HC Deb 16 December 1993 vol 234 cc1258-60
5. Mr. Lidington

To ask the Chancellor of the Exchequer when he next expects to meet his French counterpart to discuss economic competitiveness in Europe; and if he will make a statement.

Mr. Kenneth Clarke

I met Mr. Alphandery, the French Finance Minister, along with Finance Ministers from the other member states, to discuss European competitiveness at the recent European Council and ECOFIN meetings. I expect that we will discuss this issue further at future meetings.

Mr. Lidington

When my right hon. and learned Friend next meets his French counterpart, will he employ his customary energetic diplomacy to remind the French Finance Minister that an economic plan for Europe which involves higher borrowing, more help for state-funded white elephants and cuts in working hours would not encourage investment, but would cause any potential investor simply to shake his head sadly and take both money and jobs somewhere else?

Mr. Clarke

I think that my hon. Friend is assuming that the French Finance Minister is a bigger supporter of some proposals that come from the Commission in Brussels than he actually is. My colleague Mr. Alphandery is as big a sceptic as I am of some proposals, such as those my hon. Friend listed, that have been emanating from people with less well-judged ideas. The French Government have been imposing some strict austerity measures recently. They are making changes to their social security system to make it affordable and to reduce the costs on their employers. They have reduced their minimum wage for young people because they have found, as we would if we were to introduce one here, that the minimum wage created unemployment among young people. I assure my hon. Friend that my colleague Mr. Alphandery is somewhat nearer to his views and mine than he fears.

Nevertheless, France is not having the recovery that we are. It has a higher level of unemployment than we do and I think that the French Government are looking with interest at what is happening on this side of the channel and propose to follow many of our measures.

Mr. Hoon

The French Government have obviously decided that the best way of promoting their economic competitiveness is in the negotiations with the German Government on the terms of the creation of a single currency. How does the Chancellor intend to influence those negotiations? Or is he content that Britain should remain on the European sidelines?

Mr. Clarke

We are not on the European sidelines. It is true that at the Finance Ministers' meetings that I attend I am more often in total agreement with the German and Dutch Finance Ministers and usually with the Spanish Finance Minister than with Mr. Alphandery. Nevertheless, Mr. Alphandery and I are agreed on about four fifths of the issues. Last week's debate was based on the Opposition party's crazy premise that all the Finance Ministers of western Europe were sold on the idea of borrowing enormous sums and spending enormous sums to create extra jobs.

I am in complete agreement on currency with the other members of ECOFIN, including the French and the Germans. Now we have to concentrate on achieving convergence in our economic performance to achieve that stability of exchange rates, which will follow. My French and German colleagues are as keen as I am on getting inflation down to the levels that the British are now achieving and on getting public sector deficits down to the level that we are now on course for. [HON. MEMBERS: "Come on."] The gulf exists between the British Labour party and other governing parties in western Europe.

Mr. Nicholas Winterton

Does my right hon. and learned Friend accept that Europe is increasingly uncompetitive and over-regulated? Does he further accept that the growth in the world will take place outside Europe, in north America, south America and the Pacific rim? When will he create policies for Britain's manufacturing and construction sectors to enable us to take advantage of the real growth outside Europe?

Mr. Clarke

I agree with my hon. Friend. We must make ourselves competitive with the countries in the Pacific rim and north America that are our rivals in world trade, but that point is increasingly appreciated in western Europe. As my hon. Friend talked about burdens on employers, he will be glad to know that at the recent summit in Brussels it was agreed that we should have an inventory of social regulations that bear down on employers and add to the costs of employment.

Mr. Winterton

At my request and that of the manufacturing alliance.

Mr. Clarke

I am glad that my hon. Friend went ahead of us to ask for that. We regard that as a considerable success in our negotiations.

Mr. Darling

Does the Chancellor accept that taxation and transport links affect Britain's competitiveness? As the Chancellor does not know when, or even whether, the channel link will open and as he put up taxes when the Conservatives said at the previous election that they would not, why should we believe a single word that he or any of his colleagues say at the next election?

Mr. Clarke

We are borrowing more money from the European investment bank than any other member state and investing it in Britain's infrastructure—for example, the Heathrow express, the Jubilee line extension—[Interruption.] They are under construction. Until recently, expenditure on Britain's road programme was about 40 per cent. higher in real terms and railway investment in Britain was 40 or 50 per cent. higher than five years ago. We are investing heavily in our infrastructure and we are ahead of our partners in Europe in developing it using European instruments—[Interruption.] The debate that we had last week was based on the dire proposition of the hon. Member for Dunfermline, East (Mr. Brown), who had not read the document that he was talking about, that Mr. Delors was offering us some money to build the channel tunnel high-speed rail link. That rail link has not yet been built because it has not been designed.

Mr. Jessel

With regard to economic competitiveness in Europe in the auction of works of art, will my right hon. and learned Friend join me in congratulating my right hon. Friend the Paymaster General on the successful outcome of the long and difficult VAT negotiations, preventing that valuable market from being driven out of Britain and the Common Market to Geneva and New York?

Mr. Clarke

I happily join my hon. Friend in those congratulations. I happened to be there when the final decision was taken in the Council last week, and he is right to say that all the negotiations have been carried out with considerable skill by my right hon. Friend the Paymaster General.