the 1980s, 30 per cent. of it was destroyed by a Conservative Government and we are once more in a recession, with manufacturing industry going to the wall. Would not it be more positive if he were to make

representations to his right hon. Friend the Chancellor of the Exchequer to reduce interest rates, which would give manufacturing industry the boost that is sorely needed under this Government?

Mr. Leigh : It does not help argument in the House for hon. Members grossly to overstate the case as the hon. Gentleman has done. He failed to say that, in the medium term, the prospects for British industry are excellent due to the completion of the single market and the creation of new markets in eastern Europe. He also failed to say--and I shall repeat the point because he clearly was not listening to my earlier answer--that, contrary to what Opposition Members would have one believe, manufacturing output has increased by a third under the Government. Moreover--I am happy to go on giving the Opposition statistics--manufacturing productivity and export volume are 60 per cent. higher after a decade of Conservative Government.

Mr. Oppenheim : Will my hon. Friend remind Opposition Members that all the simplistic interventionist formulae and subsidies were tried and failed in the 1950s, 1960s and 1970s? Will he remind them again that, the last time they were in power, manufacturing output fell, whereas in the 1980s, when this Government meddled less in industry, manufacturing output not only rose, but did so faster than in any other European country?

Mr. Leigh : I am grateful to my hon. Friend, who makes his point very well.

Mr. Gordon Brown : Will the Minister confirm that manufacturing output is down by £1.5 billion in one quarter? Will he also confirm that, with jobs losses in steel, aerospace and hundreds of small businesses, Britain has suffered a loss of 2 million manufacturing jobs under this Government? Why are the Government compounding

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their high interest rate errors by cuts in training, technology and regional incentives? Now that we have a change of Prime Minister, what changes will there be in industrial policy?

Mr. Leigh : I will tell the hon. Gentleman what is happening to British industry. Overall, employment in this country is at record levels, with 27.5 million people in work.

The hon. Gentleman talked about this year ; I shall give him some more statistics, as he is clearly a glutton for them. In the first three quarters of this year, manufacturing output was still 25 per cent. up on 1980, and productivity is up considerably. Surely that is a record of which to be proud. It is important that we should not ditch our policies, as Opposition Members would, and that we persevere because they are the only policies that will result in keeping down inflation--the single greatest barrier to competitiveness in British industry and to creating real long- term jobs.

Sir Hal Miller : Will the Minister confirm that, far from the Opposition's suggestions of a decline in engineering being true, the motor industry is increasing production to export and is planning to double productive capacity over the next three years? Will he and his right hon. Friend ensure that the industry's efforts are not frustrated by attempts in the European Community to limit exports of British-made vehicles to our Community partners?

Mr. Leigh : My hon. Friend makes his point very well. An interesting recent study shows that output in car manufacturing will shortly rise to a record level of 2 million--we can be proud of that. I certainly acknowledge my hon. Friend's point ; as he knows, we make it vigorously to the European Commission.

General Agreement on Tariffs and Trade

5. Mr. Allen : To ask the Secretary of State for Trade and Industry if he will make a statement on the Uruguay round of the GATT talks.

The Minister for Trade (Mr. Tim Sainsbury) : My right hon. Friend the Secretary of State is this week leading the United Kingdom delegation to the ministerial meeting in Brussels called to conclude the Uruguay round of trade negotiations. While the outcome remains uncertain and many difficult issues have still to be resolved, success is in our view essential to maintain and strengthen the multilateral trading system. We are working with our Community partners in Brussels this week to bring this about. The House had a debate on the Uruguay round on 23 November.

Mr. Allen : Is the Minister aware that every family in Britain pays an unseen and unauthorised tax of £15 a week to sustain agricultural subsidies so as to ensure that Christian Democrat and Conservative small farmers re-elect the same Governments in Europe? Will he have a word with the Secretary of State in Brussels and ask him to consider seriously the United States Government's proposals to reduce agricultural subsidies and support throughout the world, so that the bill paid by British families can be reduced?

Mr. Sainsbury : I very much welcome the hon. Gentleman's enthusiastic support for an open trading

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system, because that is what we believe in. I hope that I shall have that same support if we start talking about textiles.

Sir Peter Hordern : Is my hon. Friend aware that the common agricultural policy is the biggest single obstacle to the success of the GATT round? Does he agree that it is time to get rid of a policy that does not help the farmer and places an intolerable burden on every family in Europe?

