HC Deb 20 June 2002 vol 387 cc399-401
7. Mr. Jonathan Djanogly (Huntingdon)

What recent bilateral discussions he has had with the Secretary of State for Trade and Industry regarding how his policies are affecting manufacturing industry. [60343]

The Chancellor of the Exchequer (Mr. Gordon Brown)

I meet the Secretary of State for Trade and Industry regularly to discuss a wide range of issues, such as the future of manufacturing industry and the measures that we took in the Budget, including the research and development tax credit.

Mr. Djanogly

The right hon. Gentleman will be aware that manufacturing productivity in this country is suffering. The Government's own manufacturing strategy document states: It is now 55 per cent. higher in the United States than in the UK, 32 per cent. higher in France and 29 per cent. higher in Germany. My understanding is that the position is getting worse all the time. When I speak to businesses in my constituency, they complain about the increase in taxes and regulations, yet this document does not even mention either of those issues. Will the right hon. Gentleman tell me what conversations he has had with the Secretary of State for Trade and Industry, how they intend to resolve the problems facing businesses, and why those issues are not even mentioned in his own strategy document?

Mr. Brown

In the Budget, we announced the first major simplification of the VAT regime as it affects small businesses. For the first time, instead of having to produce every estimate for every transaction, a percentage figure is being applied to the VAT bills for small businesses. This is a major simplification measure—which we hope to extend to other areas—affecting more than 500,000 companies. We are alert to the need for simplification, and we will continue to pursue that.

I think that the hon. Gentleman will find that, when he talks to businesses in his constituency, what they want most of all is economic stability. The fact that, as a result of making the Bank of England independent and of the new fiscal and monetary regime that we have introduced, we have had greater stability over the last five years than we had in the previous 18 years, shows the value of policies for stability against the old boom and bust.

Mr. Stephen McCabe (Birmingham, Hall Green)

Does my right hon. Friend agree that criticisms of Government policy of the kind that we have just heard from the hon. Member for Huntingdon (Mr. Djanogly) and, earlier, from the shadow jouster—or should that be "jester"?—from Buckingham, would have much greater impact, were it not for the fact that manufacturing productivity is actually up 12 per cent. on the figure that we inherited in 1997, and that exports are up almost 20 per cent. over the same period? This contrasts sharply with the 700,000 jobs lost and the 5.3 per cent. drop in output when the present shadow Chancellor was the Minister responsible for these matters.

Mr. Brown

I have to disappoint my hon. Friend: it was a million jobs that were lost under the shadow Chancellor, and he should continue to apologise to the House for his performance as Secretary of State for Employment. So far as manufacturing is concerned, the first thing that we had to do was to create more stability. There has certainly been an increase in employment overall in the economy. Equally, we have created a better environment for investment through reforms in corporation tax and capital gains tax. Yes, there is an all-party interest in boosting productivity growth in the economy, and I hope that the Opposition will support the measures that we have taken in the Budget.

Chris Grayling (Epsom and Ewell)

Does the Chancellor recognise the real concern in the manufacturing organisations that support the oil industry—and in the North sea oil industry as a whole—about the adverse effect that his budgetary tax changes will have on that industry? Will he now reconsider those measures, and will he listen to the cross-party campaign to encourage him, at the very least, to delay them until a full economic impact assessment can be made?

Mr. Brown

I hope that the hon. Gentleman will not fall for the propaganda of some organisations in that area. He knows perfectly well, if he has looked at the detail, that the 100 per cent. investment allowance for the development of new oil fields will make it more profitable to develop new oil fields in the future, not less.

As for the resource take from the North sea, our tax regime is more favourable than that of other countries. If the hon. Gentleman does not want us to go ahead with that tax proposal, he will have to explain to the House how he would raise the £500 million that is going into our public services.

Charlotte Atkins (Staffordshire, Moorlands)

What success has my right hon. Friend had in encouraging manufacturing to take up information and communications technology much more effectively? Is he aware of such initiatives as the e-bus in my constituency, which is promoted by Leek college and Advantage West Midlands, and provides a mobile facility for micro and small businesses? It has 10 ICT terminals, and aims to encourage training, especially among micro-businesses, which to date have been poor at taking up ICT challenges.

Mr. Brown

I have not yet been on the e-bus, but I am interested that there are so many different initiatives as a result of our computer learning proposals. Council houses have been allocated for computer learning centres, BBC local studios have become computer learning centres and they have been set up in colleges, schools and other public places. With the mobile computer learning centres, we are trying to diffuse computer literacy education throughout the country. That is absolutely crucial for business, which is why there is 100 per cent. tax relief for businesses that adopt new computer and information technology. Although it is costly in lost revenue, I hope that both sides of the House will support expenditure on that.