HC Deb 21 November 1984 vol 68 cc282-3
3. Mr. Proctor

asked the Secretary of State for Trade and Industry if he will make a statement on the current prospects for the United Kingdom paper and board industry.

Mr. Norman Lamont

I am pleased to see that the industry's production in 1984 is running well ahead of production in 1983. The industry's prospects should be helped by the growth in United Kingdom output next year, foreseen by my right hon. Friend the Chancellor of the Exchequer in his statement last week.

Mr. Proctor

Is my hon. Friend aware of the considerable concern in the paper and board industry and other energy-intensive industries about the possibility of too high an increase in industrial energy prices, particularly electricity? Will my hon. Friend pass on that expression of concern to his colleagues at the Department of Energy?

Mr. Lamont

I shall draw my right hon. Friend the Secretary of State's attention to those comments. Prices for next year are a matter for the industries themselves. The external financing limits that have been announced are consistent with price increases at about the rate of inflation. My hon. Friend is familiar with the industry and he will know that coal accounts for 28 per cent. of the industry's energy consumption. What happens in the coal mines, the cost of coal and the consequences of the dispute are important for the industry.

Mr. Litherland

Is the Minister aware that the National Association of Paper Merchants has referred to the first half of this year as a period of profitless prosperity? Is he aware that even the soft tissue industry is suffering? What steps will the Government take to prevent more closures of paper mills?

Mr. Lamont

Production so far is 8 per cent. higher than it was a year ago. Between 1979 and 1983 the Government gave the industry regional assistance of over £130 million and selective assistance of about £25 million.

The hon. Gentleman believes that people do not have confidence in the industry. I draw his attention to new investment. Thomas Tait and Son has a £22 million project to install a new fine paper machine near Aberdeen. Bowater has a £12 million project to increase capacity at Kemsley. Major projects from overseas are taking place. Consolidated Bathurst of Canada and UPM of Finland are investing here. When their mills are in production, the United Kingdom should be the second largest newsprint producer in the European Community. That does not indicate a lack of confidence.

Mr. Meadowcroft

What does the Minister think will be the effect on the paper and board industry of the imposition of VAT on books and newspapers?

Mr. Lamont

That is a matter for my right hon. Friend the Chancellor of the Exchequer. I am having consultations with representatives of the industry.