Mr. Sainsbury : My hon. Friend should recognise the fact that, although agriculture is important to achieving a successful outcome of the Uruguay round of the negotiations, it is not the only matter at issue. We hope that a flexible approach by the Community to the offer on the table, which is a good offer, will enable progress to be made on other areas of great importance, covering the whole range of exports of goods and services, which represent about a quarter of the output of British industry and commerce. All those elements can benefit from a successful outcome. If we concentrate solely on agriculture, we mislead ourselves as to what the round is about--but I agree that we must adopt a flexible approach.

Mr. John D. Taylor : As the objective of the European Community is that we all speak with one voice, does the Minister think that that should be seen to happen in practice, especially in negotiations in connection with GATT? Does he agree that the Government's decision yesterday to break rank with the rest of the Community is downright disgraceful? Will not that damage the interests of the United Kingdom's agriculture and weaken the Community's negotiating stance at these talks?

Mr. Sainsbury : I do not recognise what the right hon. Gentleman is talking about. He speaks about the need for the European Community to speak with one voice. As I am sure he is well aware, the Community is the negotiating party in the GATT round. Of course, I hope he will agree that before the Community speaks with one voice, it would be sensible for the members of the Community to discuss and agree what is to be said by the Community on their behalf.

Mr. Favell : Does it strike my hon. Friend as ironic that the European Commission, which is supposedly dedicated to free trade, should be suggesting a common economic and fiscal policy and a single currency at the same time as its flagship, the common agricultural policy, is jeopardising the whole of the world's free trade? Goodness only knows what would happen if there were a common defence policy and the Community were in charge of sending British troops to war.

Mr. Sainsbury : My hon. Friend makes a good point. It is important for the Community to show that it is able to make progress on issues for which it has been responsible for a long time, such as agriculture, before taking on fresh responsibilities. I hope, and I know that my right hon. Friend who is in Brussels also hopes, that flexibility will be shown at the meeting that is due to take place in about two and a half hours. I hope that we will be able to make substantial progress across the whole range of subjects being discussed.

Mr. Gordon Brown : Given the importance of the world trade talks to many industries and services and the seriousness of a breakdown, will the Minister tell us

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whether the Prime Minister has talked to Chancellor Kohl and President Mitterrand, or will talk to them at their joint meeting today, to see whether at the highest level a positive and constructive European initiative can be agreed in order to avoid deadlock?

Mr. Sainsbury : As I have just said, there is a meeting at 6 o'clock Brussels time, 5 o'clock our time, of Trade and Agriculture Ministers of the Community. I have every hope that that meeting will cover the whole range of subjects being discussed. The Commission intends to put to the Ministers attending that meeting the progress that has been made. As a result, I hope that the Uruguay round will be able to go forward to a successful conclusion and that there will not be any damage to the prospect of a successful outcome because of a lack of flexibility in agriculture negotiations.

Mr. Riddick : Textile manufacturers in my constituency and throughout the country are concerned about whether the Government are taking a sufficiently tough line on the negotiations over the phasing out of the multi-fibre arrangement. Can my hon. Friend assure the House that the Government and the European Community will take an extremely robust line to ensure that export subsidies and tariff barriers, which are holding back British exports, are done away with? British textile manufacturers are not afraid of free trade as long as it is fair trade, but we need a level playing field.

Mr. Sainsbury : I assure my hon. Friend that we very much recognise the importance to our textile industry of better market and export opportunities because it is a successful exporting industry. He invites us to take a robust line. We are doing that in seeking reductions not only of tariff barriers but of other obstacles, including the subsidies to which he refers, so that we can create a more level playing field.

Shipbuilding

6. Mr. Orme : To ask the Secretary of State for Trade and Industry when he last met his European counterparts to discuss shipbuilding.

Mr. Leigh : My noble Friend the Minister for Industry represented Her Majesty's Government at the Industry Council on 26 November at which the seventh directive on aid to shipbuilding was adopted unanimously.

Mr. Orme : Did the Minister on that occasion raise the question of Cammell Laird, a shipyard which is crucial to the economy of the north-west of England and to thousands of workers? Did he ask for intervention aid and raise that matter with the Commissioner? People in the north-west want to know what the Government propose to do about the survival of that shipyard.

