HL Deb 19 March 1997 vol 579 cc894-8

2.38 p.m.

The Viscount of Oxfuird asked Her Majesty's Government:

What is their forecast for inward investment for the remainder of this financial year and what effect that figure will have on the unemployment statistics.

The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)

My Lords, it is not possible to predict the number of new inward investment decisions and related employment figures that will be notified to my department's Invest in Britain Bureau in this period. However, the pattern over the past three years has shown an upward trend in both numbers of projects and jobs created.

The Viscount of Oxfuird

My Lords, is my noble and learned friend aware that today in Dunfermline, Scotland, the Hyundai Company of Korea is breaking the ground for a new factory, which will give 2,000 jobs to the constituency of the Shadow Chancellor? Does he agree that the declared objective of the party opposite is such that to sign up to the social chapter is surely a somewhat strange step, in view of that investment?

Lord Fraser of Carmyllie

My Lords, my noble friend is absolutely right. Noble Lords may laugh, but I do not believe that there is anything in the least bit humorous about it. Dunfermline is an area that many in the party opposite had written off as a place for employment, opportunity and reasons for optimism. Two thousand jobs will be created there. That is as a result of this Government's policy in attracting inward investment. I have no doubt whatever that, were we to sign up to the social chapter, that quite remarkable record in Europe, which is better than anyone else's, would seriously be put in peril.

Lord Bruce of Donington

My Lords, in order that the Question may be considered within its correct perspective, will the Minister confirm that, according to the Government's figures, for every £1 invested inwards in the United Kingdom, £2 is invested outside Britain?

Lord Fraser of Carmyllie

My Lords, I am not sure that those figures are correct. However, we have a remarkable economy in that we attract almost as much inward investment as we invest outwards. We wish to see that activity maintained. It is as desirable that we attract inward investment as it is that we invest elsewhere around the world. We are doing that extremely satisfactorily and efficiently.

Lord Clark of Kempston

My Lords, does my noble and learned friend agree that one of the reasons the UK has the bulk of inward investment into Europe, not only from Europe, but also from Korea and America, is the competitive position of our industries? They have a lower labour on-cost than our main competitors in Europe. Does he agree also that, if the social chapter was signed, inward investment would dry up?

Lord Fraser of Carmyllie

My Lords, yes. An interesting indication of that is not so much the Japanese and Korean investment that we now attract to the United Kingdom—we are the number one location for Asian investment—but that some of the most important investments undertaken by German companies are now in the United Kingdom. Most notable, in recent years, is the massive Siemens semi-conductor plant in the north-east of England.

Lord Mackie of Benshie

My Lords, can the noble and learned Lord tell us who those foolish investors are from this country who invest abroad when it is so much more attractive to invest at home?

Lord Fraser of Carmyllie

My Lords, all manner of companies. One group that certainly would not have been investing abroad, had it not been for this Government, are the privatised utilities which now have extensive investments overseas. It is highly desirable that they should undertake that activity and no other government would have given them that opportunity.

Lord Gisborough

My Lords, to what extent would a dissipation of the funds of the utilities through the proposed windfall tax—which will give six months employment to the unemployable—deny investment in restructuring which would create genuine long-term jobs?

Lord Fraser of Carmyllie

My Lords, I have just made the point that those utilities that have been privatised have been extremely successful and are now investing in every continent in the world. If they were to be subjected to a windfall tax, I would consider that their prospects of being able to continue that high level of investment, either in the United Kingdom or overseas, would be seriously diminished.

Lord Sewel

My Lords, does the Minister accept that the evidence he gave earlier indicates beyond doubt that inward investment into Scotland is not at all deterred by the prospect of a Scottish Parliament?

Lord Fraser of Carmyllie

My Lords, there is absolutely no indication of that. I am saying that we can look to those areas of Scotland which the noble Lord's friends wrote off. For instance, parts of Lanarkshire and Dunfermline, as we have already mentioned, through the efforts of this Government and the Scottish Office have been turned around. They now provide some of the finest hi-tech jobs in the country. We deserve the credit for that and not the noble Lord's party.

