Germany (Hansard, 31 October 1990)

§ 9. Mr. Knapman
To ask the Secretary of State for Trade and Industry what was the outcome of his recent discussions in Berlin with his West German counterpart on the opportunities for British firms that wish to compete in the markets of the former German Democratic Republic.

§ Mr. Lilley
I met my German counterpart, Dr. Haussmann, with a team of business men on both sides. It was a very useful opportunity to learn about the economic opportunities in the former GDR, and to raise with the German side certain problems inhibiting investment. My Department is seeking to increase awareness in the United Kingdom of the business openings in eastern Germany and eastern Europe.

§ Mr. Knapman
Despite the best endeavours of my right hon. Friend—and, indeed, the Parliamentary Under-Secretary—I should like to know whether any British firms have been able to take stakes in the key industries in East Germany. Have they been able to invest in the banking industry, the insurance industry or the state airline? Will British Gas be able to take a stake in the gas industry, or is the real position in Germany the most protectionist since Chicago in the 1930s?

§ Mr. Lilley
I believe that one of the companies that accompanied me—Ready Mixed Concrete—has taken a major stake in a German concrete firm since that meeting. My hon. Friend is right, however: we were anxious to ensure that the Treuhandanstalt treated British applications fairly, especially in the sphere of utilities. In that sphere, we have the great advantage of privatised companies, which are able to bid, take part and contribute, and which can therefore bring competition—and a degree of comparative competition—on to the German scene. There was a great deal of interest among the German press and the German business men who were present when I was there, and who were hoping that that would happen. We shall do all in our power to ensure that British firms face a level playing field when they make applications.

§ Mr. Clelland
How can British manufacturing industry be expected to compete effectively in the former GDR against foreign competitors when 62 per cent. of our industrial work force are unskilled, compared with 38 per 979 cent. in Germany, 21 per cent. in Italy and 20 per cent. in France? Will the Minister have a word with his right hon. Friend the Prime Minister and tell her that it is about time that, instead of continually criticising our European partners, she stopped carping and started learning?

§ Mr. Lilley
One thing that I learnt from the German business men present was their method of encouraging and financing training among the large number of people whom they take on after school. The trainees effectively financed themselves by accepting pay that was only 40 per cent. of the adult wage. I understand that that practice has largely been banished from British industry because of pressure from British trade unions, but I shall convey the views expressed by the hon. Gentleman when I next meet the unions.

§ Mr. Ashby
Has my right hon. Friend considered the position of Prescold, which has been taken over by the Germans, who now dominate the market? They closed down the company over here, and all the manufacturing is now taking place in Germany. That is one industry which has gone from this country to Germany.

§ Mr. Lilley
Happily, that is a rare occurrence. We are now the most favoured location for investment from West German companies and companies elsewhere in the EEC, as we are for countries outside the EEC, which are investing in the EEC to take advantage of the single market. We have received major investments from West German, Japanese, American, French and Italian companies because we provide an environment in which they can prosper. None of that investment would have come here had the Labour party been in power.

Mr. John D. Taylor
In connection with the proposed sale of Interflug, the East German airline, in which both Lufthansa and British Airways have declared an interest, has the Secretary of State made any representations to the German authorities to ensure fair play when considering British Airways' interest, or has he abandoned the matter to the Commission of the European Community?

§ Mr. Lilley
I made representations at the time and they were well received by the Minister, who recognised the strength of our point.