HC Deb 09 November 2000 vol 356 cc435-6
12. Mr. William Cash (Stone)

If he will make a statement on the impact of his economic policy on the competitiveness of UK industry.[135960]

The Financial Secretary to the Treasury (Mr. Stephen Timms)

Economic stability is a sound base for competitiveness. That is why the Government have cut public borrowing, ensured that inflation is low and stable, and achieved the lowest long-term interest rates for more than 30 years. We have introduced structural reforms to help to boost business productivity, and policies to encourage industry to invest for the long term in the skills and infrastructure that it requires to succeed.

Mr. Cash

Does the Minister accept that one of the greatest disincentives to competitiveness is regulation and over-regulation? What are the Government doing to reduce the burden of regulations on British industry, on farming and the agricultural industries, and on many others? What would be the position if, in line with the economic policy of the Chancellor and the Prime Minister on going into economic and monetary union, we went into the exchange rate mechanism? What effect would that have on competitiveness in the UK?

Mr. Timms

I can reassure the hon. Gentleman that we are not planning to enter the exchange rate mechanism, and that the United Kingdom has consistently scored highly in various competitiveness surveys. In the World Economic Forum assessment of business perceptions of corporate tax systems, the UK's is ranked the best in the world.

We are aware of concerns about regulation. We have introduced the better regulation task force and the Small Business Service. We are working to challenge excessive and complex regulations, and my right hon. Friend the Chancellor announced yesterday an important package to reduce the burden of VAT administration and to improve cash flow for small firms—precisely the sort of firms that the hon. Gentleman asks about. Therefore, we are making the changes that are needed to help.

Mr. Harry Barnes (North-East Derbyshire)

In the Chancellor's pre-Budget statement yesterday he pointed out that the Exchequer had made Britain the best place in the world for multinationals to locate. When it comes to multinational companies investing in this country, will the Chancellor ensure that action is taken to see that that is not done in ways that destroy existing United Kingdom companies, especially those involved in the export trade? That is what has happened with St. Gobain investment and the takeover of Biwater in Clay Cross, where it is possible that 700 jobs might soon be lost and the export trade will be considerably damaged. It would be good if the Treasury would discuss that with the Secretary of State for Trade and Industry, to ensure that some strong action is taken under existing regulations.

Mr. Timms

I am not familiar with the case to which my hon. Friend refers. We welcome investment into the UK, and the high levels of inward investment that we have seen in recent years. We want the United Kingdom to be the best place in the world for multinationals to be based, and my right hon. Friend the Chancellor made some important announcements yesterday about corporate taxation in that respect, which have been warmly welcomed. If my hon. Friend wants to drop me a note about the case that he mentioned, I shall be happy to take it up with the Department of Trade and Industry.

Mr. Peter Brooke (Cities of London and Westminster)

Yesterday, the Chancellor said: We are tackling the productivity gap.—[Official Report, 8 November 2000; Vol. 356, c. 332.] As productivity performance since May 1997 has been so disappointing, could the Financial Secretary enlarge on those six words?

Mr. Timms

I refer the right hon. Gentleman to an informative graph in the pre-Budget report published yesterday. It shows that there has been good progress on productivity in the past couple of years, particularly in manufacturing. However, we are still not matching the United States—there is still a 40 per cent. productivity gap. There is a great deal more to be done, and that is why the Chancellor's announcements yesterday were so important. Stability in the economy is vital, as is sustained public investment in transport and education. Those things would be drastically and savagely cut under the spending plans of the Conservative party.