Lord Elton

My Lords, does the obvious confusion of noble Lords opposite in relation to the effects of legislation and policy on Scotland throw a little light on an intriguing headline in the Glasgow Herald a week ago, which read, "Labour amends wrong clause"?

Lord Fraser of Carmyllie

My Lords, I did not see that heading, but it does not surprise me.

Lord Peston

My Lords, is the noble and learned Lord aware that, certainly on my last question in this Parliament, I could not be in a better mood? Mention has been made of the social chapter, privatised utilities and the windfall tax. I cannot think of anything more that noble Lords opposite could have spoken about. But I retain an interest in the Question on the Order Paper which asked for a connection between investment and unemployment.

One interesting aspect about this Government is that they have presided over the largest and most sustained level of unemployment in modern history. At the same time we have had high inward investment. The resulting implication is that there is, at best, no connection between inward investment and the employment figures. If one was cynical, one might point out that inward investment perhaps leads to higher unemployment rather than lower. However, I would never say that on such a pleasant and final day for me. Does the noble and learned Lord's department have any evidence whatever, at a serious level of analysis, relating to the level of inward investment and the level of unemployment? Is there any data to which he can guide me?

Lord Fraser of Carmyllie

My Lords, I am extremely grateful to the noble Lord for his question; I was wondering how I was going to get in today's unemployment figures. They are now down by 68,200, following on 68,000 in January and 46,000 in December. I am more than happy to answer as many questions as the noble Lord wishes on unemployment and the improvements that we have secured. I cannot accept that there is no relationship between our massive improvement in the way in which we have attracted inward investment and jobs. Since 1986 around 250,000 jobs have come to the United Kingdom from European investment alone.

Lord Peston

My Lords, the serious point is that in 1993, for example, unemployment was virtually 3 million and inward investment was massive in that year. There simply cannot be a connection; that is the point.

Lord Fraser of Carmyllie

My Lords, with respect, it is not. There are 2,000 people in Dunfermline today who give the lie to that assertion.

Lord Beloff

My Lords, does my noble and learned friend agree that the noble Lord, Lord Peston, has obviously lost touch with the economics he once used to teach? It is a commonplace of business that before employment is created the factories have to be built and the markets discovered. If the noble Lord does not know that, I only hope that he will not be going back to teaching economics when his party is disappointed in the election, as undoubtedly it will be.

Lord Fraser of Carmyllie

My Lords, it is only the last point of my noble friend's question with which I disagree. I hope the noble Lord will go back to teaching economics.

Lord Stallard

My Lords, what proportion of the number of unemployed is directly related to the jobseeker's allowance?

Lord Fraser of Carmyllie

My Lords, I have given the figure of the number of people unemployed. It has been going down steadily. I do not understand what else the noble Lord wants. Some 68,000 people have come off the register. That is extremely important. I should have thought that the whole House would be delighted that the trend is in the right direction. One sometimes feels that the noble Lord and his friends have a vested interest in keeping those unemployment levels up.

Earl Russell

My Lords, I congratulate the Minister on today's unemployment figures. In the light of those figures, how does he explain the MORI poll reported in today's papers showing that unemployment is causing more anxiety to voters than any other single subject? Are the voters just stupid?

Lord Fraser of Carmyllie

No, my Lords. They must be worried when they contemplate that, unlike the United Kingdom, countries like Germany probably have the highest unemployment levels since the 1930s. One of the causes has undoubtedly been the very high social costs that are attracted to employment in Germany. The prospect that such social costs might be attached to employment in the United Kingdom would seem to be very good cause for the electorate to be worried.

Baroness Farrington of Ribbleton

My Lords, can the noble and learned Lord say how much of the £2 outward investment referred to by my noble friend in the ratio of £1 inward investment is invested in countries in Europe which have signed the social chapter and have a national minimum wage?

Lord Fraser of Carmyllie

My Lords, I cannot give the noble Baroness that figure. What I can say is that there is investment throughout the world. Indeed I am delighted to say that much of the investment that is currently underway from the United Kingdom is in the developing world. I am sure that she will be as pleased as I am that there is still that investment from the United Kingdom. We all benefit from it in the long run.