House of Commons Hansard Debates for 20 Mar 1991

Companies (Foreign Capital)

12. Mr. Harry Greenway : To ask the Secretary of State for Trade and Industry if he will estimate the number of firms established in the United Kingdom with foreign capital during the past year ; how many jobs have resulted ; and if he will make a statement.

Mr. Leigh : According to the figures recorded by the Invest in Britain bureau, 1990 was a very successful year for inward investment. There were 340 inward investment projects, which are expected to create 27,000 jobs and safeguard a further 34,000. That demonstrates the continuing confidence in the United Kingdom as a sound and stable economy for inward investment.

Mr. Greenway : Will my hon. Friend confirm that the United Kingdom attracted £46 billion worth of inward investment in 1988-89, three times as much as France and six times as much as Germany? Does not that confirm what he has said? The climate in the United Kingdom--particularly in Ealing--is just what is needed for inward investors and any other type of investor.

Mr. Leigh : This is an interesting question : why was inward investment so successful last year that 61,000 jobs were created? Why do investors want to come here? Why are we the No. 1 location? It is because we are an entrepreneurial, hassle-free business environment with the lowest corporation tax in not only the EEC but the G7 countries.

Mr. Hoyle : How many of these companies intend to undertake research and development in this country? Or are they building purely assembly plants? [Interruption.] Will the Minister listen, for a change? Is the Minister quite happy that we are being treated like a banana republic?

Mr. Leigh : The hon. Gentleman will have to put aside his Luddite attitudes just once when it comes to inward investment. As is evident in the north-east in particular, inward investment has raised quality. It is interesting that, although such companies account for only 2 per cent. of establishments, they account for a staggering 18 per cent. of net output. They have improved business attitudes and they account for more capital investment than do other companies. They are 50 per cent. more productive than

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British companies, although we have doubled productivity. Inward investment is good for British companies and for Britain.

Mr. Viggers : Does my hon. Friend agree that we have been outstandingly successful in winning investment from Japan? More than 1,000 Japanese companies have invested here--representing 40 per cent. of all the investment in the European Community. Does my hon. Friend agree that, to a considerable extent, that investment is predicated upon our membership of the Community, and that it is crucial, if we wish to win further inward investment, that we show complete commitment to achievement of the single European market?

Mr. Leigh : Yes.

Timeshare Advertising

13. Mr. Michael J. Martin : To ask the Secretary of State for Trade and Industry what further steps he is taking to prohibit misleading timeshare advertising.

Mr. Leigh : The Director General of Fair Trading made recommendations for changes to the Trade Descriptions Act 1968 to tighten the controls on statements about services and to bring timeshare award schemes within the Act's powers. I announced on 18 February that I had accepted those recommendations in principle. The detail of their implementation will be dealt with as part of the general review of the Trade Descriptions Act currently being undertaken.

Mr. Martin : I welcome the Minister's reply, but I urge him to hurry up and implement his proposals. Like many people in Glasgow, I received a personal letter. Mine said "Congratulations, Mr. Martin. You have won a holiday." In other cases it was a car or an item of jewellery. I was supposed to report to premises that were rented by the day. One newspaper reported that folk who turned up had to be turned away because these people had run out of jewellery. It is a scandal not only that people are allowed to operate in that way but that local authorities and national bodies are allowed to provide names and addresses for use in that manner. I hope that the practice will be stopped.

Mr. Leigh : I agree absolutely. [Hon. Members :-- "What will the Minister do about it?"] We shall amend the Trade Descriptions Act--

Mr. Foulkes : And put the Bill through all its stages in a day? [Interruption.]

Mr. Speaker : Order. There seems to be an air of excitement today. I do not know the reason for it.

Mr. Leigh : We shall amend the Trade Descriptions Act to include award schemes. I should stress that a heavy responsibility rests on the public. I understand that my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) went to one of those award schemes and demanded his Fiesta. Surely the towering presence of my right hon. Friend would put any timeshare tout into full retreat.

Mr. Michael Brown : I am sure that the hon. Member for Glasgow, Springburn (Mr. Martin) will be delighted

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with what my hon. Friend has said. However, may I draw my hon. Friend's attention to the Opposition's attitude in Standing Committee B this morning? [Interruption.]

Mr. Speaker : Order. The hon. Member knows that we are dealing with questions about Government policy.

Mr. Brown : Does my hon. Friend agree that, this morning, he could have accepted an amendment relating to timeshare--

Mr. Speaker : No. I am afraid that the hon. Member is out of order. What goes on in Standing Committee may not be discussed on the Floor of the House.