Mr. Leigh : The future for Cammell Laird is not strictly relevant to the seventh directive, but I will answer the right hon. Gentleman, because this is a serious and important point. We are lucky to have such a hard- working local Member as my right hon. Friend the Member for Wallasey (Mrs. Chalker), who has been doing tremendous work trying to help the company to find orders. I also pay credit to the hon. Member for Birkenhead (Mr. Field) who, as always, takes a positive and sensible view of such matters.

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The problem with Cammell Laird, as the right hon. Member for Salford, East (Mr. Orme) is aware, is that it was agreed that the shipbuilding intervention fund would not be available to Cammell Laird. We have been back to the Commission and argued the case on behalf of the company, but we received a firm no. Subsidies will not be available to the company. It would be counterproductive for me to offer any hope that the Commission is likely to change its mind.

Mr. Frank Field : While we do not want the Minister to offer baseless hope, will he undertake to return to the Commission and specifically raise the matter of individual orders for which the company requests intervention fund backing? Does he accept that his negotiating position has changed as the negotiations on the seventh directive have progressed? At the beginning, it looked as though the jobs in the naval yards were secure, but it now appears that the 22, 000 jobs in the naval yards will collapse to just over 8,000. On that basis, in this last month of negotiations, should not the Minister go back to the Commission and argue the British case to defend those jobs? If he fails to do that, not only will Cammell Laird suffer, but the Minister will have locked the whole of British shipbuilding into further decline.

Mr. Leigh : The hon. Gentleman's first question was also put to me yesterday by my right hon. Friend the Member for Wallasey. I am prepared to give the commitment that the hon. Gentleman asked for. I will go back and ask the Commission to waive the rule for particular orders, but I must be honest and say that, so far, Sir Leon Brittan, on behalf of the Commission, has given a very firm no. However, we will try again.

Mr. Maginnis : Will the Minister assure us that the Government are not out of line with our European partners in relation to subvention for shipbuilding? Does he realise that the majority of our European partners would like to see subvention remain at about 20 per cent. for at least six months and then, if it must be reduced, have it reduced in a structured way and not by the massive 50 per cent. currently proposed?

Mr. Leigh : I know that the hon. Gentleman takes a close interest in these matters. Indeed, he is leading a delegation to see me this afternoon. We are anxious to help Harland and Wolff in every way we can. It would be unwise for me to speculate on the outcome of negotiations that are still proceeding on the automatic degressivity of shipbuilding aid-- [Interruption.] For those not familiar with European jargon, degressivity is the year-by-year cut in subsidies to shipbuilding. I repeat what I said in the debate on shipbuilding--it is extremely unlikely that aid will be cut to below the 10 per cent. margin. It will be somewhere between 10 and 20 per cent.

Dr. Godman : While the small Ferguson yard in Port Glasgow is thriving, principally because it recently signed an order with assistance from the intervention fund, the economy of the lower Clyde would be transformed if Scott Lithgow were allowed to compete successfully for orders for large ships. As that yard has been denied access to the intervention fund for more than five years, does the Minister recall the Commission's amendment, which he quoted the other day, to the effect that after five years a

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shipyard may be given access to the intervention fund? Will the Minister give Scott Lithgow's case the most serious consideration?

Mr. Leigh : We are anxious to help our manufacturers in any way we can and I should be happy to give the most serious consideration to Scott Lithgow's case, but the general position, as the hon. Gentleman hinted, is that the Commission is absolutely firm about the rule of up to five years. However, there may be more flexibility after five years and I am happy to take up the hon. Gentleman's suggestion and go back to the Commission.

Mr. Sayeed : My hon. Friend will be aware that in the past the Commission has changed the intervention rules for specific orders. May I, therefore, warmly welcome the commitment that he has given to the hon. Member for Birkenhead (Mr. Field) to go back with a specific request for intervention funds for specific orders?

Mr. Leigh : I am grateful to my hon. Friend.

The Gulf

7. Mr. Dalyell : To ask the Secretary of State for Trade and Industry what assessment he has made of the trade consequences of a military option in the Gulf.

Mr. Sainsbury : None.

Mr. Dalyell : With 300 Kuwaiti oilwells detonated, tankers in the Gulf Exoceted, some Saudi and Emirate production missile-eliminated, fire trenches described to many of us by General Colin Powell in a Committee Room last night as incinerated, and the use of nuclear weapons not excluded, what then happens when the price of oil is $120 per barrel on the Rotterdam spot market? How do Ministers reply to today's Oxford survey? What happens then if there is a military option?

