HC Deb 29 February 1984 vol 55 cc247-9
11. Mr. Henderson

asked the Secretary of State for Trade and Industry if he is satisfied with the balance of Government incentives for the electronics industry between the attraction of inward investment and the development of indigenous enterprises.

Mr. Kenneth Baker

I am satisfied that there is a reasonable balance in incentives between inward investment and the development of indigenous industry. When we consider inward investment cases, the benefits to the United Kingdom are taken into account in terms of trade, employment and technological development and the effects on existing industrial structures.

Mr. Henderson

Will my right hon. Friend give some recent examples of success in inward investment policy in Britain in general and Scotland in particular, and the number of jobs involved? Can he assure the House that emphasis will be placed where there is a transfer of technology or skills, and that, in any event, the support for indigenous companies will be no less than that available to foreign companies?

Mr. Baker

In the last few months well over £100 million has been invested by overseas companies in developments in electronics in Scotland, and there is no doubt that the United Kingdom generally has become a magnet for investment of this sort. To give some examples: Hewlett Packard, 700 jobs at South Queensferry; Wang, 150 jobs at Stirling; and last week the Japanese silicon manufacturer, Shin Etsu, made a £37 million investment bringing 400 jobs to Livingston. [Interruption.] This is Japanese money. What is wrong with that?

Mr. Wrigglesworth

Does the Minister agree that the development of new telecommunication services will provide tremendous incentives to the electronics industry? If so, why will Government not provide for more than just Mercury and BT to provide such services in this country?

Mr. Baker

The hon. Gentleman underestimates the degree of competition for which we are allowing. There is not only Mercury and BT—and the very existence of Mercury has led to substantial investment by Mercury itself, and orders that would not otherwise have been placed—there are also the two radio cellular networks and the 11 cable networks for which we have granted licences, which will also be capable of carrying data transmission. We are pushing ahead in all these areas because it is good for British technology and good for British jobs.

Mr. Warren

Will my right hon. Friend consider the tremendous incentive that his Department could give to the indigenous British electronics industry if he could encourage his colleagues at the Departments of Transport and of Defence to give special weighting to the advantages of buying British rather than importing?

Mr. Baker

I shall certainly draw the attention of my colleagues in those Departments to that. We try to use public purchasing creatively to encourage British development and industry.

Mr. Hoyle

On the basis of indigenous industry, may I ask the Minister to say why the Government are contemplating selling off Inmos, perhaps to a foreign buyer, when we are 30 per cent. short of silicon chips and are actually rationed? Is this not madness?

Mr. Baker

The House will know that we have provided in the last four or five years over £100 million of support for Inmos, and I am glad to say that the company is trading profitably and is now in a position to go to the market for further private funds.

Mr. Richard Page

I support the remarks of my hon. Friend the Member for Fife, North-East (Mr. Henderson). Will my right hon. Friend make strong representations to the Chancellor of the Exchequer to reverse the present tax structure on made-up component boards coming here in favour of individual components coming into this country so that we can help assembly production and, therefore, employment in Britain?

Mr. Baker

This is a matter not for the Chancellor of the Exchequer but for my Department, and we have taken it up with the Common Market. I am concerned about the differential levels of import duties on components and circuit boards, which in certain circumstances operate against our interests.

Mr. Ashdown

While on the subject of incentives for indigenous industry, may I ask the right hon. Gentleman to say when his Department will provide the incentives to enable our indigenous high-technology electronics industry to have a free market abroad by stopping the Americans from using Cocom in such a way as to block our exports so that their industry can clean up and move in?

Mr. Baker

My right hon. Friend raised this issue on his recent visit to America, and we are concerned about certain actions of this sort. Generally in these matters we are in favour of the most free market possible because we have the fastest growing electronics industry in Europe, and we can have that only with a substantial international market.

Mr. Williams

Will the Minister confirm that the great attraction for the several Japanese electronic companies that are poised to come into the United Kingdom is access to the Common Market? In exchange for that benefit, will he ensure not only that there will be, as he has said, the maximum use of British components and a net addition to the jobs in the industry, but that any newcomers bring research and development capability with them, which so many of their predecessors have failed to do? Will he also confirm that another Japanese company in a different sector, which has for five or six months been wanting to invest in Britain is having that investment blocked by the EEC?

Mr. Baker

If firms were interested solely in a base to get into the Common Market, they could invest in Germany, France or Italy. They come here because we have a strong electronic base and a high throughput of electronic engineers and training for technicians. They benefit from this. As to screwdriver assemblies, I remind the hon. Gentleman that when Sony came here to make television sets in south Wales, many hon. Members tried to stop it because it was a screwdriver assembly operation. Now, 85 to 90 per cent. of the components in that plant are made in Britain. This is an undoubted success story, and we shall encourage every investment, because even if it begins in a modest way it may lead eventually to full R and D.