Mr. Ron Brown : Is the Minister aware that many people are conned by those advertisements and by literature that comes through their letter boxes suggesting that they have won special prizes? For example, I was told that I had won a special and wonderful Volkswagen limousine. As I was very interested, I went to Glasgow to pick up the vehicle. Instead, I received a watch. I protested. I said that I thought that in taking the parliamentary road to socialism we would travel in British cars, but that was not to be. Irrespective of whether I received a watch--incidentally, the watch went to charity--many of my constituents received correspondence similar to that which was sent to me. It is about time that something was done to stop companies abusing their position by kidding people on that they will receive prizes when the reality is that they will not.

Mr. Leigh : I feel sorry for the hon. Gentleman. I hope that he will not face too many disappointments in his forthcoming career. I understand that boats are offered in award schemes, and that might come in useful for the hon. Gentleman.

Telecommunications

14. Mr. Andrew Mitchell : To ask the Secretary of State for Trade and Industry what assessment he has made of the effects of Her Majesty's Government's telecommunications policies since 1987.

Mr. Lilley : Since 1987, the effect of the Government's telecommunications policies has been to boost competition, give customers greater choice, encourage innovation and cut prices. That has given us a dynamic telecommunications market which is the envy of the world. The recommendations in the recent White Paper will build on those successes.

Mr. Mitchell : Will my right hon. Friend mark the enormous contrast between the privatised BT of today, which is reducing the cost of call charges in real terms and has ensured that 96 per cent. of its coin boxes work, with the appalling state of affairs when the industry was nationalised? Then, it took an enormously long time to get any work done if, for example, one wanted a phone installed, charges were doubled in one year and a quarter of all coin boxes did not work. Will my hon. Friend condemn the decision of the Opposition, who have announced that they will renationalise BT after the next general election? Will he note that when those matters were discussed last Thursday during the debate on the Consolidated Fund Bill, only one Labour Member

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attended to defend the Labour party's policy, presumably because Labour Members generally were embarrassed by what Opposition Front-Bench Members were saying?

Mr. Lilley : Indeed. I read the report of the debate to which my hon. Friend refers, including the interesting contribution that he made to it. It is significant that Opposition Members did not turn up for it. Perhaps even more significant was their loud applause today for the notion of nationalisation. That is very much on their agenda. I am happy to say that given the opposition of the 1.5 million shareholders and of the many, many more millions of customers, the Labour party will not get a chance to renationalise BT.

Mr. George Howarth : Will the Secretary of State reconsider his position on the development of the broad-band network? In particular, will he consider allowing British Telecom and Mercury to carry entertainment in such a way that would create 3,000 jobs in my constituency at the BICC factory and 30,000 jobs nationally? That is the way forward with telecommunications, not by way of the bland statements that the Secretary of State made today.

Mr. Lilley : The House will recall that BT applied for and was allowed franchises for cable television. It has chosen to withdraw from them. Other cable companies are, happily, going ahead with cable television and cabling. BT has introduced on trunk networks about 1.1 million km of optic fibre compared with only 13,000 km before privatisation.

Manufacturing Output

16. Mr. John Hughes : To ask the Secretary of State for Trade and Industry what plans he has to boost manufacturing output in the west midlands.

Mr. Redwood : We have just had a Budget which sets out many favourable things for business which will help those in the west midlands, as elsewhere. The November 1990 survey by the CBI showed that 80 per cent. of all respondents thought that the prospects for the west midlands were good or very good. So do the Government, and we shall give every sensible support that we can.

Mr. Hughes : Does the Minister accept that the Budget was an insult to the 107,000 unemployed men and women in the west midlands? Is he aware that this week production has plummeted once more and that since the spring of 1990 it has fallen in terms of value by £20 billion? That has cost the west midlands 306,000 jobs. Is not it time that the Government, and especially the Chancellor of the Exchequer in his Budget, took manufacturing industry seriously?

Mr. Redwood : The Government take manufacturing industry extremely seriously. There were many measures in the Budget that showed just that. Industry has welcomed the cut in corporation tax and the change in bad debt relief. It has welcomed many other measures in the Budget that will be of great assistance to business in terms of the tax structure and in the way in which taxes are computed. This is a most welcome Budget for business. As my hon. Friend the Under-Secretary has already said, a large amount of money is being given back to the business sector

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through the Budget as proposed by my right hon. Friend the Chancellor and that will be welcome in the west midlands as elsewhere.

Mr. Gerald Howarth : Does not my hon. Friend agree that manufacturing industry in the west midlands has been transformed for the better by the Government over the past 12 years and is infinitely better placed to meet the present difficulties? Does he further agree that yesterday's Budget paves the way for further interest rate cuts, which will be even more beneficial to British industry, particularly the manufacturing industries in the west midlands which are so capital-intensive?

Mr. Redwood : I know that industry has widely welcomed the interest rate cuts so far and we wish to see more progress on inflation and on the development of the recovery that the Chancellor outlined in his Budget statement. It is also true that there has been a recent letter to a leading national newspaper, commenting on how refreshing it is to hear that my right hon. Friend the Secretary of State is such a strong supporter of manufacturing and understands its importance in the modern economy.