Mr. Sainsbury : All that is needed to bring about a peaceful resolution of the crisis is for Saddam Hussein to obey the United Nations resolutions and to withdraw. [Hon. Members :-- "Answer the question."] The hon. Gentleman has made clear his concern about these issues on a number of occasions and he has been answered by my right hon. and hon. Friends.

Mr. Ian Bruce : Has my hon. Friend reflected on whether a quick resolution would ensure that we returned to normal trade throughout the region? Have not the high prices brought about by the crisis reduced the consumption of oil and petrol and thus reduced the greenhouse effect that the hon. Member for Linlithgow (Mr. Dalyell) is constantly talking about?

Mr. Sainsbury : My hon. Friend is aware that the trade consequences of what has already happened have been severe, especially on certain states in the area. The consequences of the rather volatile movements of oil prices are difficult to predict and we shall not know for a little while whether the good consequence of less oil being consumed and less sulphur dioxide in the atmosphere has been brought about. I am sure that the entire House shares the common concern that we should obtain a peaceful solution, but one which means that the United Nations resolutions have been obeyed.

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Mr. Cohen : Has not the Minister of State for Defence Procurement's denial of The Sunday Times Insight teams report been less than full and clear? Will the Minister

The Minister of State for Defence Procurement (Mr. Alan Clark) : Why did the hon. Gentleman not ask that question when I was on my feet?

Mr. Cohen : Will the Minister publish the full departmental minutes?

Mr. Bell : On a point of order, Mr. Speaker. Those of us who were trying to listen to the supplementary question put by my hon. Friend the Member for Leyton (Mr. Cohen) had our hearing of it interrupted by a Minister of the Crown. Is it appropriate for a member of the Cabinet

Mr. Speaker : Order. I was listening carefully to what the hon. Member for Leyton (Mr. Cohen) was saying. I do not think that anything disorderly occurred. However, this matter was raised at some length on Monday.

Mr. Cohen : Will the Minister publish the ministerial minutes? Is it not wholly inappropriate for a Minister to be leading the war effort who facilitated, with a nod and a wink, the sale of weapon-making equipment to the Iraqis?

Mr. Sainsbury rose--[Interruption.]

Mr. Speaker : Order. I will do the pointing.

Mr. Sainsbury : Thank you, Mr. Speaker. I suggest that the hon. Gentleman reads the proceedings of the House on Monday as they appear in Hansard, when I made a statement on the issues to which he is referring and when a number of questions were answered.

Mr. Dalyell : On a point of order, Mr. Speaker. In view of the unsatisfactory non-reply to my supplementary question, I hope to raise the ecological consequences of the Gulf military option in a debate on the Adjournment.

Shadow Directors

8. Mr. Andrew MacKay : To ask the Secretary of State for Trade and Industry if he has received representations on the role of shadow directors as defined in the Companies Act 1989.

Mr. Redwood : My hon. Friend asked about measures under the Companies Act. I have had several representations on related issues under the Insolvency Act 1986.

Mr. MacKay : Is my hon. Friend aware that there is strong circumstantial evidence that a number of companies that are running into financial difficulties are being put into receivership because the banks involved are concerned about putting their own people into those companies because they might be defined as shadow directors under the Companies Act? But for that, those companies might have been saved. Will my hon. Friend assure the banks that they will not be prosecuted, provided that they are not involved in any wrongdoing?

Mr. Redwood : I can give that assurance. Under the legislation to date, no banker has been successfully prosecuted for acting as a banker. Only one case has been brought under the legislation and that was withdrawn by the liquidator before being pressed to a conclusion. The

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reasons for that are evident in the nature of the legislation, which states that the bankers must be doing more than offering advice in a professional capacity. The courts would have to examine the consequences of any action to determine whether it resulted in wrongful trading and whether it made the position worse.

I assure my hon. Friend that it is not the intention of the legislation to frighten bankers who are acting properly, as bankers, in trying to rescue companies. Of course, such matters are subject to test in the court. I shall consider carefully the issues raised by my hon. Friend.

Mr. Tim Smith : Is there not another group of shadowy people actively trying to mislead and misrepresent their policies? What representations has my hon. Friend received about recent statements by shadow Ministers? Will he refer them to the appropriate regulatory authority?

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