HC Deb 27 November 1991 vol 199 cc900-2
7. Mr. Andrew MacKay

To ask the Secretary of State for Trade and Industry what discussions he has had with the Confederation of British Industry to discuss Government support for industry.

Mr. Lilley

I regularly meet representatives of the CBI to discuss all matters affecting industry. This month I was the first Secretary of State for Trade and industry to be invited to address its conference since it began 15 years ago.

Mr. MacKay

When my right hon. Friend last met the CBI, did he have an opportunity to discuss its recent report on manufacturing industry in which it said that the Government should have no role in backing winners, which is precisely the Opposition's policy?

Mr. Lilley

I discussed it with the CBI and congratulated the CBI on it. It was an excellent report. It endorsed British industry's achievements under the policies that we have been pursuing for the past 12 years, urged us to continue and build upon them in future and condemned utterly the sort of policies still advocated by the Labour party, which is stuck in a mind-set of the 1960s and 1970s.

Mr. Alex Carlile

The CBI, in its cogently argued annual report, argues for a more involved, better-funded Department of Trade and Industry doing more to help British industry. The Secretary of State, with the Chancellor, argues for a less well-funded, less involved Department of Trade and Industry. Will the right hon. Gentleman explain why the CBI is wrong and he is right?

Mr. Lilley

I can tell the House why the hon. and learned Gentleman is wrong. First, it was not an annual report but a one-off; secondly, it did not call for more funding——

Mr. Carlile

It did.

Mr. Lilley

It did not. Thirdly, it specifically ruled out more funding and subsidies and a return to the policies pursued by the last Labour Government, with the support of the Liberal party. The CBI rejected all that. It said that it did not want the Government to channel funds in the direction of strategically selected industries.

Mr. Nicholls

Does my right hon. Friend recall the CBI's estimate that a 1 per cent. rise in inflation costs industry some £5 billion? Does not that show that the Government could best serve the CBI by running the economy in such a way that inflation is kept down and does not reach the levels that it reached under the last Labour Government?

Mr. Lilley

That is absolutely right. That is why the CBI has warned against policies—advocated by Labour—that would re-ignite inflation. Premature cuts in interest rates, £35 billion of extra public spending, and increased public borrowing and taxation would all set fire to inflation. To put Labour in charge would be like trying to douse a fire with kerosene.

Mr. Nigel Griffiths

If the Government's record is so good, why has the CBI just reported that investment in manufacturing has fallen by 18.8 per cent. in the past year, and that it will fall by 4.4 per cent. next year? Is not the estimate of a fall of 22.2 per cent. in two years a damning verdict on the Government?

Mr. Lilley

On the contrary, the CBI takes a long-term view—unlike Opposition Members, who rarely take a view longer than 12 months—and it commends the fact that manufacturing investment is now a third up on the level of 10 years ago. It says that recent years have seen a transformation in Britain's manufacturing base, and it condemns those who do not recognise it and continue to run down the achievements of British industry. That, I think, is a pretty clear coded reference to Opposition Members.

Mr. Nicholas Winterton

Does my right hon. Friend accept that the Department of Trade and Industry has an important role to play in creating the right climate for manufacturing industry? I know that a question has already been asked about export credit guarantees, but does not my right hon. Friend feel that the Government could be more pragmatic, constructive and helpful in assisting manufacturing industry to gain the many orders for capital equipment in the Soviet Union and eastern European countries that cannot proceed because of the Department's failure to grant export credit cover?

Mr. Lilley

My hon. Friend is absolutely right to refer to the Government's role in setting the right climate and environment and providing the right services for industry.

My hon. Friend asked about the Export Credits Guarantee Department. We have paid out eight times as much in funds to industry as we have taken in premiums since 1984. Over that period there has been only a 10 per cent. increase in the average premium—some premiums have risen while others have fallen. Naturally, companies trading in the more risky markets, for which premiums have been increased somewhat to reflect the risks, are less than enthusiastic. Overall, however, I think that the comparatively small increase in premiums demonstrates a pragmatic response, given the huge losses incurred over past years.