I endorse the views expressed in that national newspaper by the director general of the Engineering Council.

Dr. Moonie : Will the Minister tell us the forecast for fixed investment in manufacturing industry next year?

Mr. Redwood : A forecast has been published and has already been mentioned during this Question Time. Investment in manufacturing has declined in recent months, but we look forward to a recovery, as the Chancellor outlined in his Budget speech, as the economy improves.

GATT

17. Mr. Anthony Coombs : To ask the Secretary of State for Trade and Industry if he will make a statement on the reopening of GATT negotiations.

Mr. Sainsbury : We welcome the fact that a basis for the resumption of negotiations has now been established. We believe that a successful conclusion would provide a valuable non-inflationary stimulus to world trade and investment.

Mr. Coombs : Does my hon. Friend agree that one of the most important objectives of the current GATT round is to ensure that state subsidies made illegally to other foreign companies, which disadvantage our own companies, are eliminated? To that end, will he look again at the 1984 case of illegal state subsidies paid by the Belgian Government to Beaulieu, Belgium's largest carpet manufacturer, which have so far not been repaid? Does he understand that the House fully supports the Government's stance in urging through GATT that penalties be imposed on national Governments who do not ensure repayment of such illegal subsidies?

Mr. Sainsbury : My hon. Friend makes an important point because the strengthening of the rules and disciplines of GATT is one of the main purposes of the current Uruguay round. It is one reason why we believe an early, successful conclusion of the round to be important. I also agree that it is most unsatisfactory that the penalties

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mentioned by my hon. Friend have still not been paid ; we are looking to see how we can improve enforcement procedures in the Community.

Mr. Cryer : Will the Minister press for the extension of the multi- fibre arrangement beyond July this year, when it expires, if GATT does not prove satisfactory? As he knows, 14,000 jobs are directly involved in the textile industry in Bradford. It is a modern and up-to-date industry, in which the work force has co-operated enthusiastically in all the changes and modernisation. Those people deserve a Government who will preserve and develop jobs, but at the moment the Government seem to be letting the industry down--and that is the view of both trade unions and employers.

Mr. Sainsbury : I am glad to be able to agree with the hon. Gentleman about the efforts that the textile industry has made to invest and to modernise. It is as a result of those efforts that, unfortunately, there have been job losses in some areas. It is important to the industry that the GATT round creates better market access for its exporters and I am glad to say that the industry is a successful exporter.

Mr. Bill Walker : Will my hon. Friend bear in mind the importance of exports to Scotland, whose export record is even better than that of the Japanese, and in particular how whisky is affected in the negotiations? Will he also bear it in mind that malting barley and grain are essential ingredients in whisky and that without them we could not sell that marvellous product of which over 90 per cent. is exported from Scotland?

Mr. Sainsbury : I am happy to join my hon. Friend in paying tribute to the exporting success of Scottish industry and commerce. I very much recognise the importance to that success of market access for that excellent product, Scotch whisky. When I talk to my opposite numbers in other countries I seldom miss an opportunity of not only commending the product but urging better market access for it.

Research and Development

18. Dr. Bray : To ask the Secretary of State for Trade and Industry whether his Department is meeting its objective of encouraging industry to increase its funding of research and development.

Mr. Leigh : My Department is successful in encouraging industry to spend more on research and development. The total of

industry-financed R and D has increased by almost one half since 1983 in real terms.

Dr. Bray : Is not it a matter of great concern that industrial research and development has fallen by 4.7 per cent. according to figures published last week by the Central Statistical Office? Since 1985, the only industry to have increased its research is the chemical industry, with a 41 per cent. increase in real terms. There have been catastrophic falls in R and D of 6 per cent. in electronics, 20 per cent. in aerospace, 39 per cent. in electrical engineering and 40 per cent. in mechanical engineering. Is not that proof positive of the disastrous failure of the Government's industrial policy?

Mr. Leigh : I hope that the hon. Gentleman will agree that the most valuable research and development in

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industry is that planned for and funded by industry itself--that has grown by a half since 1983. Of the £7 billion spent on R and D in industry, no less than 73 per cent. comes from industry itself. However, it must be accepted that in some aspects of research and development, such as pre-competitive or collaborative research, particularly in small businesses, there is a role for the Government. My right hon. Friend the Secretary of State has taken a keen interest in such matters and introduced new schemes that are widely welcomed by industry. It will be good to end Question Time by quoting the Confederation of British Industry-- [Interruption.] Opposition Members are obviously not interested in the views of the CBI--I thought that they were.

John Banham wrote to my right hon. Friend on 19 February and said :

"We were very pleased to hear the announcement of your new £48 million package of aid schemes for small firms The addition of SPUR to the DTI portfolio and the greater emphasis you are now placing on technology consultancy another area which we felt required strengthening and will, I am sure, be much welcomed by CBI Members."

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